I want to stick with the subject of globalisation because events of the last week illustrate one of the key observations in our new Guide. It suggests that “whilst economic integration powered by private capital has advanced at lightning speed, political globalisation moves at snail’s pace.”
Let’s start with last weekend’s London meeting of G20 finance ministers whose agenda included tougher banking regulations. From the preliminaries we learned that the French want to screw a tight lid on bankers’ bonuses, that Americans want to force the banks to hold more capital, and that the senior British regulator had refloated the idea of a currency transaction “Tobin” tax.
Not one of these policies can be implemented unilaterally out of fear that the big banks will relocate to a less onerous regulatory environment. Vast corporate legal departments owe their existence to the great game of moving the pawns of the business around the global chessboard. The Financial Times recently reported that the UK bank, HSBC, has more than 2,000 legal entities in its global group of companies.
The ministers succeeded only in publishing a wish-list of actions to control the banks, conceding that “more needs to be done to …. ensure a level playing field.” The G20 summit at Pittsburgh will almost certainly deliver a package of weak regulations because the national interest in retaining the presence of a global bank outweighs the national share of global interest in bringing the banks to heel. The globalised banks have the non-globalised politicians over a barrel.
Similar corporate blackmail is undermining climate change negotiations. In particular the delay in redrafting the US Climate Change Bill announced by the Senate earlier this month is bad news for the Copenhagen conference. Republicans object to the proposed cap and trade scheme. They say that jobs will be lost when big polluting companies relocate to countries where it costs nothing to pump carbon dioxide.
In Europe this hypothetical outcome has been given a name – “carbon leakage”. The European Commission has been forced to make concessions in its emissions trading scheme to important industry sectors threatening to activate carbon leakage. It will be no surprise if the US Senate takes the same compromise route.
It was certainly no surprise last week when, within hours of the new Japanese prime minister’s brave commitment to a 25% reduction in emissions by 2020, the business lobby in Japan pushed the “relocate threat” button.
Many will say that companies are reacting properly in the best interests of their shareholders and that it is the job of international negotiations to reach agreements through compromise of national interests.
But I find myself sympathising with an anti-globalisation perspective. This would blame excessive corporate power for obstructing action on climate change and poverty reduction.
These large companies present themselves as socially responsible supporters of sustainable development. Carbon blackmail directly contravenes these principles.
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this article was first published by OneWorld UK