It is not only Shell's judgment that is on trial in Nigeria

PEOPLE find it hard to feel sorry for multinational corporations. Almost by definition, they are rich, impersonal - and too free, many say, from supervision by any government. But spare a thought for the men huddling in the besieged boardroom of Royal Dutch/Shell. Just lately, the world's biggest oil company has seemed unable to do anything right.

Back in June, when it planned to dump the Brent Spar oil platform into the ocean, Shell was depicted as a despoiler of the seas. In recent weeks it has been in the headlines again, accused of propping up the Nigerian military junta that has just hanged nine activists from the Ogoni region after a questionable trial. By awful coincidence, the hanging came just as Shell was planning a $ 3.6 billion natural-gas project in the Niger delta. In reacting to the second embarrassment, the firm has tried to apply some lessons from the first. But it is not yet in the clear.

What Shell learnt from the Brent Spar affair is that public relations matter. The firm was probably right to say that disposal at sea was the cleanest and not just the cheapest way of disposing of the Brent Spar. But it did too little to explain its case and was forced to buckle following a brilliant campaign by Greenpeace, a pressure group. In Nigeria, however, Shell may be about to learn that public relations are not enough.

Undeterred by the outcry that followed the hangings, the company is going ahead with its natural-gas project, but has this time put its public-relations campaign into high gear. It has splashed out on advertisements arguing that the project will help ordinary Nigerians, creating jobs and cleaning the environment while giving no succour to their present venal rulers, because the revenues will not flow for many years.

Though not an empty argument, this stretches a point. It is all very well for Shell to argue that it will be improving the local environment, but it was Shell that despoiled much of it in the first place. Even if Nigeria's rulers cannot trouser any revenues from the gas project right away, the project's mere existence contributes something to the junta's domestic standing. Besides, Shell already has a big investment in Nigeria, separate from this latest venture. As the country's biggest producer of oil, which produces in turn 80% of the government's revenues - often embezzled, nearly always mis-spent - it cannot pretend to have no political impact whatsoever.

The business of government, the government of business

That, however, is not where the debate should end. For in doing business with Nigeria, Shell is neither better nor worse than most multinationals. Every big company worth its salt is racing to invest in China, which is no democracy and no less prone than Nigeria to bump off dissidents. If Nigeria is beyond the pale, what about Saudi Arabia, a habitual chopper-off (in public) of people's heads, and a country whose monarch has ruled out for ever a move to democracy? And if Shell quit Nigeria, would not some other company swiftly take its place? Simply to pose these questions is to see that firms cannot apply a consistent political standard to every investment decision.

Against such complexities, it is tempting to argue for a simple division of labour. Let governments perform the complex moral calculus; let multinationals observe international law, comply with international sanctions, observe international environmental standards, avoid outright oppression of local people - but behave otherwise as political neutrals, free to make business decisions on business criteria alone.

This would at least make it harder to turn firms into scapegoats. In Nigeria, most governments have after all been little firmer than Shell. While signing up for an arms embargo, they have shrunk from imposing the oil sanctions that would hit the regime hardest. Nelson Mandela has threatened to act against Shell in South Africa, but has not told his own country's firms to mount a boycott of Nigeria. If the world wants to topple Nigeria's government, its politicians should act, not expect an oil company to act on their behalf.

And yet, in the end, asking for this simple division of labour may be too simple. This is because for many multinationals, and especially for oil and mining companies, politics is part of their daily business. The activities of such firms will sometimes alter a country's geography and ecology, or change the balance of riches between its regions. In Nigeria it was probably inevitable that Shell would be drawn into the murky politics of the local Ogoni people and their grievances against the central government. It is part of a multinational's job - the part that Shell usually prides itself on - to cope with such conflicts.

Despite its public-relations blitz, Shell may yet be persuaded by the damage to its reputation or by the actions of Mr Mandela to withdraw from Nigeria. Such a retreat, on the heels of Brent Spar, would drive home the point that a multinational's failure to look like a good global citizen is increasingly expensive in a world where consumers and pressure groups can be quickly mobilised behind a cause. But it would not necessarily make conditions in Nigeria any better. The pressure groups need to ask themselves, before celebrating, whether their own position on Nigeria is consistent and whether their home governments might have made a better target than Shell.

© 1995 The Economist Newspaper Limited. All rights reserved