Heaven That Lives,
On Account of Hell
by Erik Valencic
"If we were offered a world, in which the utopias of
gentlemen Fourier, Bellamy and Morris were all exceeded,
and millions would live happily under one sole and simple
condition, that some lost soul somewhere on the edge of the
world would then have to live a life of lonely suffering,
what else but a special emotion would immediately convince
us ... that it would be repulsive all this happiness,
originating out of such an agreement?"
- William James
The Moral Philosopher and the Moral Life
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Budget, 2004 - Norway
Norway unveiled its 2004 budget this week, announcing there
would be "a gradual and sustainable increase" in the use of
petroleum revenues, amidst a scandal involving its
state-owned oil company and the on-going debate about
joining the European Union.
Statoil chairman Leif Terje Loeddesoel and chief executive
Olav Fjell were forced to resign after Norwegian police set
up an investigation into bribery allegations involving an
Iranian company. Statoil is alleged to have made a $15.2
million payment to Abbas Yazdi to represent the company to
the Iranian government, an arrangement that may have
violated Norwegian law.
Statoil, which was formed by the Norwegian government in
1992 to handle its oil interests and partly privatised in
2001 when the state sold 17.5 per cent of its shares, is
listed on both the Oslo and New York stock exchanges.
Following the raid by the Norwegian police's economic crime
unit Oekokrim on Statoil's headquarters in Stavanger in the
south of Norway, the US Securities and Exchange Commission
asked to be provided with documents on the Iran deal.
Oekokrim is seeking evidence to determine whether the Iran
deal involved corruption and violates Norwegian law.
On Sunday October 5 the Norwegian premier Kjell Magne
Bondevik announced that EU membership would be a
possibility when the union is expanded. Recent polls
suggest that Norwegian do not want to join the EU. Norway
rejected the union in referendums in 1972 and 1994.
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ON November 8, 2001, Carol J. Williams, writing in the Los
Angeles Times, described Norway, which has a population of
around 4.5 million, as the top place to live on the planet.
Headlined
"So, this heaven: Norway" she went on to explain
the incredible welfare system and great prosperity of the
Norwegian state, which is
"dedicated to spreading its now
substantial wealth". All this is true. According to the
United Nations' 2003 Human Development Report, Norway has
the best living standard in the world.
The GDP per capita amounts to nok334,279 Norwegian kroner
($47,866). Long-term unemployment is almost nil, while
"only" 4.3 per cent of the population lives under the
poverty line - that is less than $11 of income per day.
Norway can pride itself with its incredibly developed
welfare prosperity. Public health expenditure is $2,769 US
dollars per capita, while the state devotes 6.8 percent of
the GDP to the education system - four times more money
than to its military. The welfare support for single
mothers is so high there is hardly any need for the
father's income. But this of course also brings certain
problems since an estimated half of all children are born
out of wedlock.
Average Norwegians spend around a quarter of their income
on comfort. To have a sauna in your bathroom is not
considered to be a luxury. It therefore comes as no big
surprise that the majority of Norwegians remain suspicious
about their country joining the European Union, where
welfare systems of national states are drowning in the free
market of capital.
But part of the price for the great prosperity of
Norwegians is being paid by those, who cannot even dream
about any kind of decent life, let alone welfare
protection. The Norwegian state uses a fund based on its
surplus oil and gas revenues to increase its wealth and it
is doing so by investing in human misery, destruction of
the environment and the production of weapons of mass
destruction. Whilst the fund secures a promising tomorrow
for the residents of Norway, it indefinitely prolongs the
infernal today for many other people all over the planet.
Only a few decades ago Norway was one of the poorer
countries in western Europe. Its economy was mostly based
on shipping, fishing, agriculture and forestry. After the
discovery of vast oil and gas reserves in its continental
shelf Norway has, within one generation, undergone an
economic revolution. The state skipped the phase of broad
industrialisation and is now developing its service
economy. Norway is today the third largest oil exporter
after Saudi Arabia and Russia, pumping 3.1 million barrels
a day of oil, which provides the state with a high current
account, budget surpluses (this year of nok162 billion) and
one of the highest GDP per capita incomes in the world.
Even though the oil sector employs only 16,000 people
(approx. 0.7 per cent of the Norwegian workforce) it
contributes an average 12-15 per cent to the GDP.
The Norwegian Parliament (Storting) adopted the Petroleum
Fund Act on June 22, 1990, which established the so called
Government Petroleum Fund. Basically, the Petroleum Fund is
a banking account in which the state deposits money. The
fund's income is defined as
"the central government's net
cash flow from petroleum activities, income from the sale
of shares in Statoil [82.5 per cent state-owned oil
corporation] and the return on the fund's investments".
Management of the fund is divided between the government
(Ministry of Finance) and the Norwegian Central Bank
(Norges Bank). The Ministry of Finance decides on the
strategic investment decisions, while Norges Bank carries
out the investment strategy, accounting and reporting, and
offers professional advice to the ministry. The ministry
and Norges Bank invest the fund's money in shares and bonds
of foreign, mainly western corporations that ensure a high
return subject to moderate risk.
Even though the Petroleum Fund was established in 1990 no
money was formally transferred to it until 1995. In the
following two years the fund invested money into 2,093
corporations from 28 countries. At the end of 1998 the fund
was worth nok171.8 billion, which was then around $24
billion. At the end of June this year the fund was valued
at nok776 billion ($111 billion).
The Petroleum Fund is an integrated part of the government
finances, and can be seen as an accounting device. To put
it into other words, the fund is a financial reserve for
"rainy days". Like most European countries Norway also
faces the problem of an ageing population. The UN's Human
Development Report predicts that the young Norwegian
population (below 15 years) will decrease by 2.2 per cent
by 2015, while the old population (above 65 years) will
increase by 2.7 per cent by the same year. In parallel with
this the state's expenses towards pensions and health care
will increase. Long-term fund investments in foreign
businesses are to secure the flow of money into the fund
long after the oil and gas reserves run out. The future of
Norway's welfare state crucially depends on the Petroleum
Fund.
DIRTY BUSINESS, part 1
The value of the fund increases an average of 20 per cent
per year. The Norwegian Ministry of Finance predicts that
this year alone the fund will make a profit of around
nok200 billion. The high growth of the fund's value can
mainly be attributed to the steady rise of world oil prices
and to the continual flow of profit from the fund's
investments in foreign corporations.
When it comes to managing the Petroleum Fund, the ministry
and Norges Bank clearly cling to the well practised
neo-liberal principal "profit over people". Responsibility
for this lies on the shoulders of the government, which
failed to implement a set of ethical guidelines that would
direct the management of the fund and make sure that the
fund's money was not invested in corporations that commit
environmental crimes and human rights violations. The fund
has throughout the years invested money in many such
companies.
We can find the examples at the very beginning of the
fund's investment operations. Two Norwegian state-owned
corporations, Statoil and Norsk Hydro, were negotiating
with the Burmese military junta in 1996 about building up a
pipeline, that would lead from Yadana oil field (Burma) to
neighbouring Thailand. The news about it exploded like a
bomb in the Norwegian domestic public. The great majority
of Norwegians were repulsed by the idea that Norsk Hydro
and Statoil should do business with Burma. The Burmese
regime SLORC namely came to power in 1988 through a
military putsch, in which thousands of innocent civilians
were slaughtered. Representatives of democratically elected
government were killed, imprisoned or sent into exile
abroad. Shortly after coming to power SLORC established a
form of slavery all over the state. Unknown number of
families throughout the countryside are being forced to
contribute at least one member of a family, who is then
sent to work on the construction of roads and railways. Up
to several hundred men, women and also children die every
month on these so called tracks of death. The repression of
regime knows no limits. To state only one example, writing
songs about freedom can mean up to 15 years of imprisonment
or forced labour. SLORC also maintains its power with the
help of foreign economic investments into Burma, which
provide the regime with hundreds of millions of US dollars
every year.
Great indignation coming mostly from the Norwegian domestic
public forced Norsk Hydro and Statoil to pull out of Burma.
The contract about exploiting oil in the Yadana field was
shortly after successfully negotiated by Total Fina Elf and
Unocal. It was in this time that the Petroleum Fund
invested great sums of money in these two oil corporations,
nok2,178 billion in Total and nok57.7 million in Unocal.
Nok36.5 million were subsequently invested in Halliburton,
which also played a part in the construction of the
disputed pipeline. The investment proved to be profitable.
Yadana project brought Total, Unocal, Halliburton and their
investors a total of $1.2 billion of profit. It was only
then that the news came out that the pipeline had been
built with forced labour, slavery.
NorWatch, the Norwegian non-governmental organisation that
keeps an eye on the investment operations of the fund,
published a report revealing that the Petroleum Fund worked
without ethical guidelines and supported environmental
crime and human rights violations by its investments.
NorWatch listed 37 corporations in which Petroleum Fund has
invested. According to NorWatch, the 37 companies discussed
in the report were only a tip of the iceberg.
Petroleum Fund invested nok74,159,291 in Broken Hill
Proprietary Co. from Australia. BHP is co-owner and
operator of Ok Tedi Minning Ltd., which operates a gold
mine in western province of Papua New Guinea. For years the
mine was dumping large quantities of hazardous waste into
local rivers. In a settlement with 30,000 indigenous people
BHP committed itself to a process of cleaning up, which
will cost BHP $350 million. Nevertheless, much of the
damage cannot be restored. BHP has been involved in similar
scandals in Australia.
Nok1,246,716 of the fund's money was invested in Danish
chemical company Cheminova which, among other things,
produces pesticides. Cheminova gained a bad reputation in
1997, when it was discovered that the company is selling
dangerous pesticides (parathion and methyl parathion - the
use of both is forbidden in Denmark) to Nicaragua,
Guatemala and many other countries (103 people died in
Nicaragua after using these pesticides). Bjorn Albinus,
head of the Cheminova, imputed the blame to the dead
themselves, stating he has
"never seen such irresponsible
use of the product". In addition, Albinus refused to
suspend the production of deadly pesticides and commented:
"If we disappear from the market, it will be taken over by
producers in China and Mexico, and Cheminova will have no
possibilities of selling new pesticides that are more
friendly to the environment".
The Petroleum Fund invested money also in Hasbro Inc. The
investment amounted to nok8.477.018. Hasbro hired a Chinese
contractor called the Dor Lok factory to produce
Teletubbies dolls for the company. Dor Lok factory uses
child labour, working days last up to 16 hours with night
work included, 'workers' are not allowed to leave the
factory and are being subjected to a penalty system.
Salaries are miserable and employers charge 'workers' one
month's salary as a deposit. Trade unions are, as you might
have guessed it yourselves, not allowed. Similar contractor
factories (known as sweatshops) are being hired also by
Mattel Inc. (USA), McDonald's (USA), Tyco International
(USA) and Walt Disney Corp. (USA). Petroleum Fund invested
money in all of them, altogether nok332,168,980.
One of the most shameful business operations of the
Petroleum Fund was the investment in Mobil Corporation
(nok134,792,791). Mobil extracts oil and gas in the Ache
province, one of the most unstable regions in all
Indonesia. Indonesian army forces have been brutalising the
local population for many years now. It is not very likely,
that Mobil hasn't been aware of the atrocities against
civilians, that have been going on in Ache. In 1998 alone
at least nine mass graves were discovered, all of them work
done by the Indonesian army forces. There were also finds
of human body parts near the installations of the company,
but local Mobil management failed to pass this on. Mobil
and the Indonesian army have been co-operating together.
One of the military posts in the area was built in
connection with one of the Mobil's plants. Mobil also built
a small airport which, the company claims, was built for
its own needs. However, the airport was built over the
local graveyard. In comparison with everything mentioned,
chemical leaks and dumping of toxic waste into the
environment seem like a minor crime.
The Fund invested money in other oil corporations as well -
nok12,099,150 in Occidental Petroleum Corp; nok548,499,493
in Royal Dutch Petroleum/Shell; and nok56,481,966 in Texaco
Inc, all corporates involved in similar environmental
crimes and human rights violations. Occidental and Shell
are partners in exploiting oil in Colombia. The project has
led to a bitter land conflict with the local population,
the U'wa people. The Colombian army has consequently
increased the repression over the U'wa people, while
special paramilitary forces (known also as the death
squads) terrorise and murder the local leaders of
resistance. There are more and more data, that show a
direct link between Occidental/Shell and Colombian
paramilitary forces. The U'was also pay a high price in
terms of environmental problems.
Shell has also been present in Nigeria since 1958, drilling
oil in the Niger Delta, home of the Ogoni people. They have
suffered the most from the Shell's activities. To the
authorities' own statistics, there have been 2500 oil
spills in Ogoniland in the period from 1986 to 1991. Shell
financially supports the dictatorship regime, which in
return persecutes and murders those Ogonis, that feel they
deserve to live in a clean environment. Ogoni resistance to
Shell led to the destruction of at least 20 local villages,
while about 100,000 people live as refugees in their own
land, having been forcibly removed from the oil fields by
the Nigerian army.
Ignorance, if that is the right word, towards the
environment and its inhabitants has also been demonstrated
by Texaco. Texaco was exploiting oil in the Ecuadorian part
of the Amazon forest in the period from 1972 to 1992. The
company left behind serious environmental problems, which
caused the destruction of the rainforest and destroyed the
livelihood of the Indians. Oil spills and chemicals were
constantly, and on purpose, being led straight into the
forest from the open waste dams. There has been an unknown
number of oil leaks and sprayings of oil waste. All the
gas, that has been burning throughout the years has led to
what the local Indians refer to as "black rain".
Nok95,970,075 has been invested in Rio Tinto, the
Australian and British company. This is one of the biggest
mining corporations in the world. Its two mines in
Indonesia, Kaltim Prima Coal and Kelian Gold, have both
expelled indigenous people from their home area. Both mines
have interfered with the people's natural environment,
destroying the rain forest, plantations and polluting local
rivers. Rio Tinto also owes an uranium mine in Namibia.
Working conditions in the mine are catastrophic and
hundreds of workers suffer from cancer and lung diseases.
The company has opposed a court case in England, and claims
that the workers' lawsuits must take place in Namibia,
where the legal protection of the workers is much weaker.
Union Carbide Corp in which the fund invested nok11,156,766
is responsible for one of the worst industrial disasters
ever. Union Carbide owned and ran a pesticide plant in
Bhopal, India. Tons of toxic gas methyl ico cyanate leaked
from the plant on December 4 1984. According to official
statistics, more than 3000 people died as a result of
poisoning. But those who were in charge of cremation of the
dead bodies, claim that as many as 15,000 people died. The
majority of them lived in the slum areas around the plant.
Union Carbide is still refusing to compensate the victims'
families or to provide medical aid to those, who are still
dying from after-effects of the poisoning.
The Petroleum Fund also invests in biotechnology putting
nok56,438,756 into Monsanto, the leading US corporation in
the chemical industry, as well as in the production of
genetically modified foods. Monsanto can be seen as a
biotechnological doctor Frankenstein. In its laboratories
the company has invented the so called "Terminator
technology", which can be used on plants to make them
sterile. The advantage for the corporation is that the
farmers have to buy the seeds for every crop. This is a
serious threat to food security. The company is also the
world's largest producer of the genetically manipulated
soya and the loudest opponent to labelling GM food
products, which deeply interferes with the consumers'
rights.
The fund made its largest investment - nok831,179,947 - in
1998 in Novartis AG. This Swiss corporation, which is one
of the world's leading corporations doing medical research,
has been accused of gene-piracy and was highly criticised
for patenting life. The company has also developed a type
of maize that produces its own pesticide (BT).
Environmentalists say, among other things, that the
BT-poison in the maize is unspecific and that it also
affects insects that are not considered noxious. In
addition, there is a danger that insects will develop
resistance to BT, while other long-term consequences of
introducing BT maize into a natural environment are
basically unknown and very hard to predict.
The rest of the companies listed and dealt with within the
report are:
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ABB (Switzerland and Sweden)
Alcan Aluminium (Canada)
Asarco Inc. (USA)
Bank of Scotland (UK)
Bougainville Copper Ltd. (Australia)
C.Itoh & Co. Ltd. (Japan)
Freeport McMoran Copper Gold (USA)
Inco (Canada)
Marubeni Corp. (Japan)
Mitsubishi Corp. (Japan)
Mitsui & Co. (Japan)
Newmont Mining Corp. (USA)
Nissho Iwai Corp. (Japan)
Pechiney (France)
Placer Dome Inc. (Canada)
Rauma Oy (Finland)
Siemens AG (Germany)
Skanska (Sweden)
Total Petroleum (France)
Unocal (USA)
UPM Kymmene Oy (Finland)
WMC (Australia)
NorWatch's report successfully upset the Norwegian domestic
public. A debate about the necessity of introducing ethical
guidelines into fund's investment operations erupted in the
media and within political circles. Namely, according to
NorWatch, the Petroleum Fund invested nok70 billion in
around 2000 companies in the year 1998. Altogether nok3
billion were invested in the 37 corporations discussed in
NorWatch's report. The government dealt with the scandal by
promising to establish a new fund, that would
"invest in
companies that are assumed to have little negative
influence over the environment and in companies that
satisfy given demands on environmental reporting and
certification". Human and social rights were not addressed.
ORWELLIAN ECOLOGY
The Environmental Fund was established on January 31, 2001.
A total sum of nok2 billion has been transferred into the
fund by the Ministry of Finance since its establishment.
The new fund forms part of the Government Petroleum Fund
and is managed by the Norges Bank. The Environmental Fund
was set up to invest in companies that have little negative
impact on the environment. The requirements for
environmental reports and management systems are based on
the analysis provided by Ethical Investment Research
Service (EIRIS) from Britain.
But the truth is that the government only wrapped the same
old business practices in a brand new package. The
Environmental Fund, which is that only by name, invests
money in some, from the ecological point of view, of the
most disputable corporations, such as:
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British American Tobacco
Papastratos Cigarette Corp.
Exxon
Rio Tinto
Alcan Inc
Halliburton
McDonalds
Broken Hill Proprietary
Talisman Energy Inc.
Shell
Titan Cement Co.
Coca Cola
Skanska
Novartis
Imperial Chemical Industries
BP Ammoco
Lockheed Martin
Occiental Petroleum
Total Fina Elf
Phillips Petroleum
Cosmo Oil
Fuji Electric
Hitachi
Ishikawajima-Harima Heavy Industries
Kajima Corp.
Toshiba Corp.
Pall Corp.
Dow Chemical
Bayer
UPM Kymmene
Boeing
Northrop Grumman
Raytheon
TRW
Imperial Tobacco Group
Japan Tobacco, and
Barclays
The fund also invests
money in all major automobile manufacturers.
In the meantime, the Petroleum Fund continued doing
business in the same manner as before. Norwegian Norsk
Hydro, Indian Indal and Canadian Alcan Inc. were partners
in Utkal Alumina International Ltd. The company was
planning a construction of an oil refinery and a bauxite
mine in the Indian state of Orissa. But the project was
postponed several times due to massive local resistance.
The controversial Utkal project would namely lead to the
forced relocation of 142 families, while additional 1302
families would lose their land. Tens of thousands of people
would also lose access to common resources, such as grazing
land and water. After police shot three protestors in 2000,
Norsk Hydro announced the following year that it would pull
out of Utkal. But Norsk Hydro sold its shares from Utkal to
Alcan Inc., whose management expressed determination to
continue with the planned construction of the refinery and
mine. The Petroleum Fund, obviously pleased with the
firmness of the Canadians, tripled its investment in Alcan
(from nok35 million to nok110 million). Norsk Hydro's
home-going therefore made the Petroleum Fund's interest in
the Utkal project increase about 30 percent.
DIRTY BUSINESSES, part 2
The Norwegian parliament adopted the following resolution
in June 2002:
"The Storting requests the Government to
appoint a committee to submit recommendations for a set of
ethical guidelines for the Petroleum Fund and to introduce
a Bill in 2004. The committee should comprise persons with
competence in international law, in addition to knowledge
of ethical guidelines and specialist competence in the
field of the environment and human rights".
The Government showed much benevolence for the entire idea.
But while the masters of the Petroleum Fund basked in the
warm beams of light of the domestic media, many Fund's
investment operations remained in shadow and darkness. Not
for long though, a new scandal was already spreading over
the horizon.
NorWatch discovered that the fund had invested in the
production of weapons of mass destruction. A whopping
nok177.409.455 was invested in corporation Honeywell
International Inc. The company is not primarily an arms
manufacturer, but it still plays a central role in US
nuclear weapons production. Honeywell is namely a part of a
consortium, which, on behalf of the US Energy Department,
runs the Pantex Plant in Texas. Pantex Plant is the only
company in USA that assembles and dismantles nuclear
warheads. This is a place where a continuous up-grading of
American weapons of mass destruction goes on. Honeywell
also operates a Kansas City Plant in Missouri. This plant
produces electronic and mechanical components for the
nuclear warheads.
The Fund then invested nok131,204,089 in Lockheed Martin,
the biggest arms producer in the world. Lockheed
manufactures, among other weapons, one of the world's most
advanced nuclear missiles, the Trident II D5, a missile
that can be equipped with several warheads, all
programmable for different targets. The explosive power of
Trident can vary from 100 to 475 kilotons. The power of a
Hiroshima bomb was 12 kilotons. Lockheed also plays a
central role in the build-up of a nuclear arsenal, although
not in the USA, but in Great Britain. Lockheed is a
co-owner of the British company AWE Management Ltd. (AWE
stands for The Atomic Weapon Establishment). Lockheed
Martin supplies the AWE Management with Trident missiles.
The company then composes the weapons and supplies them to
British Vanguard submarines.
The Petroleum Fund also invested greatly in General
Dynamics Corp., nok103 million. This US weapons giant
manufactures products ranging from nuclear submarines to
small arms ammunition. General Dynamics also plays a
central role in production of the so called cluster bombs
(BLU-97). Their deadly speciality is that they scatter in
the air and are left unexploded on the ground. They
resemble small bottles of lemonade with a clear yellow
colour that is known to attract children. They can go off
at the mildest touch. Around 250.000 of cluster bombs were
thrown all over Afganistan during Bush's war against the
Taliban. Civilians have often mistaken them for food
packages, that US planes were dropping off along with the
bombs. The price that they paid for their ignorance were
their lives. Cluster bombs were also used in NATO bombing
of Yugoslavia. Since the end of war in 1999 around 50
people in Kosovo region died as a result of cluster bomb
detonations. More than a hundred were reported injured.
There is a strong campaign in the world against the use of
cluster bombs.
It is hardly an enigma, why did the Petroleum Fund start
investing in the production of weapons of mass destruction
on such a massive scale. Shortly after September 11 2001,
the Bush administration considerably increased the defence
budget and rewarded domestic arms manufacturers with many
supply contracts. Anyone involved in this business is
looking at astronomical profits. The fact that 92 per cent
of Norwegians oppose the development of weapons of mass
destruction was clearly of no consideration to the
government and Norges Bank, when they were deciding, where
to invest the fund's money.
NorWatch continue to monitor the fund's activites and
persist in their demand for ethical guidelines.
"The
government and parliament must make a political choice,"
state NorWatch,
"and agree to implement ethical guidelines
for the oil fund".
The government's response has been to commission an enquiry
to propose ethical guidelines for the fund. It submitted
its report in June. That report is now subject to public
hearing while the government announced this week that it
will present a proposal on ethical guidelines for the
Petroleum Fund to parliament in the revised National Budget
in May 2004.
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– Erik Valencic
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