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Ethics & International Affairs
Annual Journal of the
Carnegie Council on Ethics and International Affairs
“Think Globally, Punish Locally ”: Nonstate Actors, Multinational Corporations, and Human Rights Sanctions
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By Kenneth A. Rodman
The traditional realist paradigm holds that the sovereign nation-state is the principal political and legal unit in the world community. Reflecting this tradition, most studies of economic sanctions are state-centered. They assume that states exercise control over their national corporations to deny economic resources to other states. Within this framework, nongovernmental human rights organizations become involved only as interest groups, lobbying governments to regulate or ban private economic activity with designated mal-efactors. These groups, however, are generally unable to persuade states to mandate disinvestment from or socially responsible behavior within repressive regimes. As a result, they redirect their energies away from the central authorities and toward corporations—directly pressuring them through boycotts and shareholder activism—and local governments—persuading them to condition municipal contracts on human rights criteria.
This essay examines the degree to which these nonstate actors can provide an alternative center of authority to that of the state in imposing human rights accountability on corporate conduct abroad. The first section explains the logic of nonstate sanctions and establishes criteria against which one can judge their challenge to realism. The second section assesses the successes and limitations of the anti-apartheid movement, which is viewed as the role model for such efforts. The third and final section contrasts the South African case with recent campaigns against corporate investment in Burma and Nigeria. These cases have been chosen because most grassroots organizations have pressed for corporate withdrawal rather than for more socially responsible business practices. Each represents an attempt by citizens’ groups to impose sanctions against repressive regimes beyond those enacted by governments.
Nonstate Actors and Human Rights Sanctions: A Challenge to the State-Centric Model?
Many grassroots organizations have seen multinational corporations (MNCs) as levers through which they can promote human rights. In some cases, they have waged campaigns for disinvestment from or boycotts of abusive regimes in order to weaken the ability of such regimes to remain in power. This was the strategy of the anti-apartheid movement as well as the recent campaigns against oil companies in Burma and Nigeria. In other cases, they have called for codes of conduct by which MNCs accept social responsibility criteria. Targeted practices include employment discrimination in Northern Ireland, environmental damage in Indonesia, and the purchase of goods made in sweatshops in Central America and forced labor camps in China. 1
MNCs have generally resisted these efforts. They contend that their investments are politically neutral and that they do not bear responsibility for the practices of countries with whom they do business. To abandon this apolitical role, they argue, would only jeopardize their relationship with the host state on whom they depend and work to the advantage of less scrupulous competitors. 2 MNCs also make a moral case for doing business with repressive regimes, claiming that their operations benefit the population as a whole and withdrawal would only add economic hardship to the victims of oppression. They have conceded that there may be times when a regime’s behavior is so odious that normal business is impossible, but they maintain that such a call should be made by governments, not corporations. 3
Human rights groups have had only limited success in persuading states to make that call. Governments are reluctant to enjoin business activity with repressive regimes that are not adversaries because of the potential costs to diplomatic cooperation or access to markets, investment sites, and raw materials. Human rights organizations often try to alter these priorities by lobbying national legislatures, but their efforts are usually neutralized by the resources expended to counter them by MNCs and foreign governments. 4
As a result, activists have turned increasingly to instruments and venues not traditionally associated with foreign policy. First, they have applied consumer pressure through protests and boycotts designed to stigmatize a company’s goods in the marketplace. Second, they have used shareholder activism, persuading churches, universities, and other institutional investors either to divest their stock portfolios of targeted corporations or vote for proxy resolutions to change corporate practices. 5 Finally, they have lobbied state and local governments to condition eligibility for contracts on social responsibility criteria. Since municipalities command a huge portfolio of public funds, this enables activists to link an MNC’s “bottom line” to its ties with abusive regimes. 6
In attempting to build a transnational coalition with consumers, institutional investors, and local governments, nongovernmental organizations (NGOs) challenge traditional understandings of economic decision making. David Vogel notes that liberal political thought posits a clear dichotomy between public activity, such as voting, and private behavior, such as consumption and investment. While the former can be informed by larger questions of the public good, the latter is guided only by self-interest—that is, obtaining the best goods and services at the cheapest price or earning the highest rate of return on one’s investments. 7 Similarly, local government decisions about where to invest pension funds or with whom to negotiate contracts are typically based on technical calculations to maximize the retirement income of public employees or to make the most efficient use of taxpayers’ money. 8 In pressing for the incorporation of human rights criteria into these calculations, nonstate actors are asking individuals and institutions to accept an economic variant of the feminist adage, “the personal is political”—that is, what we buy and where we invest are political choices that should be judged by nonpecuniary criteria.
The aim of these strategies is to assert social control over business without sovereign action. If successful, they challenge one of the central tenets of the realist paradigm. Realism posits that the nation-state is the only significant actor in world politics because only states are able to “marshal the necessary resources to wield power.” 9 A corollary derived from that premise is that the “foreign policy agents of nation-state governments are the sole participants in world politics; all other groups make their presence felt through the medium of government.” 10 Arguing from this perspective, one legal scholar observed that NGOs “are powerless to effectuate anything on their own . . . [and] their influence derives from their ability to persuade governmental actors to take certain positions.” 11 Transferring this logic to the study of sanctions, human rights groups can establish a linkage between foreign investment and human rights only by lobbying the state to regulate MNCs.
Students of transnational relations, by contrast, argue that realist premises are becoming less relevant because an increasing number of important interactions in world politics take place “without significant direct participation or control by governmental actors.” 12 According to one critical observer, this has already happened in the regulation of multinationals because “NGOs can in some cases constrain private behavior as effectively as sovereign governments.” 13 If corporate accountability can be imposed by nonstate actors in the absence of state action, then citizens’ groups share with states what have traditionally been sovereign prerogatives.
The Anti-Apartheid Movement
During the 1980s, policy debates over South Africa hinged on the relationship between economics and political change. The Reagan administration’s strategy of “constructive engagement,” endorsed by most Western governments, saw increased trade and investment as progressive forces that would encourage a gradual evolution away from apartheid. Proponents of sanctions, by contrast, argued that Western business ties strengthened the system’s staying power and only economic pressure could persuade its leaders to accept majority rule. From a state-centered perspective, this debate was resolved in 1986, when most states imposed economic sanctions, including the United States after Congress overrode President Ronald Reagan’s veto of the Comprehensive Anti-Apartheid Act (CAAA).
While these laws were debated in cabinets and legislatures, the anti-apartheid movement waged a parallel battle against business with South Africa. This campaign was fought away from the central authorities, in state legislatures, city councils, colleges and universities, annual shareholder meetings, and the marketplace. Since the two most dramatic examples of corporate retrenchment from South Africa—the private credit boycott and the disinvestment of more than 350 firms—exceeded what was required by law and coincided with many of the demands of the anti-apartheid movement, the question arises whether these venues were more important in regulating Western business with South Africa than were central governments.
Banks
It is generally agreed that the most damaging source of external economic pressure on Pretoria was the private credit boycott. South Africa’s financial crisis began in July 1985, when Chase Manhattan chose not to roll over loans to South Africa as they came due and froze all new lines of credit. This triggered a panic in which other banks followed suit, producing massive capital flight and a severe weakening of the rand. The hemorrhaging of South Africa’s economy was stopped on September 1, 1985, when Pretoria imposed exchange controls and declared a moratorium on the repayment of its private debt. The end result was that South Africa was cut off from private capital markets, which, given its dependence on foreign loans, prevented it from achieving the economic growth necessary to create political stability. 14
These actions were not mandated by governments. In fact, Chase’s decision preceded state sanctions by more than a year. As a result, the CAAA’s ban on new lending merely ratified what had already taken place in the market. Moreover, European Economic Community (EEC) sanctions recommended, but did not require, an end to new lending. This exempted not only European banks from the sanctions, but U.S. banks as well if they operated through offshore branches and subsidiaries. 15
To a degree, the bankers’ decisions can be attributed to market conditions and political risk inside South Africa. First, the country had an unstable debt structure. South Africa had become increasingly dependent on foreign loans in the late 1970s and early 1980s, and its banks borrowed short-term on international markets to lend the money longer-term within the country. As a result, from 1980 to 1985 South Africa’s external debt increased by 50 percent, to $24 billion, with $14 billion due over the next year. 16 Second, this lending was premised on the assumption that South Africa would remain relatively stable. The growing township violence in the mid-1980s and President P. W. Botha’s resistance to reforms undermined that assumption and increased private calculations of risk. Many opponents of sanctions concluded from this that the private credit boycott represented the “sanctions of the marketplace” applying the market’s checks and balances to apartheid’s irrationalities. As one Citicorp official explained it, “South Africans now understand that they cannot fully access the world’s capital markets until the government shifts the risk/reward balance by eradicating apartheid.” 17
Yet the magnitude of the banks’ withdrawal cannot be explained simply by market forces. Until 1985, South Africa’s repayment record was spotless. When faced with debtors whose economic fundamentals were less sound, the international financial community opted for a more orderly strategy of rescheduling and refinancing. 18 Moreover, bankers had never before linked South Africa’s creditworthiness to its political system. After Sharpeville and Soweto, for example, there was initial capital flight, but that was reversed when Pretoria restored political and economic order. 19 Therefore, the banks’ assertion that ending apartheid was necessary for economic normalization reveals that they were concerned not only with its impact on risks and rewards in South Africa, but in their home markets as well.
The principal reason that apartheid had an impact on the home market was the ability of nonstate actors to exact a price for continued lending to South Africa. First, by mid-1985 anti-apartheid lobbies had persuaded more than 80 municipalities to enact depository bans on firms that loaned money to South Africa. 20 Second, there was a marked increase in the number of proxy resolutions filed at annual meetings by a broader range of institutional investors. This contributed to the “hassle factor,” whereby banks were forced to devote a disproportionate share of executive and board time to a small portion of their overall operations. In the case of the U.S. banks, South Africa represented on average roughly 0.5 percent of their international loans, diverting resources from more salient problems, such as the Latin American debt crisis. The Financial Times concluded that these devices “allowed shareholders, depositors, and the public directly to impose an economic sanction without having to persuade their government to do so.” 21
Yet the political factors that influenced bank decision making did not come exclusively from nongovernmental sources. The movement toward state sanctions in the mid-1980s also influenced private decision making—not so much by legally enjoining banks as by influencing their perceptions of risk. These risks had been assuaged in the early 1980s: with Ronald Reagan and Margaret Thatcher setting Western policies, creditors saw sanctions as a remote possibility. In addition, if South Africa fell into financial trouble, they assumed the West would help. This view was confirmed in November 1982 by an unconditional $1.1 billion loan from the Compensatory Finance Facility of the International Monetary Fund (IMF) to rectify payment difficulties resulting from a steep decline in the price of gold. The United States played a pivotal role in pushing through the loan, despite objections from several executive directors that any loan should have been conditioned on ending South Africa’s system of influx control because of the severe constraints it imposed on labor mobility. 22
By the mid-1980s, it was clear that Western countries would no longer play this supportive role and could actually impair South Africa’s creditworthiness through punitive sanctions. First, Congress prevented the Reagan administration from supporting another financial rescue package by a 1983 amendment to the IMF Replenishment Act that mandated a vote against loans to “any country which practices apartheid.” 23 Since the 1982 loan required strong U.S. support to overcome considerable opposition, this effectively removed the safety net from the banks when South Africa went into crisis and contributed to the financial panic in the summer of 1985. Second, by the mid-1980s lenders increasingly had to factor the likelihood of sanctions, actual and potential, into their projections of South Africa’s creditworthiness, particularly after President Botha’s “Rubicon” speech, in which he refused to make the conciliatory moves needed to defuse pressures at home. In sum, nonstate actors, combined with increasing state pressures, transformed banks into instruments of economic leverage in the area of lending.
Anti-apartheid activists attempted to achieve parallel success in the debt rescheduling negotiations that followed. The anti-apartheid movement called on banks to hold out for the toughest terms possible on the $14 billion of private debt that Pretoria had frozen in 1985. Demanding rapid repayment would augment the payment constraints facing the South African government and intensify the pressure to end apartheid. 24
Unlike the private credit boycott, however, the banks’ behavior did not coincide with activist strategies. From 1986 to 1989, the banks negotiated three accords that postponed and stretched out payment of the private debts owed by South Africa, alleviating some of the pressure on the South African economy. A clause (Section 12) in the second of these accords afforded Pretoria additional breathing space by allowing banks to convert their short-term loans into long-term (nine-and-a-half-year) loans in which payments of principal would not begin until the last two and a half years. The attraction of this option to foreign banks was that they were guaranteed repayment over a longer time frame and avoided the stigma of continuous negotiations with the South African government 25
Anti-apartheid NGOs accused the banks of betrayal. In the United States, campaigners targeted Citicorp—which used Section 12 to transform its entire $670 million in loans—through protests, shareholder resolutions, and municipal depository bans. 26 These efforts failed to persuade the banks to equate their interest in protecting their assets with the movement’s overall aims, as they had with the private credit boycott. On lending, anti-apartheid pressures reinforced the banks’ interest in repatriating capital out of South Africa and not throwing good money after bad. On rescheduling, the primary interest of the banks was to get their money out of South Africa. This was best achieved through negotiations that spread out Pretoria’s payments. By contrast, a tough policy designed to cripple South Africa’s economy could have pushed it into default and forced the banks to write off their loans. The same factors influenced the banks’ willingness to attach political strings to economic normalization. The resumption of new credits required political reform because the removal of a sanctions environment was necessary to reestablish South Africa’s creditworthiness. No such linkage was made vis-á-vis any of the rescheduling accords. 27
Direct Investors
A second area of corporate retrenchment was the wave of disinvestments following the eruption of political violence in late 1984. As in the case of the private credit boycott, these actions were not mandated by governments. Neither the United States nor the EEC applied sanctions to direct investors. In fact, both rejected the activists’ call for disinvestment and continued to encourage foreign investors, guided by codes of conduct, to act as a progressive force within South Africa. 28
While disinvestment can be attributed to economic conditions and political risk in South Africa, the scale of corporate disengagement was more pronounced than it had been in comparable circumstances elsewhere. A complete explanation has to account for the efforts of nonstate actors to compound political risk in South Africa with growing costs in the home market. By the end of the 1980s, the U.S. campaign to divest stock portfolios of firms with direct investments in South Africa had enlisted 20 states and 72 colleges and universities. 29 There was also a marked increase in shareholder activism. This contributed to a “hassle factor” comparable to that for the banks because South Africa represented only 1 to 2 percent of the global sales or assets of most American investors. Since most resolutions focused on direct investments, disinvesting enabled firms to devote fewer resources to defending a decreasingly profitable part of their global operations. 30
The most important source of nonstate pressure on multinationals came from state and local governments in the United States. By the end of the anti-apartheid campaign, 164 municipalities had enacted either stock divestment policies or selective procurement rules vis-á-vis firms that continued to do business with South Africa. 31 Municipal procurement laws, adopted in eight of the ten largest U.S. cities, were the most costly development for U.S.-based MNCs because many did considerably more business with cities and states than they did with South Africa. Surveys by U.S. consulates in South Africa found that municipal procurement power was the most significant external pressure on U.S. firms to disinvest. 32
Nonstate actors were not the only source of external political pressure on corporate decision making. Governmental sanctions, both actual and potential, became more salient as multilateral support for constructive engagement dissipated. In the early 1980s, the supportive stance of home governments, combined with economic growth in South Africa, had persuaded MNCs that they could safely ignore the anti-apartheid movement. Consequently, foreign investment in South Africa increased sharply. As one corporate official explained it: “South Africa is a classic case of people who want something done they can’t get through government.” 33
By the mid-1980s, investors could no longer make this assumption. Although no Western country mandated disinvestment, state sanctions eroded business confidence and convinced many risk-averse firms that disinvestment was the best alternative. U.S. companies were confronted with an additional cost after the passage in December 1987 of the Rangel amendment, which denied tax credits to direct investors. Several firms, most prominently Mobil, attributed their departure to this law. 34 MNCs also had to account for the possibility that states might require disinvestment if conditions worsened or even stayed the same. Such laws would place MNCs in the position of forced sellers to South Africans, who would have little incentive to pay anything resembling market price. As a result, many firms sold their South African assets in anticipation of worst-case scenarios. 35
Disinvestment, however, had only a minor impact on the South African economy. Almost all the departing firms sold their equity stakes to local management or third parties and maintained an ongoing licensing relationship to provide services, technology, and trademark rights to the new South African enterprises. This shift to nonequity ties minimized the costs imposed on white South Africans, who maintained the same access to the departing firms’ goods as before disinvestment. Moreover, disinvestment had a negative impact on social responsibility goals. The new firms were no longer bound by their former parents’ obligations, such as the Sullivan Principles, which committed its signatories to nondiscriminatory hiring and workplace practices. 36
This outcome parallels the anti-apartheid movement’s inability to translate its influence over lending to rescheduling. In both cases, nonstate pressures increased the costs and risks of “business as usual” to a point where withdrawal became a self-interested option. Once they achieved that goal, MNCs still retained the autonomy to choose the form of withdrawal that best served their interests. And the most profitable form of retrenchment for MNCs diverged from the aims of the anti-apartheid movement.
This is clearly evident in corporate responses to increased nongovernmental pressures as political conditions in South Africa deteriorated. MNCs initially sought to insulate themselves from pressures to withdraw by more aggressively assuming the mantle of social responsibility. In 1985 the number of Sullivan Principle signatories increased from 129 to 178. 37 Corporations also increased their contributions to community development programs in education, housing, training for small business, and the provision of free legal assistance to black employees who ran afoul of the apartheid laws. 38 In addition, MNCs were increasingly willing to move beyond their traditional arguments about noninterference and overtly oppose apartheid. In October 1985, 92 U.S. firms took an unprecedented step by signing a full page ad in South African newspapers calling for an end to discriminatory laws and for negotiations with the African National Congress. 39 In order to make the case more effectively that their presence eroded apartheid, many firms housed black employees in white areas in defiance of the Group Areas Act. In addition, they protested and lobbied against a law that would have required them to assist the government in quashing a rent strike in state-owned housing by deducting withheld rent from employee paychecks. 40
The principal reason that MNCs adopted a more political role was to deflect anti-apartheid pressures—defusing those from nongovernmental sources and persuading governments to stick with the argument that foreign investors could act as a “progressive force.” These obligations did entail an economic cost as well as the risk of antagonizing the host country. They were, however, seen as necessary to blunt home country pressures for withdrawal, which at the time was seen as a more costly option.
While these efforts were applauded by home governments, they provided no respite from nongovernmental anti-apartheid pressures. Activists argued that the benefits these obligations conferred upon a limited number of blacks were overwhelmed by corporate contributions to strengthening apartheid. At shareholder meetings, proponents of disinvestment resolutions pointed out that while U.S. firms provided $27 million for community development in 1985, they paid $752 million to the South African government in taxes. 41 As a result, activists escalated their pressures on MNCs to withdraw.
Yet once these pressures convinced corporations that disinvestment was the less costly option, nonequity ties best served the corporate bottom line. First, MNCs continued to earn income from South Africa through an arms-length trade relationship. Second, they maximized their returns from the sale of their assets and equipment, which would be worth considerably less to the new owners without parts, technology, and trademark rights. Finally, Pretoria’s two-tiered exchange rate required firms to repatriate the proceeds of any sale through the artificially depressed financial rand. By contrast, payment for technology and services took place at the higher commercial rand rate. Firms, therefore, had an interest in discounting the price of the sale of their assets and making up for it through higher post-disinvestment licensing fees. 42
The negative consequences for social responsibility goals can also be understood in terms of the economic interests of the new company and the departing MNC. The former had a strong incentive to free itself of costly social responsibility obligations since it was no longer connected to a larger multinational network. The latter’s interest in leaving behind an economically viable company that maximized cash flow meant that few conditioned their sales on social responsibility. As a result, only one former affiliate allowed external monitoring of its workplace practices, and contributions to community development programs decreased by more than 50 percent. 43
Anti-apartheid groups denounced this development as “corporate camouflage” and targeted nonequity ties. These efforts met with mixed results, in large measure because NGOs had to persuade universities and municipal governments to triple the number of companies to be blacklisted from contracts or stock portfolios. By 1989 only one university had expanded its divestment policy to cover nonequity ties. 44 On the state and local front, Los Angeles and San Francisco were the only major municipalities to follow the movement’s lead. 45 Activists were more successful in persuading institutional investors to include disinvestment in their proxy resolutions, because such actions were less costly. 46 These efforts registered some successes in the early 1990s. In 1991, the year in which President George Bush lifted the CAAA, ten firms severed their nonequity ties, and five more announced their intention to do so. 47 This demonstrates that subnational actors continued to deter U.S. business with South Africa even after federal policy changed. Nonetheless, most firms that disinvested and maintained their nonequity ties were relatively unaffected by nongovernmental pressures.
Another constraint on the effectiveness of the anti-apartheid movement was the fact that the most potent weapon used to pressure multinationals—municipal procurement power—was predominantly a U.S. phenomenon. In the United States, this practice did arouse some controversy. The Senate version of the CAAA had a federal preemption provision, but that was removed in conference with the House. 48 The Reagan and Bush administrations took preliminary steps to challenge this practice but backed down after protests from governors and mayors. 49 As a result, local South African laws were protected by American federalism and its tradition of strong local government.
By contrast, the efforts of European activists to enact comparable measures were unsuccessful. Britain’s anti-apartheid movement did persuade several municipalities to enact South Africa-related conditions to procurement and stock holdings. 50 In contrast to President Reagan, Prime Minister Thatcher was able to protect her policy of constructive engagement by getting Parliament to override these ordinances through a law banning the use of noncommercial criteria for local contracts. 51 Sim ilarly, the Oslo City Council was barred by the Nor wegian courts from blacklisting Shell from city business—and Norway was one of the few countries that imposed stricter sanctions than the United States and the EEC. 52
As a result, the most potent weapon of anti-apartheid NGOs in Europe was the consumer boycott, the most prominent examples of which were the British campaigns against Barclays and Standard Chartered Bank and a European boycott of Shell. These campaigns had an impact in persuading firms to accept codes of conduct and, in some cases (for example, Barclays), tipped the scales in favor of withdrawal. Their inability to extend that pressure to local governments, however, meant that they were less able to cast a wide net over the hundreds of firms involved in South Africa. As a result, NGOs were more successful in influencing U.S. firms—first, to accept social responsibility, and then to disinvest in larger numbers than their non-U.S. counterparts. 53
Nonstate Human Rights Sanctions in the 1990s
Burma
Burma has been dubbed the “South Africa of the 1990s” because it is the target of the most extensive nongovernmental campaign for human rights sanctions since the end of apartheid. In the late 1980s, a military regime known as the State Law and Order Restoration Council (SLORC) took power and renamed the country Myanmar. Its practices became a priority for the international human rights community in 1990, when the regime refused to accept the landslide victory of its democratic opposition, the National League of Democracy (NLD), and placed under house arrest its leader, Aung San Suu Kyi, who would later be awarded the Nobel Peace Prize. Concern intensified in the spring of 1996 following a crackdown on the NLD, the arrest of more than 260 of its leaders, and the reimposition of a quarantine around Aung San Suu Kyi. 54
The repression triggered the creation of the Free Burma Campaign—a transnational coalition of human rights and environmental organizations, churches, labor unions, and socially responsible investors. As in the South African case, these groups advocate economic sanctions and argue that investments in Burma strengthen the regime’s hold on power. 55 Of particular concern are the oil companies, which have been active in Burma since the SLORC opened its natural resources to foreign development in the early 1990s. The most significant and controversial deal is a $1.2 billion joint venture between UNOCAL (United States), Total (France), and the Thai and Burmese state energy companies to develop the Yadana offshore natural gas fields and construct a 260-mile pipeline to Thailand. 56 Activists charge that the project brings substantial revenues to the regime. In addition, they hold the companies responsible for the use of forced labor in the construction of infrastructure, ecological damage, and the forced relocation of villages to clear territory for the pipeline. UNOCAL and Total contend that the alleged abuses are unrelated to their investment and assert a right to stay regardless of the political practices of the host country. 57
The Free Burma Campaign has been unable to persuade governments to terminate this right. European Union (EU) sanctions were limited to arms sales, nonhumanitarian aid, and trade preferences. 58 The U.S. Congress did pass a sanctions bill in October 1996, which the administration invoked in April 1997. Its impact has been minimal. Due to a vigorous corporate lobbying campaign, the sanctions applied only to new investments, thereby exempting preexisting contracts, such as the Yadana project. 59 Moreover, the sanctions left unclear whether injecting new capital into existing ventures represented a new investment. Since the Treasury Department has not yet made a determination of this, MNCs have interpreted the regulations as if reinvestment were not covered. 60
Given the unwillingness of states to enjoin corporate behavior, activists concentrated their efforts on pressing corporations directly or through subnational actors. First, they used demonstrations and the media to publicize human rights abuses and direct social pressure at corporations. 61 Second, they persuaded individuals and private institutions, particularly universities, to boycott goods from firms that did business with Burma. 62 Third, they introduced shareholder resolutions demanding that oil companies, such as UNOCAL, appoint a committee of independent auditors to investigate allegations of forced labor and environmental abuse and assess the costs to the company of continued investment in Burma in terms of political risk and international boycotts. 63 Finally, campaigners in the United States have pressed state and local governments to use procurement power to pressure corporations to sever economic ties with Burma. As of November 4, 1997, municipal sanctions have been passed by one state (Massachusetts), one county, and twelve cities, including New York and San Francisco. 64
These techniques have had an impact on corporate decision making. Adverse publicity surrounding forced labor persuaded several prominent retailers and garment and footwear manufacturers to stop sourcing goods from Burma, thereby impeding the country’s efforts to diversify its exports. 65 The risk of consumer boycotts pressured Pepsico and several other firms to pull out of Burma. State and local ordinances have had the greatest impact on corporate withdrawals, as in the anti-apartheid case. Apple Computer and Motorola, for example, ended their relationships with their Burmese distributors to maintain supply contracts with Massachusetts and San Francisco. 66
Nonstate pressures have been most successful when an MNC’s vulnerability in its home market is disproportionate to its stake in Burma. For example, the Pepsico withdrawal is cited by the Free Burma Campaign as one of its greatest successes. Burma was indeed one of the few Asian markets where Pepsi outsold its chief competitor, Coca Cola. Still, sales in 1995 were only $4 million, a small fraction of its global sales of $10 billion. Moreover, Pepsico owned a number of affiliates, such as Taco Bell and Pizza Hut, all of which risked exclusion from an increasing number of college campuses if the company chose to maintain its Burmese business ties. 67 For Pepsico and other departing firms, pulling out was a small price to pay to insulate themselves from risks in the U.S. market. Yet what made these firms vulnerable to citizen pressures also made their withdrawal less costly to the SLORC.
By contrast, oil investments, which are more central to the SLORC’s economic plans, have been less susceptible to citizen pressures. The Yadana fields are major investments for UNOCAL and Total. It is estimated that they contain 5.7 trillion cubic feet of gas, and production is scheduled to begin in 1998. In the 1990s, UNOCAL has pursued a conscious strategy of staking its future growth in exploration in Southeast and Central Asia and has sold many of its downstream operations in its home state of California to finance this effort. San Francisco’s decision to exclude the company from a $98,000 fuel contract has given it an added impetus to expedite this process. 68
Another limitation, mirroring the South African experience, is that the use of municipal purchasing power—the technique most costly to the corporate bottom line—has been a U.S. phenomenon. Such measures have therefore had a disproportionate impact on U.S. firms, though they have affected a larger number of non-U.S. firms in the 1990s because of the liberalization of government procurement regulations. 69 Yet that liberalization has engendered another potential challenge to this instrument from trading partners. The EU and Japan have taken aim at the Massachusetts ordinance by filing a grievance before the World Trade Organization (WTO), claiming a violation of the 1994 Government Procurement Agreement that prevents the attachment of discriminatory criteria unrelated to those necessary to fulfill a contract. 70 The Massachusetts state government has countered that it has a right to control its own procurement practices and that the ordinance does not discriminate between U.S. and non-U.S. firms that do business with Burma. The Clinton administration initially sided with the EU and tried to discourage Massachusetts from passing the law. After its passage, it agreed to defend Massachusetts before the WTO in exchange for permission to work with the state to ensure that future laws (there is a pending bill on Indonesia) are consistent with international trade agreements. 71 The outcome of the WTO case and the administration’s negotiations with the states may have a major impact on the continued utility of this means of pressuring MNCs.
Nigeria
A second recent effort to use multinationals as instruments of human rights pressure is the campaign against Western oil companies in Nigeria. Nigeria has been subjected to widespread international condemnation since 1993, when General Sani Abacha annulled elections, imprisoned the winner, banned political parties, and dissolved all elected bodies. That criticism reached its peak after November 10, 1995, when the government executed playwright Ken Saro-Wiwa and eight other Ogoni activists who had been protesting Royal Dutch Shell’s activities in Ogoniland. 72
Human rights activists targeted Shell, both because it was the largest investor in Nigeria and because it was seen as complicit in the regime’s abuses, particularly the execution of the Ogoni Nine. Shell had been forced to suspend operations in Ogoniland in January 1993 after protests by the Movement for the Survival of the Ogoni People (MOSOP) against Shell’s environmental practices and attacks on its staff and equipment. Western human rights activists called on Shell to accept MOSOP’s demands for cleaning up oil spills and allocating a greater share of oil revenues to the impoverished Ogoni region. Shell’s response was that these were the responsibilities of the Nigerian government, not of a private corporation, and it would be inappropriate to intervene in local political struggles. 73 Instead, Shell asked Lagos for assistance in protecting its operations, a request that activists equated with responsibility for the repression that followed. When the Ogoni Nine were sentenced to death, Shell was asked by NGOs such as Amnesty International to use its influence to win clemency. Shell’s response was comparable to that made to MOSOP’s demands: “It is not for a commercial organization to interfere with the legal processes of a sovereign state.” 74
After the executions, human rights NGOs centered their attention on Shell and other oil companies in Nigeria. Oil, they noted, produced 80 percent of the government’s revenue and 90 percent of its foreign exchange. Therefore, the Abacha regime was vulnerable to economic pressure. These arguments were given added weight by leaked company documents revealing that Shell had imported weapons for the Nigerian police and was responsible for environmental damage. 75
Shell not only refused to withdraw, but recommitted itself to a $3.6 billion natural gas project only three days after the executions. Its Nigerian general manager explained the irrelevance of human rights to the economic opportunities in blunt terms: “For a commercial company trying to make investments, you need a stable environment. Dictatorships can give you that.” 76 The company’s headquarters was somewhat more diplomatic, arguing that business should be separated from human rights condemnations and that a pullout would hurt the Ogonis more than it would the regime. 77
Having failed to persuade Shell and other oil companies to leave Nigeria, human rights organizations called upon their governments to impose sanctions. In the United States, Congress did introduce a bill to freeze Nigeria’s assets and ban new investments, but it was defeated by an effective lobbying campaign by corporate trade associations and the Nigerian government. 78 The Clinton administration agreed to adopt these measures by executive order if it could negotiate a multilateral consensus. The EU, however, was opposed to these limited sanctions, let alone an oil embargo, because sanctions would jeopardize the economic interests of European governments. Undercutting Nigeria’s ability to export might impede its ability to service its $30 billion debt, owed mostly to European and Japanese banks. An asset freeze could lead to a retaliatory expropriation of oil company assets or undermine the role of Britain, France, or Germany as international financial centers. 79 As a result, EU sanctions were limited to the suspension of development aid, cultural and sports contacts, and visas for members of the military regime. 80
Given the unwillingness of states to impose sanctions, NGOs sought to place direct pressure on corporations to suspend operations. First, European groups sought to stigmatize Shell’s Nigerian operations through demonstrations at its service stations and the erection of gallows outside several of its corporate offices. 81 Second, Greenpeace led a Europe-wide consumer boycott against the company. The Sierra Club offered transatlantic support in calling for a U.S. boycott. By contrast, Amnesty International called on Shell to use its influence to obtain the release of political prisoners but did not endorse the boycott because such an endorsement would be contrary to its 82 Third, shareholder resolutions were filed against Shell, Mobil, and Chevron, calling upon the companies to establish human rights criteria for their investment decisions and to appoint external auditors to report on their environmental and social practices. 83 Finally, U.S. human rights groups sought to apply municipal procurement power to company decision making. As of October 1997, Nigerian procurement laws have been passed in three U.S. cities and are being considered in other municipalities, such as New York. 84
These pressures did induce some MNCs to make concessions in the area of social responsibility. Mobil, for example, agreed to work with shareholders in providing reports on its Nigerian operations. 85 Shell retreated publicly from its initial insistence that social issues were outside its purview. While continuing to defend its presence in Nigeria on both commercial and moral grounds, it conceded responsibility for environmental damage and for importing arms for the Nigerian police. It also assumed some financial responsibility to rectify this, committing itself to a $100 million per year cleanup of oil spills for five years as well as to community investments in Ogoniland. 86 In March 1997, it agreed to consult with NGOs and use its influence to promote human rights “in line with the legitimate role of businesses.” The Financial Times referred to this as a “belated recognition of the influence on multinationals of international public opinion.” 87
It was also a demonstration of the limits of international public opinion. First, no Western oil company was willing to abandon its access to crude because of political risk in the West. This was particularly true for Shell. Nigeria was the company’s second largest source of crude oil after the North Sea, and compliance with the boycotters’ demands would have been far too costly. Second, these pressures did not deter new energy investments. The Abacha regime defined offshore oil exploration as essential to maintain the country’s long-term reserves (and its own staying power) and insulated it from the graft and corruption that pervaded other sectors of the economy. 88 As a result, while most MNCs stayed away from Nigeria, oil companies increased their investments. In 1996, Nigeria was able to maintain its oil production at well over its OPEC quota of two million barrels per day. It is therefore hard to disagree with the Economist Intelligence Unit’s assessment of the failure of the sanctions campaign: “From the outside, Nigeria’s leaders seem none the worse off a year after the highly criticized executions. Their overseas assets continue to swell and multinational investments continue to flow into the country.” 89
Conclusion
This essay began by posing the question of whether nongovernmental human rights groups can impose social control over corporate conduct abroad without using the intermediary of the state. The findings provide a qualified affirmation of this new form of accountability. In each of the three cases, MNCs were pressured to assume certain ethical obligations beyond those required by law. This was most clearly evident in the area of social responsibility. In South Africa, investors adopted workplace codes of conduct and bans on loans and sales to the government. Similarly, in Nigeria, Shell increased the resources expended on environmental and social projects in Ogoniland despite its initial insistence that these were government responsibilities. These actions were, for the most part, undertaken to assuage nongovernmental pressures for withdrawal and were opposed as insufficient by most activist groups. Nonetheless, they represented a change from the traditional insistence by corporations that business is politically neutral and that social concerns are outside their responsibility.
In some cases, NGOs persuaded corporations to move beyond social responsibility to disengagement. In South Africa, private lending stopped one year before international financial sanctions were enacted, and many firms liquidated their direct investments despite the fact that Western governments favored codes of conduct over disinvestment. Similarly, no government has imposed trade sanctions or ordered its national firms out of Burma. Nonetheless, consumer pressure dissuaded many firms from importing Burmese goods, and selective contracting ordinances persuaded others to withdraw.
Some observers have inferred from these cases a serious challenge to sovereign notions of governance. From this perspective, NGOs have evolved into “a class of modern day nonterritorial potentates” who set and enforce ethical standards for business through their impact on corporate profits. 90 Their successes in the anti-apartheid campaign, and in many of the battles over labor and environmental practices, are harbingers of a new form of accountability—to be welcomed by those who believe the political system is biased against the promotion of human rights and to be feared by those who see a new means by which intensely committed minorities can circumvent the traditional political process. One legal scholar consequently concluded that when NGOs succeed in persuading consumers, institutional investors, and local governments to share their preferences, their efforts can “assume the same function as a regulatory victory.” 91
There is, however, an important difference between an NGO success and a regulatory victory. NGOs rely on inducements—that is, on creating penalties for socially irresponsible behavior that cause firms to redefine what they consider to be profitable. Nonstate actors cannot, however, exercise commands—that is, they cannot compel a firm to act according to criteria other than economic self-interest. Only states can do that.
This inability to command corporate behavior explains the mixed record of the anti-apartheid case. Nongovernmental pressures had induced international bankers and almost half of South Africa’s foreign investors to equate their self-interest with the private credit boycott and disinvestment. In both cases, however, MNCs retained the autonomy to choose the form of disengagement that best served their interests. For banks, this involved spreading out South Africa’s payments. For disinvesting firms, it meant nonequity ties and the scaling back of social responsibility obligations. In sum, without the exercise of public authority, NGOs could augment the pressures on MNCs to withdraw but could not ensure that they did so in a manner supportive of the NGOs’ agenda.
The exclusive reliance on inducements also means that NGO influence diminishes in proportion to the size of the stake in question. This makes it unlikely that the anti-apartheid movement’s successes can be replicated by the Burmese and Nigerian campaigns. In the first case, the most costly private action was triggered by U.S. banks, whose stake in South Africa was relatively small. And given the impact of their actions on South Africa’s creditworthiness, even more exposed banks were induced to comply with the sanctioners’ demands. If Burma and Nigeria have a comparable “Achilles heel,” it is the oil industry. Yet given the current importance of Nigeria to Shell and the heavy investments by several firms in exploration and development in both countries, the activists are unlikely to be able to exact a price high enough to elicit compliance with their demands. Only the exercise of public authority is capable of commanding the oil companies to suspend their operations, demonstrating a key difference between an NGO success and a regulatory victory.
This leads to another caveat against generalizing from the success of the anti-apartheid movement. While it is difficult to disentangle the factors that affected corporate retrenchment from South Africa, the change in state policies in the mid-1980s played a critical role. When the activists’ agenda was resolutely opposed by governments, MNCs saw little need to respond to their entreaties. That changed once it became clear that Western governments would no longer play a supportive role. For example, Chase Manhattan’s decision to “pull the plug” on South Africa’s debt was influenced not only by the “hassle factor,” or deposits lost due to state and local laws; it was also based on the recognition that the political climate and the congressional ban on IMF loans precluded international assistance to South Africa during its financial crisis. Governments might never have mandated the private credit boycott or disinvestment, but international sanctions made this a self-interested option for international creditors and many risk-averse investors.
This dependence of NGO successes on at least a degree of interstate cooperation weakens the applicability of the South African model to Burma and Nigeria. Although Western governments have stigmatized both regimes, there is little likelihood of an oil boycott or serious investment sanctions. The central reason for this is the high premium placed on access to energy resources and their continued development. Unlike creditors and investors in South Africa, the oil MNCs do not have to consider the possibility of state actions that would make their decision to stay a risky alternative. Moreover, unlike South Africa’s foreign creditors, the MNCs’ business confidence in Nigeria and Burma is not dependent upon supportive state and intergovernmental policies, such as the availability of financial rescue packages. Therefore, a political climate that would make it difficult for states to provide assistance does not create the same kinds of pressures on oil companies in Burma and Nigeria as it did for creditors in South Africa.
Finally, state structures played an important role in the successes of nonstate actors, particularly in the greater success of activist groups in the United States. Thomas Risse-Kappen notes that NGOs are most likely to succeed in decentralized political systems that have more points of access. 92 The U.S. system of federalism has so far protected the most potent source of pressure on multinationals—municipal procurement power. Yet given the more centralized political structures in other industrialized democracies, this instrument has been unavailable elsewhere. Therefore, alliances between NGOs and local governments have been predominantly, if not exclusively, a U.S. phenomenon. This limits their transnational reach and impact on those firms not extensively involved in the United States.
Moreover, this device currently confronts two state-level challenges to its continued utility. The first comes from corporate trade associations, acting as traditional interest groups by launching a major lobbying effort against unilateral sanctions at both the federal and local levels. Their efforts have enlisted the assistance of two respected foreign policy experts in the U.S. Congress—Richard Lugar, Republican senator from Indiana, and Lee Hamilton, Democratic congressman from Indiana—to introduce legislation that would invalidate all local sanctions laws. 93 The second challenge comes from allied governments who are using the WTO to have unilateral sanctions declared discriminatory trade practices. If successful, intergovernmental agreements to liberalize trade would deny NGOs the ability to use municipal budgets and pension funds as sources of political influence.
As of this writing, neither of these challenges has invalidated subnational sanctions. The U.S. Congress is currently considering a major new set of unilateral sanctions through the Religious Persecution Act; overturning state and local efforts to achieve the same ends is not, in the current climate, politically feasible. 94 The Clinton administration, like its predecessors, has not been happy with municipal sanctions but has been willing to defend the Massachusetts Burma law before the WTO. These are political calculations by governmental actors upon which nonstate actors are dependent for the continued utility of subnational sanctions. Were those calculations to change, a major weapon would be removed from their arsenal of pressures on multinationals. This fact tends to support the realist argument, presented by Waltz, that “while states may interfere little in the affairs of nonstate actors for long periods of time, states nevertheless set the terms of the intercourse . . . [and] when the crunch comes, states remake the rules by which other actors operate.” 95 The “crunch” has not yet come because of divisions within the U.S. federal government over the appropriateness of sanctions. For NGOs to continue using this device, those divisions have to be strong enough to fend off pressures from corporations, allies, and international organizations using more traditional political channels.
Endnotes
*: An expanded version of this paper was initially presented at “Non-State Actors and Authority in the Global System,” an international conference at the University of Warwick, Coventry, UK, October 31–November 1, 1997. I would like to thank Flannery Higgins for research assistance. Back.
Note 1: Simon Billenness, “Beyond South Africa: New Frontiers in Social Responsibility,” Business and Society Review 30 (summer 1993), p. 29, and Douglass Cassell, “Corporate Initiatives: A Second Human Rights Revolution,” Fordham International Law Journal 19 (1996), pp. 1963–84. Back.
Note 2: Control Risks Group (CRG), No Hiding Place: Business and the Politics of Pressure (July 1997), pp. 3–4. Back.
Note 3: See “Multinationals and Their Morals,” Economist, December 12, 1995, p. 18. Back.
Note 4: See David P. Forsythe, Human Rights and World Politics (Lincoln: University of Nebraska Press, 1979), pp. 130–36. Back.
Note 5: David Vogel, Lobbying the Corporation: Citizen Challenges to Business Authority (New York: Basic Books, 1978), ch. 1. Back.
Note 6: John M. Kline, State Government Influence in U.S. International Economic Policy (Lexington, Mass.: D. C. Heath, 1983), pp. 197–200. Back.
Note 7: Vogel, Lobbying the Corporation, p. 8. Back.
Note 8: Peter J. Spiro, “Taking Foreign Policy Away from the Feds, ” Washington Quarterly 10 (winter 1988), p. 195. Back.
Note 9: Richard W. Mansbach and John A. Vasquez, In Search of Theory: A New Paradigm for Global Politics (New York: Columbia University Press, 1981), p. 5. The best realist defenses of state-centrism are Kenneth N. Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979), pp. 93–97, and Stephen D. Krasner, “Power Politics, Institutions, and Transnational Relations,” in Bringing Transnational Relations Back In: Non-State Actors, Domestic Structures, and International Institutions, edited by Thomas Risse-Kappen (Cambridge: Cambridge University Press, 1995), pp. 257–79. Back.
Note 10: Richard W. Mansbach, Yale H. Ferguson, and Donald E. Lampert, The Web of World Politics: Nonstate Actors in the Global System (Englewood Cliffs, N.J.: Prentice-Hall, 1976), p. 3. Back.
Note 11: Mark L. Movsesian, “The Persistent Nation-State and the Foreign Sovereign Immunities Act,” Cardozo Law Review 18 (December 1996), p. 1091. Back.
Note 12: Bruce Russett and Harvey Starr, World Politics: The Menu for Choice, 3rd edition (San Francisco: W. H. Freeman, 1988), p. 492. Back.
Note 13: Peter J. Spiro, “New Global Potentates: NGOs and the ‘Unregulated Marketplace,” Cardozo Law Review 18 (December 1996), p. 961. Back.
Note 14: See Robert M. Price, The Apartheid State in Crisis: Political Transformation in South Africa, 1975–1990 (New York: Oxford University Press, 1991), pp. 222–33. Back.
Note 15: On the variation in national regulations, see Alison Cooper, International Bank Lending to South Africa (Washington, D.C.: Investor Responsibility Research Center [IRRC], September 1988), pp. 329–33. Back.
Note 16: Richard Knight, “Sanctions, Disinvestment, and U.S. Corporations in South Africa,” in Sanctioning Apartheid, edited by Robert E. Edgar (Trenton, N.J.: Africa World Press, 1990), p. 81. Back.
Note 17: Testimony of Gordon Phelps in U.S. Congress, House Committee on Foreign Affairs, Legislative Options and United States Policy Toward South Africa, 99th Congress, 2nd session, 1985, p. 164. Reagan administration officials made comparable arguments in equating constructive engagement with these “sanctions of the marketplace.” See Knight, “Sanctions, Disinvestment, and U.S. Corporations in South Africa,” pp. 69–71. Back.
Note 18: SeeAmerican Banker, October 2, 1985, p. 14. Back.
Note 19: See William Minter, King Solomon’s Mines Revisited: Western Interests and the Burdened History of Southern Africa (New York: Basic Books, 1987), p. 319, and Richard W. Hull, American Enterprise in South Africa: Historical Dimensions of Engagement and Disengagement (New York: New York University Press, 1990), ch. 6. Back.
Note 20: Knight, “Sanctions, Disinvestment, and U.S. Corporations in South Africa,” pp. 80–81. Back.
Note 21: ”South African Bank Deadlock,” Financial Times, February 19, 1986, p. 16. Back.
Note 22: David Tonge and Quentin Peel, “How South Africa Won Its Billion-Dollar Battle in the IMF,” Financial Times, January 25, 1983, p. 4. Back.
Note 23: Richard Leonard, “Business and South Africa: Pressures Against Apartheid Mount in the USA,” Multinational Business (fall 1984), pp. 15–17. Back.
Note 24: Knight, “Sanctions, Disinvestment, and U.S. Corporations in South Africa,” p. 85. Back.
Note 25: According to the IRRC, $4 billion of the $13 billion remaining in frozen assets in 1989 was converted through this device. U.S. banks, facing stronger pressure at home, used Section 12 to cover $1.7 billion, or 70 percent, of their $2.4 billion in outstanding loans. See “U.S. Banks and South Africa,” Banking Report B, Supplement C, March 12, 1991, p. 4. Back.
Note 27: Michael Holman, “SA Seeks Early Debt Rescheduling,” Financial Times, September 22, 1989, p. 4. Back.
Note 28: Martin Holland, “Three Approaches for Understanding European Political Co-operation: A Case Study of EC–South African Policy,” Journal of Common Market Studies 25 (June 1987), p. 297. Back.
Note 29: See William F. Moses, A Guide to American State and Local Laws on South Africa (Washington, D.C.: IRRC, August 1992), pp. 14, 145–46, and Jennifer D. Kibbe, Divestment on Campus: Issues and Implementation (Washington, D.C.: IRRC, 1989). Back.
Note 30: Les de Villiers, In Sight of Surrender: The U.S. Sanctions Campaign against South Africa, 1946–1993 (Westport, Conn.: Praeger, 1995), pp. 55–57. Back.
Note 31: Moses, A Guide to American State and Local Laws on South Africa, pp. 1, 13. Back.
Note 32: Crehan to Secretary of State, “Update on Divestment,” October 30, 1987, Johannesburg 02287 (document obtained through the Freedom of Information Act). Back.
Note 33: Allan R. Janger and Ronald E. Berenbeim, External Challenges to Management Decisions: A Growing Business Problem (New York: The Conference Board, 1981), p. 22 (emphasis in original). Back.
Note 34: IRRC, South African Reporter, June 1989, p. 17. Back.
Note 35: Anthony Robinson, “Sanctions Limit Growth Rate,” Financial Times, June 9, 1988, Survey, p. 2. Back.
Note 36: For an overview, see David Hauck, “What Happens When U.S. Companies Sell Their South African Operations,” IRRC, South Africa Review Service, May 1987. Back.
Note 37: Hull, American Enterprise in South Africa, p. 334. Back.
Note 38: Hauck, “What Happens When U.S. Companies Sell Their South African Operations,” p. 9. Back.
Note 39: Business International, Critical Issues Monitor, April 1986, p. 30. Back.
Note 40: IRRC, “U.S. Business in South Africa,” 1990 Analysis C, December 29, 1989, pp. 3–7. Back.
Note 42: Keith Ovenden and Tony Cole, Apartheid and International Finance: A Program for Change (Victoria, Australia: Penguin Books, 1989), p. 157. Back.
Note 43: Jennifer Kibbe and David Hauck, “Leaving South Africa: The Impact of U.S. Corporate Disinvestment,” IRRC, South Africa Review Service, July 1988, pp. 18–20. Back.
Note 44: Kibbe, Divestment on Campus, pp. 19–20. Back.
Note 45: IRRC, “Withdrawal of U.S. Companies from South Africa and Ending Non-Equity Ties,” 1989 Analysis C, December 13, 1988, pp. 14–17. Back.
Note 46: Ibid., 1990 Analysis C, January 2, 1990, p. 1. Back.
Note 47: IRRC, South African Reporter, March 1991, p. 6, and June 1991, p. 5. Back.
Note 48: Moses, A Guide to American State and Local Laws, p. 7. Back.
Note 49: See Business International, Critical Issues Monitor, August 1986, p. 36, and Moses, A Guide to American State and Local Laws, pp. 7–8. Back.
Note 50: Business International, Critical Issues Monitor, December 1985, p. 13. Back.
Note 51: Ibid., April 1987, p. 16. Back.
Note 52: IRRC, South Africa Reporter, March 1988, p. 11. Back.
Note 53: According to the IRRC, from 1984 through 1990, 65 percent (202 of 313) of U.S. investors withdrew, as contrasted with 24 percent (131 of 574) for the rest of the world. See “Facts and Figures on South Africa: Answers to 12 Frequently Asked Questions,” August 1990, p. 3, and February 1993, pp. 30–31. Back.
Note 54: Economic Intelligence Unit (EIU), Myanmar, Country Report, 1996, no. 3, p. 11. Back.
Note 55: IRRC, Social Issues Reporter, February 1997, p. 14. Back.
Note 56: Ibid., April/May 1996, p. 9. Back.
Note 57: IRRC, “Unocal, Human Rights (2 Resolutions) —Burma,” 1997 Company Report K and K:1, pp. 6–8. Back.
Note 58: EIU, Myanmar, Country Report, 1997, no. 2, p. 7. Back.
Note 59: See Carroll Doherty and Pat Towell, “Senate Passes Foreign Aid Bill after Dispute over Myanmar,” Congressional Quarterly Weekly Report, July 27, 1996, p. 2131. Back.
Note 60: Oil Daily, May 22, 1997, p. 3. Back.
Note 61: See the Free Burma Coalition’s website at http://www.danenet.wicip.org//fbc/freeburma.html. Back.
Note 62: Business Week (Bruce Einhorn, “Doing Business with Strongmen,” April 22, 1996, p. 53) reported that 75 U.S. colleges and universities have boycott movements associated with Burma. Back.
Note 63: Unlike the South African case, proxy resolutions calling for disinvestment or linking the suspension of operations to a regime’s political practices were ruled out of order by a 1994 decision by the U.S. Security and Exchange Commission as unrelated to the fiduciary responsibilities of the companies. Hence, proxy resolutions had to be crafted to comport with this ruling. See IRRC, Social Issues Reporter, January 1996, p. 6. Back.
Note 64: Organization for International Investment, “Status of State and Local Sanctions,” November 4, 1997. This survey was posted on the website of USA-Engage, a corporate lobbying group opposed to unilateral sanctions (http://www.usaengage.org/news/status.html). Back.
Note 65: EIU, Myanmar, Country Report, 1997, no. 1, p. 10. Back.
Note 66: Ted Bardacke, “American Burma Boycotts Start to Bite,” Financial Times, February 6, 1997, p. 6. Back.
Note 67: Jay Matthews, “Pepsico to Pull Out of Burma,” Washington Post, January 28, 1997, p. C2. Back.
Note 68: See IRRC, Social Issues Reporter, April–May 1996, p. 10; Oil Daily, March 4, 1997, p. 2; and Agis Salpukas, “Foreign Energy, Domestic Politics: Burmese Projects Test UNOCAL’s Resolve,” New York Times, May 22, 1997, p. D1. Back.
Note 69: For examples, see IRRC, Social Issues Reporter, December 1996, p. 14, and March 1997, p. 11. Back.
Note 70: IRRC, Social Issues Reporter, February 1997, p. 13. Back.
Note 71: Michael Lelyveld, “Clinton Backs Weld on Sanctions against Myanmar,” Journal of Commerce, July 23, 1997, p. 5A. Back.
Note 72: Paul Lewis, “Nigeria’s Deadly Oil War,” New York Times, February 13, 1996, p. A1. Back.
Note 73: IRRC, Social Issues Reporter, December 1996, p. 23. Back.
Note 74: Lewis, “Nigeria’s Deadly Oil War,” p. A10. Back.
Note 75: ”Shell Facing New Onslaught on Nigeria,” Financial Times, December 16, 1995, p. 3. Back.
Note 76: Joshua Hammer, “Nigeria’s Crude,” Harpers, June 1996, p. 58. Back.
Note 77: Oil Daily, December 18, 1995, p. 4. Back.
Note 78: For a detailed reporting on the failed sanctions effort, see Glenn Frankel, “Nigeria Mixes Oil and Money: A Potent Formula Keeps U.S. Sanctions at Bay,” Washington Post, November 24, 1996, p. C1. Back.
Note 79: Paul Lewis, “U.S. Seeking Tough Sanctions to Press Nigeria for Democracy,” New York Times, March 12, 1996, p. A1. Back.
Note 80: EIU, Nigeria, Country Report, 1996, no. 1, pp. 8–9. Back.
Note 81: Reuters Business Report, November 13, 1995. Back.
Note 82: Inter Press Service, November 14, 1995. Unlike other NGOs involved in this issue, Amnesty’s mandate is to remain apolitical and protest the incarceration of “prisoners of conscience”—i.e., those who do not advocate violence—and the use of torture against all prisoners. Rather than advocate a strategy of nonstate sanctions to weaken the regime, its aim is to use MNCs, such as Shell, to add another voice for the release of political prisoners. See IRRC, Social Issues Reporter, January 1996, p. 19. Also, note the difference between Amnesty and Greenpeace in their response to Shell’s announcement of human rights guidelines in Stefan Wagstyl, “Campaigners Dialogue with Business Urged,” Financial Times, March 19, 1997, p. 3. Back.
Note 83: IRRC, Social Issues Reporter, January 1997, p. 14, and Youseff Ibrahim, “Shell’s Shareholders Reject a Human Rights Initiative,” New York Times, May 15, 1997, p. D4. Back.
Note 84: IRRC, State and Local Selective Purchasing Laws as of September 1997, p. 4. Back.
Note 85: IRRC, Social Issues Reporter, March 1997, p. 12. Back.
Note 86: EIU, Nigeria, Country Report, 1996, no. 3, p. 19. Back.
Note 87: Robert Corzine, “Shell to Consult Pressure Groups,” Financial Times, March 18, 1997, p. 23. Back.
Note 88: Dev George, “International E&P at Record Height, Important Discoveries Driving Activity,” Offshore, May 1997, p. 36 Back.
Note 89: EIU, Nigeria, Country Profile, 1997, p. 23. Back.
Note 90: Spiro, “New Global Potentates,” p. 963. Back.
Note 91: Ibid., p. 958. On recent NGO successes in the labor and environmental fields, see CRG, No Hiding Place, chs. 2, 4. Back.
Note 92: Risse-Kappen, introduction, Bringing Transnational Relations Back In, p. 25. Back.
Note 93: ”Curbing Runaway Sanctions,” Journal of Commerce, September 8, 1997, p. 6A. Back.
Note 94: See “Proliferation of Sanctions Creates a Tangle of Good Intentions,” Congressional Quarterly Weekly Report, September 13, 1997, pp. 2113–20. Back.
Note 95: Waltz, Theory of International Politics, p. 94. Back.