The $20bn fund that Barack Obama managed to get BP to agree to set up to meet claims for economic losses and environmental costs from the Gulf of Mexico oil spill is impressive, especially since the amount can be increased. The political pressure so evident also caused BP to temporarily suspend paying dividends. This should set a precedence for how host countries of multinationals take stern action, and executives of multinationals respond to meet their responsibilities – even if only partially.
But then the US is a powerful host country indeed, and BP had little choice but to yield given the political pressure and public anger. Developing countries are also host to multinationals that in many cases have poisoned the environment or caused immense loss of life and property. But these multinationals have got away scot free or paid miniscule sums for the harm they caused.
These double standards must change.
Though the Mexican Gulf oil spill may be the United States’ greatest environmental disaster, worse ecological catastrophes have been caused by international companies in developing countries. Little, if any, compensation has been paid by these companies. And the governments of the countries whose people own the companies usually turn a blind eye. The two most directly related cases – because they also involve oil spills – are in Ecuador and Nigeria. Ecuador’s Amazon region has been contaminated by oil and toxic waste in amounts far larger than the Gulf oil spill so far. The oil and waste was discharged by Texaco (bought by Chevron in 2001) when it operated an oil concession in 1964-1990.
The New York Times reported indigenous people in the area saying that toxic chemicals had leaked into their soils, groundwater and streams, and that some of their children had died from the poisoning. It cited a report of an expert (contested by the company) who estimated that 1,400 people had died of cancer because of oil contamination.
The indigenous groups have taken a court case against Chevron for $27bn in damages. They accuse Chevron of dumping more than 345m gallons of crude oil into the rainforest and another 18.5bn gallons of toxic waste in pits in the forests. Experts claim that the disaster has devastated their lands, income and health to a degree far larger than the BP spill in the Gulf. The company paid Ecuador’s government $40m in the early 1990s for clean-up costs, but this amount is seen as far too little given the scale of the damage.
The second case is the Niger Delta in Nigeria, a major oil-producing region in which Shell and other companies operate. A report by environment groups calculated in 2006 that up to 1.5m tons of oil – 50 times the pollution unleashed in the Exxon Valdez tanker disaster in Alaska – has been spilled in the delta over the past half century. According to Amnesty, in 2009 the equivalent of at least 9m barrels of oil was spilled, and it accused the oil companies of a human rights outrage. Life expectancy in the rural communities has fallen to a little above 40 years.
According to Nnimo Bassey, a Nigerian who is chair of Friends of the Earth International: “We see frantic efforts being made to stop the spill in the US. But in Nigeria, oil companies largely ignore their spills, cover them up and destroy people’s livelihood and environments.”
Then there is the worst eco-disaster of all in Bhopal, where poisonous gas from the US-owned company Union Carbide in 1984 affected a half-million people, killing 2,300 immediately, with another 15,000 to 30,000 dying subsequently and many thousands of others maimed seriously. Neither Union Carbide nor Dow Chemical, which bought the firm in 2001, accepted responsibility for the disaster. Union Carbide paid $470m in a deal in 1989 with the Indian government, but this is a small and wholly inadequate amount, given the enormity of the disaster.
These cases show a big contrast between what the US administration is doing to hold a multinational company financially accountable, and how similar companies that cause ecological catastrophes in developing countries are able to get away either freely or with grossly inadequate pay-outs.
Developing countries should learn a lesson from the US and take similar action in line with the “polluter pays” principle.
But these countries just don’t have the political clout of the United States. Thus, the governments of the home countries of the multinationals should also act to make their companies accountable for their actions when they operate in other countries, and to compensate adequately when they cause environmental damage