MAY 1982 - VOLUME 3 - NUMBER 5
I would like to respond to one aspect of Susan George's comment in Multinational Monitor's March 1982 section where she suggests couscous is being replaced by bread, thus destroying the social contact between women. I am reminded of a scene in Guatemala where a number of women were washing clothes at the community wash/well stand. An American friend (male) commented on how lovely the scene, how charming the women, how healthy the scrubbing movements out-of-doors. His comments were translated by our hostess and much to our surprise, the women doubled over laughing. When she caught her breath the interpreter explained, "Every woman would trade her scrubboard in for a washing machine in a minute."
We can't imagine how backbreaking it is to mill wheat, or how long it takes to beat the stains out of clothes. Notice please that responses to social change occur quickest in areas which are the most arduous tasks for women. Mills replace hand grinding, a water tap beats several walks to the well, oil replaces dung cakes,
As I get up now at 4 a.m. to put another log on our Vermont casting stove, I recall a statement of an old-timer friend from Maine, "The greatest invention of all was central heating!"
- Dana Raphael, Ph.D., Director
TexacoWhite Plains, N. Y.
In the absence of Mr. Michael I. Malcolmson, who is out of the country on a business trip to South America, I wish to bring to your attention a series of inaccurate and misleading statements concerning Texaco's operations in Honduras, that appeared in the March 1982 issue of Multinational Monitor.
Item 1: The headline, "Texaco accused of blackmailing Honduras," is obviously biased and loaded. It sounds equivalent to an imaginary headline, "John Doe accused of shooting Richard Roe," that might be printed even after John Doe was cleared of any wrongdoing.
Item 2: [Referring to a Honduran claim that Texaco was demanding a huge price rise]: As Texaco stated in the news release dated January 21, 1982, "the temporary shortage of petroleum products in Honduras has been created because of a delay of the Honduran Government in making exchange available for the payment of such products." The price of gasoline was not an issue. In fact, as Texaco pointed out, gasoline prices in Honduras are set by the Government at artificially high levels (currently approximately $2.00 a gallon) to subsidize other products, for which the Government sets prices lower ' than their refinery costs. Past Texaco requests for gasoline price increases were in the range of approximately 10 cents a gallon.
Item 3: The foreign exchange in question was required to pay for a shipment of refined products from Trinidad, not crude oil from Saudi Arabia.
Item 4: [Concerning the approval of exchange transfer]: The [Monitor's] wording, to the effect that "Honduras' Central Bank, however, maintained that the transfer (of funds) was authorized in time to avert the shortage," appears to grant the greater credibility to the Bank's position in opposition to Texaco's statement. The facts justify Texaco's statement.
Item 5: [Referring to a Texaco spokesman's complaint over Honduran excise taxes on crude oil imports]: See foregoing reference to prices under Item 2.
Item 6: As indicated under Item 3, Texaco is importing refined products from Trinidad and not from Saudi Arabia.
Item 7: [Referring to a claim that Texaco offered to sell their refinery for $50 million]: Among various alternatives, Texaco has offered to sell the refinery to the Honduran Government, but it has set no price for, a possible sale.
In conclusion, I will add that, since the unfortunate incident of last January, the Honduran Government has provided the necessary letters of credit, in good time, in accordance with its agreement, making it possible for Texaco to maintain its delivery of petroleum products to that country.
- P. B. Hicks, Jr.
Our headline, "Texaco accused of blackmailing Honduras, " states a matter of fact: the then-economy minister of Honduras, Ruben Mondragon, told the Associated Press, as reported in The New York Times, that Honduras was suffering a petroleum shortage "Because Texaco is pressing our government to gain a 207% increase in the price of gasoline. "
Texaco's counter-claim that the shortage in January was caused by Honduran government delay in approving a foreign exchange transfer was, and still is, denied by Honduran government officials in Tegucigalpa and Washington.
Mr. Hicks complains in item 4, that the Monitor is giving the Honduran government greater credibility than Texaco; in fact, neither party's version of events was endorsed by the Monitor since neither party has presented evidence.
Whatever the cause of the January shortage, it is hard to understand Mr. Hicks' claim in item 2 that "price was not an issue. " In our story we quoted a Texaco spokesperson, Mike Malcolmson, explaining that the company had not been refining petroleum at its Honduran plants since September, 1981, because "it is uneconomical to do so. " Malcolmson blamed this situation on the Honduran government's excise tax on crude oil imports. This reference to price - made by a Texaco official - is the one Mr. Hicks rejects in item 5.
A further note on the issue of price: Texaco's refinery at Puerto Cortes contains the nation's only facilities for refining imported crude, or for storing petroleum.
The Honduran government would like Texaco to utilize fully the capacity of its 12,000-barrel-per-day refinery, only resorting to imports of refined petroleum to fill the small but widening gap between the refinery's production and domestic Honduran consumption, according to Moises Starkman, economic counselor at the Honduran embassy. But since a 1980 agreement between the governments of Honduras, Mexico and Venezuela - in which the latter two nations agreed to supply all of Honduras' crude petroleum needs at a set price and to reinvest a proportion of their profits in energy development projects within Honduras - Texaco has been reluctant to refine Mexican and Venezuelan crude at the Puerto Cortes refinery.
Because the buying price of crude and the selling price of gasoline in Honduras are now fixed by the government, "it became not uneconomical (for Texaco to refine oil in Honduras) - just more profitable to do it elsewhere, " Starkman says.
To clarify items 3 and 6, the refined petroleum that Texaco has been importing is principally Saudi Arabian crude which is refined in Trinidad or Barbados and then transshipped to Honduras.
Finally, on Mr. Hick's item 6, it was a senior Honduran official, who wished to remain anonymous, who told Multinational Monitor that Texaco had offered to sell the Puerto Cortes refinery to the Honduran government for $50 million.
At the end of your useful "U.S. Investment Around the World - Latest Figures" (March issue), there appears to be a rather misleading statement. Readers are told, "You might not be surprised to find out that foreign investment reaps the highest profits in the lowest wage countries." The implication of a direct relationship between low wages and the high profits is simply not borne out by the data. The three countries in the article's table showing highest profit rates for 1980 are Nigeria, Libya and Indonesia. In each of these countries it was investment in oil (and some other raw materials in Indonesia) that yielded the high profits. U.S. manufacturing investments, where low wages might have been directly relevant, are very small in these countries.
If one looks at the profit rate on U.S. investment in manufacturing in Asia (other than the Middle East) for 1980, one might hope to get an idea of the profitability of investment based on low wages. In fact, the profit rate on this category of investment for 1980 (calculated as in your article) was 18.1%. Yet for all U.S. direct foreign investment investment in all countries, the profit rate was 19.9%. Frankly, I would not endow any of these figures with much significance; the data for any one year in any one area can be very misleading, and the method of calculation is not comparable to most other profit rate calculations. Nonetheless, the data do not give any support to the implication at the end of your article that low wage based investments are the source of the largest super-profits for U.S. multinationals. In fact, the manufacturing investments of U.S. multinationals are more concentrated in the other advanced capitalist countries than is foreign investment generally; thus there is little basis to believe that low wages - however important they may be for particular industries - are the central feature of the internationalization of manufacturing investment.
In any case, the most rapid growing form of U.S. direct foreign investment is not manufacturing, but financial and trade services. This is a phenomenon which is of some importance in understanding the changing role of U.S. business in the international economy, but no one has paid much attention to it. Perhaps you will be able pursue the matter in future articles.
- Arthur MacEwan
In all of the countries we listed, U.S. corporations are enjoying "super profits" well above the average rate they show domestically. Mr. MacEwan is correct in pointing out that the most spectacular source of these profits lies in the natural resources - particularly oil - foreign countries have, which U.S. energy and mining companies extract.
Leaving aside the three countries mentioned above in which super profits are from resource extraction, six of the next eight countries ranked by profit rates are primarily attractive to U. S. investors because of the low wage levels prevailing. Those countries are South Africa, Italy, Malaysia, Hong Kong, Egypt and Argentina.
It is true that U.S. manufacturing investment is more concentrated in other advanced capitalist countries, where balance of payments, markets, and other non-wage related factors are primary considerations. Third world countries such as those listed above are favored by U.S. industries which operate assembly plants employing women who are paid even less than men - and in Asia, wages average $2,910 per person annually.
RobotsSan Francisco, Ca.
Your March 1982 Article on Brazilian auto-workers resistance to robots left out a key issue. While it is true that some workers oppose robots and computers, the majority favor them, if automation is done properly.
Workers in many places don't fear automation, unless it means a loss of their job. In Japan the unions actually push for more automation because the Japanese corporations have a policy of retaining and retraining workers for higher skilled jobs such as word processors and computer programmers. Both Japan and France now are pushing a policy of changing over to a 35 hour work week as another method to adjust to automation, to share the jobs, and to achieve full employment.
The greatest spur forcing the expanded use of more robots is the rising cost of labor. Thus, the unions' demands for higher pay for dangerous jobs should be encouraged in order to push progress in automation and the shorter workweek. A famous historical example of this process is the strike in May 1882 in New York City. The work week then was 60 hours long. The textile workers went out on strike for a 40 hour workweek at 60 hours pay. They won. That strike is still celebrated worldwide today as May Day. Today in the U.S. many unions still struggle for a shorter work week. Now it is lead by the PATCO strike for a 32 hour workweek to improve air safety. The demand for a shorter workweek is reasonable and necessary. We embrace the robots as our partners in this struggle.
- A.P. Kangas, Union Organizer
VALCO in GhanaOakland, Ca.
There are a number of errors in an article titled "Corporations in Ghana" which was a part of a longer article that appeared in the February issue of Multinational Monitor.
In the interests of accuracy and fairness, I hope you will set the record straight on these points.
- Ward B. Saunders, Jr.
Mr. Saunders is right that the $400 million figure for total U.S: government funding for the Volta project is incorrect. According to the Washington-based Center for Development Policy, $400 million represents the total investment in the project by the Ghanaian government, including loans from the World Bank, the U.S. Agency for International Development, and private European banks. Approximately half of this amount was financing obtained on concessionary terms through Western -principally U.S. - government aid programs.
This money went for infrastructure for the Volta Aluminium Company (VALCO) smelter - which is 90% owned by Kaiser and 10% owned by Reynolds - including roads, electric transmission lines, and electric power plant, and the dam on the Volta river which flooded one tenth of Ghana's land area and displaced 80,000 people.
In regard to Kaiser's investment in the VALCO smelter, U. S. State Department documents and press reports at the time of the dam and smelter construction in the mid-1960's placed it at $12 million, as we stated in our article. Later expansion of the smelter's capacity brought Kaiser's investment to $32 million by the early 1970's. The $55 million figure cited by Mr. Saunders was impossible to confirm.
Mr. Saunders' third objection is based on a partial quotation from our article. They story read, "In 1979, while Ghana spent about $240 million - or 25 % of the country's total export earnings for the year - to import one million metric tons of crude oil, VALCO paid Ghana about $15 million for using nearly 70% of the total electric power generated in Ghana from the Volta dam. " The year under discussion is 1979, not 1981