Companies (Page 184)

Shortly after the start of the Israel-Hamas War and the start of the massive loss of Gaza in October 2023, McDonald’s managers in Chicago discovered themselves unintentionally implicated in the fight.

Local masters of McDonald’s franchises are given considerable autonomy over earnings and procedures, and franchisees had begun taking edges. McDonald’s in Israel made headlines for providing free meals to Israeli troops in social media, leading to millions of dollars being pledged to Palestinians in Gaza by McDonald’s companies across the Middle East.

McDonald’s has since made an effort to cut down on criticism of the franchisees and sort its way out of the discussion. In April 2024, McDonald’s Corporation announced it would get up 225 of its cafes from Alonyal Limited, the Israeli company that manages McDonald’s in the country, for an undisclosed amount.

The deal, which will be finalized over the coming months, may keep McDonald’s active as the business attempts to recover the company’s lost regional sales and stock prices.

The event demonstrates how multinational corporations with distributed operations and international footprints can quickly become embroiled in conflict. Although McDonald’s top executives did not intend to support either Israel or Palestine, profit incentives have often prompted businesses to support various sides in conflicts, generally in more significant ways.

Western weapons companies directly and indirectly supplied both edges with arms during the Iran-Iraq War between 1980 and 1988, profiting from the shifting help of the American government for Iraq and Iran throughout the conflict.

But, as foreign corporations have expanded their global operations in response to the growing globalization and strains on the US-led global order, they are now faced with maintaining business relationships with both US and nations that conflict with American interests.

Additionally, these companies are becoming more entangled in fueling opposing attributes of civil wars within various countries, directly and indirectly, in ways that can enhance or rise violence.

The conflict in Ukraine has shown how foreign companies have fallen short of the demands of any one authorities, including the US, when it problems with their financial objectives.

Despite Russia’s annexation of Crimea and incitement of a proxy war in Ukraine’s Donbas region in 2014, many Western companies continued operating in both countries, providing the Soviet government with tax revenue, technical skills, products, and staff knowledge, easing the Soviet government’s efforts to support its war efforts.

However, some Western businesses had to choose between cooperating with restrictions by leaving Russia and maintaining access to lucrative government contracts and a 145-million-person client industry following Russia’s full-scale invasion of Ukraine in 2022.

However, other businesses remained in the country, citing expensive exit costs, while the majority of them departed due to public pressure and sanctions. Others who formally or delegated their intention to operate in Russia have proven to be essential to the Kremlin’s ability to lessen the impact of sanctions.

Meanwhile, even China, Russia’s most important partner, had its largest commercial drone company, DJI, emerge as the largest drone provider for both Russia and Ukraine, showing the powerful allure of profits and how international markets allow the flow of products to war zones regardless of geopolitical alliances.

Western businesses have been subject to increasing pressure to sever ties as the tensions between the West and China have also increased in recent years. US tech giants like Google, IBM, and Cisco have come under fire for aiding the development of China’s security capabilities, albeit ostensibly for domestic use.

In 2019, NBA officials ‘ remarks regarding China’s response to pro-democracy protests in Hong Kong drew severe financial consequences for the organization’s operations there, and the White House criticized businesses that had “kowtowed to the lure of China’s money and markets.”

Beijing continues to try to prevent conflict by requiring foreign companies to separate their domestic governments from their national governments on divisive issues or at least ensure neutrality. Many US businesses already have higher domestic revenues in China than domestically, and they are not willing to ignore the second-largest economy and consumer market in the world.

Despite the fact that many multinational corporations have historically relied on the US to govern their operations during the last few decades of neoliberal globalization, many have since rethought their positions.

Some multinational corporations appear to have been encouraged by this dynamic, in addition to globalized supply chains and markets, believing that they can support multiple sides in geopolitical conflict with relative impunity while their goods and services will likely find their way to desired destinations and partners regardless of government orders.

Companies appear more willing to try to maintain ties with the US while also maintaining and fostering ties with nations that are hostile, than to march in lockstep with it.

This approach runs the risk of aggravated geopolitical tensions and undermines the coherence of the US-led global order because multinational corporations ‘ profit motives diverge from their foreign policy goals.

Importantly, as globalization has advanced, multinational corporations have become increasingly involved in civil conflicts and regions with fragile governance. By supporting rebel groups and governments, they have in some cases actively heightened tensions.

One of the biggest agricultural companies in the world, Chiquita Brands International S. à. l., acknowledged paying money to both the FARC rebel group and right-wing paramilitary groups in Colombia in the 1990s and 2000s to ensure the safety of operations.

This pattern of businesses supporting multiple sides in conflicts is especially perceptible in Africa, frequently to gain access to resources. Shell and Chevron have paid insurgent groups in Nigeria to protect their oil and gas interests while also providing the country with tax and development funds.

Similar to this, mining companies like Afrimex ( UK) Ltd. and Trademet SA, both of which have contracts with the DRC government.

Chinese miners are alleged to have paid Nigerian militant groups to access the country’s mineral reserves while also operating with the government.

In Myanmar, various Chinese and Thai companies have engaged in covert negotiations with ethnic armed groups that control areas rich in natural resources.

Mining, logging, and agricultural companies also paid “revolutionary taxes” to the New People’s Army ( NPA ) and other insurgent groups in the Philippines, including companies like Lepanto Consolidated Mining Company and Philex Mining Corporation, prompting public disapproval by Filipino officials.

While serving contracts for the US military, the Louis Berger Group, an engineering consultancy, paid the Taliban and other groups in Afghanistan to guard supply convoys and construction projects.

Indirectly, banks and payment processing networks are assisting or obstructing the funding of alleged terrorist and criminal organizations. The FinCEN Files, which were released in 2020, also revealed how banks like Standard Chartered PLC handled millions of dollars for Arab Bank customers despite Arab Bank being held accountable in 2014 for knowingly giving money to Hamas.

Private military and security companies ( PMSCs ) are also playing a significant role in the expanding direct and indirect roles of corporations in conflict zones, particularly in those areas with weak state enforcement. Other private actors frequently work with these companies to protect investments and personnel, but they have a natural propensity to manage and prolong conflicts rather than resolve them.

Across Africa in particular, PMSCs are present to serve private interests as well as governments. Concerned about the ability of multinational corporations to quickly shift their support between opposing sides as their strategic interests change, possibly playing a much bigger part in fostering and prolonging conflicts, has become a result of PMSC usage.

Governments, of course, regularly support rival actors in conflicts. Competing political factions, shifting interests, political expediency, economic motives, desperation, and a desire to promote instability.

Syrian rebels supported by the Pentagon engaged in combat during the Syrian Civil War. In addition, the Syrian government was funding other rebel groups to fight IS while also paying the Islamic State ( IS ) to return its own stolen oil and natural gas.

However, the risk of corporations actively supporting more than one side in conflict zones and staking up their own spheres of influence is concerning, much like the Dutch East India Company, which established its own military and trade monopolies.

There are still waning hopes that multinational corporations will choose more skilled sides in interstate disputes, but there is little that can prevent them from stoking the pressure on non-state actors to fuel and prolong intrastate disputes as long as it serves their financial goals.

As their ability to shape conflicts appears to be expanding, urgent action is required to strengthen the regulation and accountability of PMSCs and multinational corporations operating in conflict zones.

John P. Ruehl, an Australian-American journalist who lives in Washington, DC, writes for the Independent Media Institute about world affairs. He contributes to several other foreign affairs publications as well as contributing to Strategic Policy. His book,” Budget Superpower: How Russia Challenges the West With an Economy Smaller Than Texas”, was published in December 2022.

Independent Media Institute authorized republishing this article.

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