The Americans are furious that the European Union has blocked the merger of two huge US companies, a $45 billion deal which would have been the largest ever corporate takeover. The companies involved, General Electric and Honeywell, would have combined to become the dominant world manufacturer of, among many other things, jet engines.
Though European commentators were insisting that this move by EU competition commissioner Mario Monti was not going to sling gas onto the already simmering trans-Atlantic trade war, US analysts were less sure. The new Bush White House is likely to be impatient of what it will see as European protectionist meddling. There are causes enough, such as the continuing subsidizing of European steel and EU bans on the import of US hormone- and antibiotic-reared beef, to start a nasty little trade war.
But perhaps a more important issue to come out of the brewing row is the huge deal itself and what it says about the changing face of multinational business. European empires, especially those of Britain, Holland and Portugal, were established to promote trade. Those empires have been swept away but now the multinationals, whose profits very often dwarf the gross national product of the average Third World country, have replaced them. The one defining element in imperial administrations was that business could only be done on their terms. Though today’s multinationals make much of behaving with respect to the rights of sovereign countries in which they operate, the truth is that they can be utterly ruthless if they do not receive the support and concessions they require. They can close down plants, fire workers, withdraw investments and leave a small developing country economically crippled. Even big states are no longer immune to being kicked about by multinationals. The way that governments of developed countries scrap among themselves as they seek to attract a new auto plant or high technology factory, is often unedifying.
Only where countries have sought to protect their fledgling industries, such as in India and Turkey, has it been possible for big industrial groups, typically conglomerates of businesses, to grow. But these firms are more often than not family-owned. When the protectionist barriers finally go down, in a buck-for-buck battle they will not be able to find the capital to outbuild a multinational. So first there are partnerships or joint ventures and then gradually the global company takes over.
Generally speaking, wherever you don’t see an international name operating, that is where there is not sufficient business to justify the investment in setting up an operation.
Today, the future of hundreds of millions of people all overthe world is being decided around the well-polished boardroom tables of a few hundred multinational companies, some of them European but most American. The most successful of these companies have survived and prospered because they have been ruthless, both to their competitors and their own people. They are answerable to no one except largely anonymous shareholders, whose main measure anyway is purely profit. Their existence, however inevitable, poses many moral questions, which except for the cynical purposes of public relations, the multinationals are incapable of addressing.
