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Lobbying, Subsidies, and U.S Multinational Corporations (Part 4)

June 30th, 2008

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While oil interests may not be the sole explanation of their foreign policy goals, they stand as part of a wider variety of interests that share common goals, such as defense contractors. A glimpse at the news today reveals that the price of oil per gallon to the customer is as much a leading economic statistic as the stock indexes. The “price at the pump” has become a highly symbolic issue, and many Americans often complain that gas prices have been allowed to become too high and that something ought to be done about it. To some, this means moving to alternative fuel sources. To oil companies, it is an opportunity to continue arguing for the necessity of oil on the basis of economic growth, appealing to the average American’s lifestyle.

The issue of global climate change has particularly in the last decade led to political gamesmanship from major corporate interests in the oil industry. The Kyoto protocols, negotiated and signed by the Clinton administration in 1997, were drafted with the objective of “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. “[9] This would entail the reduction of emissions, either via increased automobile efficiency among other conservation measures, or even possibly the development of permanent alternative fuel sources- a clear threat to the oil industry’s many sunken capital costs. Exxon-Mobil, the largest oil company in the world and contributor of the greatest amount of U. S. lobbying dollars in its industry, has undertaken a strong anti-global-warming campaign, funding private think-tanks to promote uncertainty over global warming and the economic danger of environmental regulations. Not surprisingly, their business model is suited primarily for research and development in oil extraction and refinement, and they hold several oil assets abroad, including major pipelines in Siberia and Africa.

Oil companies like Exxon-Mobil had quickly realized that they needed to win the war against the Kyoto protocols and all other climate control policies, and doing so would require the scientific agreement of the public, and in turn Congress. In 1998, the New York Times revealed a leaked American Petroleum Institute (an organization whose membership includes Exxon-Mobil) memo aimed at addressing the ubiquitous presence of global climate concerns. Its proposed organization, the Global Climate Science Data Center, would serve several useful functions, among them, “identifying and establishing cooperative relationships with all major scientists whose research in this field supports our position,” and “developing opportunities to maximize the impact of scientific views consistent with ours with Congress, the media and other key audiences. ” It is quite clear that no matter where the evidence lies for global warming phenomena, money is pushed into politics in a manner concurrent with partisanship over science. [10]

In Opensecrets. org’s special election report, “President Bush’s First 100 Days: A Look at How the Special Interests Have Fared,” the section subtitled “Energy” begins bluntly: “If there were any doubt that President Bush and Vice President Cheney, two former oil executives, would be sympathetic to the interests of energy companies, it has been put to rest in the first 100 days of the new administration. ”[11] Evidence of a “revolving door”-style administration is abundant with respect to the petroleum industry. In 2001, Exxon-Mobil lobbyist Randy Randol sent a memo to the White House requesting that Intergovernmental Panel on Climate Change (IPCC) chairman Robert Watson resign. Though he did not resign, his reelection was blocked one year later. [12] In 2003, the Bush administration officially denounced the Kyoto protocols. Presently, the administration shows few signs of substantively addressing the global warming issue, and the “lame-duck” period will likely prolong that trend until 2009.

Conclusions

The omnipresence of private interests bearing significant influence on governmental policy is not unknown or surprising to most people. However, an understanding of the process of how these interests come to affect government policies is important for the MNC strategy theorist, for the foundations that underlie it must be considered as new developments in globalization world governance begin to surface. Greater empirical study of the effects of political dollars on profits can yield great insight into the causes MNC decision-making, along with possible reforms to counteract the exploitation of political systems for subsidies, but it is ultimately limited by the obscure nature of the interpersonal dealings and complexity of publicized procedures that constitute the lobbying-subsidy process. More exploration of the broad spectrum of powers such as multilateral institutions that can be tapped for MNC benefit can also explain how government intervention is still not out of the question in a rapidly globalizing economy.


[1] Lobbying Database, Center for Responsive Politics. http://www. opensecrets. org/lobbyists/index. asp (Accessed April 3, 2007)

[2] These large firms, because of their size, require bureaucracy-like institutions in order to effectively manage their vast resources.

[3] This is a quasi-political function of corporations that is captured exogenously in ui in order to keep the lobbying-subsidy model simple.

[4] “Lobbying in the United States. ” Wikipedia. http://en. wikipedia. org/wiki/Lobbying_in_the_United_States

[5] Compiled from Opensecrets. org.

[6] “Pharmaceutical Industry Spent $800M on Lobbying Over 7 Years, Report States. ” Medical News Today. http://www. medicalnewstoday. com/medicalnews. php? newsid=27125

[7] “The U. S. Congress Votes Database. ” The Washington Post. http://projects. washingtonpost. com/congress/109/house/1/votes/443/

[8] “CAFTA, Data Protection and Generic Drugs. ” Embassy of the United States: Guatemala. http://guatemala. usembassy. gov/factsheetcaftagenerics. html

[9] The United Nations Framework Convention on Climate Change. http://unfccc. int/essential_background/convention/background/items/1353. php.

[10] Global Climate Science Communications: Action Plan. The American Petroleum Institute. http://www. euronet. nl/users/e_wesker/ew@shell/API-prop. html

[11]“President Bush’s First 100 Days: A Look at How the Special Interests Have Fared,” Center for Responsive Politics. http://www. opensecrets. org/bush/100days/energy. asp

[12] Mooney, Chris. “Some Like it Hot. ” Mother Jones. http://www. motherjones. com/news/feature/2005/05/some_like_it_hot. html

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