A Real Threat: ISDS

The corporate controlled media have hyped the threat from IS (ISIL, ISIS), the self-proclaimed Islamic State. IS has committed horribly brutal acts in part of the Middle East. Despite all the media attention, it is relevant to note the US media didn’t mention that IS has come nowhere close to the level of killing and destruction that the US did in Iraq. Regardless, there is an urgent need for a true diplomatic effort to stop further IS crimes.

Despite being a small regional group with a relatively limited goal — the intent to restore an Islamic caliphate in the Middle East — the corporate media has managed to scare many Americans about IS being a real threat here.

Perhaps a 1957 statement from General Douglas MacArthur provides a clue about the media hype (propaganda) over IS.

Our swollen budgets constantly have been misrepresented to the public. Our government has kept us in a perpetual state of fear — kept us in a continuous stampede of patriotic fervor — with the cry of grave national emergency. Always there has been some terrible evil at home or some monstrous foreign power that was going to gobble us up if we did not blindly rally behind it by furnishing the exorbitant funds demanded. Yet, in retrospect, these disasters seem never to have happened, seem never to have been quite real.

Contrast the media hype about IS with the lack of coverage of ISDS, a real and far greater threat to Americans and to people all around the world. Among other things, ISDS threatens democracy, national sovereignty, financial stability, public health as well as the availability of clean air and water and good paying jobs.

ISDS is the Investor-State Dispute Settlement process that is part of recent so-called trade agreements. The zealots pushing ISDS are those who worship Mammon and who seemingly are willing to sacrifice everything else on the altar of short-term greed. Specifically, ISDS is being pushed by Wall Street, transnational corporations and rich investors.

Under ISDS, if a foreign corporation/investor thinks that a government’s policy reduces its profits or expected future profits, ISDS allows the foreign investor to evade the usual judicial system. Instead, the investor can bring a nation before a hearing of a tribunal of trade lawyers. These lawyers may represent an investor in one case and be an arbitrator in another case. Public interests, such as protection of public health, the environment, buy local programs, etc. take a back seat to commercial considerations in these deliberations. Laws passed by a democratic process can be overridden and national sovereignty is out the window.

If the investor wins, the government must either change the policy or pay what can turn out to be a very substantial fee. If the state wins, there is no cost to the investor. In addition, the ISDS is even more one-sided as the state has no corresponding right to bring an original claim against the foreign investor.

According to an article by Robin Broad in the January/February Dollars & Sense issue, in 1964, 21 developing-country governments voted no on the establishment of the International Centre for Settlement of Investment Disputes (ICSID), a predecessor of ISDS, as a new part of the World Bank. All 19 of the Latin American countries attending the meeting voted no.

Felix Ruiz of Chile spoke on behalf of these 19 countries and said:

The new system that has been suggested would give the foreign investor, by virtue of the fact that he is a foreigner, the right to sue a sovereign state outside its national territory, dispensing with the courts of law. This provision is contrary to the accepted legal principles of our countries and, de facto, would confer a privilege on the foreign investor, placing the nationals of the country concerned in a position of inferiority.

Broad goes on to point out the irony that the ISDS process is in conflict with the World Trade Organization’s requirement that foreign and domestic investors be treated the same. Broad also points out that if foreign investors believe they are making a risky investment, they could rely on foreign risk insurance. Broad adds that the corporations/investors also have recourse to the relevant domestic courts in a given country. Thus, there is little-to-no need for the ISDS process or the ICSID.

The National Conference on State Legislatures (NCSL) is another key group greatly concerned about ISDS. NCSL issued a statement that it will not support any trade agreement that includes the ISDS process.

One wonders why US negotiators would be pushing a process that threatens US sovereignty, the rights of our states and local governments to govern, and the public interest. Unfortunately, this sad situation reflects the power held by Wall Street, transnational corporations and other wealthy. In plain terms, the US campaign finance system is legalized bribery, and money plays a major role in what legislation is enacted. Nomi Prins’ book, All the Presidents’ Bankers: The Hidden Alliances That Drive American Power, clearly demonstrates the influential role that bankers have held in US policy making for over a century.

These powerful actors now are using the US government as a tool to convince other governments to accept these deals that are about expanding the control of big banks and transnational corporations. These deals are a means to undermine legislation that regulate corporate behavior in the US and elsewhere. These schemes also reduce the number of good paying jobs in the US and spark a worldwide race to the bottom in terms of wages, increasing corporate profits even more. Welcome to the world of the bankers and corporate investor state!

Unsurprisingly, drafts of the Trans-Pacific Partnership scheme includes ISDS. Unfortunately both our senators and our representative are likely to vote in favor of TPP and ISDS unless they hear from us. It is up to us and others around the world to stop the TPP and ISD from wreaking havoc on the 12 nations involved in the negotiations.

Ron Forthofer is a retired professor of biostatistics from the University of Texas School of Public Health in Houston and was a Green Party candidate for Congress and also for governor of Colorado. Read other articles by Ron.