Transnational Strategies of Protection and Defense by Multinational Corporations: Spreading the Risk and Raising the Cost for Nationalization in Natural Resources

Abstract

Multinational corporations in natural resource industries that are challenged by economic nationalists in the countries where they have their production stage can no longer count automatically on the direct diplomatic support of their home governments as they could in the days of the Big Stick or the Pith Helmet. To protect their investments, they are realizing that they may have to devise their own means for the defense of their interests. Gunboats and marines no longer respond unhesitatingly to their beck and call. And even the more subtle pressures from loans blocked, funds impounded, credits unavailable, and aid cut off require a carefully orchestrated private effort to arrange. In the study of transnational relations, the large international natural resource companies have frequently been singled out as nongovernmental actors who possess par excellence the power to carry out their own foreign policy, to form alliances and exercise influence with a scope and range that exceeds the control of the countries in which they operate.' Not all such companies need to perfect these skills in private diplomacy, however. I have shown in a prior study that vertically integrated natural resource companies in which the crucial scale factors or barriers to entry are located downstream from the production stagesuch as tropical agriculture, tin, bauxite, and iron ore-may have various opportunities to keep oligopoly control outside the reach of