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European Unification and the Rise of Corporate Power



Despite the rosy rethoric around `the Europe of the citizens`, the reality of European unification is that the EU promotes a sweeping transformation of societies along neoliberal lines, through ` free trade`, privatisation and deregulation. Corporate lobby groups have contributed heavily to the transfer of powers to European institutions and the corresponding neoliberal restructuring. With international competitiveness being the primary concern of EU institutions, corporate priorities become the starting point for political decision-making. A harmful and deeply undemocratic situation, but much enjoyed by the hundreds of more or less ambitious corporate lobby groups set up to influence EU policies . This chapter provides an introduction to the rise of corporate political power in the context of European unification, with special focus on the EU's international trade policies. Shaping trade policies around the 'offensive interests' of major corporations is routine both in national governments and in the European Commission, which regards EU-based corporations as its natural constituency.

by Olivier Hoedeman, Corporate Europe Observatory

Welcome to the EU`s `bureacratic-industrial complex`Transnational corporations (TNCs), working both individual ly and within various lobby groups, are powerful political actors in European Union decision making. Over the past 15 years, European unification has entered the fast lane with the completion of the Single Market, the adoption of a single currency and the overall empowerment of the EU institutions. Baron Daniel Janssen, a prominent member of the European Roundtable of Industrialists (ERT), describes this as a "double revolution" taking place in Europe: on the one hand the sweeping neoliberal restructuring of societies through privatisation and deregulation (described elsewhere in this book) and on the other hand the transfer of decision-making "to a more modern and internationally minded (read: business-friendly, OH) structure at European level" This `revolution` has been expedited by lobby groups like the ERT, representing the largest transnational corporations in Europe.

The European Roundtable of Industrialists (ERT) is without doubt the most influential corporate lobby group, bringing together some 45 captains of industry from Europe's largest TNCs. More than just another industry pressure group trying to benefit from European integration, the ERT was formed with the express intention of reviving the unification process and shaping it to the preferences of European corporations. The ERT threathened that the economy would collapse unless an empowered European Union would provide industry with a borderless single market, investments in highspeed transport infrastructure and other operating conditions that were at least as business-friendly as in Japan and the US. Through its privileged access to both governments and the European Commission, the Roundtable has performed an agenda-setting role at the EU level, pushing for deregulation, liberalisation and other measures to subvert all levels of society to market forces and the increasing pressures of global economic competition. The role of the state is to ensure the right conditions for industrial competitiveness, for instance through corporate-friendly regulations and subsidies (such as for biotechnology as well as transport and other infrastructure). The ERT's message is reinforced by a chorus of other corporate lobby groups in Brussels, led by the European employers' organisation UNICE and the EU Committee of the American Chamber of Commerce (AmCham). Although less proactive than the ERT, UNICE and AmCham have also succeeded in sculpting the emerging body of European law by closely monitoring and advocating for or against EU policies relevant to business.

Rather than corporations imposing their agenda, the last two decades have seen the rise of a virtual symbiosis between the EU's key political and economic actors. The Commission began to engage industry in strategic alliances in the 1980s, and has since actively encouraged the involvement of large corporations and pan-European industry associations in the Brussels political apparatus. In the 1980s Commission President Delors worked successfully with the ERT`s corporate heavyweights to gather support for t he proposed Single Market and Monetary Union among European governments. A recent example of the European corporate-state alliance in action is the strong involvement of the ERT in the preparation of the EU`s Jobs Summit in Lisbon (March 2000), which resulted in an ultra-neoliberal action plan for `urgent structural reforms` of labor markets, social security systems, etc. A few months later the EC and various industry lobby groups organised the first `European Business Summit`, attended by over 1.000 businessmen and most European Commissioners. This annual event resulted in a list of predictable recommendations for "improving European competitiveness", which the EC has commited itself to implement. These kind of partnerships add weight to EU initiatives, and they tend to strengthen the Commission's power vis-a-vis Member States. The EC`s connections with business varies within different Commission directorates, but the phenomenon appears only to be increasing. The ERT`s Baron Daniel Janssen describes the EC as "extremely open to the business community, so that when businessmen like me face an issue that needs political input we have access to excellent Commissioners such as Monti for competition, Lamy forworld trade, and Liikanen for electronic commerce and industry".

The cosy relations between the EC and business are underlined by the phenomena of revolving doors between the two sides. An early example from the 1980`s is Industry Commissioner Davignon who after leaving the EC became head of Belgian industrial holding Societe Generale and joined the European Roundtable of Industrialists and other corporate lobby groups. Recently, former Trade Commissioner Brittan got busy at investment bank Warburg Reed Dillon and at the London-based law firm Herbert Smith as a consultant on WTO issues (specialised in international trade), while new Trade Commissioner Lamy came to the EC straight from a job as director of French bank Credit Lyonnaise. "It feels good to be back in a business environment", Lamy told the 200 captains of industry attending the 1999 summit of the Transatlantic business Dialogue.}

Today's Brussels teems with lobbyists Over 10,000 professional lobbyists roam the halls of the Commission, Council andParliament buildings, the vast majority of them from PR firms, industry lobby groups and individual companies. The total spending on lobbying in Brussels is likely to exceed thatof Washington D.C., until now the undisputed global capital of corporate lobbying. Brussels hosts an estimated over 500 industry lobby groups, from sectoral groupingsrepresenting the biotech, the chemical, the arms or the nuclear industry, to business groups set up to influence legislation on a specific issue, such as incineration of waste or the use ofPVC.

The centralisation of power in Brussels and the resulting democratic gap has provided large corporations with an enormous advantage in the European political arena. More and more decision making power shifts to the two highly untransparent EU institutions , the EC and the Council of Ministers, which is made up of national government ministers. Organisations like the European Roundtable of Industrialists are in a highly privileged situation, as the prestigious leaders of their powerful member corporations are granted easy access to both Commissioners and high-level government officials in the various capitals around Europe. The power of industry lobby groups is build exactly on their ability to access the European Commission and mobilise traditional corporate-state alliances on the national level that remain strong. Economic globalisation has in most countries only strengthened the political power of corporations headquartered there. In the manic logic of the increasingly deregulated and globalised marketplace that holds European decision-makers in a firm grip, maintaining international competitiveness is presented as a matter of survival.

With European and global markets under the control of an increasingly small number of mega corporations, the concentration of economic and political power has re ached historic levels. Markets in virtually every sector of the new EU economy are controlled by the five largest corporations in that sector. Since the late 1980s, liberalisation, deregulation and privatisation policies have created waves of mergers and acquisitions which have resulted in further corporate concentration. (see chapter 3, Mergermania) The mega-mergers -- which create European and global corporate goliaths overnight -- further increase the disproportionate bargaining powers held by TNCs, and thereby corporate dominance in political decision making.

Towards a Lobbying Democracy?The social movements that often constitute a real countervailing force to corporate pressure groups on the local and national levels remain comparatively weak at the European level. As a result, they have lost numerous battles. Trade unionists and other social and environmental movements are racing to catch up, but they are facing many obstacles, such as their lack of European constituencies. Maybe more seriously, the European trade union confederation (ETUC) follows a reformist strategy and does not challenge the neoliberal development model of the European Union. (see chapter 16, Social dialogue, social pacts or a social Europe? ) The same is unfortunately the case with many other European `civil society` structures.

The powers of the European Parliament remain limited, but would increased powers to this institution solve "the democratic gap"? The influence of industry lobby groups is also a serious problem in the European Parliament, which members often depend on lobbyists as a source of `information` on the huge number of at times very technical issues they vote. In numerous important votes European Parliamentarians have bowed to industry pressure and sacrificed other concerns, like environment and international solidarity. A tragic example was the 1999 vote in which the MEPs approved the overwhelmingly industry-friendly Patents on Life directive. The vote was the result of an intensive multi-million dollar lobbying campaign by the biotech industry, carried out by industry coalition EuropaBio and individual corporations like Smith-Kline Beecham. Admitted, international environmental NGO structures do occassionally achieve successes by lobbying the European Parliament. Almost without exception, however, these NGOs adapt to the rules of t he political game in Brussels, which is highly technocratic and centralised by nature. Engaging local people in fundamental debates and mobilising grassroots groups to pursue visionary change is not part of the game. Paying experts and lobbyists to directly approach parliamentarians or Commission officials to lobby for `feasible` amendments to draft legislation, on the other hand, is. Also with expanded powers to the European Parliament, this model of decision-making can in the best case be described as a `lobbying democracy`, which is light years removed from genuine participatory democracy.

Those who interpret the current model of European unification as a progressive project are clearly jumping the wrong train. Returning to the European nation states of previous decades or to the economic models which existed in earlier phases of capitalist development is obviously no alternative either. There is a need for movements fighting neoliberal, corporate-driven EU policies to join hands with other movements - inside and outside Europe - that are struggling for emancipation and social justice. Real alternatives will materialise as these coalitions develop. Such an approach is certainly needed to build opposition against the many EU-promoted global and regional ` free` trade and investment agreements, that further expand corporate economic and political power.

The EU's Corporate-led Global Trade Agenda

Today, the EU is simultaneously reshaping European societies to become 'internationallycompetitive' and actively promoting economic globalisation through bilateral and global trade deregulation (see other chapters). Despite a thick layer of 'feel good' pro-globalisation rhetoric, the goals of the EU's international trade and investment policies are propelled by a craving for unfettered market access around the world for European-based TNCs. A similar logic rules the policies adopted by other major global powers, and the predominant political blocs have joined forces within the World Trade Organisation to dismantle barriers to trade and investment in the countries of the South.

Decision making on international trade and investment policies is arguably one of the areas where the EU's democratic gap is most pronounced. The European Commission has the agenda setting role, negotiating for EU member states in bodies like the WTO. The bulk of the EU's decisions on trade and investment are made in the powerful '133 Committee', which consists of trade officials from member states and Commission representatives. Although the European Parliament is informed, it lacks decision-making power (and a critical perspective) on external trade policies. National parliaments fail to exert effective control over their EU trade ministers. The EU's disastrous habit of shaping internationaltrade policies around the offensive interests of large TNCs remains largely unchallenged.

In its campaigning for international trade and investment deregulation, the EC works very closely with large European corporations and their lobby groups. The Commission and corporations share nearly identical visions for the role of the EU in the world. This is crystal clear in the case of EC policies within the World Trade Organisation (WTO). The European Commission has since 1998 campaigned for a sweeping new round of WTO negotiations to pursue further trade and investment liberalisation, the so-called Millennium Round. Despite the massive protests in Seattle and at virtually every other major international trade summit in the last few years, the EC continues to essentially ignore the fundamental social and environmental flaws of corporate-led globalisation, a process that the WTO Millennium Round would further accelerate and lock in. In its campaign for a new Round, the Commission has been freshening up its connections with European industry and actively encouraged the creation of new business structures to build support for the Millennium Round and to deliver input into the negotiations. In contrast with the lofty claims of a WTO Millennium Round being about 'sustainable development' and the concerns of the worlds' poorest, the EC shows great eagerness to let business priorities define its WTO strategies and sees corporate lobbies as the key campaign ally. The first steps to wards this relatively new, increasingly symbiotic relationship were taken during negotiations on the WTO Financial Services Agreement in 1997, where the EC worked in tandem with the industry coalition Financial Leaders Group. The EC's close cooperation wi th business is modeled after the example of the US government-industry liaisons in the WTO arena. In the run-up to Seattle, the European Commission coordinated its campaign for investment negotiations in the WTO with the Investment Network (IN), an "informal network" of business representatives initiated by the EC in 1998. The IN, representing Fiat, I CI, Daimler- Benz, Carlsberg, British Petroleum, Rhone-Poulenc and some 45 other corporations, was set up to identify the priorities of large European corporations for a WTO investment agreement. The Commission also encouraged European corporations in the services sector to set up a European Services Forum (ESF), which will "advise European Union negotiators on the "key barriers and countries on which they should focus on in these negotiations." As US academic Maria Green Cowles points out, "By working closely together, the companies and the Commission present the member states with a negotiating strategy 'pre-approved' by European industry." The EC's cooperation with business is complemented with a highly publicized, but far vaguer parallel process of 'dialogues' with `civil society`. Unfortunately, Brussels-based international NGO structures have generally failed to keep a critical distance to the EC and its campaign for a WTO Millennium Round, either because they are satisfied with being briefed and listened to or because they expect to get a part of their often very narrow reform agenda full-filled through such a new round. The opportunism of many of the Brussels-based NGOs has enabled the EC to successfully play divide-and-rule, claiming `civil society` support for a new WTO round and labeling those who oppose as "extremists".

Another major corporate structure with a large say in EU's trade policies is the Transatlantic Business Dialogue (TABD), a striking example of corporate-political synergy. Through the TABD, EU and US based corporations develop government policy recommendations, which the both governments in turn do their utmost to implement. In both Washington DC and Brussels, the TABD's access to the political process is remarkably institutionalised. The primary aim of the TABD is to build an integrated transatlantic marketplace and to develop and steer EU-US leadership in international trade negotiations such as within the World Trade Organisation (WTO). Rather than being yet another example of a corporate lobby group successfully influencing and manipulating the political environment on behalf of its member companies, the TABD is initiated by (parts of) the European Commission and the US government which saw such a body as providing momentum for their political agenda and increasing their power. The TABD is a disturbing but predictable model of political decision-making in an era where corporate international competitiveness dominates the political agenda. As in the case of the campaign for WTO Millennium Round, governments have efficiently used co-optation strategies to avoid opposition to Transatlantic deregulation and the power of the business dialogue. Environmental NGOs received generous funding to set up a Transatlantic Environment Dialogue (TAED), that now for a couple of years has drafted proposals on various environmental issues. Fortunately, the movement against corporate-led globalisation has now grown too strong for governments and business to 'buy off' opposition. The most recent TABD summit, November 2000 in Cincinnati, was met with a cornucopia of demonstrations and other protests throughout the event, organised by a wide range of local grassroots groups.

For references and more information, see "Europe Inc.; Regional & GlobalRestructuring and the Rise of Corporate Power", Belen Balanya, Ann Doherty, Olivier Hoedeman, Adam Ma'anit and Erik Wesselius / London: Pluto Press, January 2000. The book is available through bookshops, but can also be ordered directly from Pluto Press at http://www.plutobooks.com

See also: * "WTO Millennium Bug: TNC Control over Global Trade Politics" (July 1999) * "Transatlantic Business Dialogue - Putting the Business Horse Before the Government Cart" (October 1999) * "Investment Network: How the EC and Business Prepared for WTO Investment Talks in Seattle" (Corporate Europe Observer, Issue 6, April 2000)

The quotes by Baron Daniel Janssen are from his speech to the Trilateral Commission`s meeting in April 2000 in Tokyo, "The Pace of Economic Change in Europe", to be found at the Trilateral Commission website: http://www.trilateral.org/

Olivier Hoedeman, Corporate Europe Observatory (CEO) CEO is a research and campaign group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups.

Corporate Europe Observatory Paulus Potterstraat 20, 1071 DA Amsterdam, Netherlands tel/fax: +31-20-612-7023e-mail: <ceo@xs4all.nl>http://www.xs4all.nl/~ceo


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