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Feed the world - but how?

The assumption in the corridors of power is that the only real hope for the poorest developing countries in the world is to open their economies to big business from abroad. There is no need for these multinational companies to be interested in the future of the developing nations. If they are interested only in profits then the fact that there is money to be made in developing countries will attract them there, investments will be made and those poor economies will develop. In short: just make the world economy as free as possible for business and everyone will be happy.

(Just to fill you in: people who call for a free international economy also call for a strict international legal system that companies can use to demand compensation from governments when the latter impose policies that constrain the former. It doesn't matter if those governments are acting democratically and expressing the will of the people. The sovereignty of individual nation-states doesn't count for much in the eyes of those who want to make sure that big businesses are free to carry on doing business.)

The idea that there is a perfect harmony between the aspirations of developing nations and the interests of big business is an appealing one. If only it were true. However, if we look at what some of the biggest businesses have done, we quickly come to the conclusion that something more is needed if these countries are to prosper and the gap between the richest and the poorest in the world is to be narrowed.

One case in point is that of Nestle and it's dealings with Ethiopia. Nestle - famous for its milk products, breakfast cereals and Nescafe coffee - is Switzerland's largest industrial company and the value of its annual sales in 2001 (60 billion US dollars) was eight times greater than the value of all the goods produced in Ethiopia.

In 1986 Nestle bought a German company called the Schweisfurth Group which had previously been part owner of the Ethiopian Livestock Development Company (Elidco). That ownership was lost in 1975 when the Ethiopian government nationalised the company. Although this had happened 11 years before Nestle bought the German company, Nestle still took the Ethiopian government to court and insisted that Nestle should be compensated by the Ethiopian government. Despite its huge economic problems the government offered the Swiss company 1.6 million dollars.

Nestle rejected the offer "as a matter of principle" and insisted on a figure of 6 million dollars, arguing that anything less would indicate that Ethiopia was not serious about recognising the the rights of foreign investors. They argued that the payment was "in the interest of continued flows of foreign direct investment which is critical for developing countries."

While popstars like Bob Geldof were desperately trying to persuade people to donate more money to help those on the verge of starvation in countries like Ethiopia, the managing directors of Nestle, sitting in their comfortable offices in Geneva, refused to sacrifice a tiny 0.01% of their annual turnover. Ethiopia needed help. The average wage was less than a dollar a day, 14 million people didn't have enough food to eat, and one in ten children were dying before they reached their first birthday. But there was "a matter of principle", and according to international law Ethiopia had to respect the rights of foreign investors.

Nestle said it was acting "in a spirit of fairness". Is this the spirit which will save the millions who are condemned to a life of poverty, disease and hunger? Do the actions of Nestle prove that if big businesses are left free to do what they want in the poorest economies then those countries will develop and people will rise out of poverty?