[governance] FW: Economic Power, Democracy and Human Rights: A New International Debate on Human Rights and Corporations

Wed Jun 25 02:25:06 EDT 2014

Since the Internet Governance community has at NetMundial and elsewhere
"taken onboard" and is celebrating the necessary relationship between
Internet Governance and Human Rights the article below might be of some
interest as it provides a useful context for the emerging discussion and
debate on Human Rights and Corporate Power as is currently being promoted by
Ecuador and a significant proportion of the Group of 77, and a subject of
some significance for IG discussions.

M

-----Original Message-----
From: Sally Burch - ALAI
Sent: Tuesday, June 24, 2014 8:41 PM
Subject: Another article on the bid to regulate corporate power

http://www.tni.org/article/economic-power-democracy-and-human-rights

Economic Power, Democracy and Human Rights: A New International Debate on
Human Rights and Corporations

Gonzalo Berrón

The 26th Session of the United Nations Human Rights Council (UNHRC) opened
in Geneva on June 10th. A major focus on the UNHRC agenda is the issue of
binding regulations for Transnational Corporations (TNCs). This demand has
been raised by Ecuador and 84 other governments in a Statement to the UNHRC
last September 2013.

The urgent need for such a Binding Treaty has been on the agenda of social
movements and human rights organisations for a long time who have recently
converged in a Treaty Alliance whose statement is supported by more than 500
movements and networks from all regions of the world. There are indications
that this demand for a Binding Treaty on TNCs will be a matter of intense
negotiations at the UNHRC (as some governments including the US and the EU,
seem determined to block this demand. This article places the political
tensions converging in Geneva in the context of the broader agenda of
corporate capture of political power and the privatisation of democracy.

Economic interests in contemporary global capitalism: a new phase in the
privatisation of democracy

We are currently in a phase of global capitalism where certain tendencies
appear to be converging to conspire against the ability of several
generations to exercise democracy and human rights. On the one hand, the
growing concentration of private economic power is overlapping the old
North-South geopolitical division and is expressed at the global level in
the form of transnational "mega-corporations" and the arrival of the
"translatinas"1 and other corporations based in "emerging" economies. On the
other hand, there is a new kind of interdependence between the world of
money and the world of politics in what some describe as "corporate
capture", or the capture of politics/democracy by economic power. These
phenomena cannot be simply reduced to the participation of the "rich" in
politics - the old Weberian plutocracy.

Instead, they are the result of greater promiscuity between both worlds due
to the dependency of politicians in competitive democratic systems. In other
words, politicians' chances of getting elected depend on the economic means
at their disposal for election campaigns, while their performance in
positions of power (executive and legislative) is conditioned by the
commitments they make to guarantee their re-election or a "dignified
withdrawal" from public service. Several former European premieres currently
act as consultants for major corporations. The growth of economic power
arising from its concentration also has impacts on the international level:
these mechanisms of capture can also be found in international
institutions2. Furthermore, to the traditional geopolitical calculations of
power on the international scene, one can add the economic calculations of
actors from the business world who have organically penetrated mechanisms of
the so-called "global governance". They do so actively through the
construction of what some call the "architecture of impunity"3 - a framework
of free trade agreements and investment treaties, and laws that expand the
rights of "businesses" - or by directly occupying positions in international
institutions, or exerting pressure via national governments defending the
economic interests of their corporations4.

Hyper-concentration, the 1% and rights

Popularised after the 2008 crisis as the "1%", the high concentration of
wealth, property and decision-making power in the hands of an increasingly
smaller number of actors has been the focus of a growing number of studies
published in recent years. If we examine each of these three dimensions, in
terms of the concentration of wealth, recent studies report that in the
United States, 1% of the population owns 45% of total wealth5. According to
ECLAC, in Latin America, the "richest quintile owns on average 46%, which
ranges from 35% (in Uruguay) to 55% (in Brazil)6. In Europe, in 2012, the
income of the 20% of the population with the highest income was 5.1 times
higher than that of the 20% of the population with the lowest income; in
2003, this ratio was 4.67. As for the ownership of corporations, the famous
ETH Zurich study showed that the global network of companies is currently
managed by 17 mega-corporations9.

The intensification of certain changes in the morphology of corporate
management and ownership has implications for decision-making processes,
which increase the probability that human rights violations will occur.
Investment funds and the idea of mega-corporations (corporations that are
owners of corporations, which are owners of other corporations, and so
forth) render responsibility for decision-making increasingly invisible and
distance even more those who make decisions from those who are directly
affected by them. Moreover, outsourcing the management of corporations by
hiring CEOs and executives has the added effect of diluting responsibility
and immunizing corporations' real owners against the illegal acts of their
managers. The second aspect of this morphology is the pressure to earn
profit either through the economic performance of the funds - in which,
paradoxically, active and retired workers own bonds - or the performance of
executive directors whose success depends on their ability to generate more
and more profit.

Political and social actions and responses

We are not dealing with an entirely new phenomenon, but rather a
configuration of contemporary capitalism that, as it consolidates in this
new morphology, generates distinct and novel effects and reactions. In the
process of defending their rights, new and old affected actors - workers,
users and consumers, people in general, communities and even States -
identify the different types of responsibility involved. They also help to
elaborate on the type of problems, gaps and shortcomings that exist in the
legal systems that are supposed to protect them. In countries like Brazil,
there is a growing social awareness on the role of the abuses of
international economic power, due to the privatisations in the 1990s, the
globalisation of investments and emblematic cases of corruption and
environmental disasters. Similar impacts of corporate operations are also
hitting public consciousness - such as massive layoffs and the
flexibilisation of labour through relocation (or the threat to relocate),
and more recently, the aggressive role of investment and corporations in
"extractivist"10 complexes (agricultural or mineral) and pressure on the
environment and natural resources.

In Brazil, the introduction of genetically modified organisms, the Forestry
Code reform, the debate on the Mining Code, initiatives to change the method
used to demarcate indigenous land, the construction of massive
infrastructure projects, and tax exemptions are but some of the
manifestations of economic pressure on the State that affect people's
rights. The recent case of hosting the Soccer World Cup provides cross
cutting exposure of some of the most perverse forms of this phenomenon:
violations of state sovereignty by obliging the State to adopt reforms to
laws and imposing demands for tax exemptions that are exclusively for the
FIFA (laws 12.663 and 12.350); the explosion of infrastructure projects and
pressures to meet deadlines that left public administrators in the hands of
construction firms, as authorities were forced to accept their exorbitant
over pricing, while the supposed beneficial legacy of these works - that is,
new social and transportation infrastructure and benefits for urban areas in
general - took the back seat. Government authorities also failed to stop the
displacement of neighbourhoods and major increases in stadium entrance fees,
which have resulted in the privatisation of access to sports stadia that
previously were accessible to the public.

This increase in social conflict is an expression of the new contradictions
emerging in this recent phase of global capitalism. These contradictions are
also present in countries whose governments emerged as a political response
to the period immediately prior to the current one, dominated by the
hegemony of the so-called Washington Consensus. Though not entirely removed
from the resistance movements of that period, new struggles can be
characterised as being in direct confrontation with capital, whose systemic
responsibility was emblematically exposed by the crisis that erupted in
2008. And, as in the previous period, this conflict is developing on several
levels: within States and on the international scene, which I will address
below.

The "Ruggie peace" lasted only 3 years: new tensions in the international
debate on human rights and corporations

Not long after the victory of corporate interests in the last major round of
discussions on the issue of "human rights and business" in the UN, the
system is currently in the midst of a new debate that gives hope to those
who defend binding rules for corporations. Currently, the UN system has the
"Guiding Principles, approved by the UN Human Rights Council (UNHRC) in
2011. These principles developed in the period 2006-2011, were presented to
the UN in the "Guiding Principles on Business and Human Rights: Implementing
the United Nations 'Protect, Respect and Remedy' Framework" report, by the
Special Representative of the UN Secretary General, John Ruggie. Defended by
"optimists", these Guiding Principles (GPs) are general voluntary guidelines
on human rights and corporations. They are organised into the three pillars:
"protect, respect and remedy". In 2011, in addition to adopting the
guidelines, the Council resolved to implement a program to promote them.
This program includes various actions and the creation of a Working Group
composed of 5 experts (chosen according to the usual UN criteria and
balancing "business" affinities with academic and social ones. Among these
actions, it is worth highlighting national implementation plans and annual
and regional forums. The resolution gave the working group a three-year
mandate, which ends in June 201411.

The Working Group began its work in what appeared to be a period of calm
surrounding the "implementation" of the GPs. However, "Ruggie's peace" came
to an abrupt end: in September 2013, when Ecuador, together with another 84
governments12, presented a declaration, in which these governments affirm
that:

"The endorsement by the UN Human Rights Council in June 2011 of the Guiding
Principles on Business and Human Rights: Implementing the United Nations
Protect, Respect, and Remedy Framework was a first step, but without a
legally binding instrument, it will remain only as such: a first step
without further consequence. A legally binding instrument would provide the
framework for enhanced State action to protect rights and prevent the
occurrence of violations.13

This declaration reopens the 40-year debate on the need to effectively
regulate the operations and conduct of corporations and protect people and
communities from the violations they commit. In this dispute and conflict of
interests, corporations and the governments that protect them have won all
of the battles so far, blocking attempts to get initiatives on binding norms
approved14. At the same time, as a way to draw attention away from what
really counts in terms of protections, corporations promote various
initiatives on soft or voluntary codes. These codes, like "corporate social
responsibility", offer a response to society that aims to downplay both the
exorbitant profits and wealth they obtain from their activities and the
violations they usually commit to obtain it.

Those who defend the Ruggie process argue that one has to give the Guiding
Principles time and that now is not the time to start discussing this issue
again. They try to deny that Ecuador's declaration expresses a demand,
always present in society, for the establishment of control over those whose
irresponsible actions are seen as being responsible for the global crises
(financial, economic, social, energy, environmental and food prices). To
defend their position, GP defendants use four main arguments, almost all
based on practical or pragmatic issues:

    1- The consensus that was possible: the voluntary GPs are an important
advance in relation to what there was before. For the first time, the UN
unanimously adopted norms on "business and human rights". This was the
consensus that it was possible to attain and we must respect it. It is not
possible to go beyond this point.
    2- Complexity: Generating binding rules for corporations is a Herculean
task and, due to the complexity of the international system, it is
practically impossible to do.
    3- Implementation: Since this is such a complex task, initiating a
negotiating process that could take years would reduce efforts to
effectively implement the Ruggie Principles and, along with it, delay the
concrete, albeit voluntary, enforcement of human rights in situations where
they are violated.
    4- It is the responsibility of nation-states: it is ultimately states
that must ensure that human rights are respected in their jurisdictions. The
role of the international community, as the Guiding Principles indicate, is
to help strengthen their capacity to enforce them. Therefore, these
voluntary principles are sufficient.

One can surely add to this list the arguments that diplomats in New York or
Geneva do not reveal in public. Their arguments are undoubtedly much more
pragmatic and real than the ones listed above, and are related to the
obstacles that this type of legislation could create for the free
circulation of investment and further market liberalisation. As for host
countries, the majority being the poorest or developing countries, they are
concerned with the risk of corporations being discouraged from investing in
their countries if binding obligations are adopted. It is clear that this
kind of binding rules goes against the logic that allowed what we referred
to earlier as the "architecture of impunity" to be built, as it implies
taking a step towards reversing the excessive widening of mechanisms that
protect the "rights" of foreign investors - i.e. transnational corporations
and international investment funding instruments and mechanisms.

Not only do these arguments ignore the tradition of robust theoretical
debates and the principles that have historically characterised the
discussion on human rights in international fora, their weak arguments are
staggering. How can the international community tolerate this? And how can
the members of the UN Working Group on Business and Human Rights who have
assumed the defence of the Ruggie Principles as if they were rules set in
stone on human rights and corporations.

The first issue we should address is that, by definition, there is no
measure of time that indicates when it is an appropriate moment to address
an initiative like the one led by Ecuador. Political timing is determined by
a set of factors, such as the will of the actors involved. In this case,
even though the debate had apparently ended in 2011, there is an important
group of States and social organisations that want to put the issue back on
the agenda of the UNHRC. Therefore, we can say that we are before a new
"moment" - one that demands that the debate on this issue be reopened. The
fact that other actors do not want to do so reveals that they are
comfortable with the status quo that many  especially the affected
communities - have been questioning for the past four decades. What is more,
there is nothing preventing advance on both processes simultaneously. In
other words, it is possible to discuss a treaty with binding obligations for
corporations and promote the Ruggie principles at the same time. The
argument on the "consensus that was possible" is also dynamic and depends on
the historical context. There are no elements indicating that the world is
not mature enough to reach a consensus on stricter enforcement of rules on
human rights. Or, to put it differently, the level of tolerance towards the
human rights violations of major corporations and their exorbitant profits
has fallen in the public opinion, and therefore, there is now less political
space to sustain a global laissez faire human rights policy for corporations
on the world.

The task of elaborating this kind of Treaty is indeed complex. It implies
making decisions on: what crimes are to be judged; about who and what
framework will judge them; what the penalties are; how to organize the
various branches of human rights; the level of applicability and detail; the
extraterritorial application of the law; who is responsible; how to combine
this kind of treaty with those already in effect; identifying judicial gaps;
and many other issues. It is, without a doubt, a complicated task, yet its
complexity does not eliminate the urgent need for it. Protecting people and
communities, defending their rights and providing remedy in case of their
violation are also complex tasks, but they are just as complex and vital for
humanity as the development of a vaccine against AIDS, for example, or
finding a cure for cancer. The complexity of these tasks does not make them
less urgent or necessary for people. The issue of States' responsibilities
has been examined at great length. By now, everyone knows that where the
nation-state falters, only international norms and/or the international
community can protect people. Moreover, as Martin Kohr from the South
Center15 argues in relation to the abuses of transnational corporations -
asymmetry is greater due to the fact that developed countries possess the
institutional means they need to more effectively process violators of the
law and human rights, and therefore, are able to better enforce the rule of
law. Powerful states have a greater capacity to exert control over powerful
economic interests in their territory. As for poor countries, with low
levels of institutionalisation and States that are weak in comparison to
transnational mega-corporations, for example, the defence of peoples' rights
and access to justice are limited. Economic powers are able to use various
extra-judicial mechanisms to circumvent the law, escape punishment or make
it difficult to enforce sanctions. In the case of the contamination of the
Gulf of Mexico, British Petroleum was condemned to paying several billions
of dollars in fines by the United States government. The Bophal disaster in
India or the recent Chevron case in Ecuador, on the other hand, provide
telling examples of the difficulties that the communities affected by
violations of human rights face in States with less economic power.

Shielding the rights of people, not of corporations

An international armour is needed to help protect people from the asymmetry
of power produced by the accumulation of wealth and the political advantages
it creates. For this, we must overturn the system mounted through
international arbitration tribunals that protect investors' rights (ICSID
and WTO dispute panels) - that is, the rights of major transnational
corporations, which are responsible for the majority of international trade
and investment flows.

The creation of a legal framework that, through one or more treaties, can
serve as an international reference on a new vision on economic and
political relations and rights in the contemporary world is fundamental. By
doing so, the fight for human rights can provide a fundamental tool that -
when complemented by the mobilisations of affected communities and social
organisations, movements and networks - can expand the frontier of the
applicability of human rights throughout the world. 

1. Translatinas refers to transnational corporations from Latin America.
2. Friends of the Earth International, Reclaim the UN from corporate
capture (2012) and more recently, Oxfam Internacional, Working for the
few. Political capture and economic inequality (2014).
3. Brennan, Brid and Berrón, Gonzalo Hacia una respuesta sistemica al
capital transnacionalizado, en Capital Transnacional vs Resistencia de los
Pueblos, América Latina en Movimineto, ALAI, Quito, June 2012.
4. Joseph Stiglitz, On the Wrong Side of Globalization, New York Times,
March 15, 2014,
http://opinionator.blogs.nytimes.com/2014/03/15/on-the-wrong-side-of-glo...
5. Wealth inequality in America by Wondershare
https://www.youtube.com/watch?v=QPKKQnijnsM&feature=share
6. Panorama Economico y Social de la Comunidad de Estados Latinoamericanos
y Caribeños, 2013, ECLAC, January 2014:
http://www.cepal.org/publicaciones/xml/7/52077/PanoramaEconomicoySocial.pdf
Data for EU-15, Eurostat:
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&plugin=1&languag...
8. Stefania Vitali, James B. Glattfelder, Stefano Battiston The Network of
Global Corporate Control, 2011
9. They rule, Eles Mandam, Proprietários do Brasil, 

10. For an analysis on extractivism, see Gudynas, Eduardo (2009) «Diez
tesis urgentes sobre el nuevo extractivismo. Contextos y demandas bajo el
progresismo sudamericano actual» en VV.AA, Extractivismo, política y
sociedad, CAAP / CLAES, Quito.
11. UN Human Rights Council Resolution 17/4, June 16, 2011.
12. African Group, the group of Arab Countries, Pakistan, Sri Lanka,
Kyrgyzstan, Cuba, Nicaragua, Bolivia, Venezuela, Peru and Ecuador
13. "Statement on behalf of a Group of Countries at the 24th Session of the
Human Rights Council", Geneva, September 2013:
http://business-humanrights.org/media/documents/statement-unhrc-legally-...
14. The initiative of a UN Code of Conduct for Transnational Corporations
(1983) and the Draft Norms on the responsibilities of transnational
corporations approved in 2003 by the UN Sub-commission on the Promotion and
Protection of Human Rights are of particular importance.
15. Intervention in the Seminar on Transnational Corporations and Human
Rights, March 11 and 12, 2014, Palais des Nations, Geneva

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