10 сентября 1987

Vladimir Andrianov: TNCs: Strike Force of Neo-Globalism

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First Published, 1987 Vladimir Andrianov, 1987











Neoglobalism means total disregard for generally recognised norms of international relations and violation of the sovereignty of nations. It is an outrageous but vain attempt to rob the nations of the right to a free choice.

In other words, this doctrine is nothing new in the age-old system of brigandage. It is a generalised policy of modern colonialism and militarism.

Transnational corporations (TNCs) are the basis and the strike force of this policy. Like giant octopuses they have gripped many nations in Asia, Africa and Latin America in a bid to prop up the remaining elements of the disintegrated system of oppression and enslavement. The task of the TNCs is to retain the developing countries in the capitalist camp as suppliers of raw materials, and areas for capital investment and trade market. No wonder the TNCs move heaven and earth to prevent the newly-free countries from taking the road of progressive socio-economic development.

"We know that some people still regard the world as their private domain and declare zones of their "vital interests" wherever they like," said Mikhail Gorbachev at the Moscow forum For Nuclear-Free World, for Survival of Humanity. "This in turn stimulates the arms race because such views stem from a policy of strength, without which it is impossible to attain political and economic domination. This is stereotyped thinking belonging to a time when it was considered "right" to exploit other peoples, to manage their resources and to arbitrarily decide their destinies."

To attain their aims the neoglobalists use a whole arsenal of economic, political, ideological and even military methods, in particular the expansion of capital and economic diktat, food shortages and the technological dependence of the newly-free countries on the capitalist states.

One of the main levers of neocolonialist exploitation is the huge debt of the developing countries (roughly one trillion dollars), one quarter of which was borrowed to finance the purchases of Western arms and military hardware. The imperialist countries, and above all the US military-industrial complex, use the interest collected on this debt to finance their gigantic military programmes thus shifting onto the newly-free countries the heavy burden of the arms race.

When the TNCs and their patrons cannot achieve their neoglobalist aims through economic leverage, they turn to sabotage, instigate and fan regional conflicts, support internal reaction, intrude in the political life of newly-free I countries,; finance and arm terrorists, and topple unsuitable governments by using direct armed intervention. The "psychological warfare" and all kinds of ideological sabotage have become part and parcel of the policy of neoglobalism.


The developing countries of Asia, Africa and Latin America which have won political independence now have to fight for their economic sovereignty. In a historically short period of time they must overcome their backwardness through modernising economy. Since they won independence, the developing countries have advanced much farther than they did over the entire period of colonialism.

But the imperialist countries that would not stand the greater economic independence of the newly-free nations, seek to keep them dependent and continue exploiting their resources.

This aim is served by the policy of neoglobalism and its basis, the transnational corporations. In the 1980s the TNCs have been expanding their intrusion in the economy of the newly-free countries. In many of them the TNCs have become an inseparable part of the economic mechanism. The TNCs vary their activities in response to changes in the socio-economic situation in the Third World countries and quickly adapt to new conditions.

The TNCs" economic expansion is based on direct investment of productive capital and the formation of foreign subsidiaries and branch companies. By exporting productive capital the transnational retain control over the economy of the newly-free countries and exploit their material and labour resources.

In 1983 the total volume of direct foreign investment in the developing countries amounted to some 270,000 million US dollars, with more than 165,000 million US dollars invested in the 1970s and 1980s1. The US is the largest investor in the developing countries accounting for over 50 per cent of all capitalist countries" investment; Japan, West Germany and Britain account for 10 per cent each; France for 5 per cent; and Canada for more than 3 per cent. The US also leads the capitalist fraternity in the number of TNC subsidiaries in Asia, Africa and Latin America. Of the 28,000 TNC subsidiaries in the newly-free countries, as of early 1980s, some 12,000 were owned by the US, 6,000 by Britain and about 2,000 by Japan.2

The largest TNC investors in the developing countries are the American Exxon, General Electric, General Motors, Chrysler and Union Carbide; the British Royal Dutch Shell (including Dutch capital) and Imperial Chemical Industries; the Japanese Mitsubishi, Nippon Steel, Matsushita Denki, Marubeni and Torei; West German Siemens, Klockner and Robert Busch; the Ij)utch Philips; and the Swedish Ericsson.

TNCs" investment in the developing countries is extremely irregular. The bulk (over 50 per pent) is invested in industrially more developed Third World nations called "the new industrialised states". In Asia these are South Korea, Hongkong, Taiwan, Singapore and Malaysia.

On the other hand, most Third World countries with a low per capita income (less than 500 dollars) still remain on the outskirts of TNCs" attention which invested only 7.6 per cent of capital in these countries in the 1980s.

The same trend underlies regional distribution of direct investment. The growing TNC investment in Latin America and Southeast Asia leads to the curtailment of investment in Africa and South and West Asia.

The above shifts depend on the changes in the branch structure of foreign investment in the developing countries. More funds are invested in the dynamic processing industries and, consequently, in the countries where these industries are developed. Investment in agriculture and raw materials, once the key sphere of foreign investment, has been on the decrease.

The activities of TNCs promote, in a way, economic progress of the developing countries by modernising some branches, establishing certain import-substituting industries, increasing employment and exports. Yet the forms and methods of TNCs" activities often run counter to the tasks of economic development of the Third World countries and have long-term negative consequences.

In the past few years the developing countries have been suffering from lack of modern technologies which could propel their economic progress. They had to turn to the TNCs for assistance. The TNCs agreed to supply modern technology not out of altruism but because they pursue their bid for maximally increasing production operations in the Third World and deriving superprofits.

The developing countries of Asia, Africa and Latin America sometimes receive from the TNCs technologies which turn out to be outdated or inadequate for local conditions and possibilities. The technology transfer agreements often include clauses which limit its use. Besides, the new technologies are first supplied to the TNC branches and only then passed on to other industrial sectors.

The industrialised countries often transfer ecologically-hazardous industries to the Third World and reduce the cost of production by saving on purification facilities. All this leads to environmental pollution in many Third World countries.

Thus, in Malaysia one-third of all polluted water bodies were contaminated by palm oil-producing plants, the largest of them controlled by the Japanese TNCs Marubeni, Mitsubishi and Nippon Oil and Fats. The US Union Carbide branch in India is known to have caused a chemical disaster there in the city of Bhopal. Pollution is rampant in such industrially developed regions of the Third World as Rio de Janeiro, Mexico City, Bombay, Tehran, Seoul and Jakarta. The TNCs have caused the Third World ecological damage to the tune of tens of billions of dollars.

In general, the technology supplies to the Third World do not meet the demand and are a heavy financial burden on the national economies. According to some estimates, the newly-free countries paid some 15,000 million US dollars for patents, licenses, technologies and trade marks in the mid-1980s.

This sharply reduces the worth of technology supplies and affects the development of national technological potentials. In a word, technology transfer is used by the TNCs to exploit the developing countries of Asia, Africa and Latin America.

The TNCs set up many of their subsidiaries and branch companies in the "free trade zones." There are some 90 such zones in the Third World, with nearly half of them in Asia. The TNC subsidiaries in these zones specialize mainly in the assembly and production of electronic components, toys, clothes and sportswear.

The high competitiveness of these goods is accounted for by cheap local labour who, unlike the workers in capitalist countries, draw no social benefits.

Seventy per cent of workforce employed in the free trade zones are women who are most ruthlessly exploited, particularly in South Korea, the Philippines, Thailand, Malaysia and Indonesia. The proprietors believe that women workers cause less complications, and cost less than men or machines. These zones are sometimes termed as "labour camps" because the employers prohibit trade unions, strikes or political demands there.

Besides, by setting up their enterprises in the free trade zones the TNCs save on the infrastructure (roads, buildings and power supply paid for by the local governments). The TNCs draw additional profits from tax-free import of raw materials and export of manufactured goods, relief from taxes and the like. So the TNCs" manufacturing enterprises in the Third World bring huge profits.

The activities of the TNCs in the mining industry and agriculture of developing countries deplete their mineral resources. It happened in the case of iron and tin ores in Malaysia plundered by the British companies Eastern Mining, London Tin Corporation and Charter Consolidated. The Japanese TNCs have caused irreparable damage to the forests of Indonesia, Malaysia and other Southeast Asian countries.

The TNC giants, these financial behemoths with a broad sphere of international activities, have at their disposal various methods of influencing the foreign trade of the young states. The limited commercial practice, agreements on preferential rights on sales, prices and the use of patents and licenses, and intra-company operations and transfer prices not only complicate the foreign trade activities of the Third World countries but result in great financial losses for the developing countries involved in international trade.

A large part of the trade of the developing countries with imperialist states is effected through intra-company TNC channels using transfer prices. UN analyses show that the TNCs have special reasons for using transfer prices in trade with the developing rather than the industrialised countries. Fearing nationalisation, the TNCs seek to speed up investment turnover and avoid taxes on profits. Another reason is that transfer prices allow the TNCs to evade limitations on the export of profits.

The TNC manipulations with transfer prices promoted their monopoly status at individual markets. It transpired in the early 1980s that goods supplied by the TNCs to Colombia were over-priced on the average by 155 per cent in pharmaceutics, 54 per cent in electronics, 44 per cent in technical rubber engineering and 25 per cent in the chemical industry. Some foreign goods were over-priced by 3,000 per cent. The same applies to Peru where imported medicines cost 300 per cent more than in the producer country, Iran which was sold raw materials at a price 100 times higher than the retail prices, and India where TNC dye-producing branches raised prices for imported dyes by 140-350 per cent.

The transfer prices machinations affect most developing countries which since the mid-1960s have lost 200-229 billion US dollars as a result of price scissors.


The development of certain Third World industries encouraged in part by foreign investment has failed to enhance the developing countries" economic independence. In the meantime, increasing penetration by transnational corporations into developing economies only consolidates the links between emergent nations and major industrial centres of imperialism. Thus economic expansion by transnationals is becoming a crucial part in a succession of moves to promote "strings-attached" capitalism in emergent countries. This dependence in the past few years has been added to and diversified in many respects.

In some countries, the encouraging of foreign investment has facilitated its role in the reproduction of the Gross Domestic Product (GDP). In the "newly industrializing countries" about half of the GDP is generated by the foreign-controlled sector of which the bulk belongs to enterprises controlled by transnational corporations.

This means that Third World industrialization is virtually in the hands of transnationals. Many branches of developing economies, particularly the manufacturing industry (electrotechnical, auto assembly plants, etc.), offer a vivid example of "parcelated" production, whereby the initial and final stages of technological processes are headquartered in the Western industrialized countries and the intermediate stages in the developing nations. It is a new kind of technologial bondage in which emergent countries are ever more deeply integrated in the world capitalist economy as subordinated and unequal members.

Many Third World economies are still heavily export-oriented, something that makes them ever more dependent on the chief centres of imperialism. In spite of recent attempts to diversify exports, many a developing nation is still a one-item exporter. For example, by the mid-1980s 54 per cent of Gambia"s exports fell on peanuts, 52 per cent of Colombia"s exports on coffee, 47 per cent of Burma"s exports on rice, 43 per cent of Chile"s exports on copper, 44 per cent of Ghana"s exports on cocoa beans, 27 per cent of Costa Rica"s exports on coffee and 24 per cent on bananas, and 24 per cent of Morocco"s exports on phosphates.

This lopsided specialisation makes a country"s economy entirely dependent on exports and world market conditions. This dependence is particularly hurting during all kinds of upheavals in the foreign markets as well as during economic crises in Western countries.

Earlier the Third World was dependent on the West in raw materials sales. With the advent of manufacturing industries difficulties cropped up also for its manufactured goods traders. As a rule, semi-finished products turned out by transnationals are more or less easily sold, because they are sought by parent companies. However, attempts to sell finished goods ran into all kinds of protectionist barriers devised by the home countries of transnationals.

At the present time import restraints cover a variety of manufactured goods, with the draconian measures being applied against highly competitive goods from the Third World, such as textiles, clothes, footwear, electronic components, calculators, radio sets, leather goods, carpets and garments, rolled stock, electrical equipment and some processed foods, including coffee, palm oil, cocoa-based products etc.

The problem is aggravated by the fact that Asian, African and Latin American countries are heavily dependent on the West in marketing and advertising since most of the commercial networks in the capitalist states are monopolized by transnationals. Transnational corporations currently control about half of Third World export-import transactions. In raw materials trade, their share in the early 1980s amounted to 70-80 per cent.

Under the impact of transnationals, Third World trade has been split into two distinct channels-the usual commercial deals and transfer sales. The latter differ from normal commercial transactions in that they do not depend on independent dealers and middlemen and are largely isolated from the influences of the world market and international competition. Commodity traffic through transfer channels is regulated by intracompany planning at transnationals" headquarters, rather than encouraged by traditional means.

Transfer sales in overall corporate trade are vast in scope and scale, ranging between 25 and 95 per cent for many raw materials exports. In the early 1980s the share of 15 major transnationals amounted to 90-95 per cent in iron ore exports; 90 per cent in sawn timber exports; 85 to 90 per cent in cotton, tobacco, coffee, jute, wheat and corn exports; 85 per cent in cocoa beans exports; 80 to 85 per cent in copper and bauxite exports; 80 per cent in tea exports; 75 to 80 per cent in tin exports; 75 per cent in oil exports; 70 to 75 per cent in bananas and natural rubber exports; 70 per cent in rice exports; 60 per cent in sugar exports; and 25 per cent in raw hides exports.1

Most of intracompany transactions are effected in transfer prices. Transnationals set prices for goods they buy and sell in Asian, African and Latin American countries, relying on their control of the world markets, patent monopoly, trade marks and other privileges. Transfer sales cover the most arbitrary and secret operations accomplished by transnational corporations that often violate local laws of emergent nations.

As a result, developing countries find themselves heavily dependent on rapacious price policies of the TNCs. According to some estimates, what they get for their exported raw materials amounts to about a quarter of the product selling price.

Furthermore, while producing the bulk of raw materials, emergent nations often cannot deliver them to consumers. In the mid-1980s they controlled only about 14 per cent of the world mercantile marine"s tonnage. That explains why freight costs amount to only 5.3 per cent of the product price for the capitalist countries and almost twice as much, that is 10.7 per cent, for developing nations.2 Having scored some achievements in the production of exports, emergent nations by far remain almost entirely dependent on transnational shipping companies of the imperialist powers in the handling and ensuring of their export traffic.

In the era of the scientific and technological revolution economic progress in developing countries largely depends on the extent to which they use advanced technologies and scientific discoveries and inventions. One of the chief goals pursued by transnationals in technological policy is to safeguard their monopoly on know-how. As a result, developing countries know no other way to acquire technology and know-how, of which 80 to 90 per cent is controlled by the self-same transnationals, except importing it. For instance, should one of the developing countries want to produce aluminium, most of them would then have to agree to terms imposed on them by such transnationals as ALCAN, ALCOA, Kaiser, Reynolds or Pechiney that have a virtual monopoly over aluminium production.

Over 90 per cent of scientific researchers of the capitalist world live in industrialised countries. Of about 3.5 million patents registered throughout the world in the early 1980s only six per cent belonged to the developing countries, an indication that the fruits of the technological revolution are reaped by the imperialist powers and their transnationals commanding advanced technology.

Transnational corporations want to prevent real transfer of technology to the developing nations under all kinds of pretexts. Even in cases of a transfer of technology for the production of certain items there has not been actual sharing of know-how in most cases.

Analysing the mechanism of technology transfer to Brazilian companies, the magazine Industria e produtividade, an official organ of the National Conference of Brazil, wrote: "Attention should be drawn to the fact that the process of buying and selling technology is not technology transfer. The use of the word "transfer" instead of "purchase" creates an illusion that the transferring side makes an altruistic act offering the buyer all the know-how it commands in the field in order to help emergent nations solve some of the problems facing them. But what usually happens in real life is the act of selling in which the seller more often than not hides the real know-how, selling operation manuals instead."1

One of the ways for transnational to sell technology without transfer of know-how is to trade in what they call sealed technology packages, in which case no particulars about technological processes are given to client countries that receive only operational units and operating manuals. As the arrangement does not imply a real transfer of technology, emergent nations find themselves always dependent on technical assistance of the transnationals.

Access to advanced know-how could significantly quicken the pace of development in emergent countries, narrow the gap between the developed and developing worlds and facilitate the dismantling of the system in which one group of countries exploits another group. However, transnationals turned their monopoly on scientific and technological achievements into a powerful leverage for imperialist subordination and exploitation of emergent nations.

Asian, African and Latin American nations in the 1960s, after attaining political independence, depended on Western goods and technology. Today, still depending on the same goods and technology, they owe the West a staggering debt of about one trillion dollars which has grown to a point where it begins to reproduce itself on a vast scale.

Some debt-trapped nations need new financial injections as badly as a drug addict needs a shot, the fact that makes this kind of dependence increasingly dangerous, damaging and frought with dire consequences.

It would be erroneous to say that the ruling imperialist quarters are unaware of the danger inherent in the situation. However, their concerns boil down to just one end-how to safeguard the existing system of waxing rich on exploitation and super exploitation of the developing nations, how to push them still deeper into the quagmire of debts.

The Third World"s contribution to some economic branches is regarded by transnationals as a ticket to further exploitation and the maximization of profits. That is why the development of new industries and promotion of corporate investment in developing countries cannot be qualified as industrialization. It is a lopsided process because the development of productive forces in its first phase becomes entirely dependent on the imperialist powers which are the home countries of transnationals. The bondage changes in form, rather than lessens, growing ever more sophisticated structurally and technologically.


The world capitalist economy is crisis-ridden, with all capitalist countries, particularly the leading, plagued by a recurrent economic crisis, compounded by energy, currency, raw-materials and food crises.

These are rooted in the post-war economic trends, such as concentration of financial resources and industry in the developed countries, the fast expansion of the TNCs, the growing role of the state-monopoly capitalism, and the monopolisation of the results of the scientific and technological revolution in Western countries.

The post-war period has seen new features of the crisis in the capitalist economy. Economic growth has declined, the periods of revival have become shorter, less pronounced and less stable. Inflation and unemployment have been growing fast, financial instability has become chronic, and cyclic crises have intertwined with structural ones, spilling over into the emerging nations. Lenin wrote that the process of reproduction under imperialism had become international following internationalisation of production. Contradictions of capitalism had transcended national boundaries, engulfing the whole of the world capitalist economy.

Crisis developments spread to backward countries which have not yet reached the stage of capitalism because they are dependent on world imperialism and because the framework of the capitalist relations of production expands. Practice has shown that the higher the degree of capitalist development in any particular developing country or region and the stronger the positions of foreign capital and TNCs there-the greater the impact of the recurrent crises on the developing countries.

Attempts by the imperialist nations to deal with their economic troubles at the expense of the developing countries have become particularly obvious in recent years, with the TNCs being the crisis-exporting vehicles acting as catalysts of crisis developments within Asian, African and Latin American nations. Witness the crisis which hit capitalist countries in 1980-1982.

Never before had a crisis in the developed countries so quickly triggered an economic slump in the Third World, particularly in the Middle East, affecting virtually the entire world capitalist economy. Indicatively, the developing countries suffered more than the developed nations. The decline in growth and the rise in inflation and unemployment were much more pronounced there than in the US, Western Europe and Japan.

The growth of the GDP in the developing countries in 1980-81 decreased 0.2 per cent, and in 1981-82 it grew at a rate of 0.5 per cent, far below the average of 7 per cent sought by the UN Development Programme for 1981-90. The per capita income dropped, mostly in the least developed countries.

The unfavourable situation on the world commodity markets, the low demand for the traditional Third World exports caused prices to plummet. In 1981-82 the export price index in the developing countries on the whole was down 7 per cent, though prices for Latin American commodities decreased 12 per cent, African by 8 per cent, and Asian 4 per cent. High prices of manufactured goods, the main import items of the newly-free nations, worsened the terms of trade, inequitable as it is for most Third World countries. The terms of their trade worsened by 7 per cent.

The economic plight of the newly-free countries is deteriorating as the advanced capitalist nations intensify protectionism, putting up more and more non-tariff barriers in addition to tariff restrictions. In recent years, on top of import quotas, compensatory and anti-dumping duties, there appeared "voluntary" export restrictions, agreements on "streamlining trade", sanitary standards, documents certifying the origin of goods, new marking and packaging requirements, etc. Experts estimate that protectionist restrictions have covered some 65 per cent of the imports of manufactured goods from the developing countries.

The overall volume of Third World exports has decreased by 6 per cent (by 9 per cent in Asia, and by 2 per cent in Africa), with the export earnings of the developing countries in the crisis period down by 80,600 million US dollars.1 Since for most of these countries exports remain the basic source of hard currency and are vital for economic development, their reduction has had an impact on all aspects of economic life in the developing countries.

The current international debt crisis is unprecedented in terms of magnitude and implications. In 1982 the foreign debt arrears of 35 nations reached some 140 billion dollars.

Faced with the increased likelihood of default, many Western creditors, particularly private transnational banks, have started to withdraw the earlier granted loans, thus making it impossible for the borrowers to meet their current obligations. As a result, the net flight of capital from the developing countries has totalled some 11 billion dollars.

As the debt crisis persists, the transnational banks and financial institutions of the imperialist nations, fearful of the possible disruption of their credit system, provide "emergency financial aid" to the developing countries and reschedule their debts, using this aid as leverage against the Third World and as a means of furthering their neo-globalist object: /es.

Inflationary processes have intensified, with the annual price increase in 1982 at 34.3 per cent, much more than the corresponding figure for the industrially developed nations. TNCs are manipulating prices, making inflation even worse. As a result, inflationary processes are shifting to Asian, African and Latin American countries, with their impact greater every year. There is a direct relation between the positions of the TNCs abroad and the rate of inflation. Prices grow faster in those countries where the TNCs are firmly established. For instance, in 1985 inflation was running at 463.3 per cent in Argentina, at 217.9 per cent in Brazil, at 169.9 per cent in Peru, and at 59.8 per cent in Mexico.1

Convertible currencies used in settling international accounts serve as yet another means of exporting inflation to the developing countries and intensifying their exploitation.

The fall in the leading economic indicators has been attended by worsening social problems in many developing countries. The number of unemployed and under-employed in the developing countries has grown to 500 million, or 40 per cent of the able-bodied population. These figures show that the problem of unemployment is far more acute in the Third World than it is in the developed countries. Apart from that, real wages have fallen and the distribution of wealth has become even more uneven-to the detriment of large sections of the population.

Significantly, even during more or less dynamic economic growth in the developing countries wealth is distributed unevenly and employment fails to reach the desired level, while in times of crisis and a general worsening of the situation the low-income sections suffer the most.

In 1986 most developing countries were once again in crisis. The deteriorating situation on the world capitalist market affected the Third World nations more than other countries primarily because there was a sharp fall in the prices of raw materials and fuel, particularly oil, which accounts for a large portion of their exports. As a result, Third World exports shrank both in volume and cost. That is not accidental. Using the achievements of technological progress and reducing the requirements for raw materials and energy products, the imperialist nations are seeking to shift the burden of the crisis on to the economically weaker developing countries, thus intensifying their exploitation. On Western estimates, the developing countries have made the advanced capitalist nations a "gift" of several dozen billion dollars.

So, the social and economic crisis, compounded as it is by recurrent recession, is a global problem which is impossible to resolve without overhauling economic relations between the developed and developing countries, putting TNC activities under control, and changing the entire world economic order.


Neoglobalism increasingly promotes the export of loan capital to the developing countries. Between 1980 and 1983 the loans and grants of Western countries or the West-controlled international financial institutions to the Third World totalled 238 billion dollars, greatly exceeding direct investments. Loans are becoming the main form of the export of capital to the developing countries, highlighting its usurious character.

The pattern of the export of loan capital to Asia, Africa and Latin America is changing. The specific share of private finance, coming from major transnational banks, has increased. In the 1980s, it has reached 64.3 per cent of overall external finance at the expense of official development aid which has gone down to 35.6 per cent. The proportion of easy-term finance reaching the Third World has reduced markedly to 38 per cent in favour of the loans extended on commercial or near-commercial conditions.1

This shows that the imperialists are toughening financial policies with regard to the developing nations. For instance, the United States considers that American aid should be handled by private enterprise and not by the government. US aid should be bilateral and geared to Washington"s political and military interests, they say. Such views confirm the West"s neocolonialist attitudes to the Third World"s external finances.

A considerable proportion of US aid goes for military purposes. In 1985 US military aid climbed to 113 billion dollars, 38 per cent of overall American foreign aid. This leads to the militarization of emergent countries" economic activity.1

Loans further increase the tremendous debt of Asia, Africa and Latin America. The debt question has economic and political aspects. What is at issue is not only the current financial commitments of many Third World countries, but also their economic future, particularly the unreliable foundation of their loan-geared growth and its sinister implications.

Between 1980 and 1986 external debt of the developing countries grew from 570 billion to 967 billion dollars and its share of these nations" GDP rose from 25.9 to 40.4 per cent. In 1987 the Third World"s debt is likely to exceed a trillion dollars. Latin America is responsible for 54 per cent of the Third World"s debt, Asia for 27 per cent and Africa for 19 per cent.2

Three countries, Brazil, Mexico and Argentina, where the multinationals" positions are particularly strong, account for nearly a third of the Third World"s debt. The major debtors in South and Southeast Asia are Indonesia, 28.5 billion dollars (1985); India, 26.3 billion dollars; the Philippines, 24.8 billion dollars (1984); Malaysia, 12.8 billion dollars; and Bangladesh, 5.2 billion dollars (1984). Transnational banks are active in enslaving emergent countries financially. For instance, 1,400 private commercial banks extend loans to Brazil, and some 1,000 such banks are involved in such operations with Mexico. Nearly 70 per cent of the Third World"s debt is traceable to 82 transnational banks, including 24 Japanese, 15 American, 11 West German, 8 French, 8 Italian, 5 British and 5 Canadian.

In the mid-80s over half of the transnational banks" overseas offices have been in the Third World, with the United States dominating in Latin America, Japan in Southeast Asia and Western Europe in Africa.

Foreign debt grows through debt-servicing payments which currently exceed new loans and grants.

Debt return payments absorb developing nations" foreign exchange receipts from exports. Foreign exchange goes to return the debt rather than purchase commodities these nations need.

The export-debt return ratio shows how far this process has gone. In 1983 the corresponding indice was as follows: Argentina, 149 per cent; Brazil, 82 per cent; Peru, 66 per cent; Chile, 63 per cent; Mexico, 59 per cent; and Columbia, 43 per cent. For the developing countries as a group in 1986 the figure averaged 24.2 per cent, which fact shows that newly-free states do not use nearly a quarter of export receipts for development.1

This undercuts the import potentialities of Asia, Africa and Latin America. Many developing nations curtail imports to the detriment of social and economic programmes.

External debt also makes for imbalances in national finances. These imbalances reveal themselves in budget deficit, with debt-based expenditures vastly exceeding revenues in big debtor-nations.

Debt servicing has an adverse impact on developing states" balances of payments, showing deficit for some years now. In 1983 the aggregate deficit of the Third World"s balance of payments reached 20.4 billion dollars, with Latin America accounting for 58.8 per cent of the total, Africa for 25.1 per cent and Asia for 16.1 per cent. In Asia, the bigger deficits are shown by India, the Philippines and Thailand.1

The withdrawal of profits by multinational corporations also has a bad effect on the balance of payments. In 1983 the outflow of funds from the developing countries reached 21.3 billion dollars, nearly doubling new direct investments. Profits are expatriated with the aid of transnational banks which thus deprive developing nations of a considerable part of their GNP.

The worsening solvency status of most countries in" Asia, Africa and Latin America results in the bulk of new external finance being used to return debts and finance balance-of-payment deficit, not for development. Nowadays this claims up to 50 per cent of the Third World"s external finance coming from the West.

Difficulties of the developing countries due to repaying their huge debt adversely affect national currency systems, particularly domestic pricing. In 1986 consumer prices grew by an average of 25.9 per cent in the Third World. Developing countries have a much higher level of inflation than the West.

The imperialists use financial bondage to enforce upon newly-free states" development patterns favouring multinational corporations. They insist on import and private foreign investment liberalization, public sector dismantling, devaluation, social and economic growth curtailment, and involvement of their experts in drafting the budgets of developing states.

There is a direct link between the debtor status of the developing nations and their involvement in militaristic preparations. Neoglobalism uses as its bases South Korea, whose debt has reached 47 billion dollars in the mid-80s; the Philippines, 25 billion dollars; Pakistan, 15 billion dollars; Chile, 15 billion dollars; Thailand, nearly 10 billion dollars; Sudan, 6 billion dollars; Zaire, 4 billion dollars; and Somalia, over a billion dollars.1

The developing countries" indebtedness allows the imperialists to have military bases there. The imperialist military presence in the Third World is used for acts of aggression and also to protect the interests of the Western investors and perpetuate the developing nations" financial slavery.


The arms race, now assuming unprecedented proportions, has been one of the most dangerous developments ever since World War II. It has been a sequel to, and manifestation of the policy of neoglobalism of the imperialist powers which are banking on the direct or indirect use of armed force to retain their economic, political and military positions undercut by the irresistible process of the revolutionary remaking of the world."

It is the transnational corporations of the military-industrial complexes (MIC) of the U.S. and other Western countries, waxing fat on war orders, that have the greatest stake in spiraling military expenditures and in the new and dangerous round of the arms race.

It was President Eisenhower who, speaking at the end of his term of office on January 17, 1961, first noted the rising influence of the MIC in the economic, political and even intellectual life of the United States. His warning remained unheeded, however, and today we bear witness to the formidable danger that the MIC is posing not only to the US but also to the rest of humanity.

Transnationals make up the core of the military-industrial complex. Arms manufacturers are those that used to be called cannon and dynamite kings at the turn of the century and who now preside over aeromissile, nuclear and electronic empires. This is the elite of the military business, a relatively small group of corporations, comprising about 20-25 companies in the U.S. and between 10 and 15 companies apiece in Great Britain, West Germany and France, most of which are the capitalist world"s biggest monopolies.

The world community knows most of these TNCs, above all, by their dirty tricks or loud scandals. In the last decade, 115 out of 500 big American corporations alone have each been found guilty of at least one major offence.

ITT is known to have been involved in overthrowing the legitimate government of Salvador Allende in Chile and Lockheed in generously bribing Japanese government officials under Prime Minister Tanaka. The Northrop Co. was engaged in similar shady dealings in the countries of Southeast Asia. The criminal negligence of the Union Carbide plant managers in the Indian city of Bhopal led to a gas leak affecting close on 50,000 people of whom over 2,000 died and 20,000 have since been in danger of becoming blind and contracting lung, kidney or other diseases. These are just a few typical features of MIC transnationals.

MIC power is a cross-breed of monopoly rule and the power of the imperialist state. Many government officials in the U.S. and NATO countries are closely connected with weapons-makers. The present US Administration is a clear case in point.

Americans say that America is in California, the home base of 8500 TNC enterprises, the Pentagon"s main contractors getting nearly 90% of all war orders. That state produces 80% of aerospace technology and has created 40% of the U.S. nuclear arsenal, and there is the famous Silicon Valley there with its upwards of 600 electronics and electrical engineering monopolies. It is there, too, that the basic programmes of the notorious SDI are being worked out. California is, indeed, a Star Wars factory.

Many high-ranking officials of the present White House Administration are closely connected with the military Big Business. It is an open secret that Defence Secretary Caspar Weinberger, Secretary of State George Shultz, Vice-President George Bush, former CIA Director William Casey, Senators John Tower, Lloyd Bentsen, Alan Cranston, Carl Levin and many others are directly or indirectly connected with the military business. As The U.S. News & World Report has figured out, most of the US Defence Secretaries since 1947 have been the proxies of the MIC corporations.

The military-industrial complex is a you-scratch-my-back-and-I-scratch-yours bunch of manufacturers, officials, and military. Generals become presidents of munitions corporations while company presidents become ministers or vice-ministers. Congressmen support the demands of munitions corporations and their owners back up Congressmen. A vicious circle, indeed.

Annual U.S. military appropriations came up to just about $300 billion in 1986 (the projected outlay for 1987 is $312 billion), and those of the NATO countries were $367.4 billion in 1985, including $23.8 billion in Britain, $20.7 billion in France, $20.3 billion in West Germany, $9.5 billion in Italy, and $26.4 billion in the other European NATO countries, and those of Japan, $12.9 billion. The aggregate military spending of the non-socialist world in the entire post-war period (1948-1985) was $11,800 billion. The arms race around the world cost $1.7 million a minute in 1986.

The arms race is entering a yet more dangerous phase, with new types of military activity under way, and spreading to the seas and outer space as well as to 28 regions and countries now free from colonial domination. Many developing countries are fast expanding their defence budgets and arms imports and starting both licensed and national munitions production. The operation of transnationals in a number of developing nations in Asia, Africa and Latin America has spawned "military-industrial mini-complexes" and encouraged the elements having a stake in growing military programmes. The involvement of the emergent nations in the arms race is an important objective of the doctrine of neoglobalism.

The military expenditure of the developing nations has been swelling even faster than that of the advanced capitalist states. The annual military appropriations of the developing countries rose from $13 billion in 1960 to $93.5 billion in 1982. In 1970-1982, the military expenditure of the developing nations amounted to about $800 billion, which was roughly equivalent to the aggregate gross national product of all the countries of Africa, South Asia, South-West Asia and the Middle East, with one-third of the world"s population, in 1980.1

On the whole, the emergent nations have come to spend the same proportion of their budget money for military purposes as the advanced capitalist countries, and have even outstripped many of them in this respect over the last few years. In the early "80s, the arms bill share of the national budgets of the developing nations averaged 17%, with 23.5% in the countries of South-West Asia and the Middle East, 19.7% in the Far East, 15.7% in South Asia, 13.8% in Africa, and 9% in Latin America. The largest proportion was in Asian countries-40% in Oman, 32% in Taiwan, and 27-28% in South Korea, Saudi Arabia and Iran.

A considerable proportion of the resources set aside by the developing nations for military purposes is used to buy arms from imperialist powers. International arms traffic has become a most adverse development at the present stage with much of this trade monopolized by transnational corporations. The concept of neoglobalism treats arms supplies as a major instrument of commercial and economic penetration into the developing nations and of drawing them into the orbit of military preparations.

The demand for arms is artificially cultivated by TNCs and imperialist states. The annual arms imports increased from $2.4 billion in 1970 to $8.4 billion in 1983, in the 1975 prices or more than $16 billion in current prices. In the early "80s, the developing nations brought in over 62% of the total world imports of basic conventional arms.

The growing arms imports have led to the militarily advanced countries of Asia, Africa and Latin America being equipped with the most up-to-date systems and types of weapons: jet aircraft, up-to-date tanks, missiles of various types, electronic equipment-all TNC products. About a dozen developing countries are on the nuclear threshold.

In addition to exporting arms to the developing countries, the TNCs seek to transfer some of their military production over there. There were various munitions capacities in 30 developing countries in the mid-"80s.

The range of munitions produced is rather wide, comprising as it does fire-arms and tanks, armoured vehicles, aircraft, submarines and missiles. The biggest American TNCs-General Electric, Hewlett-Packard, Motorola, Texas Instruments-have created over 120 subsidiaries in developing countries for the manufacture of electronics and electrical engineering products for the US munitions industry. In the early "80s, the countries of Asia, Africa and Latin America accounted for around 40% of the American imports of electronic components for military purposes.

The expansion of munitions industries in the developing countries is bringing the transnational billions of dollars of profit through licenses for arms manufacture, construction of military installations and exploitation of local manpower. In this context, the TNCs of the imperialist powers seek not just to expand the markets for all kinds of military and industrial products and technology but to reproduce the basic elements of the Western military-industrial complex in the developing countries. So what happens is something like "internationalization" or "globalization" of the military business.

The expansion of military expenditure and the involvement of developing countries in the arms race bear hard upon their economies, exercise a negative influence on economic growth rates, the size and structure of investment, the pattern of foreign trade, and the balance of payments, augment their foreign debt and draw off manpower resources. There are about 15 million servicemen in the developing countries.

The more material and intellectual resources go for military purposes the less remains for vital social programmes. One must not forget that over a billion people in the developing world still live in absolute poverty. One in every four is underfed. Millions of people go hungry and 300 million children are out of school.

The militarization of the economy of the developing countries with the involvement of transnational corporations has been slowing down progress in overcoming the backwardness of emergent nations, widening the gap between the capitalist centres and their outlying provinces, and perpetuating the unequal status of the developing countries in the world capitalist economy.

Neoglobalism further aggravates international tension, building up military expenditure and speeding up the arms race in Asia, Africa and Latin America and preventing the establishment of a new international economic order.

Neoglobalism is compounding the instability and distorting international economic relations, thereby certainly holding up the progress of humanity and reducing the opportunities for effective assistance to the developing nations which have some two-thirds of the world"s population. More and more people in the world are coming to realize that the continued arms race at global and regional level and a swift resolution of the pressing issues confronting the emergent nations are totally incompatible.

The neoglobalist policy of imperialist powers has taken on a dangerous aspect for the whole world since the present U.S. administration came into office. A major goal of this policy has been to enable American TNCs to regain the positions they have lost around the world during the last few decades and capture new ones. The doctrine of neoglobalism proclaims the right of imperialist powers to resort to intimidation, blackmail or pressure in dealing with the emergent nations, back up all kinds of subversive and terrorist groups and use armed forces to overthrow progressive regimes. While riding roughshod over the generally accepted standards of international law, the U.S. is unilaterally declaring just about all parts of the world to be the areas of its "Vital interest." It has been making its intention to impose the American way of life and scheme of things all over the world an official government guideline. The normal functioning of the military-industrial complex is impossible without massive militarist indoctrination. TNCs and military departments have their own information services and channels. The Pentagon alone is financing more than a thousand newspapers and about 400 magazines and various bulletins with a total circulation of over 12 million. The Department of the Navy maintains contact with 600 television centres and 5,000 radio stations. In the last 20 years, the appropriations for the Defence Department"s ideological warfare effort to sustain the policy of neoglobalism have increased 15-fold.

The machinery of ideological expansionism, including its militarist aspect, has the latest in high technology at its disposal, like cable television and direct relay satellites. The screen, TV, and printed "products of violence" are now an important item in American TNC exports.

The tactics of neoglobalist propaganda are to sow the seeds of misturst and fan up hatred for the lifestyle and ideals of Socialist society. It is to this end that the achievements of actual Socialism are glossed over and the domestic and foreign policies of the USSR are misrepresented.

But the main preoccupation in stoking up militaristic and chauvinistic ambitions is to create favourable conditions for TNC lobbies in the legislative assemblies to get more cash for military ends. In defiance of common sense, they go as far as to scuttle the existing system of arms control agreements.


Security and progress all over the world and specifically in developing countries can be ensured only through relaxation of tension, limitation and reduction of military activity and establishment of a new international economic order. This is the sole alternative. Life places the questions of international detente, curbing the arms race, reducing of the military expenditures and using the sums thus released for development, high on the list of the priorities facing the emergent states.

Earliest termination of the arms race and switching over to disarmament became a particularly pressing issue in the mid-1980s. In the context of the further aggravation of the general crisis of capitalism and deepening of its internal social problems (an economic crisis, inflation, growing unemployment, class struggle, and the intensification of the TNCs" inter imperialist rivalry for the markets and sources of raw materials and energy), the opponents of the policy of disarmament and detente have perceptibly intensified their activities. Putting the concept of neoglobalism into practice leads to deterioration of the international situation.

The world is going through a crucial stage of its history, a stage which requires a radical change of our way of thinking, resolute renunciation of the obsolete stereotypes, categories and forms of political mentality, and a sharp turn from confrontation to international detente.

To counterbalance the concept of neoglobalism, the Soviet Union has advanced the concept of an all-embracing system of international security the essence of which lies in a comprehensive approach to resolving the outstanding issues in all spheres-military, political, economic and humanitarian.

Mankind has already witnessed first examples of a new political thinking. On January 15, 1986 the Soviet leader proposed a programme for stage-by-stage and eventually complete elimination of nuclear weapons before the end of the 20th century. At the 27th Congress of the CPSU held in February 1986 this programme organically merged with the Soviet concept of an all-embracing system of international security.

In June 1986, the countries of the socialist community advanced a detailed plan for radically reducing armed forces and conventional arms in Europe on the territory from the Atlantic to the Urals. New proposals were tabled at the Geneva Disarmament Conference, at the Geneva Soviet-US talks on nuclear and space weapons, and at the Vienna talks.

A broad platform for ensuring security and cooperation in the Asian-Pacific region was advanced. It was suggested that a safety regime for development of the nuclear power industry be created and that a world space organisation be set up. A programme for building "Star Peace" was submitted to the United Nations as an alternative to the "Star Wars" programme.

For more than sixteen months the Soviet Union did not conduct any nuclear tests, calling upon the USA to follow its example. The USSR also adopted a new approach to the verification issue. Fresh evidence of the USSR"s peaceable line were the far-reaching Soviet proposals on disarmament at the Soviet-US summit meeting in Reykjavik.

The confrontation policy cannot ensure peace and security. This is why the USSR"s call for jointly seeking for ways to promote peace, security and cooperation in Asia and in the Pacific zone is particularly topical. The peoples of that area of the world are interested in a coordinated approach to regional issues.

The Soviet Union proposes that disputable questions be resolved through bilateral consultations, that mutual confidence be built and prerequisites for holding an Asian forum, on the pattern of the Helsinki Conference, be gradually created so that a joint search for constructive solutions could be started.

In doing so, it is necessary to take into account the specifics of the Asian-Pacific region. We do not mean mechanical transfer of European experience onto Asian soil. We mean implementation, with due account for the Helsinki experience, of the principles which were evolved by the Asian peoples themselves.

The concept of Asian security did not come out of thin air. As Prime Minister Rajiv Gandhi of India stated, the Panchsheel, Bandung and non-aligned principles which Mikhail Gorbachev cited in his Vladivostok speech form a theoretical and political basis for analysing the complicated and specific issues relating to peace and stability in the Asian-Pacific area.

The Soviet-Indian summit talks in New Delhi gave a powerful impetus to the positive processes in Asia. By their example the USSR and India help assert the principles of peaceful co-existence, hamper the tendencies leading to a nuclear catastrophe, and show a real possibility of countering neoglobalism and the expansionist ambitions of imperialism.

The Delhi Declaration on Principles for a Nuclear-Weapon-Free and Non-Violent World, signed by the leaders of the two countries, is a graphic illustration of a new political thinking. A nuclear-weapon-free and non-violent world requires specific and immediate action, the Delhi Declaration says. Nuclear arsenals should be completely destroyed before the end of this century, all weapons barred from outer space, nuclear weapons tests banned, development of new types of mass destruction weapons prohibited, the stockpiles of chemical weapons destroyed, and the levels of conventional arms and armed forces reduced.

Implementation of all these peace initiatives and translation of the Delhi Declaration principles into reality would radically improve the situation in the Asian-Pacific region. If a nuclear-weapon-free world became a universal political landmark, this would create favourable conditions for eliminating a bridgehead of neoglobalism-the foreign military bases on the territory of states in Asia and in the Pacific and Indian Ocean basins.

Evolving a concept of Asian security on the basis of nuclear disarmament is a long-term objective but such factors as the growing prestige of the non-aligned movement, the upswing of the anti-nuclear sentiments, and the intensified struggle for a new international economic order pave the way for its attainment.

The concept of a new international economic order is of great importance in the struggle against neoglobalism. It is based on the idea of an imperative need of democratising international economic relations and doing away with the actual inequality of the newly-free countries in this sphere, of setting up a mechanism for countering the diktat of the transnational corporations and an international mechanism for regulating international economic relations with a view to controlling market fluctuations.

Holding global negotiations on the cardinal issues of economic development, trade and currency-financial relations could help implement the idea of a new international economic order. The imperialist powers, supporting the idea in words, advance such conditions which, in effect, block them. The obstractionist policy of the transnationals and the countries where they are based hinders the implementation of the UN resolution on a new international economic order.

Furthermore, in the past few years the capitalist states have tried to adopt a tougher attitude to the demands by developing countries and even to switch to an aggressive tactic in negotiations with them. This explains the absence of real progress in restructuring international economic relations and ensuring normal conditions for Asian, African and Latin American development.

In their straggle for restructuring economic relations the emergent states are supported by the countries of the socialist community. The growing trade and economic relations of socialist countries with the newly-free states, relations in which the ideas of a new international economic order are being put into practice, are an effective means for attaining the objectives of a new international economic order. As distinct from the imperialist powers, the socialist states build their trade and economic relations on the principles of equality, mutual benefit and non-interference in home affairs.

Trade and economic relations between socialist and developing states are an example of international relations of a new type between countries with different development levels and social systems. These relations make an ever greater contribution to the efforts of the Asian, African and Latin American countries to overcome backwardness and to establish a modern multi-sectoral economy, to improve the living standards of the broad masses and to carry out progressive social and economic changes.

To date, over 5,000 enterprises have been built with technical and economic assistance of socialist countries in more than 100 emergent states, mainly in key industries and in the public sector. Trade between the socialist community member countries and developing states reached nearly 77,000 million dollars in 1985. The existing long-term agreements on trade, economic and scientific-technical cooperation ensure to the newly-free countries stable marketing for many years to come.

So, for the Asian, African and Latin American countries trade and economic cooperation with the Soviet Union and other socialist countries becomes a major factor for acceleration of their socio-economic development and fortifies the position of developing countries in the straggle against neoglobalism, against the imperialist exploitation by transnational corporations.


History shows that the last century"s American expansion has, as it were, paved the way to the US imperialist adventures of the post-war years and then to the neoglobalist policy of our days. So, the aims which neoglobalism pursues are far from being new. This is the same old imperial policy generated by the yearning for world domination, by the hatred of socialism. Being a doctrine of international brigandage, neoglobalism is particularly dangerous to newly-free countries.

The operation of the multinationals, which are the vanguard of neoglobalism, in the Asian, African and Latin American countries spells deep-going adverse social and economic consequences. The dependence of the emergent states on the main centres of imperialism grows stronger. This dependence acquires ever more sophisticated forms and is continually modified. The ever more intensive exploitation of developing countries increases the outflow of financial resources from them into the countries where the TNCs are headquartered. The sums which the transnational syphon out from the emergent states exceed by far their investments in the countries of Asia, Africa and Latin America.

The developed capitalist countries try to lay the burden of economic crises onto the newly-free countries. This slows down the latter"s economic growth, reduces their export receipts, intensifies the inflation processes, boosts unemployment, and increases social inequality. The TNCs have become the main channel for transferring crisis phenomena to developing countries.

The imperialist powers use the foreign-debt burden to exert political and economic pressure on the young states. The transnationals of the munitions industry of the USA and other NATO countries draw developing countries into the arms race which is burdensome to them. The growing military expenditures of the Asian, African and Latin American countries divert sizeable material, manpower and intellectual resources from the development programmes and hamper progressive changes.

As it was noted during Mikhail Gorbachev"s visit to India, the development rate of the emergent states and the overcoming by them of the difficulties inherited from the past largely depend on whether they will be able to counter neoglobalism which is the main obstacle to world progress. Resolution of the global issues of disarmament and development, pressing as they are for the countries of Asia and the Pacific, will largely depend on this.

WORLD & YOU series














о HUMAN RIGHTS: TWO ATTITUDES by Vsevolod Sofinsky

о FROM PEACE ZONES TO A PEACE PLANET by Bakhtiyar Tuzmukhamedov

о USSR-ESCAP 40 YEARS OF COOPERATION by a group of Soviet experts

о IN THE LAND OF AFGHANS by Anil Narendra


by N. Kudryashov and A. Polikanov

о A N-FREE NON-VIOLENT WORLD by Alexander Gorev








1.    Handbook of International Trade and Development Statistics,
Supplement 1985. Transnational Corporations in World
Developments. Third Survey, U.N., New York, 1983.

2.    Ibid.

1.    The CTC Reporter, No. 15, Spring, 1983.

2.    Document UNCTADTD/B/C. 4/266

1. Industria e produtividade, N 174, outubro de 1983. 14

1 Based on data from Handbook of International Trade and Development Statistics, Supplement 1985, Monthly Bulletin of Statistics, April 1985.

1 Cepal, Comision Economica Para Americo Latina EL CARIBE, Diciembredel985.

1. Handbook of International Trade and Development Statistics, ] Supplement 1985

1.    US Overseas Loans and Grants, Washington, 1985.

2.    World Economic Outlook, a Survey by the Staff of the International
Monetary Fund, October 1986.

1 World Debt Tables. 1984-1985 Edition, World Bank, Washington, 1985.

1. Handbook of International Trade and Development Statistics, UN, 1985.

1. World Debt Tables, External Debt of" Developing Countries, 1984-1985.

1. Estimated from World -Armaments and Disarmament, SIPRI, Yearbook, 1983,L-N.Y., 1983, pp. 161-166.




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