States have always been the major if not the only actor on the world stage until the thriving of International Organizations in the post-Second World War era. The 21st century has witnessed the appearance of new equally important actors in International relations, Individuals, and Multinational Corporations.
These two actors have had a significant impact on international relations, from transnational activists to terrorists, they are all individuals that have a transborder impact and succeeded in keeping states, communities, and news outlets prepared to anticipate any new steps they take. On the other hand, Multinational corporations, the main topic of this article, are a structure that has an organizational presence in two or more countries.
The mentioned structures actively transfer capital back and forth from their country of origin to the hosting country or countries. The questions this article will be answering are the following:
What are Multinational Corporations?
How some of them became so powerful that the impact of their actions is transnational?
And finally what are the examples of some of these actions?
As we’ve already mentioned, a Multinational Corporation is a company that operates in its home country plus two or more other countries. Some add to this definition its ability to generate 25% of its whole revenue and profits from outside the home country. Multinational companies can vary in terms of size and activity which in turn affects their importance.
A big corporation can expand its activities in up to 100 countries, with an army of employers that can reach thousands depending on its field of activity. The latter has begun to gain more importance with the rise of Silicon Valley technological monsters, companies with the size of numerous countries in terms of profits, and even more significant in terms of technologies, patents, and experience.
Threat to State's Authority
Being a foreign direct investment to expand operations in a new region, Corporations are perceived by developing countries’ governments as an opportunity to acquire the latest technologies, well-qualified workers, and most importantly foreign capital. With all these advantages they provide for the hosting country, Multinationals are a source of anxiety and worry in their areas of expansion for a couple of reasons.
First, is the vulnerability of the hosting state in the face of the significant amounts of money that multinational firms can inject into its economy. The second reason is the knowledge and technological advance that the firm has over the hosting country gives it the upper hand in all negotiations with the government.
The third is job opportunities, once created, the local government wouldn’t prefer to deal once again with thousands of employees who lost their job because a multinational firm didn’t find the right environment to proceed with its activities.
Those factors combined represent a card in the hands of big companies and can be played from the comfort of their home countries, disrupt other states' economies and create political turmoil within them. A plethora of examples exists of actual events in which multinational firms’ interventions were turning points whether in countries' lifetimes or conflicts.
Examples of Multinational Corporations' Transnational Damage
Nigeria is one of the cases in which a country’s population found itself under the control of a corrupt government that pursues the generous bribes offered by the famous Multinational Oil company ‘Shell’ The Oil Giant has managed to build and take control of extraction infrastructure in all thousand Nigerian oil wells. With oil representing approximately 90% of Nigerian exportations, Shell made a fortune out of it and carelessly harmed the environment in Nigeria, poisoned waters due to oil leaks have caused cancer to numerous Nigerians leaving the country without any access to potable water.
A population that once depended on farming and fishing couldn’t deal with the contaminated waters anymore, protesters filled the streets of Nigeria but with the corrupt government and army’s intervention civilians were silenced pushing the situation in Nigeria farther and farther into civil war.
The Ukrainian conflict demonstrates at the same time how advanced are some companies and how they can act on behalf of their countries of origin and adopt their state’s foreign policy objectives as theirs. We’re talking here about Elon Musk’s Starlink company. The company provided internet to Ukraine after it was almost taken down by Russia, which represented a turning point both on the military level by giving access to the Ukrainian army to secure internet in order to conduct precision airstrikes, and on the civilian level by keeping Ukrainian companies and individuals online.
Embargos are another tool used by states to harness the power of their Multinational corporations, the US has used it to ensure the submission of many of its rivals. From cutting the flow of technology and investment to countries like Cuba, Venezuela, Iran, and Russia to targeting other countries' multinational companies like China’s Huawei.
Multinational corporations have positively contributed to the development of humanity, by providing cutting-edge technologies and services to people all over the globe. They also manage to transfer precious knowledge across borders. However, their unlimited benefits and power come with a desire for profits, which is their raison d’etre and can lead to tragic results if no one holds these giants accountable for their actions.
Written by: Abderrahmane Loudiyi
Edited by: Nidhi Jha
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