Wednesday, April 2, 2008

State Inc.

"The most important new forces in global business are aggressive, wealthy, and entrepreneurial. But they aren't corporations: they're authoritarian governments.

In the past five years, governments around the world have been transforming themselves into deal makers and business players on a scale never seen in the modern era. In China, state-owned oil giant PetroChina has become the largest company in the world, worth more than $1 trillion. In Russia, state-owned Gazprom has grown into the world's largest gas company. States are also wielding influence by directly buying into major private firms: The investment fund run by the Arab emirate of Abu Dhabi is now the world's largest, and recently spent $7.5 billion to become the top shareholder of the American financial giant Citigroup.

In Syria, the government of Bashar Assad has launched plans to emulate China, while in Iran both reformers and conservatives have discussed how to copy China. Raul Castro, who has visited China several times, reportedly wants to emulate Beijing in revamping Cuba's economy.

The rising price of oil has put a gusher of cash in the hands of authoritarian petrostates like Saudi Arabia and Russia, all of which now want to invest their cash hoards. With their pile of reserves, oil producers like the United Arab Emirates and Asian exporters have developed massive state-controlled funds that can buy into companies around the globe. Abu Dhabi's fund alone controls nearly $900 billion, while China's controls $200 billion and Kuwait's $250 billion."

From the Boston Globe a good article on state capitalism. But the author presents it as if things were radically different in the US or in Europe or in the rest of the Global North. What is different? That governments put political pressure on weaker countries to pave the way for home corporations? Everybody does that and foreign aid is used for that purpose, and so are bilateral trade agreements. That this pressure may sometimes be a bit more than diplomatic, as in Iraq? Read Naomi Klein. That the governments and the businesses are closely connected? Read Haliburton. The state is a business everywhere.

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