The Domino Theory, Redux

The Domino Theory, Redux

Hrab Op-ed from American Enterprise Online
May 26, 2004

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Exactly 50 years ago, the idea of the "domino theory" first found its way into popular discourse in the context of Communist aggression in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Southeast Asia.  While it sounds a bit like a Cold War relic today, the phrase remains useful to explain certain events.  Consider the activist Rainforest Action Network's (RAN) recently concluded four-year campaign against Citigroup, one of America's most respected financial institutions.

 

In 2000, RAN accused Citigroup of loaning money to economic development projects that were purportedly destroying the world's "remaining old growth forests" and "accelerat[ing] climate change."  When Citigroup disputed the charges, RAN strategists went to work.  Over the next four years, RAN staged dozens of anti-Citigroup stunts, including student rallies and boycotts, anti-Citigroup TV ads, and street protests.  RAN activists also hung banners in front of Citigroup's New York headquarters and demanded that Citigroup not make loans to economic development projects in undeveloped regions of the world, to ensure that they remain pristine.

 

Last January, Citigroup gave in—it sued for peace. In exchange for an end to RAN's campaign, Citigroup promised to "promote higher environmental standards through its business practices," particularly in the areas of "endangered ecosystems, illegal logging, ecologically sustainable development, and climate change."  Translation: Citigroup will no longer help finance projects that environmentalists don't like.  It will help NGOs start drawing what an activist once referred to as "green lines" around poor countries, setting them off-limits for conventional forms of intense development.

 

 

Now, having browbeaten Citigroup into accepting their agenda, will RAN activists put away their banners and protest signs, and retire from the field?  Hardly.  According to an article in the April issue of Peacework, the protest Left's self-declared "trade journal," RAN's Citigroup campaign is merely one battle in a very ambitious long-term campaign to turn businesses into instruments of green social engineering.  Citigroup, you might say, was just the first domino.  States the article: "RAN is now using the agreement with Citibank as a floor upon which to negotiate with the next 10 largest banks in the U.S.  In the next phase of the campaign, RAN has sent letters to each of them, asking for a response by Earth Day, April 22, 2004.  If the banks do not respond with good faith improvements in their policies, RAN will choose another egregious banking eco-violator upon which to focus its creative protest energies." (The banks concerned are, JP Morgan Chase, Bank One, Bank of America, Fleet Boston Financial, Wells Fargo, Goldman Sachs, John Hancock, Wachovia, U.S. Bancorp, and SunTrust.)

 

 

How did the large banks respond to RAN's campaign?  In an April 29 press release, RAN boasts that its letters "resulted in movement [read: promises of future concessions] from eight out of 10 of America's most environmentally destructive mega-banks."  As RAN no doubt hoped, more dominoes seem ready to fall.

 

 

This is bad news for the world's poor.  Major financial institutions making large swaths of the Third World off-limits to development will ensure that these areas remain undeveloped—and poverty-ridden.  This may seem wonderful for globe-trotting RAN activists and supporters who can enjoy backpacking in these quaint, pristine areas; but for the people who actually live there, it means continued low incomes.  It also means, as a consequence, lack of access to health-enhancing technologies that residents of developed countries take for granted, such as indoor plumbing, modern medicines, and electricity.

 

Most frustrating about this mass surrender is the fact that these banks did not have to roll over so easily. They could have countered, with facts, RAN's mischaracterization of their lending activities.  They could have pointed out that by loaning money to economic development projects in the Third World, they are helping spread a global culture of prosperity.

 

If the banks had really wanted to throw RAN for a loop, they could have announced that they plan to increase their loans to projects in the Third World in the name of protecting the environment. The banks could have cited academic research that finds that as incomes in poor countries begin to rise and their political cultures become more democratic, the people in those countries begin to value the environment more than when they were simply scrambling for survival.  To provide RAN with examples of this process in action, the banks could have turned to an authoritative book on the subject, The Real Environmental Crisis, by University of California at Berkeley professor Jack Hollander.  (Hollander, by the way, is hardly a free market purist, which makes his book all the more compelling.)

 

The large banks have a choice.  They can continue to act like dominos, and fall down on command.  Or they can start to defend their legitimate activities from attacks such as RAN's campaign—and help spread a global culture of prosperity.