Multinational Monitor

JAN/FEB 2003
VOL 24 No. 1&2


Oil, Security, War: The Geopolitics of U.S. Energy Planning
by Steve Kretzmann

The Military-Industrial-Think Tank Complex: Corporate Think Tanks and the Doctrine of Aggressive Militarism
by William Hartung and Michelle Ciarrocca

Total Business Awareness: The Corporate Contracting Behind John Poindexter’s Total Information Awareness Program
by Adam Mayle and Alex Knott

Tanks & Toxics, Planes & Pollution: The Ecology of a Military Build-Up
by William Kelly


No Cause For War: Pretexts, Preemption and the Prospects for Peace
an Interview with Phyllis Bennis


Letters to the Editor

Behind the Lines

Why This War

The Front
Pesticide Justice - Biotech Cotton Failure - Enviros Temperature Rising - Stealing From Kids

The Lawrence Summers Memorial Award

Names In the News


The Front

Pesticide Justice

Dow Chemical, Shell Oil Company and Standard Fruit (Dole Food Company in the U.S.), must pay $490 million in compensation to 583 banana workers injured by Nemagon, an extremely toxic soil fumigant that has sterilized thousands of Central American banana workers, a Nicaraguan judge ruled in December 2002. The pesticide, used to control burrowing rootworms or nematodes, is also known to cause impotence, depression and is suspected to be responsible for increased rates of stomach cancer.

Nemagon's active ingredient is dibromochloropropane or DBCP, formerly classified "extremely hazardous" and now classified "obsolete or discontinued" by the World Health Organization (WHO).

The nematicide was first produced in the late 1950s by Dow and Shell, which conducted toxicity tests before U.S. registration.

Those early tests revealed that DBCP reduced sperm counts and atrophied testicles of rabbits and monkeys; however, neither Dow nor Shell revealed that information to government regulators. In 1964, the U.S. government approved DBCP for commercial use, and the companies proceeded to market the pesticide but did not divulge its full toxicity or recommend protective clothing.

The companies produced roughly 11 million kilograms of Nemagon each year in the 1960s and early 1970s. Standard Fruit was the largest user of the pesticide in Central America. In 1977, workers and their union at a formulating plant in Occidental, California, identified the first human sterility cases linked to DBCP. The product was banned in the United States after the California cases became public, but exports of DBCP continued. Two of the three major banana-producing companies in Central America switched to other, more expensive nematicides in 1977, but Standard Fruit continued using Nemagon.

An attorney for the Nicaraguan workers called the December court ruling historic.

However, a Dow spokesperson termed the recent judgment unenforceable because the case was supposed to be moved to a U.S. court, and because the ruling was "based on a law passed in Nicaragua that its own attorney general has called unconstitutional.'' This is in reference to a 2001 Nicaraguan law intended to help DBCP victims bring suit against foreign chemical and agribusiness companies responsible for their injuries.

The Nicaraguan workers' suit is not the first to seek compensation for harm caused by DBCP. In the early 1990s, more than 16,000 banana plantation workers from Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua and the Philippines filed a class-action lawsuit in Texas against a number of U.S. fruit and chemical companies asking for compensation for permanent sterility linked to DBCP exposure [see "The South's Day in Court," Multinational Monitor, July/August 1990]. In 1997, the four chemical corporations that produced DBCP -- Amvac, Dow, Occidental and Shell -- agreed to pay $41.5 million in an out-of court settlement that resulted in relatively small payments to affected workers. The case against the banana plantation owners, Dole, Chiquita and Del Monte, is ongoing.

It was possible to go forward with the 1990s suit because at the time Texas did not recognize the legal doctrine of forum non conveniens (inconvenient forum). This doctrine allows a judge to refuse to exercise jurisdiction over a case if he or she feels that another forum is more convenient. International corporate defendants have successfully used this legal doctrine to escape liability claims in U.S. courts (the claims against Dow by Bhopal survivors are one striking example). Liability suits face greater barriers in foreign countries where the cost to pursue a case may be prohibitive, compensation awards are usually low or are limited by law, and where few precedents exist for complicated toxics cases. In response to petitions from Texas corporations, Texas changed its law and now recognizes forum non conveniens.

That the Nicaraguan workers were able to find justice in their home country courts was extremely unusual. Only 4 percent of the liability cases turned away in U.S. courts through forum non conveniens have been brought to court in other countries, according to Erika Rosenthal, legal adviser for Pesticide Action Network Latin America.

The guiding principle in cases involving harm caused by U.S. multinationals operating overseas, says Rosenthal, is to provide "global access to justice for citizens injured abroad by the products or services of U.S. corporations."

-- Amy Ling and Martha Olson Jarocki work with the Pesticide
Action Network North America in San Francisco.

Biotech Cotton Failure

Nalgonda and Warangal, Andhra Pradesh, India -- As harvests draw to a close in the cotton-growing districts of India, reports from around the country indicate that the maiden commercial crop of Mahyco-Monsanto's Bt cotton is a disappointment.

Farmers in Madhya Pradesh and Maharashtra have reported near total losses.

Meanwhile, in Nalgonda and Warangal districts of Andhra Pradesh, farmers told Multinational Monitor that the technology has fallen far short of the performance promised by Mahyco-Monsanto.

Genetically engineered Bt crops are spliced with the Bt gene. Bt is a naturally occurring soil bacterium, used as a spray by organic farmers as a natural pesticide. Monsanto has engineered Bt into crops, making them pest resistant, and, the theory goes, less in need of pesticides. Critics charge that the Bt crops overexpose Bt, and will quickly give rise to Bt-resistant pests -- destroying Bt as an effective tool of organic farmers.

Despite some savings on pesticide costs, Bt cotton's modest yields, low quality and poor market price do not convert into attractive economics, according to six out of seven Bt cotton farmers contacted by the Monitor. Unlike the green revolution hybrids or traditional varieties, Bt cotton, they say, is delicate, requires a lot of attention and will fail if water availability is not optimal.

However, government agencies have responded with remarkable alacrity to join Mahyco-Monsanto in downplaying the failure of Bt cotton, lending credence to allegations that the company enjoys more access to governmental decision-making than do the farmers or the Indian public.

In December 2002, in response to a question in the Upper House of the parliament, the Minister of Environment & Forests Mr. T. R. Baalu said that Bt cotton has shown "satisfactory performance" in the first year of its planting.

Baalu's statement was based on a visit in November by an expert team of the Genetic Engineering Approval Committee (GEAC) to farms in Nalgonda, Warangal and Karimnagar districts of Andhra Pradesh.

"Some reports say that Bt cotton is better both in quantity and quality," says a senior official of the Approval Committee and member of the expert team who wished to remain anonymous.

Environmentalists and agricultural sector observers, however, have questioned the credibility of the report by the Approval Committee that -- as the name suggests -- approved Mahyco-Monsanto's application for commercializing the Bt crop.

"We don't trust the Government ever since they pushed through the approval for Monsanto's technology based on illegal field trials, confidential performance data and an evaluation process shrouded in secrecy," says D. Narsimha Reddy of the Hyderabad-based Centre for Resource Education, an organization working on sustainable agriculture among other issues.

Bt cotton was approved for commercial planting in India in March 2002.

The expert team's official report, "Genetic Engineering Approval Committee (GEAC) Visit to Andhra Pradesh," fails to mention that the field assessment was carried out in conjunction with Mahyco-Monsanto representatives.

The companies' participation in the field assessment came to light only when Multinational Monitor met one of the farmers visited by the expert team.

"One team visited around [November]. I didn't know they were government officials. I thought they were from the company [Monsanto] because they were all wearing ëbollgard' caps," says R. Narsimha Reddy, a farmer from Aleru village of Nalgonda district visited by the GEAC team.

The senior GEAC official admitted that "Monsanto people" accompanied the government team, but was unable to explain why the presence of Mahyco-Monsanto representatives was not mentioned in the official report.

The expert team's report also glosses over the dissatisfaction expressed by the farmers, and exaggerates yield projections made by them.

"I told them that the boll was small, that the yield was poor. I never said that I expected 15 quintals (1500 kilograms) per acre. The yield is not that good," recalls Reddy.

Referring to Reddy's farm, the expert team's report says, "this will give an average yield of 15 quintals/acre in Bt cotton."

"The company promised 20 quintals. Even 15 would have been enough. But 10 to 11 is all I'm likely to get ... about the same as the non-Bt hybrids," farmer Narsimha Reddy adds.

His neighbor M. Mohan Reddy concurs. "The yield is less for Bt because it is very water dependent. With more water, it's probably better. Non-Bt is good even with less water," he says.

Mohan Reddy says he expects 7 quintals from his acre-wide Bt patch, about 100 kg per acre more than his hybrids will yield.

Farmers squarely counter the GEAC official's claim that Bt cotton is of superior quality. Fiber length and texture are key indicators of quality in cotton -- the longer the fiber and finer the texture, the better. Farmer Narsimha Reddy's observations are telling. "The fiber length is shorter for Bt cotton. Also the quality is poorer. ... It's rougher. I have kept the Bt separate from the non-Bt. I don't want its market value to be compromised by mixing with Bt," he says.

According to farmers, the market price of Bt cotton could be as much as $4 lower per quintal (100 kilograms) than non-Bt.

As Narsimha Reddy puts it, "I may be saving on pesticide costs. But if yields are low and the quality is poor, it's not worth it."

While the GEAC continues to declare the success of Bt cotton, other members of the expert team have updated their findings. The November "report is too early a report," says expert team member Suthirtha Bhattacharya.

Bhattacharya, who is also commissioner and director of agriculture in the state of Andhra Pradesh, concedes, "We have been getting feedback from various quarters that Bt yield has not really gone up, and that the crop's resistance to sucking pests is not significantly better. Overall, the cotton crop has been poor because of the drought."

Experts like Dr. Padma Raj of the Andhra Agricultural University in Hyderabad maintain that Bt cotton is not for poorly irrigated or drought-prone areas.

"Farmers in water-scarce areas should grow only traditional varieties. Bt or hybrids are not recommended," he says.

Given that water is the number one risk in Indian agriculture and a precious commodity accessible in full supply only by the rich farmers, Mahyco-Monsanto's claims that Bt cotton will deliver the poor Indian farmer from the clutches of poverty seem likely to remain a dream.

-- Nityanand Jayaraman

Enviros Temperature Rising

Amid growing anger among environmentalists over the record and intentions of President George Bush, three major U.S. environmental groups announced in December that they are suing his Environmental Protection Agency (EPA) for failing to curb global warming.

The lawsuit by the Sierra Club, Greenpeace, and the International Center for Technology Assessment (CTA) charges the EPA with violating the 1977 Clean Air Act by failing to limit air pollution caused by automobiles that "may reasonably be anticipated to endanger public health or welfare."

Despite growing impacts of global warming on human health and the environment, the three groups charged, the EPA has steadfastly refused to control automobile emissions, which contribute to global warming.

"It's time for the Bush administration to get its head out of the sand," charges Joseph Mendelson, CTA's legal director. "The EPA stalling tactics are doing real damage in the fight against global warming."

The lawsuit marks the latest expression of rising frustration on the part of environmental activists over the administration's failure to act, despite a report by its own scientists last June that concluded that the burning of fossil fuels for industry and automobiles was contributing heavily to the climate change that will wreak havoc on natural ecosystems throughout the United States.

Environmentalists also fear future administration plans, particularly now that Republicans have gained control of both houses of Congress. Last year, much of the administration's energy plan, particularly its hopes of opening the Arctic National Wildlife Refuge (ANWR) to drilling by U.S. energy companies, was held up by the Democratic majority in the Senate.

But Republican control of Congress should make it much easier for Bush to relax existing environmental laws and regulations over the coming two years, at the behest of energy and automobile companies and electrical utilities that contributed heavily to his presidential campaign in 2000.

In the Senate, for example, the new committee chairs dealing with energy and the environment both support drilling in ANWR and have among the upper chamber's worst voting records on environmental protection.

In one of his first moves after the November 2002 elections, Bush proposed a substantial loosening of federal regulations under the Clean Air Act to permit old coal-fired power plants to upgrade their facilities without requiring them to install new anti-pollution equipment, as they must now do.

While the administration insisted that the change would encourage investment that would eventually result in cleaner air, environmentalists blasted the proposals as a major step back in the fight against air pollution, and a number of leading Democrats called for EPA Administrator Christine Todd Whitman to resign her post in protest.

Whitman, a former governor of New Jersey, has long urged Bush to toughen regulations governing the Clean Air Act and even to sign the Kyoto Protocol, the international accord that requires industrialized countries to reduce their greenhouse gas emissions some 7 percent below 1990 levels by 2012. The United States currently accounts for about 25 percent of the world's total greenhouse gas emissions.

But Whitman has been largely sidelined by the administration. She even avoided appearing personally to announce the power-plant proposals as she would normally do, issuing a statement through her spokesperson instead.

The December lawsuit was motivated by the EPA's failure to respond to a formal petition submitted to it three years ago that demanded the regulation of global warming pollutants under the Clean Air Act.

The EPA subsequently received some 50,000 comments on the petition, the vast majority of which strongly agreed that global warming should be addressed under those provisions of the Clean Air Act that require it to regulate air pollution that may endanger public health or welfare.

Yet, 18 months after the public-comment period closed, the EPA has yet to offer a formal response to the petition, let alone enact rules regulating greenhouse gas emissions as requested by the petitioners.

According to the lawsuit, which cites the government's own studies about possible impacts of global warming on ecosystems and human health, climate change is responsible for unstable weather patterns, floods, droughts and outbreaks of tropical diseases, including the West Nile virus that raged through much of the eastern United States last summer.

Scientists say that global warming, if left unchecked, will cause potentially catastrophic rises in sea level, the melting of the polar icecaps, and the loss of unique ecosystems around the world.

"Under the Bush administration, the EPA has found time to weaken or threaten many crucial environmental protections that Americans take for granted," says David Bookbinder, an attorney with the Sierra Club. "But it can't find time to get serious about the most pressing environmental problem in the world's history."

The lawsuit coincides with the launch of the administration's first phase of its strategy to deal with climate change, a meeting of hundreds of scientists to map out a research plan designed to better assess the problem and more accurately predict the effects of certain policy changes.

But environmentalists and many of the scientists taking part in the exercise have said enough is known about the threat posed by global warming to warrant a decision to cap, if not reduce, U.S. emissions immediately.

"The Bush administration is asking for five more years of studies while the world is warming, and regular people will pay the price," says Gary Cook, climate coordinator for Greenpeace.

"We are asking the courts to intervene and order the EPA to enforce U.S. environmental laws and take action to address global warming."

-- Jim Lobe, Third World Network Features/Inter Press Service

Stealing From Kids

With the U.S. states now facing their worst budgetary shortfall since World War II, there is enormous pressure on states to cut financing for a wide array of programs, including education.

A January report from the National Education Association suggests one important source of foregone funds: property tax breaks for corporations.

The NEA study, "Protecting Public Education From Tax Giveaways to Corporations," analyzed the impact of two kinds of tax breaks, property tax abatements and what is called tax increment financing (TIF, a long-term diversion of certain areas' property taxes to corporations investing in those areas), on school funding.

Property tax holidays often directly siphon money away from schools, which rely heavily on property taxes as a revenue source. According to the NEA report, local property taxes constitute 65 percent of all local education funding, and 29 percent of all school funding, including local, state and federal contributions.

Property tax abatements and TIF districts cost schools hundreds of millions of dollars a year, at least.

"With most states reeling from staggering budget deficits -- and the federal government unwilling to provide enough financial support, state policymakers are being faced with difficult funding decisions even as our children, our schools, our economy and our country need more resources to succeed," says NEA President Reg Weaver.

"For too long, local officials across the country have doled out tax breaks and other subsidies to corporations under the guise of promoting economic development," Weaver says. "And too often, the property tax revenues that pay for these tax giveaways come out of the pockets of local public schools."

Weaver is careful to note that, in his assessment, some abatements and TIF deals may be justified, but he cautions that, "too often, local policymakers hand out these tax advantages without measuring whether they work as promised."

Case studies in the NEA report, which was conducted by Good Jobs First, the leading organization studying state and local business subsidies, show that abatements and TIF districts cost schools in Texas $52 million a year. Montana schools lose $16 million a year in revenues to business tax subsidies. Abatements and TIF reduced or diverted property tax revenue for Ohio schools by $102 million in 1999.

Poor reporting rules and the diversity of jurisdictions and tax revenues make it almost impossible to determine a total cost to schools from business tax breaks.

However, some estimates have tagged the cost of local and state subsidies to business as high as $50 billion annually. This is an estimate of the total cost, not just the amount borne by schools, and some states reimburse schools, in whole or part, for revenues foregone due to property tax breaks.

The NEA report offers three recommendations to redress the problem highlighted by the study:

  • Improve disclosure of subsidies and enforcement of conditions attached to subsidies.
  • Give local school boards a formal say -- up to and including veto power -- over subsidy decisions.
  • States should prohibit the abatement or diversion of the school portion of property taxes.

Some states now implement one or more of each of these proposals, though often in ways that are inadequate or easily circumvented, the report shows.

Greg LeRoy, director of Good Jobs First and the principle author of the study, points to Ohio as an example of how inadequate safeguards can be easily avoided. Ohio requires school boards to approve abatements of school property taxes -- but only if the abatements exempt more than 75 percent of taxes or last longer than 10 years. Many abatements in Ohio are therefore designed to last exactly 10 years, precluding a school board veto.

The study is designed to highlight the scope of the problem and point to solutions with bite, LeRoy says. "We hope this study will help schools and school boards become full partners in the process of economic development." Especially given the state fiscal crisis, he says, "it is critical that school boards have a voice in protecting their revenue base."

The report was not greeted warmly by business representatives.

Marty Regalia, the U.S. Chamber of Commerce's chief economist, dismisses out of hand the notion that communities harm themselves by offering tax breaks, calling it "ridiculous." No one forces cities and states to give tax breaks, he says. They are competing for a benefit -- new investment -- and they choose to enter the competition. If they think it is a bad deal, they are free not to offer tax breaks. "Local communities do not give away [tax breaks] at gunpoint," he says.

Asked if, in light of the impact on schools, companies stop seeking tax breaks from cities and states, Regalia says such a proposal would be "blatantly un-American."

Regalia is especially vocal in objecting to the proposal that school boards be given veto authority over property tax subsidies. There is no reason for one group to have a supermajority vote, he said, "that's not democracy."

Interestingly, Regalia acknowledges that business tax breaks are a relatively unimportant factor in corporations' siting decisions. Much more important, he says, are quality and availability of workforce, infrastructure and access to markets, among others.

Dan Navin, director of legislative affairs for the Ohio Chamber of Commerce, takes a similar tack.

"There is no ëloss' of school revenues" from property tax breaks, Navin says. If the tax breaks weren't offered, he says, economic development would not occur, and there would be nothing new to tax. Therefore, he argues, there is no net loss to the school district or the local and state tax coffers.

Moreover, he says, property tax breaks often do not cover 100 percent of the tax owed, so schools and government agencies take in some incrementally higher revenues than they would in the absence of economic development. And, he says, businesses often make in-kind contributions to schools, such as through computer donations.

However, school board officials point out that new development frequently imposes new costs on schools, since they have to teach children of employees at new or expanded enterprises.

And LeRoy and other critics of tax breaks emphasize that -- as the U.S. Chamber's Regalia acknowledges -- tax subsidies typically exert little influence on company siting decisions, and very rarely determine whether a company will make a new plant or office investment. Thus, they argue, the school districts, and local and state governments, are providing subsidies to businesses that would have proceeded with their investments anyway. But because companies have the power to decide where they will locate, and governments have no way of knowing in any particular case what a company's calculus is, local and state governments are vulnerable to "job blackmail" -- even at the expense of funding public schools.

-- Robert Weissman


The January/February 2003 Lawrence Summers Memorial Award* is shared by Larry Goldstein, president of the New York City-based Petroleum Industry Research Foundation, and Sir Charles Masefield, vice chairman of BAE Systems PLC, a UK firm.

"If we go to war, it's not about oil," Goldstein told the Wall Street Journal. "But the day the war ends, it has everything to do with oil."

"When there are wars, we feel it's been a failure of what all of us have been working for," Masefield told the Chicago Sun-Times. BAE Systems is a major weapons manufacturer. "Masefield commented that wars are waged against nations unprepared to fight, so the defense business provides a deterrent," the Chicago Sun-Times reported.

Source: Thaddeus Herrick, "U.S. Oil Wants to Work in Iraq: Firms Discuss How to Raise Nation's Output After a Possible War," Wall Street Journal, January 16, 2003; David Roeder, "Trade Called Best Way to Peace," Chicago Sun-Times, November 7, 2002.

Thanks to Chris McGinn and Joe DiGangi for forwarding these items.

*In a 1991 internal memorandum, then-World Bank economist Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" wrote Summers, who went on to serve as Treasury Secretary during the Clinton administration. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.


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