Wednesday, December 17, 2003

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MNCs vs. IGOs

Robert Tagorda has a great post highlighting the contrasts in behavior between international governmental organizations (IGOs) and multinational corporations (MNCs) in parts of the globe that are vulnerable to terrorism. To put it in fight-or-flight terms -- the IGOs are more likely to vamoose when trouble comes around, while the MNCs are much more resilient in the face of terror attacks.

Check out this Christian Science Monitor story for more on corporate strategies in countries experiencing terrorism. Tagorda concludes his post:

This comparison should prompt serious discussions on who truly benefits struggling localities. As the international community worries about the influence of its most powerful member, the business world is productively establishing long-term relationships.

posted by Dan on 12.17.03 at 11:37 AM


Brave Sir Robin ran away, bravely ran away away. When danger reared its ugly head, he bravely turned his tail and fled. Yes, brave Sir Robin turned about, and valiantly, he chickened out. Bravely taking to his feet, he beat a very brave retreat. A brave retreat by Sir Robin.

posted by: Crank on 12.17.03 at 11:37 AM [permalink]

Hate to state the obvious Dan, but IGOs tend to care about their personnel more and are less likely to hire mercenaries or security. Your average MNC in Iraq is subcontracting heavily and armed to the teeth.

posted by: rosco on 12.17.03 at 11:37 AM [permalink]

Actually, rosco, I'd say both groups care equally about their personnel. The difference could be that IGOs tend to bring in a lot more expats while the MNCs employ more locals (and not just for security functions). As the CSM story indicates:

Then, too, many multinationals staff their overseas offices with local residents.

"The very significant majority of our staff in local markets are members of the local community," explains Richard Beck, HSBC's head of group external relations, in London. Even HSBC's chief executive in Istanbul is Turkish, says Mr. Beck. "The notion that somehow HSBC might want to remove itself from a country doesn't quite work, when you consider that the bank is embedded there."

posted by: Dan Drezner on 12.17.03 at 11:37 AM [permalink]

"IGOs tend to care about their personnel more and are less likely to hire mercenaries or security."

Perhpas, but caring more about their personnel than the impoverished in struggling countries (who have to face the terrorists anyway), and refusing to take the necessary steps to defend themselves so that they can continue to help the people does not exactly engender respect with me.

posted by: John Thacker on 12.17.03 at 11:37 AM [permalink]


Good get - Not to mention the fact that IGO's use the acts of "staying" and, more recently,"leaving" to communicate their politics, don't you think?

posted by: TommyG on 12.17.03 at 11:37 AM [permalink]

If you hire security -- which is simply a prudent thing, but may also be required by the MNC's auditors so that the stockholders (you and me) can be assured that the managers are ensuring the preservation of the business -- then the employees are more likely to be protected. Remember the issue of the UN rejecting the US Army's security reommendations for its Bagdad headquarters. An MNC wouldn't do this, for various prudential reasons including insurance costs and bad audits.

posted by: John Bruce on 12.17.03 at 11:37 AM [permalink]

Strange we don't see any MNC's in the Congo then. Oh wait, perhaps it has something to do with the notion that MNCs go where the money goes and stay when the money keeps flowing? What's the point of this anyway? That MNCs are better for Iraq than IGOs? Very useful comparison indeed.

posted by: zaoem on 12.17.03 at 11:37 AM [permalink]

In many ways, the clashing political agendas of the IGOs and MNCs in today's transnational world resemble the same sort of clash between missionaries and commercial interests in each of the old European empires. The UN now plays the role of the old elitist, patronage-larded colonial bureaucracies, with their own political agendas more driven by complacency and international gamesmanship than local conditions.

But instead of mediating between the missionary and commercial interests, as the old colonial bureaucracies had to do because the empires were financially dependent on commercially generated revenue, the UN is entirely captive to the missionary interests and entirely inimical to commercial interests (unless the revenue goes directly into UN coffers, as in the Iraq oil-for-palaces program).

Of course, the commercial interests have their own competing bureaucratic allies--the World Bank, WTO, IMF, with their own clubby and imagination-challenged elites--who play the same sort of regulatory role that the Bank of England, Lloyd's, the London Stock Exchange, etc., used to (and still do) play, and which are routinely vilified by the IGOs and their allies, who regard commerce as antithetical to righteousness (now called "social justice").

See also Michael Crichton's September 2003 talk before the Commonwealth Club in SF on environmentalism as the new religion of choice for urban atheists (who constitute the prime recruiting ground for IGOs).

posted by: Joel on 12.17.03 at 11:37 AM [permalink]

Yeah, Dan. Iraqi industry, or the rights to and ownership of, are being sold to the highest multi-national bidder. Little wonder that those bravely deep-pocketed MNC's are choosing to tough it out. It's worth the risk to carve out their turf.

IGO's rely more on the general good will of the populace that they're there to serve, hence their reluctance to appear to be taking sides (which someone above somehow sees as "communicating their politics"). When that good will turns diffuse, IGO's without the resources to hire their own private armies pretty much have to leave until the situation cools down.

Certainly, though, if MNC's help with the cooling down, that can only be a good thing. I just don't see that happening enough yet in Iraq.

posted by: Bloggerhead on 12.17.03 at 11:37 AM [permalink]

The article makes clear that corporations are making most of their decisions, for better or for worse, on the basis of purely rational cost-benefit analysis. Staying has some potential positive value, which can be measured against possible cost of the death or dismemberment of an employee or employees (and associated insurance costs, lawsuits etc). This negative outcome has quantifiable economic value. Isn't is a constant part of the behavior of corporations to weigh things that otherwise might be considered sacred (human life and health, clean air and water, abiding by law, traditional cultures, "community," other intangibles) purely in terms of their measurable economic value against potential economic gain. If IGOs choose to stay in such situations they are choosing to risk human life for some compelling purpose. If MNCs choose to stay they are choosing to risk the economic cost of employee death against potential profit-- a decision that MNCs make every day.

yes, no?

The fact that corporations might stay when the UN leaves is important -- and may be of some benefit to people -- though this is unclear. The corporation might provide some benefit to the local people as an *incidental* outcome of strategies intended to produce profit for the corporation. But isnt it just as possible that the corporatin might stay in a violent or unstable area to pursue ends that have an incidental negative outcome for local populations?

Finally, isn't this phenomenon in Iraq partly based on the fact that the strategies pursued by IGOs in this case (but maybe not in the case where they are the official "peacekeeper") are necessarily based on being a neutral player -- where as business have long employed strategies for operating in conditions where they are regared as an "enemy" or a target? not sure about this last part.

posted by: Ben on 12.17.03 at 11:37 AM [permalink]

Good points, bloggerhead. But Robert Kaplan, in his book The Coming Anarchy, relates some local enthusiasm in Azerbaijan and Georgia for the coming Baku-Tbilisi-Ceyhan oil pipeline, which enthusiasm rests on the assumption that powerful outside forces will then have an abiding interest in serious, longterm peacekeeping in that dangerous neighborhood--to protect their investments, if nothing else.

The IGOs don't have the equivalent longterm local investments to protect, especially if they are overwhelmingly staffed by nomadic expat do-gooders. Though I'm not at all religious, I have more respect for (esp. medical) missionaries, who do try to "plant" and nurture lasting religious communities in far corners of the globe. Unfortunately, they share the IGO tendency to rely on soft goodwill rather than hard security, and are perhaps even more likely to end up as martyrs or kidnap victims because they're less willing to pack up and leave.

posted by: Joel on 12.17.03 at 11:37 AM [permalink]

Never forget how powerful a single, definable goal is. The MNCs are after profit. Easy to understand, fairly easy to measure. The IGOs are after . . . what? Well that depends on rather a lot of things. Thus, goal displacement takes place, and so on, and so on, yadda yadda.

Even if they were equally motivated in the first place, the IGOs would deteriorate more rapidly due to goal displacement, if nothing else.

posted by: JorgXMcKie on 12.17.03 at 11:37 AM [permalink]

The attachment of IGOs to a supposedly "neutral" stance reveals their moral relativism, which is a nice way of saying their fundamental amorality.

posted by: R C Dean on 12.17.03 at 11:37 AM [permalink]

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