Corrupt Regimes Become Legitimized. When MNCs begin project development planning, dealing with one regime reduces the MNCs’ complexities. In this instance, the ruling elite controls all aspects of the negotiated deal and services for the MNC; from transportation and security personnel to payment and revenue allocation structures, those controlling the state’s power provide all services. When commercial production begins, the new source of revenue serves to legitimize, empower, and enable the existing, often autocratic or rebel, regimes. The misappropriation of economic benefits from resource revenue is rampant and devastating to the host state. For example, DeBeers, the world’s largest diamond producer, enabled multiple autocratic regimes to maintain power. However, the company realized that dealing exclusively with corrupt ruling elite often results in human rights atrocities and damages the company’s brand—a massive anti-DeBeers publicity campaign was launched in New York City after it became apparent that the company’s corporation was legitimizing violent rebels and funding multiple civil wars. “A diamond is forever,” the company’s popular advertising phrase turned into a marketing nightmare when grassroots organizations brought worldwide attention to “blood diamonds.” The company operated mines in Botswana, Namibia, South Africa, and Tanzania, and had effectively traded guns for gems with rebel groups in conflict zones such as Angola, the DRC, and Sierra Leone. The diamond industry has a contrived value, largely through marketing campaigns, and regulates supply to match demand. DeBeers took this negative press, turned it into a positive by working with the international community, including the United States, and avoided liability for passive or active complicity in human rights violations. In 2002, following UN Security Council resolutions imposing sanctions against “blood diamonds,” diamond traders, DeBeers, and major diamond trading countries created an international protocol known as the Kimberly Process, which calls for minimum standards of certification of rough diamonds from conflict regions. The countries and companies agreed to establish internal controls to eliminate the import and export of conflict diamonds from their territories. Although steps have been taken to ensure transparency and independent monitoring, many technical and operational complexities remain with significant loopholes. To add another level of accountability and protection for host-state citizens the ... exist
Posted on: Sun, 23 Mar 2014 05:26:37 +0000
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