There is a handful of terms which one may use to describe multinational corporations but my all time favourite is ‘el pulpo’, the octopus. The term was coined in Honduras, one of the countries most-affected by the ‘banana republic’ phenomenon. Essentially, a banana republic is a developing country whose economy and politics lack stability and which bases its income on one, or a limited range, of products. But when, and how, do corporations come into play?
Corporations attach themselves to a sector of the country’s economy and rapidly buy out competitors (if any). Banana republics owe much of their vulnerability (and their very name) to their limited sources of wealth. If the country relies on only one crop as its primary generator of income, it becomes very easy for a foreign company to dominate the country’s entire economy. Once a corporation has secured the monopoly of the main crop it begins to affect the country’s infrastructure system, the socio-political matters of its labour force and, eventually, its domestic policies.
The octopus creates a web of issues which stem directly from company’s infiltration of state. Once corporations have secured their trade bases within the country, not only do they penetrate its economic heart, but, most worryingly, they end up affecting the socio-political profile of the nation. For example, Chiquita, a banana company, is a multinational corporation whose reputation has long been questioned. Professor Werre points out “the company’s alleged participation in labour rights suppression in Colombia in 1928, the use of company-ships in the US government-backed overthrow of the Guatemalan government in 1954 and involvement in a bribery scandal in Honduras in 1975”.
Corporations also have the tendency to sustain local elites, provided their interests lie within that of the corporation. The problems arises when the corporations’ infiltration of the state’s economy becomes irreversible. Colonial officials normally justify their concessions to companies as investments, which they say are essential to the colony’s agricultural development. The money poured into the company’s hands, however, is a result of radical cuts on local, smaller projects which have the potential to provide the most impoverished with relief. Belizean Colonials, having committed to the Stann Creek railway in 1911, were unable to oppose escalating United Fruit’s demands despite their willingness to cut some of its heavy costs. Had the company been stopped, it would have retaliated so as to lead to the collapse of the whole project (and most likely the collapse of the colony itself). There should be no fear in exaggerating. United Fruit, as early as 1911, gained control of Belize’s first railway and its first telegraph station. The House of Commons, despite its unanimous condemnation, was too late to reverse the process which resulted in the entanglement of United Fruit and the interests of the colony.
It is clear that the banana republic phenomenon is not new. What is new – or rather, what is attracting increasing attention – is the effect globalization is having on corporations and developing countries alike. Thanks to the viral nature of multinational corporations and the deterioration of state sovereignty, major corporations of all kinds are now able too reap the benefits of this process by exploiting some of the most disadvantaged countries in the world. The disadvantages of globalization are accompanied by the benefits of a global media base, which raises awareness on a vast range of issues. Corporations which operated “in the shadows” in the first half of the past century now need to watch out for public condemnations. The Cincinnati Enquirer published in 1998 a series of articles portraying Chiquita as greedy and exploitative. This article itself is, on a much smaller case, the result of the same process. The need to change their outlook is all the more urgent now than it has ever been. How – and how effectively in relation to the local populations – this change will be carried out is a much harder question to answer.