DATE: July 4, 1997
TO: H.E. Mr. Razali Ismail, President of the UN General Assembly
SUBJECT: Subsidizing corporate takeover
PAGES: 3 pages (including cover page)
FROM:David C. Korten
Thanks for including me in the Corporate Roundtable luncheon last Tuesday. The food was great and witnessing the proceedings was an instructive experience.

I send this fax in follow-up to that lunch and the discussions we had prior to it. Specifically I offer comments on two arguments I heard presented favoring a formalization of UN relationships with TNCs.

  1. TNC funds are needed to help finance UN projects. I didn’t really grasp the implications of what the proponents had in mind until I heard that UNDP is now using its funds “to leverage private investment funds” on a ratio of 6 to 1. That sounds pretty good, until you realize this means UN development assistance money is being used to subsidize the buyout of Third World economies by global corporations. The most extraordinary part of it is that the TNCs seem to have convinced Third World leaders that the greater the foreign ownership of their economies the better off their people will be. No mention is made of the reality that foreign investors expect to extract profits in foreign exchange at rates upwards of 30 percent while at the same time extracting the country’s natural wealth and the product of its workers to service wasteful consumption by the world’s elites.

    The credibility of the UN is seriously at stake here. Consider the implications for the UN’s public image as people wake up to the reality that the scarce UN development funds intended to benefit the poor of the world are in fact being dispensed as corporate welfare to help finance the global corporate take over of the world economy. It should not be surprising if this eventually pushes the progressive citizen organizations that have heretofore supported the United Nations into a position of organizing against UN funding, as many of them have organized against World Bank and IMF funding.

  2. TNCs have a contribution to make in the policy process to assure the rules are workable. You probably missed the briefing the WBCSD held for NGOs immediately following the Tuesday luncheon. During that briefing an NGO participant asked whether the WBCSD supports the proposal to create a CSD sub-committee on corporate accountability. Mr. Stigson gave a very clear answer that they oppose it because in their view global corporations are already accountable to far too many bodies.

The one thing I can say in Mr. Stigson’s favor here is that he gave an honest answer. None of us should be surprised when the WBCSD uses its place at the UN table to scuttle efforts to establish a framework of rules holding corporations accountable to the public interest—exactly as the critics who wrote the articles I gave you on Monday night point out it has been doing all along. The fox is now in the UN chicken coop participating in writing the security protocols intended to protect the chickens from the fox—yet another serious blow to the UN’s credibility.

With regard to the credibility issue, I call your attention to the attached cartoon I found circulating among participants in the CSD NGO forum following the Tuesday luncheon.

I welcome any future opportunity to carry forward the dialogue on these and other issues at your convenience.

With best warm regards.