There is currently an eminent absence of international governance standards on business across borders. International disputes arise everyday in countries where we do not have access to information and which we know very little about. If we look at the recent collapse of a coal mine in the South-East Russian border it is clear that thousands (if not millions) of people put their life at risk in health and environmental conditions and at working standards, saying the least, which are a continuous threat to human health and decency. Unfortunately, as it has happened in this case, these stories hit the news only when some major incident occur, or when it is not possible to 'cover it up'. In the specific example of the coal-mine Russian workers, the story hit the news also because it had a good ending. Luckily nearly all of them were safe and back to their families.
However, such occurrence has profound effects on the risk perceptions of the people living in wealthy nations. News stories are brought to their attention only in specific circumstances, but that is only part of a greater picture of events characterising the effects of decisions made in places, which not only are detached from the local context were these will ultimately have effect, but also where no one has real power on.
It is not a new story the way in which some multinationals decide to locate their highest polluting facilities (or other kinds of hazardous operations) in countries where law enforcement on international environmental standards is weaker, thus not only putting at risk the ecosystem of these countries, but risking also systemic crises whose spill-overs will affect everyone on the planet. The effects of such actions affects countries whose bargaining position vis-à-vis powerful industrialised nations is weaker and whose legal structures and systems provide an easy loophole to stricter regulations in developed nations.
Yet another important story, which has recently hit the news, has been the case of the oil giant Chevron Texaco in Ecuador. According to a recent article of the Guardian newspaper it is claimed that up to 1m hectares of rainforest along the route of Texaco's pipelines and wells were polluted or destroyed, let alone the effects on the local population. Recent studies have discovered high incidences of cancer, a disease which is nearly unknown in other parts of the Amazon.
It has then come a shock to the global oil industry that a court in New York has decided (despite a previous plot to carry out the decision in a court in Ecuador) that the company should be fined and the trial conduced according to US law and also enforceable in the US. This is a landmark case against all those business practices that some multinationals 'outsource' overseas in the attempt to escape such responsibility in their own country. Certainly, it would be better for some LDCs to be protected under the umbrella of US regulations other than by their political cronies or legal systems, inadequate to deal with such cases. The issue however is what happens during (who will get the benefits) and after (will compensation be really redistributed to the people, and what this will mean for future cases of similar nature?) a US court will rule on that case. These are just some of the 'hard questions':
- Where the money of the fines will go?
- What does this means for the possibility of less developed nations to create their own legal framework?
- What this means also for non-oil industry and the future development of cases similar to this in the developing world. Will a court in the US be empowered to decide upon all of these issues?
(Posted by Daniele Navarra at 23 February, 2004) --- Permalink ---