DEVELOPMENT-UN: Pitfalls of Private Sector Involvement

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Apr 21 1999 (IPS) - The UN Children’s Fund (UNICEF), which in the past has tangled with cigarette companies and firms that exploit child labour, now is urging caution in any United Nations dealings with big business.

The warning comes at a time when the private sector increasingly is being touted as the saviour of the cash-strapped world body.

“To begin with, it is dangerous to assume that the goals of the private sector are somehow synonymous with those of the United Nations, because they most emphatically are not,” says Carol Bellamy, executive director of the UN Children’s Fund (UNICEF).

The New York-based children’s agency – whose own international fund-raising activities are supported by Warner Brothers, British Airways, Turner Network Television, American Express, and the Sheraton and Westin Hotel chains – has the most extensive corporate involvement of any single UN body.

Bellamy argues that business and industry are driven by the profit motive – “as they should be and must be – both for their shareholders and their employees.”

“The work of the United Nations, on the other hand, is driven by a set of ethical principles that sustain its mission – principles set out in the Charter of the United Nations, in the Universal Declaration of Human Rights, in the Convention on the Rights of the Child, and elsewhere in the galaxy of international instruments and treaties that have been promulgated since the UN’s founding in 1945,” Bellamy says.

It is perfectly right and legitimate for both to be pursuing their singular mandates – “and where they can work as partners, so much the better,” she says.

“But in coming together with the private sector, the United Nations must carefully, and constantly, appraise this relationship.”

Currently, UNICEF buys millions of dollars worth of medicine, relief supplies, pharmaceutical products and vitamins from private companies throughout the world.

Bellamy says that UNICEF attaches “ethical strings” to its supply contracts, favouring companies that pledge to avoid links with such activities as landmine production and exploitative child labour. “We do not deal with cigarette companies or accept contributions from manufacturers of infant formula.”

The San Francisco-based Transnational Resource and Action Centre (TRAC) points out to the UN Development Programme (UNDP) that some of its private sector partners are companies accused of complicity in or direct violations of environmental, labour and human rights.

Among the transnational corporations identified by TRAC are Rio Tinto Plc, Brown and Bover, Dow Chemical and Citibank. Some of these companies were corporate sponsors of a proposed new UNDP initiative called the “Global Sustainable Development Facility.”

“We fear these global corporations care more about ‘greenwashing’ their own tarnished public images than about meeting the pressing needs of the world’s poor,” says TRAC Executive Director Joshua Karliner.

In response, UNDP Administrator James Gustave Speth says that the reality is that developing countries increasingly are seeking out investments from transnational corporations. Similarly, these companies are searching for new production bases and new markets.

“The question, therefore, is not whether global corporations will increase their investments in developing countries, but how can we, as UNDP and others who are committed to sustainable human development, seek to ensure that at least some of these investments occur in ways that are pro-poor, pro-environment, pro- jobs and pro-women,” Speth says.

UNDP’s work is not in the “normative area,” and thus “we are not in a position to certify compliance with internationally agreed standards on labour, human rights, and the environment.”

“However, we will ensure that projects that would be coming under this initiative meet rigorous criteria, and are in compliance with all standards that the United Nations stands by,” Speth says.

He also has denied that he plans to franchise the UNDP logo to corporate sponsors. “No one has bought the right to use the UN or UNDP logo or name. Nor will they ever,” he says.

Bellamy, meanwhile, has pointed out the fallacy that a decline in official development assistance (ODA) could be offset with private sector investments through the natural workings of the global market economy. The chief evidence cited is the fact that private sector funding and investment in developing countries has been rising dramatically.

“This certainly is true,” Bellamy says. Even as overall development aid has dropped, private capital flows have increased five-fold, and now represent close to 80 percent of the total resources that go to developing nations each year – nearly twice what it was in 1990.

“But private capital seldom gravitates to the very neediest countries – in 1995, for example, all but 20 percent of total private flows went to just 12 developing countries, while the 49 countries in sub-Saharan Africa received only five percent,” she adds.

Moreover, in those countries that it does reach, private capital often does little for the poor. Bellamy says it is true to say that in some places, transnational corporations provide income opportunities for many people, including some of the literate poor.

“But for the most part, private capital is used to finance hard infrastructure, like roads, bridges and communications. Only rarely do we find it supporting the development of such essential social services as primary health care, or basic education.”