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Food Stomp: Nestlé Unwraps Corruption In Azerbaijan

Asia

The world’s largest food supplier, Nestlé, has terminated shipments of all of its products to Azerbaijan. This unorthodox and unforeseen maneuver is seen by many as an attempt to avoid corrupt governmental entities, who allegedly ask for kickbacks or other illegal activities to participate in the Caucasus country’s business affairs. This situation marks a continuation of the general population having little say in the economic direction of their country and being pushed out of the way either by companies or their government in pursuit of money.

Food Stomp: Nestlé Unwraps Corruption In Azerbaijan

By David Patrick
Industrial Worker
April 2012

The world’s largest food supplier, Nestlé, has terminated shipments of all of its products to Azerbaijan. This unorthodox and unforeseen maneuver is seen by many as an attempt to avoid corrupt governmental entities, who allegedly ask for kickbacks or other illegal activities to participate in the Caucasus country’s business affairs. This situation marks a continuation of the general population having little say in the economic direction of their country and being pushed out of the way either by companies or their government in pursuit of money.

Founded in 1866 in Vevey, Switzerland, Nestlé employs almost 280,000 people in 86 countries. The company has been involved in several ethical and legal dilemmas in years past, which have allowed Nestlé to increase profit. These issues have crossed a wide range of human rights concerns. In 2002, Nestlé demanded of the Ethiopian government that a $6 million debt be repaid at a time when country was suffering through a harsh and severe famine. An infuriated public demanded the company back down, which happened after Nestlé received over 8,000 emails and feared a product boycott in Europe.

The $6 million debt could be considered odious and eligible for cancellation, having been incurred while the Ethiopian government was occupied by a military junta. The spending was completely undemocratic and the population neither benefited from, nor consented to, any expenditures. The payments, if made under the new government, would have forced administrative agencies to cut even more services to an estimated 11 million desperate and starving people at the time. Now, the shipping freeze to Azerbaijan, which was enacted on Jan. 1, 2012, has just recently come to light in the West. Publication of the halt comes at a time when current supplies within the country are expected to run out. After inventories run out, stores in Azerbaijan will no longer carry Nestlé products.

Nestlé’s largest contributions to the country mainly rested with coffee, confectionery and baby food products. Nestlé has faced allegations of illegal or unethical business practices itself in recent years. In 2009, Nestlé was revealed to have purchased milk from illegally seized farms in Zimbabwe operated under the wife of despot Robert Mugabe. Zimbabwe is currently under European Union sanctions and Nestlé later stopped purchasing milk from those locations.

In addition, Nestlé was shown to have used child labor at a cocoa plantation in the Ivory Coast. The issue was even the subject of a documentary film, “The Dark Side of Chocolate.”

“The [child laborers] would regularly work 12 hours a day and receive no salary or education. Girls were usually purchased as housemaids and would work a seven-day week all year round, often in addition to their duties in the plantation,” reported Interpol.

The child slaves were further endangered in the environments they were forced to work in, often leaving them vulnerable to poisonous toxins. The International Institute for Tropical Agriculture (IITA) specifically noted “the application of noxious pesticides.” Children are reportedly forced to work with dangerous chemicals and not provided with safety equipment.

Nestlé has also been criticized for its practices of deforestation in Borneo and other regions. Such actions threaten native animal species and contribute to global climate change as large and lush areas of rain forests are cleared out to harvest hardwood and develop palm oil plantations. The whole series of problems with Nestlé’s past, combined with the actions of Azerbaijan, raise the suspicion of the company’s willingness to put up with corruption as long as it doesn’t threaten the profit margin. The company seemingly waits to have attention drawn to a particular issue before correcting it.

Azerbaijan seems to be a victim no matter how Nestlé conducts its own operations. Despite being named to the Human Rights Council, several human rights agencies such as Human Rights Watch and Freedom House have labeled Azerbaijan’s status on human rights to be well below civilized conditions. Police brutality and political prisoners are commonplace. The city of Baku, Azerbaijan’s capital, has seen large-scale evictions, where thousands were forcibly removed from their homes to make way for parks, business plazas and luxury residences. According to Reporters Without Borders, journalists have been deported, imprisoned, and assaulted.

Despite the high standard of living and human development compared to other Eastern European nations and being a member of the Commonwealth of Independent States (CIS), Azerbaijan has had a long and notorious record of corruption. In 2011, Azerbaijan ranked 143 out of 182 countries on Transparency International’s Corruption Perception Index.

It is this corruption which leaves the business and governmental interests in good standing while threatening the security of the Azeri population. In another example of corruption, companies are allowed to bring in labor that is cheaper, provided they pay a fee for foreign workers, and conditions at these companies are not glamorous. For example, the Mingachevir hydroelectric power plant ships in Chinese laborers, who are housed in filthy barracks and prohibited from leaving the grounds or talking to the press during their three to six month stay.

Meanwhile, government fees do not discourage outsourcing and sap political will to change the situation. “Most of the jobs that foreigners are occupying should be given to Azerbaijanis. But we see in practice that workers from Southeast Asia are more attractive for local employers because of the lower salaries,” said Sahib Mammadov, a labor law expert, citing a report from The Asia Times.

Nestlé had attributed the termination of shipments to “supply problems.” Invoking a sense of frustration and isolation from the market directly, Corporate Communications Manager for Nestlé Russia & Eurasia Marina Zibareva said, “The company doesn’t have the operational office in the country, we delivered products though the distributors.” However, many of the local news agencies in the region have pinpointed the cause of the delivery halt as being the corruption among Azeri governmental agencies—primarily Azeri Customs, which act as gatekeepers and exercise authority over what is able to enter the country. Other countries in the CIS are not affected by the halt of products to Azerbaijan.

“Customs in Azerbaijan is an instrument of power and control over illegal local market,” Chairman of the Public Association “Assistance to Economic Initiatives” (PEI) Mehdiyev told Turan, a news agency based in Baku. The very presence of a black market not only threatens corporate profits, but worker security and potentially public safety. Counterfeit goods, or goods not sold without legal protections, may be defective or dangerous to own or use.

The oil and gas industry, pivotal to the economic stability and success of Azerbaijan, is the rare exception. Often projects will operate under special contracts. This exceptionalism has led to serious problems for the workers of Azerbaijan. Even in regards to the establishment of a State Oil Fund, long-term stability issues for workers can be spotted.

The economy, despite strong statistics, has seen sectors dramatically falling as well as rising, leading to the concentrations of power that lead to many social problems. According to inside documents published on Wikileaks, the staggering decline in cotton harvests has led to the introduction of child labor in the harvests. This has now also branched into the worst forms of child labor, including prostitution and drug sales.

The lack of professional jobs leads children to enter the labor force and not complete their education. One teenager noted about the cotton harvest, “Why should I go to school? I will just sit there for no reason for two more years, and then I will come back to work here. I should start working now.”

What is seen in Azerbaijan is commonly referred to as Dutch Disease: an economics concept noting the decline in manufacturing and skilled trade positions in correlation to the boom in energy markets. This concept was first coined in The Economist, which noted the pattern in the Netherlands after discovering a large natural gas reserve in 1959. While it is economically advantageous for a country to invest in the sale of its resources, it should take precaution about the finite nature of natural resources, and without adequate preparation and innovation, the country’s labor force is threatened due to the difficulty in bringing manufacturing jobs back once they have left.

Despite recent developments in Azeri society and the national economy, the small nation still faces a variety of problems on many fronts. Azerbaijan remains largely contaminated from DDT and other toxic defoliants from cotton farming during the Soviet era. The booming petrochemical industry of the region doesn’t assist in any cleanup efforts. Baku was the world’s lowest-ranking city for health and sanitation according to Mercer Human Resource Consulting’s 2007 Worldwide Quality of Living Survey. Baku is second from last currently, only beating out Port-au-Prince, Haiti, the earthquake ravaged city which contains Soleil, one of the world’s most dangerous and unsanitary slums.

Nestlé’s termination of shipments to Azerbaijan marks a continuation of economic exploitation in which citizens have no say in the economic direction of their country. The livelihoods and working conditions of the people, in turn, suffer.

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