This report has shown how TNCs have moulded EU policies to suit their own goals at the expense of jobs, social infrastructure and the environment in Europe. The reasons for this disproportionate influence of industry on EU policies are manifold, and need to be thoroughly analyzed. This chapter will make a start by looking at some of the political and structural factors that have made the current situation possible. It will also make some proposals for how to reduce the political influence of TNCs in Europe.
A fundamental problem is the unbalanced playing field in Brussels. Basic financial inequality means that industry can afford to be represented by thousands of lobbyists in Brussels, whereas environmental organizations and trade unions are understaffed and lack resources.
More critical, however is the enormous gap in access to decision-makers. Organizations like the European Roundtable of Industrialists (ERT) are clearly in an extremely advantageous situation, able to approach Commissioners and high-level government officials whenever they so desire.
The centralization of power in Brussels, which undermines national democracy, has given business an enormous advantage over social movements. The social groups that sometimes hamper corporate activities at the local and national level are relatively weak at the European level. As a result, they have lost numerous battles. Both the Single Market and the EMU are projects in which social, environmental and democratic concerns have been largely bypassed. The power bases of trade unionists, as well as environmentalists, remain on the local, regional or national level. These movements are now racing to catch up, but their lack of a European constituency makes this an extremely difficult task.
The EU political system is a wonderful place for organizations like the ERT to do business: decisions with far-reaching effects are made behind closed doors and in secretive committees, invisible to and far removed from the many people affected by the resulting deals. The powerful European Commissioners give scarce thought to the reactions of voters, as they are not elected. The decision-making procedures of the Council of Ministers also lack transparency, making this body largely unaccountable as well. Finally, the powers of the European Parliament are far too limited to compensate for the overall lack of democracy in the Union.
The lack of European media tracking EU decision-making is another important factor in the unchallenged dominance of corporate interests. One can assume, however, that such close cooperation between public insitutions and organizations like the ERT, which represents the narrow interests of 45 European TNCs, would not be appreciated by people in most EU countries – if only they knew!
But there is another reason for the firm corporate grasp on European policies: the increased importance of TNCs in the European economy. The dominance of free trade policies in the European Union and increasing dependence on international trade and investments have strengthened the power of TNCs to such an extent that decision-makers can no longer afford to ignore their political demands.
ERT Assistant Secretary-General Caroline
Walcott says: “Lobbying at the Commission is not a problem.
But at the national level you often find a lack of continuity.
The problem is that in individual countries, the politicians have
to gather votes. But in the European Union they can see the whole
picture.”1
As explained in chapter 2.1, the ERT was instrumental in putting the Single Market on the EU agenda. However, the realization of the Internal Market was only made possible through the support of unlikely but powerful allies: social democrats and trade unionists. Probably the most prominent ally was Commission President Jacques Delors, who imagined that a single market was the best way to push European integration further. A political union, with strong social and democratic aspects, would logically follow. More than ten years after the signing of the Single European Act and five years after the Maastricht Treaty, it is clear that market-driven integration was no guarantee for achieving the European Union with a social and democratic face. Delors’ dream has turned into a nightmare.
On the flip side of the EU’s soothing public rhetoric lies a brutal, competitive world in which free trade, the breaking down of social and environmental “barriers” to trade, the unrestricted flow of capital, privatization and the increased flexibility of labour markets are top priorities. States are steadily losing both the ability and the desire to protect their populations, and are instead turning their attention towards creating the most attractive conditions for global companies and finance. The symptoms are clear: a widening gap between rich and poor, growing unemployment and job insecurity, environmental pollution and destruction of nature, social fragmentation and public apathy. The forces unleashed with the removal of control on finance and trade have created a vicious circle of ever-increasing competitive pressure. This is an endless cycle, and a trap from which even TNCs themselves cannot escape.
This is neither the Europe which its founders spoke of with such idealism, nor is it the Europe celebrated in the glossy publications pouring out of the Brussels apparatus. These ‘official’ visions of Europe, which describe the shared fruits of economic growth, steady job creation, strong social and environmental policies and a citizenry actively involved in decision-making, are part of a pervasive set of myths which obscure the disastrous path down which the EU is currently plunging.
The bottom line in the ERT’s demands for Maastricht Treaty revision is that they hope to strengthen the ability of the EU to act – in order to ensure that all policies lead to increased European competitiveness. Most of all, it wants a transfer of power from the member states to the European Union. The Roundtable seems quite confident that a stronger EU will work in their interest. Such power shifts would, however, deepen the democratic deficit by transferring yet more power to non-elected bodies like the Commission or the highly secretive European Council.
Granting more power to the European Parliament would reduce one dimension of the democratic gap. However, this would not solve the problem of the increasing distance between voters and decision-makers. Under these circumstances, industry’s financial resources will still result in an unbalanced playing field. Corporations would still have more resources at their disposal to influence a more centralized parliament, and the potential for local counterbalancing influences would be reduced. In any case, improved transparency and accountability is of crucial importance.
Instead of learning from the experiences of the last decade, the EU continues to fuel economic globalization with a conscious set of policy choices which remove control from capital and trade. Global free trade is a main objective of the EU today. This is visible in efforts by Directorate General I (External Trade) to “prize open world markets”2 or by Directorate General XV (Internal Market) to “complete the single market”. Hundreds of people in national and European trade and industry departments are fighting hard to “sustain the process of opening and modernization”.3 Of course, these people have little interest in informing the general public about their efforts. They have learned that policies which are difficult to sell to the general public - like budget cuts in social expenditure in order to fulfil EMU criteria can be made more palatable by repeating: “There is no alternative”.
Because the assumption that globalization is unavoidable has never been seriously challenged, there has been no real public debate about the political choices that are leading Europe further and further down the path of sacrificing social services, environmental policies and public expenditure to international competitiveness. It is high time that this path itself is questioned.
There is no ultimate blueprint for the alternative to global free trade. But it is possible to lay down steps towards a future world with stronger and more diverse local economies with high democratic, social and environmental standards.
Turning the tide would begin with the rejection of policies that increase the economic dominance of TNCs. Many of these policies which are promoted by the EU have been extensively described in this report. The next step would be to regain democratic control over finance and capital. This could help to provide resources for governments and communities to improve social conditions and job opportunities. Realistic proposals already exist, such as the Tobin Tax on international capital transitions,4 taxes on short-term speculative transactions, and measures to stop corporate tax evasion. Equally important is the regulation of corporate investments, e.g. through ‘site here to sell here’ and other investment requirements to be decided upon by affected communities. Strategies must be developed to dismantle corporations which have grown too big and have thereby gained unacceptable economic and political power. Reducing political dependence on TNCs will allow a large number of new policies to emerge, such as the introduction of ecological taxes on a level at which they can efficiently reduce environmental damage. Currently, international competition and corporate threats to relocate act as serious barriers to ecological tax reform.
The urgently needed rebuilding of local economies is possible through the introduction of community reinvestment legislation, and with direct public investment in sustainable agriculture, public transport for local needs, urban renewal, social services, education and health care. But rather than waiting for governments to act, many local communities have already discovered various ways in which they can recapture lost vitality.
Local credit unions and other small scale-saving systems with clear social and environmental objectives can be set up, ending dependency upon conventional profit-driven banks. Community-supported agriculture enables healthy local food production and allows farmers to escape from the drawbacks of industrial agriculture.5 A growing number of decentralized Local Exchange and Trade Schemes (LETS) promote economic and social activities outside of the mainstream economy.6 All of these alternative economic systems by themselves halt the growing power of TNCs, if only by not feeding them what they require.
The power of individual consumers should also not be underestimated. Ethical consumption – buying products that are socially and environmentally benign and leaving others on the shelves – has enormous potential, as do boycotts which force companies to listen to the bottom line set down by consumers. In many parts of Europe and the world, shareholder actions and international alliances against specific corporations and their malpractices have effected significant, albeit reluctant, change in corporate behaviour.
Today’s footloose and fancy-free corporations as well as the global marketplace within which they operate are neither economically necessary nor immune to change. Viable and socially fulfilling alternatives exist. Citizens all over the world start rejecting the corporate agenda by way of strikes, demonstrations and civil disobedience. As these initiatives begin to gather momentum, the strong corporate hold over people’s work, communities and lives starts to crumble. It is this diversely-spun web of struggles which gives hope for the future.
1. Interview between Caroline Walcott and Staffan Dahll÷f, Kritiska EU Fakta (Stockholm), 24 October 1994. |back to text|
2. The Global Challenge of International Trade: A Market Access Strategy for the European Union, Market Access Unit DG1 D/4, 1996, p.1. |back to text|
3. ERT, Investment in the Developing World: New Openings and Challenges for European Industry, Brussels, 1996, p.15. |back to text|
4. A tax on all international capital transactions, named after the Nobel-prize winning economist James Tobin. |back to text|
5. Community Supported Agriculture (CSA, also known as ‘subscription farming’ or ‘linking farmers with consumers’) is an alternative to the current system of agriculture (best described as corporate agriculture because of its dependence on large agribusiness). In CSA, consumers buy shares in early spring to support the farmers’ expenses during the year. In return, shareholders receive fresh products throughout the season. CSA means environmentally-friendly, local food production for local consumption, cutting out the enormous distances food travels in todays globalized market. |back to text|
6. LETs schemes aim to revitalize informal local economies by enabling people to exchange goods and services using a local currency. A list is compiled of what members need and can provide, prices are set, and goods and services are paid with local currency that never enters the official economy. |back to text|