Open Borders, Broken Promises, Privatization and Foreign Investment: Protecting the Environment Through Contractual Clauses (Greenpeace, 1993) (Hunter and Downes) [EU93-1]

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Foreign investment is of enormous potential benefit toa counny Iike ·Poland, which has insufficient domestic capital to finance its needs. Foreign banks and corporations can provide capital for improving infrastructure (transport systems. communications. industrial plant. and so on), establishing clean production facilities. providing employment and protecting the environment. However, foreign investtnent also carries the risk that hazardous or inappropriate technologies and products from the industrialized West will be transferred to the world’s most economically and politically powerless countries.

The involvement of international aid agencies in establishing industry in less developed countries is no safeguard against the establishment of new plants as deadly as those in Seveso and Bhopal. The World Bank and the General Agreement on Trade and Tariffs (GATT) have shown a willingness to enable polluting industries to shift from the West to the rest of the world- that is, the Third World, Central and Eastern Europe, and the Commonwealth of Independent States.

In the process, the West will get richer and tbe mst d the world will get still poorer. Western banks, including multilateral development banks such as the World Bank, make profits from interest on loans and credits given to countries that accept industries that migrate to them from the West. And these often involve production systems or products that Western businesses would otherwise have had to dump because of strict environmental standards in their home countries. By transferring them elsewhere, they can continue to profit from them.

There is also a political dimension to this pattern of investment by the West. The financial debts to Western institutions built up in the rest of the world give the West more de facto political and economic control in other countries, notably through International Monetary Fund (IMF) conditions and loans. The rest of the world is thus pushed deeper into debt, poverty, and environmental degradation, while its sovereignty — the ability of nations to decide their own destiny — is eroded.

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