The case of the banana war between the US and the EU illustrates the flaws in the global trading system governed by the World Trade Organisation, and in US campaign finance rules. Unfortunately, poor banana farmers in the Eastern Caribbean will pay the price for the Clinton administration's decision to convert the US into a Banana Republic.

By Russell Mokhiber & Robert Weissman

April 1999

'Banana Republic' used to refer to poor, developing countries that relied on a single cash crop - typically bananas - and were ruled by corrupt governments. Now the term seems singularly appropriate to the United States, even though the US relies neither on bananas nor any other single cash crop.

Operating at the behest of banana magnate Carl Lindner - the CEO of Chiquita - the United States for years has complained about the European Union's policy of importing its bananas from former colonies in the Eastern Caribbean (tiny countries like Dominica).

To guarantee continued support for the Eastern Caribbean banana producers, the EU gives them preferential treatment through a quota system. 'Dollar bananas' from Central American countries - controlled by US marketing companies - are cheaper than those from the Eastern Caribbean, which has inferior land.

The United States pursued its campaign against the EU system at the World Trade Organisation (WTO). The United States won the claim, because in fact the EU policy does violate WTO norms: it is illegal under WTO rules to place a quota on imports from one region.

Under the WTO rules, as manipulated by the United States, it is largely irrelevant that the purpose of the EU's preference for the Eastern Caribbean is for beneficent reasons - to provide some minimal remedial support for its extremely poor former colonies. It doesn't matter that some 200,000 farmers plus many others stand to lose their livelihoods - in countries where 30 to 50% unemployment is the norm - if the EU abandons its banana system.

Under the WTO rules, it is irrelevant if the Eastern Caribbean bananas are produced in a relatively more socially just way - on many small farms, mostly headed by women - as opposed to the giant Chiquita plantations in Central America, where unions are routinely smashed and workers underpaid and exposed to serious pesticide and other chemical hazards.

The International Confederation of Free Trade Unions explains: 'Central American bananas are produced on large "industrial"-scale plantations employing large numbers of relatively poorly paid workers. Few workers have been able to win recognition for their unions in the face of the deep hostility of the companies, governments, the military and in some countries para-military gangsters.'

After a long series of back-and-forth negotiations and further pro-US rulings from the WTO, the United States has now been authorised to undertake retaliation to the tune of $191.4 million against Europe in connection with the banana case. Under WTO rules, the United States has the right to impose countervailing sanctions against European imports in industries totally unrelated to the dispute. The United States has chosen to impose 100% tariffs on a range of European luxury imports, hoping that the affected industries will become internal lobbyists in the EU for a change in Europe's banana policy.

Of course, despite the degree of importance the US government places on its banana interests, the United States differs in one remarkable way from the Banana Republics of old - it does not produce any bananas.

Why then, one may reasonably ask, is the United States launching what is commonly labelled a 'trade war' against Europe? The answer: Carl Lindner, and his money. Lindner has poured money into the political system.

Lindner and wife Edyth donated more than half a million dollars in 1998 in political contributions. That's standard for the banana titan, who contributes generously to both major parties.

Lindner's mega-contributions to former Senate Majority Leader, former presidential candidate, current Viagra pitchman and aspiring First Husband Bob helped Dole see the importance of the banana issue to the US economy. He pushed various legislative proposals designed to force changes in the EU banana preference system, and deserves some credit for the Clinton administration's decision to take up the case.

Greased by campaign money, the Clinton administration has chosen to identify the national interest with Carl Lindner and Chiquita. The US Trade Representative humorously asserts that 'the US economic stake in this case is clear' - even though virtually no US jobs are at stake, and even though it is widely understood that displacing the Eastern Caribbean banana farmers will push many of them into the illegal drug trade.

It is hard to imagine a more outlandish case to illustrate the flaws in the WTO-governed global trading system or in US campaign finance rules.

Unfortunately, there are serious consequences to the US buffoonery, and it is innocent parties in the Eastern Caribbean who will pay the price for the Clinton administration's decision to convert the United States into a Banana Republic. - Third World Network Features


About the writer: Russell Mokhiber is editor of the Washington, DC-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, DC-based Multinational Monitor, and co-director of Essential Action, a corporate accountability group working on debt and trade issues. The above article first appeared in their weekly column Focus on the Corporation, posted on the Multinational Monitor web site <>.

(c) Russell Mokhiber and Robert Weissman