Can't shut down Big Oil? Then browbeat companies like Shell and ExxonMobil into preaching the gospel of human rights and democracy to their developing-world hosts. As appealing as this strategy seems to global do-gooders, it won't work. Not only are oil companies unsuited for the job of turning the world's most difficult neighborhoods into thriving market democracies, they're increasingly adept at passing the buck of reform to others.
Beginning in the late 16th century, European countries found a way to extend their global commercial and political power on the cheap: They granted charter companies monopolies over trade in designated areas and in return required the businesses to establish and maintain order there. Charter companies played an especially important role in the expansion of the British Empire, opening up North America for settlement and conquering India and Southern Africa before disappearing in the 19th century.
These companies had enormous powers. The 1621 charter of the Dutch West India Company gave it the right to "make contracts, engagements and alliances with princes and natives of the countries.and also build forts and fortifications there, to appoint and discharge Governors, people for war, and officers of justice, and other public officers, for the preservation of the places, keeping good order, police and justice." Together with such powers, however, came escalating demands for moral responsibility. Missionaries insisted that the companies had the duty to facilitate the spread of Christianity, while many politicians expected the political values of their country to follow trade. The powers of the East India Company, declared British statesman Edmund Burke, "have emanated from the supreme power of this kingdom. . . . The responsibility of the Company is increased by the greatness and sacredness of the powers that have been intrusted [sic] to it." It was thus proper, he concluded, that the governor of the East India Company should be hauled in front of "the supreme royal justice of this kingdom" and held accountable for his actions in India.
Unexpectedly, the charter company concept is reemerging. At the forefront of economic globalization, transnational corporations, which have long pursued their business in developing countries with little oversight by weak local governments and even less by the international community, are being targeted by modern-day missionaries in the form of human rights and environmental nongovernmental organizations (NGOs). The idea that corporate economic power entails political and moral responsibility is also gaining acceptance in some Western governments. [snip]
The so-called partnership between NGOs, developed countries, and transnational corporations is beginning to look like a game in which each actor tries to pass the hot potato of reforming reluctant governments to somebody else. Neither the U.S. government, the World Bank, nor the human rights NGOs could convince the military regime in Nigeria to mend its ways in the past and cannot force change in Myanmar or Sudan today. So they saddle the oil companies with the task. And the oil companies are finding ways to pass the burden back. Above all of them, NGOs set unreachable standards, adding to the incentives of all involved to duck the burdens involved in achieving change.
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