MNCs and Security !

Explores the hypothesis that the globalization of production can lessen the potential for armed conflict both through creating economic interdependencies (e.g. via Regional Trade Agreements) and forcing a redefinition of security in light of fundamental changes that MNCs—among other actors—have brought about. !

ReadingsStephen Brooks (2007) chapter 4 from Producing Security, Princeton: Princeton University Press. (re-read) Juliette Bennett (2002) “MNCs, Social Responsibility and Conflict,” Journal of International Affairs, 55, 2 . !Yee-Kuang Heng and Kenneth McDonagh (2009) “Risk, Global Governance and Security,” in Risk, Global Governance and Security: The Other War on Terror, London: Routledge. !Small Arms Survey, “Protected but Exposed: Multinationals and Private Security,” chapter 5, Annual Report 2011 (Private Security PDF)

Traditional idea of security: the MNC perspective

MNCs typically risk averse• majority of FDI outflows & inflows

among and between politically stable states

• strong preference for OECD countries

• LDC countries associated with higher risks (but also high payoffs where lucrative or strategic resources are involved)

• even among LDCs, investments concentrated in most politically stable states

MNCs as potential contributors to violent

conflict

MNCs as potential victims of violent

conflict (e.g. effects detrimental to their

operations)

MNCs & Violent Conflict: Causes and Effects

• may knowingly or unknowingly support and legitimize repressive regimes

• may contribute to corruption, violent repression, & other criminal activities

• worsen inequalities (e.g. certain regions, social groups, or individuals may benefit

while others lose out) • may hire private security forces that use

illegal or violent tactics • may have environmental impacts (e.g.

may contribute to displacement and resource scarcities)

• may use hiring practices & marketing strategies that increase tensions between social, religious, gender, or ethnic groups

• security, health, education level, and overall well-being of economically active population may be

decimated by violence • destruction of roads, telecommunications

systems, transport links, public and private buildings, and other essential physical assets

• devastating environmental impact • damages international trade, economic

development, and domestic commerce (war economies also tend to contribute to further

violence) • absence of the rule of law: crime, abuse of

power, corruption, and insecurity

Nontraditional security paradigm: UN Human Development Report 1994

• introduces a new concept of human security

• equates security with people rather than territories (with development rather than arms)

• examines both national and global aspects of human security

• expands concept of development cooperation to include all flows, not just aid

• explicitly invites MNCs into the security framework

• zones of conflict can provide opportunities for private governance (new notion of governance based in “collective management of the planet” or “global public policy”)

International Security and MNCs today: The Brooks thesis

• a return to the idea that economic interdependency can lead to peace

• but focused now on economic globalization, and mostly a story of the globalization of production (e.g. a story of MNCs)

• this is a 3 part story

Part Oneincreased geographic dispersion of MNC production: !

rise of (trans-national) subcontracting arrangements

! new role for foreign affiliates (global intra-firm

division of labour & growing integration of global production networks)

Part Two⌑ The geographic dispersion

of technological development by MNCs

!

⌑ Interfirm alliances (pre-production or

“front end stage”/R&D)

Part Three

⌑ The increased opportunity cost of being closed off from MNCs (state rather than MNC-driven shift)

more than simply a story of FDI

• “The size and scope of international production are amplified further by the activities of MNCs in forms other than FDI, such as subcontracting, licensing and franchising, through which markets for goods, services, and factors of production can be reached and international production organized”

!(UNCTAD 1995, as cited in Brooks)

Other factors: !1. the increased ease of engaging in FDI !2. the general shift toward “knowledge-based”

economies in the most advanced countries !

these changes collectively appear to have reduced the economic benefits of conquest

!BUT only among those highly advanced countries

in which these economic transformations have so far had a substantial impact

Example of an inter firm alliance

MNCs and the “other war on terror”

–Yee-Kuang Heng and Kenneth McDonagh, “Risk, Global Governance and Security,” in Risk, Global Governance and Security: The Other War on

Terror, London: Routledge (2009, p. 2)

“It has become clear that the use of dramatic highly visible military force, while a useful and

indispensable instrument in the counter-terrorism tool kit, is not always the right solution all the time…While power might be exercised overtly in the use of dramatic military force, it

might also be deployed in less overt and more subtle ways in the everyday dimensions of the

‘other’ war on terror.”

Assumptions• the shared global nature of risks also bring the world together into greater

communication and cooperation as a counter-terrorism strategy (e.g. a new more complex form of global governance might be the way of the future)

• increasing recognition of the need to move away from reliance on military force; examination of alternative (less-noticed & non-military) aspects of the war on terror

• builds upon notion of overlapping multilevel global governance and how that might have a crucial role to play in the war on terror

• extends the idea of Strobe Talbot (President Clinton’s deputy secretary of state) of overlapping multilevel global governance (e.g. a UN-based network of systematic collaboration between states and private sector, civil society, and NGOs can create anti-terrorist norms)

Are cooperative non-military alternatives to military force a reasonable counter-

terrorism strategy?

• “we cannot kill our way to victory” (Admiral Mike Mullen, Chairman of the US Joint Chiefs of Staff)

• counter-terrorism now spans a much wider range of activity

• global governance perspective captures these many activities

• this more than simply multilateral cooperation: global governance perspective emphasizes more broad-ranging and multilevel approach

• e.g. involves diverse range of activities and actors (states, regional organizations, transnational NGOs, and private businesses)

global governance and cooperation as a global risk

management strategy

global terror ecological conflict

financial crisesglobal crises

-financial -pandemics

Blurred line between public and private in the realm of international security

• MNCs might be contracted to take on

state-like functions (e.g. private military

contractors) • or indirect security

services (e.g. ISPs, medical firms, banks)

• MNCs enhance influence thru

transnational policy networks (seek convergence in

institutional policies) • but do these networks

threaten to “take the public out of public

policy”?