When Union Carbide received a license from the Indian Government on October 31, 1975 to manufacture MIC, the government was pleased because of the relief this might afford to the foreign exchange losses implicit in importing MIC.
Around then, too, pesticides were cutting down Indian grain losses; then 25% of the crop, today's losses are 15% representing 15 million tons or enough to feed over 70 million people. Ten years later, in the wake of Bhopal, the Director of the United Nations Environment Program was saying of pesticides :
"Local regulations, inspections, monitoring, maintenance, training, education, siting, cultural differences, corporate responsibility and the transfer of technology must be reviewed directly and quickly. And it must be done with broad cooperation between governments and industry."
Large corporations operating across national boundaries do so by the consent of the nations within whose geographical limits they do their work. Their morality, their working ethics, are generally no worse and often better then those of corporations who work solely within the boundaries of the nation. Further their morality is usually no worse than that of the governments with which they deal.
The foreign corporations are licensed by the nation to operate, and the license usually betokens that they produce or bring in something that is especially desired and not adequately forthcoming from domestic corporations. For this they are usually given the privilege of taking money out of the country, this being usually their investments (or costs) plus their profits from the investments or sales. In this business, the bargains made between nations and foreign companies are sometimes better for one than the other.
If a nation already harbored corporations with the capital, resources, and skills of the foreign company, they would not let it come in, or the company would come in only on equal or worse terms than those governing domestic companies.
Nearly always, the admission of a foreign company implies or entails advantages to a nation other than those immediately obtainable in the form of production. New kinds of capital, the domestic economy, take root, and hopefully will flourish, whether directly in the field of operations or generally in the community, in years to come.
When conditions change, and what once worked to its advantage becomes onerous, a nation may have good reason and legal means for withdrawing a foreign company's licenses or increasing its obligations. A company may also withdraw from the bargain, with penalties often attached to the withdrawal.
When a foreign company withdraws from a national economy, whether voluntarily or coerced, the nation is either benefited or harmed with regards to the precise affected sector of the economy and the more extended effects referred to above.
Not surprisingly, a transnational corporation finds its operations helped or hindered by the political, economic and financial relations of its home country with its host country. Without specific fault, it can suffer from outbursts of nationalism or socialism or pacifism or religious fundamentalism, indeed, any aspect of the comportment of some or all of the political class of the host country that is or is deemed to be incompatible with its presence. To these can be added the tricky problems of fiscal transactions and legal complications. It is a sitting duck target. It is expected to behave better than local companies while at the same time it is suspected of being arrogant or know-it-all when it tries to behave better. Like the humble tourist, but with much less mobility, the multinational feels every day the variations in the economic and political weather.
Among the principal world problems, hazardous chemicals have rapidly come into prominence. Others include the related problems of pollution of land and waters; exponential population growth; conventional war and nuclear armaments; and equal justice and human rights. The problems of famine and disease, though unspeakably prevalent, are the most susceptible to administrative action, so readily available are the means for their general elimination. The largest problems represent chemistry and chemical engineering in their historical and advanced stages, including "conventional" and nuclear explosives, and the armaments industry that deals in these.
Chemistry, it must be concluded, is inextricably bound up with every major problem pressing upon mankind, except the problem of justice and human rights, that is, the proper governance of the world. It is unfortunate that from among all the science and professions, chemists as a group stand out as the least educated in and conversant with questions of politics, while most great world problems involve chemistry. It is remarkable how little chemical knowledge was to be found at all levels and at all stages of action in the Bhopal crisis. One encounters salesmen, public relations men, police, ex-military officers, mechanical engineers, lawyers, professional politicians, journalists, professional administrators, accountants, stockbrokers, insurance agents, business promoters, agitators, and professors in law and political science; yet one only encounters chemists who are called in as experts, a role as disadvantageous as it may be narrowly prestigious. Chemists, then, are an exploited group, whose fate is caused by their self-induced blindness to the political world that they have helped greatly to create.
The viper that both poor and rich states nourish at their very bosoms is the armaments industry. This, too, is a creature of chemistry. It makes a nasty contrast with the ultimately legitimate and benign chemical industry. The armaments industry is extremely hazardous, largely multinational, riddled with corruption, enveloped in secrecy through most of its operations from conception to use, accompanied by blatant advertising whose public relations managers are the governments themselves, causing in fact an infinity of fatal accidents, capable of blowing mankind and his works and life itself off the face of the Earth.
It is well for all who are concerned about the peaceful uses of chemistry to bear this in mind. Armaments are the king of hazards, the breaker of poor backs, the exploiter of human recklessness, the pamperer of degraded officialdom, the privileged dealer in hazardous chemicals down to the last bullet.
Every discussion of every problem affecting every person and group in the world ought to begin by demanding : "Destroy the weapons !"
With this clarification of issues and priorities, our attention can return to the problems of the multinational corporation. Every corporation entering from a rich country into a poor country smacks of imperialism and colonialism. The resemblance between a foreign government and a foreign corporation taking over a position in the economy is close enough to stir up bitter memories and stimulate false sensations. The chastisement of a foreign corporation, in the same way, arouses proud memories of the expulsion of the foreigners.
Despite this, and the high risks that follow, multinationals still flourish by the many thousands, some with a single branch or affiliated corporation, others with many in many countries, some specializing in a single product, others producing a broad spectrum of goods. Also, the number of multi-nationals coming out of the Third World is increasing -- there are up to 10,000 of them, with India, South Korea, Hong-Kong, Argentina and Brazil as especially prolific sires.
A large part of the world's gross product of goods and services is an outgrowth of multinational activities and any country that tries to do without them jeopardizes its economy and lowers its technological level. Yet, in receiving multinationals, a poorer nation suffers pangs of colonialism, must endure the humiliation of being a "learner" instead of a "brahmin," undergoes a loss of traditional cultural and religious values, must make and keep serious far-reaching promises over many years, and needs to pay out hard currency that it has trouble collecting. If it is forced to get dollars by borrowing, then it falls into another set of complicated and frustrating relations with the international banks, which seem to be another form of the multinational corporation, even when these appear to be fully world-oriented such as the International Monetary Fund and World Bank.
To resort to old-fashioned nationalism and parochialism reduces its economy and technology and merely makes a poor nation poorer and weaker, while to push ahead toward superior economic and technical levels at all costs raises its level of cultural frustration and disorganization without there being any world government to guarantee the future, to say "Come this way and we shall guarantee you permanently against the risks, frustrations, and failures on the way to the future world where you will enjoy all the equality and compensation you rightfully deserve."
The Bhopal disaster cannot but discourage investors in industry and commerce dealing with hazardous chemicals and encourage companies to sell of related interests. These trends are likely to occur whether or not heavy judgements or settlement costs occur with reference to Union Carbide for there is a gathering hysteria now over the government of the air, of the soil, of the water supplies; a mankind that has never learned reliably to govern the most ancient areas of life -- violence, human relations, production, population -- is entering upon new and exotic areas of rule.
What may happen, paradoxically, is that companies, whether of the West or of the Third World, that are less well equipped will plunge into such operations and that governments, too, will go more into such business, and this may not convey necessarily more safely managed enterprises and at best will bring heavily bureaucratized and high-cost production.
This last prospect -- heavier governmental participation -- may in some cases hinder worldwide agreement upon standards if governments jealous of their sovereignty refuse to lay their operations open to international inspection and to abide faithfully by worldwide rules.
In the likely event that Union Carbide pays unprecedented damages, all of the foregoing processes will be intensified and speeded up. Thus the widespread initial belief that industry and commerce worldwide will heed the fate of Union Carbide and tighten up safety practices is likely to be proven incorrect in the course of time.
The alternatives to such trends would be a true worldwide control of hazardous industries and/or the prompt substitution of new and possibly less effective, but less noxious, means of pest control everywhere. These latter solutions, or combinations of solutions, are much to be preferred to letting the world pesticide industry drift wherever it will in the aftermath of Bhopal. They run up against the sharp sentiments of neo-nationalism, the tawdry jewel of the impoverished, the poor imitation of the extravagant irresponsibility of the great powers.
We have already written of the "culture lag" accompanying high technology: Bhopal is a city most of whose people have responded to but are not possessed of an industrial culture. We can also speak of a cultural lag in the law of high technology. Just as it is negligent of a multinational corporation to set itself up to profit in a culture by equipment and procedures the culture cannot accommodate, so also it is negligent to establish itself in a legal setting where it makes its own law or benefits from an undeveloped and inadequate law. Negligent, true: still, the normal way of doing business domestically as well as internationally is often innocently and benevolently negligent. Either you are negligent or you do not do business at all, and if you do not, others will and be praised for not being arrogant, and you are depriving the culture of your technology and pushing the government against the financial wall with your hard currency exports of high technology products that the country must have, and you are wheedled and promised this and that until you accede. Whereupon eventually you become a foreigner, a public enemy.
This process has repeated itself time after time. I see no way out of its unless and until, first, a company calls upon the skills of the human sciences to acculturate its processes as they move into other cultures, as "part of the deal," introducing a full measure of innovations and education as it goes; then, secondly, that the company be part of a world movement of multinational companies to demand their own governance by world-wide rules, to demand a code of behavior under which they can live and work, where a consonance between a community's culture and the incoming technology is a serious requirement, clearly present in the minds of the corporation leaders and the government politicians and bureaucrats. An active world assembly and secretariat of multinationals, in which all functions are deliberately represented, the hazardous industries among them, should take a company by the hand as it goes into a different community setting, saying to the government: "See here, this is more than a deal; it is a serious engagement in which certain conditions of finance, production, acculturation, staffing, work, and safety have to be fulfilled along with whatever special deals and conditions you wish to make."
The ideal within a nation should become the world reality. Let me present an illustration. Following upon the Bhopal disaster, the Indian State of Tamil Nadu held up all authorizations for all chemical projects utilizing hazardous chemicals, and asked the Chemical Manufacturers' Association to report on outstanding questions, whereupon an expert team was named and reported within a month.
The report examined the Union Carbide plant of Bhopal, where hazardous chemicals, besides Methyl isocyanate, chlorine, carbon monoxide, phosgene, and methyl amine, were handled. It criticized the inadequate safety of the MIC storage tanks and the lack of medical knowledge of how to deal with the crisis. Then it recommends a number of measures :
The establishment of an independent central authority to lay down guidelines, classifications for the design of packages, shipping containers, tankers, and so on for all kinds of chemicals, with legal authority to force compliance.
The establishment of a central industrial safety and health authority to make safety rules and conduct research.
Setting up within every State of industrial response teams for cleaning up hazardous spills and related threats.
The organization by Chemical Manufacturers' Associations of emergency guidance centers on chemicals leakage and other hazards, and to report and circulate information and accident studies.
Increases in the pay and emoluments of industrial and safety inspectors to attract superior personnel.
The prompt publication and circulation of all laws and rules governing safety, health and industrial conditions. Data on toxic materials and hazards should be stored in computer data banks for ready accessibility.
Open licensing of all imported instruments and software for safety devices and computer systems, together with reduced customs duties.
Cooperation of trade unions in installing instrumentation and automatic control devices even when they result in manpower reductions.
A cordon sanitaire, enforced around all factories handling hazardous materials. Government help in financing relocations is recommended.
Government aid in financing safety systems and pollution controls.
Hardly any one of these recommendations can be disputed in principle. The question of who bears their financial burden arises. So also the question of finding personnel capable of administering all of the programs. Once again every bureaucracy and every government is committed to the notion that it can handle or must in any event take on every worthy program, whereas experience bluntly contradicts this notion. Once again, we revert to the educational system and the culture in general and assert that these are highly unlikely to be adequate for the tasks thrust upon their human products.
And once again we revert to the larger world where resources of education and technical experience are hoarded or bottled up. Some say of Bhopal, "it was unfortunate that the last American expert was withdrawn several years ago." That may be true : it is likely that no professional American of the chemical industry would have stood for the safety practices exhibited on all sides. It might be also that he would have received small sympathy from the U.S. side for being a troublemaker.
Several reasons explain the disappearance of the foreigner from the foreign-owned plant and one of these reasons might be sheer Indian chauvinism. Still whereas the presence of foreigners (in American as well as Indian plants) is usually beneficial and a safety measure too, it would be more generally beneficial if every government, not only Indian, could hire and use foreigners on the inspection and safety side. Officials would be horrified at the thought and quite mistaken; they need not worry, however, for the chauvinism that denies a foreigner any authority is accompanied by such poverty and miserable working conditions for the inspectorate that the turnover rate of high quality foreigners would be absurdly high.
In a state of 443,000 square kilometers, Madhya Pradesh, the government employs a score of inspectors, each of whom is assigned about 400 factories. Given 200 working days, an inspector, to complete his quota, must average to cover two factories per day, this traveling by slow bus and train. From the bus and train stops to the installation requires additional transportation, but local cabs are often unavailable or costly, and the factory management is requested to send a car. Once in the factory, only several hours in the larger factory can be afforded. If the inspection uncovers any problem, the slow wheels of government begin turning -- discussions, warnings, reports, follow-up, correspondence (no typewriters or secretarial help or private offices and little back-up clerical staff), and if a court case is decided upon (administrative rulings are only exceptionally allowed), a long delay and further efforts are entailed of the inspector; it is expectable that upcoming inspections will be perfunctory. Telephones are difficult to use in any casual continuous way to expedite business.
Inspection implies skills at inspecting something special; a know-how for a what. The two inspectors working from the Bhopal office were mechanical engineers, not chemical engineers. Inspection requires instruments, to test gauges, etc.; the inspectors had no instruments. The Labor Department inspected devices to protect worker safety, not gaseous emissions; the inspectors did call repeatedly at the Union Carbide plant after reports of mishaps and internal leaks, urging the company as a matter of course to pursue more faithfully its own procedures.
I shall not delve into the work of the Air and pollution Control Board of Madhya Pradesh, which with a small staff is supposed to inspect and discipline 200 larger and 90,000 smaller business, and municipal waste disposal as well; yet be Board has no power to issue orders "to cease and desist" harmful practices, but must go to court for this purpose. The Board did actually measure high levels of pollution surrounding the UC Bhopal plant, but remedial action did not occur.
Such problems of regulation are common in the developed areas of the world, in most of the world. The infrastructure of regulation is lacking. The costs of elevating the infrastructure to meet even present needs, much less future expectations of industrial growth, are more than can reasonably be provided in line with all other competing budget demands. In the end, under-regulation is inevitable.
What then? Abandon ideas of introducing new industry? Give up fine ideas of proper safety and working conditions? Add to the costs of doing business whether by taxes or assessments? Raise the price of the product? None of these solutions is appealing. Perhaps the most effective means of regulation would be the organization of the country's or world's business of a given category, such as pesticides, into a corporate national body and then a world body that will constitute itself to legislate appropriate safe conduct among all firms (whether privately or publicly owned). Then let this body assess its member units for insurance according to ordinary actuarial practice. As a condition of belonging to the world association, qualifying for insurance would be necessary, and in this case, inspection and regulation of a number of practices would go along with the insurance. Let the World Association conduct its own inspections, charging the cost to its annual budget with costs of problem cases thereafter charged to the company giving trouble.
In effect, a kind of world functional government would emerge, handling a large part of the burden today carried by national governments, or by no one at all. The multinational company goes beyond countries, but cannot govern well inside a country. The governments of the countries where they go are beset by and interested in domestic problems and can govern the international economic sphere only fitfully. They should be represented in, not govern, problem areas where their competences are admittedly limited. So a large place for functional self-government is foreseen in the new world economic order.