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Embargoes and corporate goals
Rejoinder Embargoes
and corporate goals
A recent article in Food Policy, ‘US-Soviet grain embargoes: regulating the MNCs’, by Erik Lindeil,1 broached the problem of controlling and regulating muftinational corpoWons (MNCs) during recent US-Soviet grain embargoes. While agreeing witf~ LindelPs analysis as far as it goes, Peter Okaiyeto provides a conceptual fiamew6rk to tiprove our understanding of why MNCs behave as hhey do, demonstrating that MNCs will undermine those global interests of their national governments lhat run counter to tieir own Merests.
As Lindell rightly states, multinational corporations (MNCs) ‘. . _ possess considerable operational flexibility and freedom of action in the current international system . . .’ (P240) because of their numerous holding subsidiaries and factors. companies, The statement remains true only if we assume the neutrality of political structures that in the first place allows for the ‘free-handedness’ of operations by the MNCs in whatever proxy fashion they are represented. Thus, MNCs are able to function much more freely in Third World nations for a number of reasons. First, their capital, and managerial and technological expertise are usually beyond the mainstream capacities of Third World nations. This allows the MNCs some degree of access to sources of political power, which in turn gives the MNCs some measure of economic and political power that at times runs parallel with the political interests of their home-country. Consequently, MNCs co-opt local political, economic and bureaucratic elites in the Third World as hierarchy members of their local directorates. This usually (and normally) allows for continuity of corporate programmes and policies of the MNCs to be sustained especially in those nations regarded as falling into the West’s ‘sphere of interests and influences’. Second, MNCs should be viewed as specific representing and quasipartisan interests of their home bases. For example, when jobs are threatened due to shortfalls in sales, shortfalls of planned or projected profits, diminishing capacity to either increase turnover or sustain its market shares, 154
MNCs flout partisan policies that view the economic situation in a global fashion vi&-v& geopolitical interests. This is because a nation’s geopolitical interests usually regard the nation as a single constituency with monolithic global political interests. This stand by the political structure assumes MNCs could be patriotic and thereby sacrifice corporate objectives. This usually conflicts and subterranean brings approaches by MNCs to sidetrack national political wishes. Third, while it is true that MNCs corporate leaders have alliances (or even hold political office, ie the Betchel Group that has cabinet-rank former members in the USA’s White House) with the ruling political elites of their home country, MNCs do not normally have an input in the shaping of spur-ofthe-moment political decisions, those with especially associated withholding planned supplies. For political that example, analyses recommend embargoes could have the following cardinal objectives: to reduce the ability of the ‘hostile’ nation in having access to steady and perhaps cheap sources of inputs; to increase costs and per se depletion of foreign exchange of the ‘hostile’ country; to force the ‘hostile’ country to become obsequious; to reduce the ‘hostile’ country’s ability to spend more on arms or to support surrogates; or, to enhance the prestige of the home country. These are purely political variables and their combinations and probable political gains are of little or no use to the variables of consequence in the boardrooms of the MNCs. They can hardly lead to increases in supplies but
could readily diminish both turnover and outreaches of the MNCs. Fourth, and finally, MNCs are sources of important geopolitical hegemony through guaranteeing the presence, ideals, interests, and technological expertise of their home country and, providing inputs for the formulation of guidelines that ensures sustained spheres of interests and influences. To that extent, political elites are hardly in a good position, in the long run, if they stymie the corporate objectives of MNCs. Thus, political elites are ready to look the other way at times, when they reflect upon long-run interests. This usually allows MNCs to sidetrack embargoes. When Lindell wrote his article, the unenforceable US pipeline-embargo on its allies w.as not formulated. The embargo of August 1982 and its lifting in November 19822 reinforces my point of view. The aim of the pipeline embargo was to limit access to high technology and foreign exchange earnings by the USSR (buying of grains depletes Soviet foreign exchange as well as reducing stockpiling of surplus grains in the USA). Lindell’s article does not provide sufficient background for an analysis of MNCs under embargo. MNCs operate firstly to satisfy corporate interests such as profits, turnover and sustaining their market share. After these, MNCs pursue the interests of their immediate constituencies which includes the guaranteeing of jobs and creation of wealth. Geopolitical interests as globally viewed by the political elites are hardly in line with corporate goals or constituency interests. Thus, MNCs sidestep those global interests that run counter to their own interests. MNCs do, however, provide the political structures with the wherewithal of sustaining their spheres of interests and influences by their presence outside their home country. Peter 0. Okaiyeto Ahmadu Be/lo University Zaria, Nigeria *Erik Lindell, ‘US-Soviet grain embargoes: rt3gulatitIg the MNCs’, Food P&icy, Vol7, No 3, August 1982, pp 240-246. *see vafiuus Newwwek and Time issues between August and November 1982.
FOWKBLlCY~1983
and corporate goals
A recent article in Food Policy, ‘US-Soviet grain embargoes: regulating the MNCs’, by Erik Lindeil,1 broached the problem of controlling and regulating muftinational corpoWons (MNCs) during recent US-Soviet grain embargoes. While agreeing witf~ LindelPs analysis as far as it goes, Peter Okaiyeto provides a conceptual fiamew6rk to tiprove our understanding of why MNCs behave as hhey do, demonstrating that MNCs will undermine those global interests of their national governments lhat run counter to tieir own Merests.
As Lindell rightly states, multinational corporations (MNCs) ‘. . _ possess considerable operational flexibility and freedom of action in the current international system . . .’ (P240) because of their numerous holding subsidiaries and factors. companies, The statement remains true only if we assume the neutrality of political structures that in the first place allows for the ‘free-handedness’ of operations by the MNCs in whatever proxy fashion they are represented. Thus, MNCs are able to function much more freely in Third World nations for a number of reasons. First, their capital, and managerial and technological expertise are usually beyond the mainstream capacities of Third World nations. This allows the MNCs some degree of access to sources of political power, which in turn gives the MNCs some measure of economic and political power that at times runs parallel with the political interests of their home-country. Consequently, MNCs co-opt local political, economic and bureaucratic elites in the Third World as hierarchy members of their local directorates. This usually (and normally) allows for continuity of corporate programmes and policies of the MNCs to be sustained especially in those nations regarded as falling into the West’s ‘sphere of interests and influences’. Second, MNCs should be viewed as specific representing and quasipartisan interests of their home bases. For example, when jobs are threatened due to shortfalls in sales, shortfalls of planned or projected profits, diminishing capacity to either increase turnover or sustain its market shares, 154
MNCs flout partisan policies that view the economic situation in a global fashion vi&-v& geopolitical interests. This is because a nation’s geopolitical interests usually regard the nation as a single constituency with monolithic global political interests. This stand by the political structure assumes MNCs could be patriotic and thereby sacrifice corporate objectives. This usually conflicts and subterranean brings approaches by MNCs to sidetrack national political wishes. Third, while it is true that MNCs corporate leaders have alliances (or even hold political office, ie the Betchel Group that has cabinet-rank former members in the USA’s White House) with the ruling political elites of their home country, MNCs do not normally have an input in the shaping of spur-ofthe-moment political decisions, those with especially associated withholding planned supplies. For political that example, analyses recommend embargoes could have the following cardinal objectives: to reduce the ability of the ‘hostile’ nation in having access to steady and perhaps cheap sources of inputs; to increase costs and per se depletion of foreign exchange of the ‘hostile’ country; to force the ‘hostile’ country to become obsequious; to reduce the ‘hostile’ country’s ability to spend more on arms or to support surrogates; or, to enhance the prestige of the home country. These are purely political variables and their combinations and probable political gains are of little or no use to the variables of consequence in the boardrooms of the MNCs. They can hardly lead to increases in supplies but
could readily diminish both turnover and outreaches of the MNCs. Fourth, and finally, MNCs are sources of important geopolitical hegemony through guaranteeing the presence, ideals, interests, and technological expertise of their home country and, providing inputs for the formulation of guidelines that ensures sustained spheres of interests and influences. To that extent, political elites are hardly in a good position, in the long run, if they stymie the corporate objectives of MNCs. Thus, political elites are ready to look the other way at times, when they reflect upon long-run interests. This usually allows MNCs to sidetrack embargoes. When Lindell wrote his article, the unenforceable US pipeline-embargo on its allies w.as not formulated. The embargo of August 1982 and its lifting in November 19822 reinforces my point of view. The aim of the pipeline embargo was to limit access to high technology and foreign exchange earnings by the USSR (buying of grains depletes Soviet foreign exchange as well as reducing stockpiling of surplus grains in the USA). Lindell’s article does not provide sufficient background for an analysis of MNCs under embargo. MNCs operate firstly to satisfy corporate interests such as profits, turnover and sustaining their market share. After these, MNCs pursue the interests of their immediate constituencies which includes the guaranteeing of jobs and creation of wealth. Geopolitical interests as globally viewed by the political elites are hardly in line with corporate goals or constituency interests. Thus, MNCs sidestep those global interests that run counter to their own interests. MNCs do, however, provide the political structures with the wherewithal of sustaining their spheres of interests and influences by their presence outside their home country. Peter 0. Okaiyeto Ahmadu Be/lo University Zaria, Nigeria *Erik Lindell, ‘US-Soviet grain embargoes: rt3gulatitIg the MNCs’, Food P&icy, Vol7, No 3, August 1982, pp 240-246. *see vafiuus Newwwek and Time issues between August and November 1982.
FOWKBLlCY~1983