Outlook: Multinationals are not the villains

OF ALL the people in the Labour Government who might have been expected to resist the stampede towards hard-headed pragmatism, Clare Short must have topped the list. Against the herd, she's tried to remain a passionate idealist. Now even our Secretary of State for International Development seems to have swung behind the nasty capitalists. Yesterday she lent her support to research which concludes that the Multilateral Agreement on Investment would be in the interests of developing countries. Given that many aid and environmental organisations have remained fervently against this agreement, believing it to be a multinationals charter, this is quite a turn up.

The MAI has proved an astonishingly contentious proposal for something that on the face of it seems entirely sensible. The MAI began life as a plan among member countries of the Organisation for Economic Co-operation and Development - the first world - for overseas investors to be treated in exactly the same way as domestic investors. The idea was to outlaw discrimination against foreign capital, which even in the developed world takes many and varied forms - local content rules for example. The controversy arose from suggestions that developing countries should, in time, sign up too. This fired up a coalition of protests from aid agencies and environmental campaigners, who see multinationals as exploiters of the world's poor. They wanted to tag on to the MAI additional requirements for minimum labour and environmental standards.

There are good reasons for concern about Americanisation of the planet. The way things are going it's only a matter of time before McDonalds open at Everest base camp. Titanic is already showing in Kerala in Southern India. Even so, poor countries are only going to become prosperous ones if they get the know-how and market access that big foreign investors bring. Any possibility of discrimination, and international capital will simply stay away. The trouble with the protesters and their stereotyped view of multinationals is that they would prevent the countries most in need of foreign expertise and capital from getting it.

These companies do not treat workers as well in the Third World as they do at home. But on the whole they pay higher wages, and show more concern for pollution, than local companies. Unpalatable as it might seem, these apparent villains are forces for improving standards.

The paper published by the Department for International Development seems finally to accept these arguments. Ms Short sympathises with the campaigners who rail against the harsh realities of the world; but she has rightly decided to disagree with their conclusions. We all have to grow up one day, don't we?