Corporate power - A challenge facing all democracies

It would be foolish to underestimate how corporate ambition limits the potential of politics to change things.

It would be just as foolish to underestimate the capacity of multinational corporations to steer public policy to protect their interests even if they conflict with the best interests of the majority of citizens in countries where they do business.

This reality, attractive or otherwise, shows how the control of resources — or expressed in another way, the ability to sustain or create employment — can be such a powerful card in the high stakes game of attracting international business to locate in a work-hungry, almost insolvent country without significant natural resources. Of course, they would argue that every society is free to make whatever policy decisions it chooses but it must be prepared to deal with the consequences of those decisions.

That rationale — blackmail if you prefer — may have informed the thinking of the Association of Pharmaceutical Manufacturers when they warned our Government that their intention to replace branded drugs with generic drugs might influence how decisions to invest in Ireland are made. This intervention came as it was revealed that some drugs are 12 times more expensive here than they are in Britain. Since then there was a fleeting furore when the red-carpet income tax arrangements available to foreign executives coming here to help establish Irish facilities was revealed.

Two more such interventions were made publicly yesterday — it must be assumed many more are made far more discreetly. Drinks giant Diageo’s Irish boss David Smith rattled the corporate sabre by warning that any decision to change drinks’ companies ability to sponsor sports events would make Ireland a “dark market” and less attractive to invest in.

It is not cheering to have to temper any response to that thinly veiled threat by acknowledging Diageo invested over €150m here in recent months and directly employ around 1,500 people. That response must be tempered too by the vast sums collected via drinks products by the exchequer. In an ideal world these considerations could be dismissed but this is just another humiliation forced on us because we squandered our economic independence. If it was possible to be certain, but it is not, that the huge health and social costs of alcohol abuse would end if drink sponsorship of sport was ended then the choice might be more clear cut.

Health insurers threw their increasingly expensive hat in the ring yesterday by warning that as many as 21 hospitals might close if plans to charge private patients the full rate for using a bed in a public hospital become a reality. To spice that threat they predicted a 30% hike in premiums, another in a long line that would make even more people move to the public system.

The relationship between states and business — especially banks — will feature at this week’s G8 summit in Fermanagh when Britain will open a discussion on international tax arrangements. Though this campaign is riven with hypocrisy and self-interest, a small and relatively weak country like Ireland may find itself at a huge disadvantage if the rules are changed. Resolving these contradictions, these terribly fraught and volatile issues, is one of the great challenges facing our Government and governments, our democracy and democracies, right around the world today.