Fighting the Cookie Monster

A nation-wide boycott of Danone products, co-ordinated in large part via the Internet, had some success in Hungary

Despite the social malaise which has gripped Hungary since the fall of communism, there are signs of an awakening social conscience, albeit it's still small and disparate. Whereas elsewhere much has been made of the "liberating" power of computer-mediated and mobile communications, enabling activists to better organise themselves and disseminate information, this potential is only now slowly beginning to be appreciated in this tiny Central European nation.

Hungary is not a country usually associated with social protest. Yet the few instances when circumstances were such that it rallied people around a common cause, it has had a profound effect. Hence, while the environment was instrumental in speeding the decline of communism, cookies may end up doing the same for corporate capitalism.

The cookies in question refers to Danone's plan in April to shut down and reorganise its holdings in Hungary. This includes the cookie factory in the western Hungarian town of Gyor. Many Hungarians were outraged at the idea; the 100 year old factory struck a sensitive cord among the old and young alike.

A nation-wide boycott of Danone products, co-ordinated in large part via the Internet, ensued. The Hungarian authorities, partly sympathetic to the protesters and partly unsure of how to handle on-line protest, didn't interfere.

By the end of the month, Danone suffered a 10% fall in sales thanks to the boycott. Considering that the cookie factory in Gyor has a monthly turnover of over 100 million HUF (370,000 Euro), this drop was something which could not be easily ignored. Tamas Jaross, managing director of Metro Holding Hungary, admitted that the net-based boycott achieved its objective.

In addition to the boycott, many young people took part in demonstration concerts in front of the factory. The co-ordination of these concerts and subsequent protests were also facilitated in large part by the Internet. As one co-ordinator pointed out, "we feel that the factory not only belongs to the city or who bought it, but to us as well."

The protests against Danone were not restricted to just Hungary. Many other countries within the EU have held similar boycotts and protests, for the company plans to shut down factories all over Europe: two in France, one in Belgium, one in The Netherlands, and one in Italy. Unlike in Hungary, these protests weren't always hassle-free. In France, for instance, a judge ordered a web site calling for a boycott of Danone to be shut down.

Social consternation over Danone's closure plans was such that the issue was even raised in the Council of Europe, although the company wasn't singled out by name. In the end, Danone decided to scrap its plan to close the factory in Gyor. According to a press release, Danone will keep the factory going and will concentrate on making its operations more "efficient".

For the mayor of Gyor, the worst appears to be over. He knows that Danone's plans for restructuring will not be painless, but at the same time he feels it's a necessary step. He is confident, however, that in the long run the cookie factory will find its place within the Danone group of companies.

As for the government, the Danone affair exposed to the public the weakness of globalisation, not to mention the paradoxes inherent within its economic policies. The government conceded that it had no legal options to counter Danone's moves, but at the same time stressed that it respected the decision of multinationals. Indeed, although government officials were apparently sympathetic with the boycott, they didn't officially support it because they felt "it may cause harm to the economy."

From the very beginning, it was clear that the Hungarian government didn't want to take strong action for fear that it would send the wrong signal to foreign investors. Without doubt, this fatalistic approach means corporations have a free hand to ignore national sovereignty and that although the government may bark once in a while, it won't dare bite.

All this betrays the intellectual dishonesty on the part of government officials, for they fail to explicitly admit that this is the crux of globalisation: that national governments have no say in running their own economies, and that international organisations like the WTO are specifically designed to represent the interests of global capital.

The reason for the growing opposition to multis is the predatory practices they have used in which to dominate the market and the economy. Some examples of industries where multis have taken over completely are pulp and paper, meat, sugar, vegetable oil, electronics, and cement.

Basically, what multis have done in the post communist nations of Central and Eastern Europe is they have bought markets and closed factories. For example, Hungary used to have 12 sugar factories; now only five remain. The rest had been bought by multis and then shut down because they were not needed. In other words, the new owners were only interested in buying themselves into the market and not running the companies they acquired. What is more, they flooded the newly-acquired markets with their own products from abroad.

Multis clearly put domestic firms at a disadvantage. In order to facilitate "foreign investment" in Hungary, multis have been given many concessions. They often operate in tax-free zones and pay little or no duty. They are also exempt from various social taxes as well as capital gains tax. This preferential taxation system for the purpose of "encouraging investment" clearly favours multis over local businesses.

While the debate over multis raged, exemplified by the actions against Danone, the corporate-dominated media did its best to downplay the situation. As soon as the "agreement" with Danone was reached, the mainstream media quickly turned its attention elsewhere and considered the matter closed and forgotten. Moreover, when pretending to discuss the role of multinationals in the economy, no-one with opposing views to globalisation -- e.g., trade union representatives or activists -- were ever represented.

So far, the only political parties critical of the multis are on the opposite ends of the political spectrum: the Worker's Party on the left and the Truth and Life Party (MIEP) on the right. For the politicians of all stripes, this makes the task of defending multis easy. To be against globalisation and overly critical of the multis means you are either an extremist from the far-left (i.e., an unrepentant communist) or an extremist from the far-right (i.e., a neo-nazi fascist).

In spite of the obvious problems with multis, the general feeling of the government, most politicians, and assorted pundits is that multis have done good for the Hungarian economy. By all paper indicators, they have increased exports, contributed to GDP growth, introduced new products and production methods, and have provided jobs. What they fail to mention, however, is that more jobs have been lost than created. Also, as soon as the various exemptions and concessions run out, there is no reason for multis to stay. Most will probably pack up and move on to other countries where labour is cheap and they are able to negotiate for themselves a new set of exemptions and preferential treatment. At the same time, it's an opportunity to exploit new markets.

This aspect of corporate behaviour is never mentioned by the economic and political elite. Instead, they go on ad nauseum about the advantages of multis and "foreign investment": that the concentration of economic power is actually a good thing, especially for consumers in terms of the products they can buy; that the closing down of factories is not just because of multis, but is an international problem and, for post communist countries in particular, is an expected result of a re-orientation to a market economy; that multis provide a lot of greenfield investment; and that although they may have bought themselves into the market, they have also "brought a market" along with them.

To this extent, apologists are able to explain away Danone's actions. They note that the company has been simply over-taken by events. The corporate giant over-extended itself, buying not only the Gyor factory from United Biscuits, but also the Stollwerk plant in Szekesfehervar (central Hungary). This, prior to an "unforeseen" global economic slowdown, which naturally forced Danone to deal with contracting markets.

Yet this is precisely the problem with globalisation. The concentration of economic power is such that markets are no longer flexible enough to deal with fluctuations in the global business environment. Thus, although market demand at the local or domestic level may be strong (as with the cookie market in Hungary), in terms of a global economic strategy it's still considered inadequate and not viable. This, as a result, deepens existing downturns and artificially introduces them where they don't exist.

For the managers at Danone, what clearly caught them off guard was not poor economic conditions but public outrage to their consolidation plans. In order to put a positive spin on events, the company later claimed that they were unaware of the attachment of Hungarians to the cookie factory in Gyor and its products; in reality, they didn't think that a tiny Central European country would make such a fuss.

Yet despite the "concessions" made by Danone, calls for continued protest against the company can be still heard. This is because many take the company's change of heart with a grain of salt. They are not fooled by the diplomatic language of the press release and are able to read between the lines: that is, Danone will keep the factories in Gyor and Szekesfehervar for the time being, but will downsize their operations and eventually close them down.

While this is the most likely outcome, the Danone boycott has been a small victory of sorts, nonetheless. For one, it shows how activists within the country are beginning to take advantage of the opportunities provided by computer and mobile communications. Protest against corporations in Hungary is actually nothing new, they just haven't been well co-ordinated or disseminated. Take, for instance, the McDonalds barf-ins: in the mid-1990s, as McDonalds began to make its presence felt throughout Budapest, a small group of activists would go into a McDonalds, order food, and induce themselves to vomit it. The reason why this protest didn't make much of an impact was because people were generally not aware of it.

In addition to raising awareness, the Danone boycott also revealed how Hungarian activists have been integrating themselves more and more into the bigger picture. Not only did they take part in a boycott with parallel actions in other countries, they are also increasingly taking part in larger global movements as well. During the Prague demonstrations, for instance, Hungarian activists took part and were even arrested. This, in turn, forced the mainstream media to reflect on the event.

It's clear that the Danone boycott isn't an isolated, one-time event, but part of a continuous campaign against the forces of globalisation. Indeed, Budapest will host in August a "Poetic Conference on Globalization". This "conference" aims to discuss the issues of globalisation "by means of verse in an artful, though sophisticated, yet vivid way of non-continence and apprehension". According to Péter Litván, one of the organisers of the event, they hope to tempt poetic minds out of their dens, and make them "encounter, question, attack, yield to or just learn about their differently equipped fellow-minds".

Although the future of world remains somewhat uncertain, one thing is not: if the WTO or World Bank ever plans to come to Budapest, they had better be well prepared.