← New Books Network
New Books Network
Claire Provost and Matt Kennard, "Silent Coup: How Corporations Overthrew Democracy" (Bloomsbury, 2023)
00:44:32
An interview with Claire Provost
Loading summary
Transcript29 lines
- [00:01]
A
Get in the game with the college branded Venmo debit card. Wreck your team with every tap and earn up to 5% cash back with Venmo Stash, a new rewards program from Venmo. No monthly fee, no minimum balance, just school pride and spending power. Get in the game and sign up for the Venmo debit card@venmo.com collegecard. The Venmo MasterCard is issued by the Bancorp Bank N.A. select schools available. Venmo Stash terms and exclusions apply at Venmo me stash terms max $100 cash back per month. Welcome to the New Books Network.
- [00:36]
B
Hello and welcome to another episode on the New Books Network. I'm one of your hosts, Dr. Miranda Melcher, and I'm very pleased today to be speaking to one of the two authors of a book just out in 2023 from Bloomsbury titled Silent How Corporations Overthrew Democracy, written by Claire Provo, who we have with us today, and Matt Kennard. They are two investigative journalists that went all over the world to examine the rise of a corporate empire, an institutional system that really has quite a lot of power in determining how resources are allocated, what control countries have over their own stuff, and really helps us understand a lot of how today's world actually works. So, Claire, thank you so much for being with us on the podcast.
- [01:24]
A
Thank you for having me.
- [01:26]
B
Before we get into the findings of the book, would you mind introducing yourself and your co author, Matt a little bit, who's not with us today, and explain kind of why you two decided to write this book?
- [01:38]
A
Absolutely. So both myself and Matt, we are investigative journalists and we met back in 2014, so almost a decade ago now when we started as fellows at the center for Investigative Journalism in London under its founding and really inspirational director, Gavin McFadden. And Gavin had a really impressive journalistic track record, but he was also, we learned something of a matchmaker. And it didn't seem like a coincidence that Matt and I were interested in similar things. Gavin really encouraged us to work together. We didn't really need that much encouragement. And then we got an unexpected phone call that led us to start investigating together the obscure but powerful international investor state dispute settlement system. And then as these things happen, one thing led to another and then 25 countries and many years of work and a long term collaboration and then this
- [02:40]
B
book, one thing very much led to another to end up with all of this. So obviously it's a focus of the book and you've already mentioned it. So can you tell us A bit about the World bank center for the Settlement of Investment Disputes, which sounds deeply dry but is very important after reading the book. What is this and what does it do?
- [03:03]
A
Absolutely. So the International center for the Settlement of Investment Disputes or its acronym icsid and I apologize, apologize. There are a number of acronyms here. It is a relatively little known branch of the World bank, yet it sits at the center of this investor state dispute settlement system, also known as isds, another acronym. And it handles so far the largest number of these disputes that are mounted by multinational corporations and foreign investors against states, against entire countries, entire populations, putting them on the hook to potentially have to pay huge or even multi million, multi million, multi billion dollar awards or change policies in favor of corporate investors. This system has enabled corporations and investors to file claims challenging a wide, really wide range of state actions. And issues like human rights and the environment just aren't the concern or the expertise of the tribunals that are assembled to hear these cases. They usually have three arbitrators on them who often have corporate or business friendly backgrounds and everything from environmental regulations to tax bills that companies don't want to pay up. In the subject of these cases, it's a very advantageous system for foreign investors. It allows them to bypass national courts and scrutiny and challenge states directly and internationally. States on the other side can really only lose or settle, change policies, suit corporate interests, or walk away with the status quo. If they win. The best case scenario is that they win their defense, they still likely have to pay many millions to have mounted that defense and they walk away with the status quo. There's no real way to win, only lose or maintain the status quo.
- [05:07]
B
Okay, so high stakes and the acronyms in some sense create some invisibility of what this actually is doing. And also where this is coming from. Right. The acronyms, the names don't really say kind of here's where this all, here's how the system where you can't really win. Here's where this is from. But thankfully you both uncover that in the book. So can you tell us kind of where this came from and to what extent it's from colonial organizations?
- [05:37]
A
Yeah. So The World Bank's ICD Centre was set up in 1966, but there were proposals and discussions about setting up this investor state dispute settlement system much earlier than that. So throughout the 50s and then the early 60s until its establishment, and as countries like Ghana and others began to gain independence from colonial rulers and elites felt then and talked about it about how the ground was really shifting beneath their feet and new ways to maintain and expand power would be needed. So in the late 50s, for example, years before the World bank sets up its ICSID system, the Deutsche Banks Herman ABS goes to San Francisco and we have a really, really detailed record of this event because Time magazine co sponsored was an international investment conference. And the Deutsche Banks Herman ABS gives a very, very popular talk at this conference, widely applauded, described, proposing what's described by Time as a new corporate Magna Carta. So we're talking extremely ambitious proposals about building a new justice system at an international level that would wrench power from states and from rebellious people that were rising up in this period of decolonization and thinking about different ways to structure economies, things they might want to nationalize, different ways to deal with how to build a more just society out of extraordinary, extraordinarily unjust situation. So pitching this extremely ambitious corporate Magna Carta first to business elites and as well as some political elites in San Francisco, and then his proposal and a proposal from a British lord, Lord Shawcross, were then merged. It took time for this to be then taken up by the World bank and established. But the roots of the system and the debates, the early debates and proposals, proposals for it really do come from this moment when many people thought, and some people feared that things could be different. And for elites with a lot of power and a lot at stake, they set about to insulate themselves basically from the changes that could come. Other systems and strategies furthering corporate power that we looked at and that are in the book also emerge at a very similar time.
- [08:32]
B
Thank you for explaining that. I think this idea of change is coming. It's important to remember that some of the people were very scared of it. It wasn't all happy and liberatory. But of course that seems kind of at odds with what we think happened. Right. A lot of countries did become independent, did have sovereign control. Many became democracies. And yet this system that came from these fears and impulses nevertheless was able to be created. So kind of, how do we put all these things together? How do we think about this system coming out of colonial institutions, out of fears of decolonization? How does that interact with norms and maybe realities of sovereignty?
- [09:19]
A
Well, our introduction to the system largely came through that unexpected phone call. I mentioned that Ben sent us to El Salvador to look at a particular case and its impacts on the country. That case was filed by a Canadian company that then was bought by an Australian Canadian company. And it was challenging the state's refusal to give it A license to dig up gold. In the context of a really phenomenal, pioneering, world leading environmental movement that had gained significant widespread power, grassroots support, but also religious institutions and political leaders thinking about how in the midst of El Salvador's extreme water crisis, clean water crisis, how to. How to do things differently and how to protect the environment. It was widespread calls for a ban on mining. In this context, this multinational company, because it has access to the system, sues the country for a vast amount of money, really threatening it with a very poor country with a very large bill, basically, if it went ahead and thought about not giving licenses for mining or demanding a license to dig. So using this system and using the ability to file a case while being very clear that its objective was to dig, not that its objective was to necessarily get the financial award in that case, but to change policy and change the terms of what's possible in the country. That case was denounced by local civil society, international civil society, as well as by Salvadoran politicians and the Salvadoran legal team as a major threat to the country's sovereignty by limiting its ability to make decisions about how to protect the environment or threatening its ability to do that. We saw similar things in other countries, like in South Africa and Germany, about how cases through the system were challenging, sometimes overruling, democratically supported, democratically driven decisions and movements around the protection of the environment, the creation of more just and equal societies, dealing with legacies of historical injustices, for example, in South Africa. And the really shocking thing, I think for us was not just the enormous power of the system and the enormous power that companies can wield through this system, but also how concerns from civil society, as well as politicians, MPs in the countries that were being sued really mirrored some of the concerns from developing countries. Right at the beginning of the story and before the World Bank's ICSID centers was set up, there were meetings and consultations about it, quote, unquote, consultations at the World Bank. And there was a block of developing countries that were very, very vocal in their opposition to the idea from the beginning, warning that it would threaten their sovereignty, warning that it would undermine their ability to make changes, moving that it would freeze them into the status quo, that it would prioritize multinationals over local businesses. All of the things that we were seeing play out on the ground were actually forewarned. And that was really chilling.
- [13:36]
B
Very much so. And kind of begs the question of how do countries kind of end up in the system? Because as detailed in the book, this only works if countries sign treaties to be part of the system. And given these infringements on sovereignty, it sort of seems like, well, why would anyone possibly sign such a treaty? But countries obviously do, and there's arguments made about why they should. Why do countries sign these treaties? Do they benefit from them?
- [14:07]
A
Well, the argument, the often made argument to sign an international investment treaty that gives investors advance consent to sue your country through this system. The argument for doing that is that if investors feel like they have this access to this international justice system, they'll feel more confident investing in your country. And then, therefore you'll get more investment, and then, therefore, you'll get more development. That's the argument for the system that's been repeated for generations now. And. It's been repeated for. It's an argument that's been repeated for generations. But both at the beginning and now, there's no solid evidence to back up those claims. There's no solid evidence that having these treaties with these provisions increases investment. There's also no solid evidence that just increasing investment on its own, any kind of investment is going to lead to broad based, shared, equitable, sustainable development. And South Africa, one of the countries that we did look at, is one of the countries that has been trying to extricate itself from the system. Treaties can be canceled even if they're canceled. Sometimes these provisions can remain enforced for many years through what are called sunset clauses. But you still can cancel and try to get yourself out of the system. And South Africa is a country that did start canceling some of its treaties several years ago after it did a study. The government did an internal study of what's the evidence they were aware, after having been sued over black economic empowerment policies, of the potential threats of the system. But they did this internal study to compare that with like, the potential benefits, and found no evidence that there were such benefits that would mean that they should stay in it regardless of the risks. So then they took the decision based on that to start extricating the country from the system. Some other countries have been trying to cancel treaties or trying to ensure that new treaties are written differently so that they limit corporate access to the system. So there's now quite a significant amount of evidence that, that the claims and that proponents make are not convincing.
- [17:00]
B
Hmm. And yet this idea that there's been an argument going for generations without a lot of evidence is interesting in a sense, because the suing, the legal cases seem to have started a lot more recently. Obviously South Africa's case, we're talking about black empowerment, there's kind of an implication that that's happening after the end of apartheid, when it ended in the 90s. And in fact, that's not an accident. You show that in the book. A lot more of these cases seem to be starting from the 90s onwards, even though the system was already a few decades old by that point. Why was there this sudden uptick in the mid-1990s of actually using this system to sue countries?
- [17:43]
A
So, great question. And there's a bunch of different potential answers to it. I think, I think it's a number of things happening at the same time. One of them is the proliferation of these international investment and free trade treaties that enshrine access to the system. From the 90s, you get new mega treaties like NAFTA bringing in Canada, the U.S. and Mexico, and also the Energy Charter Treaty, bringing in a huge number of countries, including former Soviet countries. And these, these, the dawn of these like mega treaties happens around that time. And then another thing that has happened is, and that was, that was described, explained to us by lawyers that work, work on these cases, both for companies and for states, is that the, the institutional knowledge within the legal ecosystem around the system. There are more lawyers now that, that are aware of it, that will work on it, that specialize in it. There are conference circuits and magazines for them. There's a whole sort of industry that's legal and legal industry that's developed around these cases. And then there's also a financial industry that's developed around these cases where there are a, particularly since the financial crisis that's even a bit after the 90s, you know, a bit quite a while after the 90s. But after the 2008 financial crisis, there was an increase also in boutique financial firms investing in corporate cases through the system, seeing them as an asset class, so basically paying the costs of mounting it in exchange for a cut of the award, making it even easier for companies to file cases. So the whole, the industry around this system has certainly expanded significantly and in many ways appears to have driven the rise in cases. The fact that if you're a corporation and you have a dispute with the state, you have access to finance, you can file a case without it costing you any money. You also have law firms that are able to mount, like, have the expertise in mounting these cases, but that are also like regularly bombarding your legal team and your, your executives with information about how you could use the system to your benefit. So law firms that work in the system for corporations do quite a lot of work advertising how, how it's beneficial because it's like less transparent than national courts because certain issues are not going to be discussed because you can get access to this finance for all sorts of different reasons. Mounting these cases has also become a business in itself for lawyers and also for third party financiers, which is part of the story.
- [20:53]
B
Thank you for explaining how all the pieces come together. I think it makes a lot more sense than saying, ah, well it's all from this one reason, right. That's almost never the case. And so tracing it all out as you've just done a bit there and of course the book goes into lots of detail is helpful for understanding, understanding kind of the different pieces of the system. And one of which I'd love to bring in that the book details quite a few examples of is an example. I think the phrase in the book is something like all of the world is watching a city in southern China, right? The idea of special economic zones or SEZs that started in Shenzhen, that I have to admit when you first started talking in the book about this legal dispute system, I was not thinking of. Of special economic zones as being part of that, but they very much are. How do they fit into this system?
- [21:47]
A
Well, special economic zones are another mega strategy that we looked at that has a similar history in a way and that it expands in the, in the mid 20th century in that same period of decolonization and a moment of things could be different and then again expands, proliferates significantly again in the 90s, end of the Cold War and then again at the end of the financial crisis. And similar to the international investor state dispute settlement system, the proliferation of these special economic zones enabled corporations to and private investors to effectively insulate themselves from democracies. They There are spaces of exception where normal rules usually don't apply, where taxes might be lower, labor laws might not exist, regulations might be different. The level of infrastructure, whatever you have access to is completely off the charts compared to what else is available in the country. We describe them in the book as. As a type of corporate utopia where everything is oriented around your interests. So similar to the legal system where issues like human rights and the environment are really not on the table and they're not what tribunals are expert in in special economic sense. Similarly, like the rules that exist in a country are different and they're modified to shape your interests. And there are cases where both. Sorry, the World bank has also been very involved in promoting special economic zones around the world. And there is a fascinating current investor state dispute case that brings both that legal system and these special economic zones together. And it's Honduras that changed a law around special economic zones. And an investor in one of these special economic zones is suing the country through this system for changing their policy. Both of these, both the isds system and sezs, what they have, I think particularly in common is the ambition to completely rewrite the rules of the game in service of corporate interests, as well as the history that overlaps in the role of some similar institutions.
- [24:57]
B
Thank you for explaining how that puzzle piece fits into this whole system. We've mainly been talking about the lawyers, the countries and the companies. I want to bring in another actor because in a lot of senses you'd expect, given how pervasive this is across time and across space, we would maybe know more about it. And yet the title of your book, Silent Coup, indicates pretty strongly that we, we don't. Why don't we see, for example, NGOs making more of a fuss about this, holding companies to account for using the system.
- [25:37]
A
One of the things that we sort of parallel trends that we trace in the book is the increasing proliferation of corporate and NGO tie ups and partnerships, where increasingly the NGOs that you might expect to otherwise hold companies to account or challenge corporate power are also their partners in development, co implementing projects, co branding projects. And there's many reasons for those tie ups, including budget pressures, cuts from government aid, but also a business friendly ideology and a way of thinking about success being like fundraising based. And if you're an NGO that's thinking primarily about measuring your success in that way or, or significantly measuring your success in terms of how big you are and how much you're growing, how many high profile partners you have and without, without sufficient due diligence and prioritization of your mission. We've seen a vast number of these kind of partnerships. So I think that's one reason. Another reason is that like the truth is that around the world we met civil society activists and social movements who were resisting or challenging these systems and corporate systems and corporate strategies, and knew a lot, they knew a lot about them. So in El Salvador, for example, we would meet people and a wide variety doesn't didn't matter if it was someone at the guest house we were staying at or a taxi driver, whoever, and they would ask what we were, what we were doing there. And we at first tentatively said, oh, we're here because there's a big case against El Salvador at the World bank and we want to learn more about it. And then the response was like, oh, so siadi. Then you're talking about that, which is the Spanish acronym for icsid. And everybody seemed to know about it. And so then the next person asks us what we're there for, we say, oh, we're there for this SIADI case to look into that. And they're like, oh, okay, everyone knew about it. In that case, there were very powerful social movements that were really raising it to a national level issue and also politicians that were publicly talking about the case and very forcefully talking about it and about how it was threatening alternative action in the country. In many cases though, in many other countries and many other cases, governments don't talk about the threats that they're under. And there might be different reasons for that. They might be worried about publicizing it because there might be worried about other companies trying to sort of copy it and file claims as well. Sometimes they might not want to publicize it because they're in backroom negotiations with the, with the company trying to come up with some sort of compromise. It might not be good for democracy, those backroom negotiations, but that might be what's, what's happening sometimes. There are hundreds of these cases that are going on right now and there are thousands of special economic zones around the world. There are vast number of these corporate NGO tie ups and other ways in which corporations are benefiting from and furthering their power through the international aid system. But these, and there are people who know about this, but often their voices don't, and their perspectives and their knowledge don't make it their way to the mainstream awareness. And in El Salvador is an exception. And that was where you had very powerful social movements raising the issue. But you also had a government that was publicly talking about it and publicly being very clear about its position and how it was trying to defend itself in court. That doesn't always happen. And so most of the time these things happen without taxpayers and voters and citizens really knowing about them. And as a journalist, it's also from the perspective of a journalist, there's also a failure of the media here and explaining to people, explaining to us where power lies, but also how decisions are made, what decisions are being challenged and how the hundreds of cases that are currently ongoing, they're not being covered anywhere near the frequency that supreme courts are covered at a national level. But the international investor state dispute settlement system effectively acts like a, a Supreme Court for the world. And there aren't that many correspondence that cover it that are not for very specialist or industry trade journals. So there are issues that my industry, the media, needs to reckon with. Too here about how to get better at covering transnational issues like this.
- [31:10]
B
And of course one of the biggest transnational issues to try and cover all the pieces of is looming future problems like climate change. Right. This system is not just about kind of individual companies wanting to do things or kind of a few of the examples we've talked about before. I was wondering if you could maybe tell us a bit more about how this system gets in the way of countries that are trying to do things, make changes to adapt to climate change.
- [31:41]
A
Yeah. So the, but I think it's quite well accepted now that in order to adapt to and respond to climate change, slow it down, et cetera, we have to do things differently. We have to make changes on big levels, on structural, systemic, societal, whole economy wide levels. And the investor state dispute settlement system basically locks countries into their position at the time when investments happen. Makes it really hard to change your mind to do things better. So South Africa for example, that's not an environmental case, but it's a really clear case of not being able to change your mind or being challenged for changing your mind. After apartheid introduces black economic empowerment laws, a group of Italian investors don't like them, they sue. As a result of that suit they get an exemption to those black economic empowerment laws. The case that we looked at in Germany was an environmental case, that was Hamburg. As the result of widespread requests from citizens to do this, Hamburg tries to put on clear, clear rules for a new coal fired power plant in the city to ensure that it does not exceed EU like limits on how much it's able to affect the local water resources, et cetera. And so it's not, it doesn't block the power plant, but it does what it can to impose all the EU rules which you'd think should happen. But these EU rules also may be new and maybe the result of more environmental awareness. The company doesn't like it, the company sues, the company as a result gets basically an exemption to those rules. Similar to in South Africa, gets a new water license to be able to raise the temperature higher, regardless of concerns on local fish populations in the river, etc. So we've seen there are a lot of cases like this is a common theme within these cases about challenging companies using the system to challenge states ability to change their mind. And if we can't change our minds like as countries on a systemic level, it's going to be very hard to tackle climate change. But also other major, major imperatives for social and, and other justice issues.
- [34:34]
B
Especially because when you talk about changing minds. Right? It's not about, oh, last year we did this and now we're changing it. It's like, no, we decided this in the 70s and we now have a bunch more information, but we signed a contract in 1970 and now we'd like to change it. Some of the examples that you talk about in the book are really quite that long. And the idea of being stuck into them really does have quite an impact. Thinking of this idea though, of kind of what can we do about it? Or what more can we be aware of, obviously, besides just the understanding from the book, this idea of the media needing to do more about it. You've spoken about the constraints on NGOs and a lot of them, of course, also apply to the media. What can be done? How can this be less underreported?
- [35:26]
A
It's a good and challenging question, and I think there's many answers here. And one of them is about recognizing that some of the key threats to democracy right now at this moment transcend national borders. So the threats from this investor state dispute settlement system, they transcend national borders. The proliferation of special economic zones, the use of aid and development institutions to reshape countries and corporate interests, these are all transnational stories. That in general, the media is not good at covering transnational stories, not good at covering structural issues than one off scandals. So there's, you know, we're living in an, like in a, in an era of transnational power that requires like a lot of thought and thinking about how, how to, how to cover that better and how to, how to better serve audiences so they better understand what, what's shaping their, their worlds and the different forces at play. But I think there's similarly, this is also a big point though. There's a bigger crisis in the media right now where there's significant declining trust and public trust in the media as well as in quote, unquote, democratic institutions. And I think that though these declines in trust do make sense in a way, like if democratic institutions don't have the power that we're told they do, because they don't. And if the media is not helping us understand that and understand like why things are the way they are, why things aren't different, then those decline. The lacking trust makes sense more broadly across the media. We need to reconnect journalism with its really core social purpose, which is to support democracy, and then go move from that perspective. And if you focus on that core social purpose of journalism to support democracy, and then you move from there to look at what Are the current threats to democracy. Our book outlines several that would should be new beats for journalists, many journalists. There are journalists who cover the Supreme Court. Supreme Supreme Court in the US or in other, other countries. And, and there should be more regular coverage of, of the these international investor state disputes and also recognition that even a case against Honduras, let's say you're don't, you're not based in Honduras, but that case against Honduras still could have not a future effects on your country because there's also a lot of learning and, and it sort of influenced maybe not formal, but a version of precedent setting and, and companies and law firms, they learn from other cases. And so if, if, if Honduras is being challenged over changing its special economic zone law, then probably every country in the world that has special economic zone, which is the vast majority of countries, should care about that case because if they ever wanted to change their policy, they might come up against the same problem that Honduras is coming up against now. So those are big. That's a big answer. That was a big question.
- [39:22]
B
Yeah, no, very fair. It was absolutely a big question and needs some big answers. So I think that does a lot to help us start thinking about it and really only leaves my final question, which is hopefully not as big as my previous question. This book, book that is the result of so much work from the two of you is now available. People can read it. Is there anything you might be working on now or next, whether or not it's on this topic, whether or not it's a book that you'd like our audience to be aware of?
- [39:52]
A
Yeah, I'm doing more work on international aid and I've recently done a couple of research projects, some of which have been released, some of which are still forthcoming looking at the international aid system and how it's also been used by far right religious right organizations to raise resources and at the same time raise resources from donors that in theory commit to supporting human rights at the same time as they engage in anti human rights activities as well as international aid supporting wars on drugs, undermining public health and rights goals. And these projects have been very interesting because I've seen how to some extent some other anti democratic actors, including far right religious right actors, have been able to use and benefit from the aid and development system in ways that parallel some, that sometimes parallel how corporations have been able to use these systems. Yes. So I could. And then Matt is doing a lot of work also on, you know, related to the book, but also more broadly on foreign policy and British foreign policy around the world, which is also another area of, you know, significant public interest and concern that isn't really rigorously covered otherwise in the media.
- [41:34]
B
Wonderful. And if people are interested in that very cool sounding range of projects, where can they find you both?
- [41:43]
A
On Twitter, let's say.
- [41:45]
B
All right, Twitter it is. Anyone who's listening, Claire has obviously shared us a whole bunch of fascinating things from the book, the full title of which, again is Silent How Corporations Overthrew Democracy, just out from Bloomsbury. Claire, thank you so much for sharing your time and expertise with us.
- [42:04]
A
Thank you so much for having me.