US Hypocrisy and the Gulf Oil Tragedy

US President Barak Obama has fanned the wind of public anger against BP for its massive Gulf oil spill. But the US could well reap a whirlwind for the manner of its official response to the disaster. There are several reasons.

The first is the sheer hypocrisy of US demands for mammoth compensation for livelihood losses incurred by its citizens, given the persistent refusal of the US (and other) oil majors, miners and assorted multinationals to compensate for environmental havoc they have created in other countries.

The most outrageous example, which smacks of downright racism as well as corporate greed, is the puny compensation for the upward of 20,000 killed and an estimated half million more suffering permanent health damage from the gas leak at the Union Carbide plant at Bhopal, India, 1984. The Indian government shares some of the blame for failing to achieve justice for Bhopal, but the brutal fact remains that Indian lives are less a fraction of American livelihoods – and that the US continues to provide sanctuary against the extradition to India of Union Carbide's then-boss, Warren Anderson.

But if Bhopal was a frightening but fortunately so far uniquely devastating event, oil spills are a continuing occurrence. A similar-sized spill to the BP one in Mexican waters in 1979 mainly affected Mexico. The US suffered too but its attempts to demand compensation ran up against Pemex's claim to sovereign immunity as a state-owned company.

But US and other foreign companies don't even bother with such get-outs when they cause the spills along the coasts of Nigeria or in the forests of Ecuador on a much bigger scale even than the BP event in the Gulf of Mexico. These spills get scant media attention. As for compensation – well, forget about it.

The US's action in strong-arming BP into paying out at least US$20 billion for livelihood compensation and cleanup is setting a wonderful example to governments, individuals and communities in the rest of the world to demand their own compensation for US corporate misdeeds abroad. If the US courts continue to refuse to recognize foreign claims against US companies – those as those of Bhopal victims – one can well imagine that other methods will be used.

Here again, President Obama has provided a fine example of circumventing due process to extract cash from BP as part of his campaign for the November elections. Forget the rule of law, the compensation limits established by legislation, the established procedures for allocating liability and assessing damages. No, just have the president act like a South American populist demagogue and decree that BP is entirely guilty and must pay the above sum. The view of one Republican that BP had been "shaken down" is accurate enough.

The administration has also behaved as though decisions made by government agencies with personnel appointed by his predecessor have no validity. How else to interpret allocating some of the blame and cost to government bodies which authorized exceptions to safety procedures in the rush to get more oil out of the Gulf? BP, like the others, was encouraged to "Drill baby, drill".

In the eyes of many, BP deserves to be shaken down. But the way it was done, the focus of blame on the one player in the mess who was known to be cash rich, offers a splendid example to aggrieved parties in other countries to go after US and other corporate giants, particularly if they know they can lay their hands on cash flow from oil and other ventures.

Mining and tobacco companies are obvious targets but there are plenty of others such as seed and agricultural chemical companies, pharmaceutical giants, even snack food and powdered milk producers who will, justly or not, be targeted, if not by governments then by NGOs particularly in the developing world.

The US has behaved in a way which further underlines its exceptionalist view of itself. At the same time it undermines the reasonable reputation of the US as a society which believes in the sanctity of legal and constitutional process. That opens opportunities for those in other countries who have always viewed western insistence on laws and due process as a weapon to be used against them. The US has shown a fine precedent of politics overriding law that others can follow.

China will also be watching all this with interest – and worry. For sure, Chinese companies have been mainly investing in oil in Africa and elsewhere rather than the Gulf of Mexico. The value of those leases will go up as Gulf ones go down. But if the US can take this action towards BP, a company close to the bosom of its closest European ally, what might it do to China's investments in the US if congressional anger boils over or the president faces a crucial election when China trade, not an oil spill, is the center of US attention?

The unilateralist actions of the administration of George W Bush did enough damage to the international reputation of the US. Obama promised to reverse that. But it seems that under pressure he is capable of behaving similarly. He even compared the oil spill to the 9/11 attack on the World Trade Center in New York and the Pentagon in Washington, DC. Is the corollary that we are now to get Obama versions of the Iraq invasion, Guantanamo and general assault on civil liberties served up, first over oil issue then over China and its $2 trillion in dollar assets?