Multinational corporations do have to sign contracts to operate in foreign countries. However, the contracts often provide unfavorable terms for those countries. Even if the terms are good, multinationals don’t always honor their contracts. When this happens, the power imbalance between the country and the multinational becomes clear. It is difficult for a country to hold a multinational accountable when it violates a contract. The company may break the law where it is operating, but its headquarters are in another country–typically a developed country. For example, if a United Kingdom multinational violates a contract with the government of Guinea, the government can try to sue in the local courts. But the multinational can just leave the country completely. Some governments do allow people from other countries to sue multinational corporations in court for their actions abroad. The United States government is one example. However, these types of lawsuits are difficult and expensive for small, developing countries. Even if a country has the legal ability and political will to sue a multinational in the U.S., it is very complicated. Multinationals can also be held accountable in international courts. But this can be difficult and expensive. In addition, even if the international court makes a decision against the multinational, enforcing that decision may be impossible. International law sometimes works better for multinationals themselves than for governments. Several multinationals have sued an entire government in an international court if they thought the government did something that damaged the corporation’s profits. Developed and Developing Countries It’s also important to note that the resources multinationals remove from developing countries are distributed to and consumed in developed countries. Cobalt is one example of this. More than 70 percent of the world’s cobalt is mined in the DRC and immediately exported. Cobalt is an important part of advanced medical equipment, high-quality paint, and lithium batteries in smartphones and laptops. Cobalt is taken from a developing country, transformed in a country with more manufacturing facilities, and then sold in an even richer country. If the cobalt does make its way back to the DRC, it is inside a product that is probably too expensive for many Congolese citizens to buy. The natural resource development process is more complicated with developed countries. Sometimes a natural resource is distributed and consumed in the same country it is produced in. U.S. oil production is one example of this. Between 60 and 75 percent of U.S. oil consumption comes from oil extracted within the U.S. But, sometimes, multinational companies will extract a natural resource in a country, such as the U.S. or Canada, export it to a factory somewhere else, then reimport it to the original country inside a new product.
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