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DOCUMENT: TRNSCORP.TXT
W O R L D C O U N C I L O F
I N D I G E N O U S P E O P L E S
WCIP Secretariat
Suite B-844
University of Lethbridge
Lethbridge, Alberta
Canada T1K 3M4
Tel: (403) 327-7256
INDIGENOUS HOMELANDS AND TRANSNATIONAL CORPORATIONS
Amax, Alcan, Coca Cola, United Fruit, Volkswagon, Sonya, Rio Tinto Zinc, ITT, Mitsubishi,
Noranda, BP to name a few of the transnational corporations that are attempting to control
all of the world's resources. Each corporation represents men and technology designed to
exploit a variety of natural and human resources. They are transnational because their
only allegiance is to their shareholders and they operate outside national control. Their
control over oods and services has given them power over the governments of nation-states.
Their principle reason for existence is to make money (profits) for private economic gain.
They are the new imperialists.
WHO CONTROLS A CORPORATION?
A corporation is controlled by the people that own and manage it. Most corporations are
owned by shareholders Shareholders can be individuals of any nationality (Japanese,
German, American, Brazilian) banks, other corporations, national governments, or any
person or group of persons with enough money to buy a share of the corporation. Owning a
piece of a corporation entitles the owner to their percentage of the corporate profits.
Some corporations are solely owned by a single individual, as is Occidental Petroleum (Dr.
Armand Hammer owns this enterprise estimated to be worth $9 billion). Other corporations
are privately held by a single family. Information concerning privately owned corporations
is seldom published, while the profits and operations of 'publicly' owned shareholder
corporations is more readily available. Some churches and other organizations of
shareholders have begun to use their powers as shareholders to pressure particular
corporations into respecting human rights.
In recent years, many national governments have demanded 51% of the shares of a
corporations' national operations before it can operate within the national boundaries.
Unfortunately, without information concerning the global workings of the corporation, the
national government finds itself rather powerless to effect the operation even within its
own boundaries. Because of lack of national government expertise in running the corporate
enterprise, many governments have signed management contracts with the corporation giving
up any potential control of the industry.
Controlling interest does not have to be 51% of the stock (share) ownership. Controlling
interest is more often 10 to 15% of the stock. Considering each corporation may sell
millions of shares to thousands of stockholders, 15% ownership of the total company is
usually enough to be chairman of the board.
WHO RUNS A CORPORATION?
Corporate decisions are made from the corporate headquarters. The board of directors
(those owning the most shares) make the policy decisions. Corporate headquarters can be
located anywhere. Day to day decisions about the operations of particular mines,
factories, ships, etc. are left to the managers working for the corporation.
WHERE DO PROFITS COME FROM?
Profits are realized by changing a resource into a saleable commodity. For example: A tree
growing in a forest produces no monetary profit. Once it is chopped down it is SOLD for
money to a log hauling company. The log hauling company can then SELL it to a lumber mill.
The lumber mill then cuts the tree into lumber and SELLS it to a furniture factory. The
furniture factory then SELLS it as furniture to a consumer. Each time the tree is sold,
the seller realizes a profit.
This process is repeated a million times a day with everything from grain, labor, and Coke
bottles to
molybedenim and uranium.
HOW IS A TRANSNATIONAL CORPORATION ORGANIZED?
A transnational corporation is organized for maximum profit. This means that the least
amount of money is spent by the corporation to produce the most amount of money. The money
spent to produce money is called 'capital.' Capital expenditures include equipment and
labor costs.
To dig uranium from the ground requires millions of dollars worth of equipment. Equipment
to find the uranium, dig the hole and separate the uranium from the other minerals within
the dirt. People are bought to run the equipment. All of these costs must be paid before
the uranium company can SELL the uranium and make a profit. The profit is the total amount
of money the uranium is sold for minus the 'capital expenditures'. A profit may not be
realized from the mine until the equipment and labor is paid for.
Transnationals often make a profit on each step of the process from natural resource to
commodity by 'vertical integration'. A vertically integrated corporation OWNS THE
EQUIPMENT FOR EVERY PHASE OF PRODUCTION. A mineral company, such as Alcoa, owns the
equipment to explore and extract bauxite, then to smelt, refine, fabricate, ship and
market the aluminum. This total control of production provides protection against new
competitors entering the aluminum field. It also allows Alcoa to avoid national taxation
by setting its own price at each step of production. With vertical integration, a
corporation is also insured against a fall in the world price of the mineral or material,
since any losses can be made up at a later stage of production.
WHAT ABOUT HUMAN LABOR?
Most corporations prefer to be as 'capital intensive' as possible. Equipment is much more
reliable than human beings. Since the costs of an individual's labor is an ongoing expense
that rises with inflation, it does not compare well with the cost of a machine that is
purchased only once. In terms of global resources, it may be more advantageous to use
human labor power to produce goods. To the large transnational labor is a headache it
doesn't need. A machine that can do the work of a hundred men is more reliable and adds to
the corporations overall worth. Human labor always represents a possibility of unionizing,
absenteeism, strikes and pay increases. A one day strike can cost a corporation millions
of dollars.
Considering the profits and products produced by most transnationals they employee very
few persons.
For example:
Amax employees only 17,360 persons worldwide
Alcoa...............46,000
Alcan...............63,200
Asarco..............12,500
Certain industries are more labor intensive than others. Communications, automotive, and
clothing employee many more people than mineral companies.. A community usually has more
to gain from a 'labor intensive' industry than from a 'capital intensive' company. The
community dealing with the labor intensive industry has more avenues to impact the
industry and therefore bargaining power. It
also will receive a greater share of the industry's wealth through the earnings of the
community members working for the corporation.
Extreme reliance upon machinery has produced much technology that is very fragile. A rule
of thumb is that the more complex and 'sophisticated' a machine is the more apt it is to
break down with the slightest mishap.
DO TRANSNATIONALS WORK TOGETHER?
Yes, many transnationals work together from time to time. Often they form cartels. A
cartel is an organization of corporations (although many producing countries have also
formed cartels with varying degrees of success) of a particular commodity, mineral, or
service to restrict output and keep prices high and stable. While they may be working
together on one hand, they are continually jockeying for the largest share of the market
and highest profits. Corporate technical inventions and plans may be the most protected
secrets on earth.
Many corporations, even competing corporations are owned by the same people. This is
called 'interlocking directorships'. Finding a company has interlocking directorships is
often a clue that the interests of the particular companies are being looked after by men
who play golf, eat lunch, and go to meetings together.
As more and more (smaller) companies are bought by larger companies competition between
the corporations does tend to decrease. This does not mean that the people who run large
corporations are one big happy family. The race for profits is a continual struggle to
become the biggest fish. Corporations can be played off against each other. If a
corporations offers a community a contract, it is wise that the community shop around the
competing companies before signing.
HOW DO TRANSNATIONALS CONTROL NATIONAL GOVERNMENTS?
Transnationals control national governments because the national government needs what the
transnationals have - technological expertise, equipment, goods, shipping lines, and
investment capital - although most corporations are not above a few bribes or kickbacks to
government officials.
Most national governments are dependent upon transnationals due to their reliance on
import/export trade to keep their economy afloat. These governments find themselves in a
bind, where they must sell their resources at the corporate price and buy the goods and
services they need back at the corporate price. Vertical integration and corporate
bookkeeping procedures enable a transnational to name its prices.
National governments must often offer incentives for corporate investments. These
incentives may be dams to provide cheap power, tax free areas for manufacturing or direct
capital investment from the government. All government incentives force the government
deeper into debt to transnational banking powers and therefore make it practically
impossible for the government to end their corporate dependence.
National governments also provide direct subsidies to corporations in the form of military
aide and population control. Few corporations will invest in a country if the political
situation is 'unstable'. In corporate lingo 'unstable' means any chance of unionization,
nationalization, and sabotage exists. Military dictatorships have proven 'good investment
climates', regardless of the human misery they foster. (There are exceptions, since Somoza
was overthrown in Nicaragua, corporations are re-examining the most corrupt regimes as
potentially 'unstable.' Too much active government resistance, as in the Philippines, can
prove 'unstable').
WHERE DO BANKS AND THE INTERNATIONAL MONETARY FUND FIT IN?
Since national governments must sell cheap and buy dear from the transnational, they are
caught in an ever-increasing debt trap. To pay for the goods, services and corporate
incentives they must borrow money from international banks. These banks demand high
interest payments on the borrowed money often equaling millions of dollars per year. The
borrowed money must also be paid back in full at an agreed upon date. If the government
chooses to default on its loans, history has shown that banks and lack of cash can
strangle an import/export dependent economy. Without the support of cash government
officials can be easily toppled. Michael Manley of Jamaica and Salvador Allende of Chile
were both removed from power precisely because they choose to default on their loans. Both
of these leaders were faced with internal subversion from outside operations. Few nations
long dependent upon the international economic system are in a position to withdraw from
the system long enough to build a strong internal economy that can meet the needs of their
people. (Military dictatorships are so propped up by banks and international aid that the
needs of the people is quite irrelevant to their power.)
The International Monetary Fund (IMF) is currently the key financial institution in the
increasing debt process. IMF policies determine which governments are fit to receive bank
loans. Although the IMF, itself was established as a debt relief agency, it does not
provide much money for loan assistance. Primarily, it sets the criteria by which a
government is able to receive bank loans. IMF criteria varies slightly from government to
government. Generally the IMF requires a government to enforce IMF 'austerity measures'
devalue its currency, diminish social services, and provide corporate incentives. Without
an IMF seal of approval, a government has few options but to default on its debts. Default
ends a governments ability to operate within the world economic system and usually means
an overthrow of the existing government. The new government knowing its shaky position
will undoubtedly accept IMF policy.
The World Bank provides loans for governments to build dams and other industry incentives.
World Bank loans must also be repaid in full.
ARE COMMUNIST COUNTRIES INVOLVED IN THE WORLD ECONOMIC SYSTEM?
Yes, but they have their own institutions. Their corporate structures are their
governments. The Soviet Union respects the rulings of the IMF. More than one nation-state
has been told by the Soviets to get their IMF credentials before asking for Soviet aide.
The Soviet Union is completely tied up in the world economic system. Recent efforts by
Polish trade unions are a partial result of IMF austerity measures.
DOES THE IMF HAVE CONTROL OVER EUROPE, JAPAN OR THE U.S.?
Yes, the FIRST, SECOND and THIRD worlds are all part of the same system. To be more
precise, the producing and consuming nations are all part of the world economic system.
Perhaps, the consuming nations (U.S., Japan, and Germany, primarily) have reaped more
material benefits from the system than the producing nations. They also receive many of
the terrors of the system, environmental pollution, alienated populations, inflation and
massive debts. More and more consuming nations are having to provide incentives for
corporate investment and are instituting austerity measures to relieve their debts.
The United States and Britain are watching their economies slide from their once held
prosperity. The people benefiting from the economic system are becoming fewer and fewer.
Those people with direct connections in the corporations, shareholders and corporate
managers, are taking larger and larger pieces of the corporate profits. Japan has a
somewhat different system that is more responsive to human rights and the demands of
popular national governments to receive a bigger share of the profits.
All consumers and members of producing nations must contend with the poisons and
environmental degradation caused by corporate development, not to mention the fear of
nuclear war.
WHAT IS THE ROLE OF INDIGENOUS PEOPLES?
Indigenous peoples, everywhere, live on the lands that have yet to be exploited.
Imperialist actions have forced indigenous peoples to make a living from the most
inhospitable lands of the earth. These lands are now found to contain the minerals and
resources needed for continued corporate growth and industrial 'progress.' As peoples with
cultures and economies independent from the world economic system, indigenous peoples are
a problem for national governments. To seduce corporate investment the indigenous people
must be removed or silenced to make way for mines, dams, plantations and factories. Some
indigenous peoples may be employed by these industries, but there are plenty of
desperately impoverished people to take their place. For the most part, indigenous peoples
are headed for the slums and ghettos of the starving,millions to make way for industrial
'development.'
ARE THERE ANY ALTERNATIVES FOR INDIGENOUS PEOPLES?
The minerals and resources of indigenous territories are desperately needed by
corporations and debt ridden national governments alike. If these resources are to be
anything but a curse on indigenous peoples, actions must be taken to stop further
industrial exploitation of their territories.
The finely tuned cultures and economies that have kept indigenous peoples alive for
thousands of years may be their very tools for survival.
The first priority of indigenous peoples must be to remain independent from the world cash
economy. Subsistence economies practiced by many indigenous communities, while not
offering the material conveniences of the modern world, do provide for basic human needs.
The temptations to join the consuming world are mostly only fleeting advertising images
that will probably never be available to the majority of the world's people. The riches of
the earth if carefully used can provide livelihoods for generations to come. If exploited
for quick profit, the following generations may
face untold horrors.
The internal organization, cultural beliefs and knowledge of the territory must play an
important role in the indigenous struggle for survival. The more self-sufficient the
community the stronger it can be. There are no survival manuals written with guarantees.
Good sense and careful observation are the best tools. Information about specific
corporations and national governments can be collected for use. Strategies and alliances
between communities may be necessary. International organizations can provide pressure
from the outside, but each community must be shrewd, willing and able to defend itself.
* * * * * * * *
Written by: Tamara Broadhead
of COSAMCO, Ltd.
April 18, 1981
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