Reconciling profits and social mission
Boston — Ideas have ways of slipping into foreign quarters. Like the African basket purses that have appeared on the display racks at Bloomingdale's. The striped baskets, once the domain of college-age pilgrims to the third world, now grace the fashionable with a "less developed" look.
And so perhaps the talk of multinational businessmen in dark suits and high-rise urban offices will someday show traces of ideas planted and grown on organic farms.
Maurice Strong's ideals are not surprising by themselves. It's surprising, rather, to hear them from someone like Maurice Strong. And surprising that a man driven by Mr. Strong's kind of ideas could grow to prominence and power among the entrepreneurial barons, sheikhs, and wildcatters of the oil business.
Men like Maurice Strong -- always controversial -- carry ideas to the heart of where money and influence is. He might call it "creative innovation in institutional mechanisms." Others might call it making things happen.
A self-educated, western Canadian oilman, Mr. Strong is also a "New Age" idealist who speaks Eskimo and Swahili. He has resume enough to staff the World Bank single- handedly: founder and chairman of Canada's state oil corporation, director of the country's foreign aid programs, and undersecretary-general for environmental programs at the united Nations, to name a few entries.
On his way through Boston to collect the 1981 Lindbergh Award (which acknowledges attempts to find a balance between technology and the environment) in New York, he smiles and mentions appearing in the morning's Wall Street Journal as the rope in a tug of war between Canada's Trudeau government and the country's investment community. According to the article, the government wants him to be chairman of the Canada Development Corporation; the investment community doesn't.
Controversy, he says, is inevitable. While Mr. Strong was more frequently in the news in the early 1970s when he was at the UN, in the heart of the business world he stands for some things that, in his own words, "a lot of the traditional interests find threatening."
He has most recently created the International Energy Development Corporation (IEDC), a multinational oil company, which now consumes most of his efforts. He built it around the idea that private capital can help poor economies survive their oil bills. And shareholders can still be shown profits. Its main point is to speed up the pace of exploration in developing countries, often ignored by the conventional oil companies. His oil company is unconventional in several other ways -- a carefully crafted attempt, like Strong's entire career, a reconciling profit motive and social mission. Some heavyweight corporate resources -- such as Volvo AB in Sweden, Sulpetro in Canada, and Kuwait Petroleum Corporation -- stand behind it.
In the business world, Mr. Strong is a savvy innocent, an old hand with an unclouded brow. His sense of profitmaking is sound, but subordinated to the greater public good. Now living in London and spending about a third of his time in the developing world, he explains his many-channeled career by saying that his interests haven't changed. They are, simply put, the developing world and putting a more human face on industrial societies.
"If you read what I said in my early 20s," he insists, "what I've been doing is exactly that. But I've changed vehicles in order to be consistent with my career."
These are lonely times for conscience, however. The mood, especially in the United States, is somewhere else: on cutting back the overseer's role of government in social, business, and environmental questions.
To Mr. Strong, who has the manner of a relentless optimist even in his direct opinions, this is a chance that won't come back for many years. It's a chance for the private sector to show what it can do for people, to prove it doesn't need government regulation to take on social responsibility.
"This could be a very creative period for the private sector," he urges. "But it also could be the last chance. Will the public trust them again?"
Unleashing the creativity of the private sector is different from giving it license to ignore social concerns. "[People] haven't, in my view, said, 'We don't care about the environment; we don't care about welfare; we don't care about food and health laws; we don't care about automobile safety, industrial safety.' They haven't said that at all."
Instead, what Strong sees is that the public acknowledges the inefficiency of big government and wants to give business a chance. But if the business community revels in new freedom without seeking new responsibility, Strong suggests, its great opportunity will become a "brief aberration in the long trend toward bigger government."
Then he riffles through briefcase to quote himself from the text of a speech he is to deliver that evening: "America is a country of moods, and the current mood will not last forever." Businessmen have only themselves to blame, he adds, if there is a swing back to governmental control.
Where will the pressure come from to impress a social conscience on private industry?
Strong laughs wisely, throws up is hands -- rather uncharacteristically -- and rocks back in his chair. "Where from? That's it. I don't have the answer to that. I just share with you the question."
Strong himself isn't waiting for an answer to set an example. People in positions of influence have to lead the way. This is Strong's circle; the high-placed are the people he has lunch with. He even recently bought a summer place on Martha's Vineyard, off the Massachusetts coast, with "Kay Graham [ publisher, the Washington Post], Bob McNamara [president, World Bank], and some others."
Once a self-described "proselytizer," he shifted his course about three years ago. "There's a limit to talk," he says. "In the final analysis all these theories have to be worked out in practical terms."
The third world is something of a no man's land to private oil companies. Its oil potential is underexplored. The point of IEDC is on one hand to make money by helping to raise the level of world oil production. On the other it is to push poor countries toward oil self-sufficiency, countries that need outside money to find and pump their oil.
"We do not pretend," Strong points out, "that the public interest of the countries concerned and the private sector profit objective always coincide."
Yet in many areas they do. And these are the areas Strong is interested in. "That gives us still a very, very great scope."
Scope enough the IEDC has negotiated contracts that will make it the second-largest private oil operation in the Sudan, the first private oil company to enter Turkey since the recent coup, and one of several roughly equal operators in Angola. The company has already sunk its first dry hole, Strong confides, laughing.
The working ethic of the corporation is that it seeks a decent commercial return, but not maximum possible profits, which Strong regards as shortsighted. "This is something that each of our shareholders understands and subscribes to."
It's clearly not an enterprise in the traditional oil style. Apart from Strong's own high regard in the developing world, IEDC is structured in a way to make its aims credible. The ownership is a mix between state and private companies in which no one nation or corporation has dominant interest. This well-spread base should help buoy the new company above what political or ideological snarls may ensue.
Francisco Parra is a prime example of IEDC breadth. Mr. Parra, a Venezuelan with an Oxford English accent, and a director and full-time executive of the company, began his career as a petroleum economist with Exxon and has since been secretary-general of OPEC and managing director of the Venezuela state oil company.
In a sense it has been bureaucratic barriers that have held third world oil in the ground -- the difficulty of haggling out agreements to the satisfaction of both public and private interests.
But businessmen like Parra and Strong have a practical understanding of working with ministries and state firms, having run them, and in Strong's case, created them. They have done a lot of work on a new type of agreement, Parra says at a Boston restaurant where he and Strong are meeting on their way to New York.
The gist of the new agreement is this: Heavy taxes geared to wells that are already producing oil make it too risky to drill exploratory wells, which may well turn up dry. The door opens when taxes can be renegotiated after a find is made. So low taxes make it practical to explore for oil, and higher rates make it pay for the country being drilled once oil is flowing.
For Maurice Strong -- who wears a dark, double-breasted suit in the style of international businessmen -- this practical stuff of contract arrangements and fiscal regimes fits into a much bigger picture of where the world is going.
He's interested in bridges, and IEDC is one, between the developed and the developing economies. This means that countries in which the private economy is strong, as it is in the West, work with those countries whose state enterprises have to take up the slack for a weak private sector.
Strong admits that his detractors in the business world often associate him with "statism," or deeper government intervention in business, because of his connection to state corporations. His own concept is that neither the state nor free enterprise can manage alone, especially in the third world.
"Those who have been advocating purely statist approaches, I think, are realizing these are no longer practical." And those who push for a purely private approach, he says, "realize they can go far but not do the entire job."
In the broadest sense, the job is to remake the concept of economic growth which business life is traditionally based on. Strong has long maintained that the world can't sustain a growth that means ever greater consumption of things and resources. Rather, the dynamic force of the world economy must be grounded on the "less material elements of life."
"In fact we're seeing this." Less is becoming more, and the shrinking of the computer chip is an example. Progress means smaller and more efficient, rather than bigger and more consuming.
The most far-reaching change under way is in our use of time, he says. Just as the Industrial Revolution freed large numbers of people from spending all their time just to feed themselves, so in present-day industry an ever smaller portion of human labor is needed to fulfill human needs.
In other words, people will have more time to do what they want, time that doesn't have to be productive in traditional terms.
"There has been a tremendous explosion in the amount of time people spend listening to and producing music," Strong said. "In the field of the arts, culture, you go into a small town today where there was never such a thing as an art gallery or a local art club and you will find them now."
In economic terms, this follows the already apparent trend that labor becomes less important and capital more important. This may mean widespread unemployment in the future, and that owning capital resources becomes a more dominant way to earn income.
Looking 10 years ahead at his current venture, the IEDC, Strong hopes most basically to still be in business. This alone, he says, would be a sign of success, since at present the outfit is spending capital without significant return.
Of course, he also hopes to have helped break the energy logjam by finding new sources of energy in some of the world's poorest countries. In the meantime , IEDC will have spread some technical advice and training that the developing countries need.
And last, Strong hopes others will follow his lead, that other private companies will move into the developing world, that IEDC will have "stimulated a lot of emulation."
"The kind of things that are controversial today are a little less controversial than a few years ago and may be a little less controversial in the future."
Perhaps. If things have changed, Maurice Strong will almost certainly have had a part in changing them -- a sheep among the wildcatters, a blue-eyed sheik among the shepherds.