Resource control regimes - Contributions to conflict prevention

Resource-rich countries are not automatically wealthy. On the contrary, war and violence prevail in some of these countries. Resource-related conflicts are ignited by an unjust distribution of the proceeds or when living conditions in resource-rich regions deteriorate. Corrupt elites profit while the majority of the population is unable to benefit from the country's wealth. In some cases, resource wealth is controlled by rebels and used to finance their cause.

Ideally, resource wealth should serve to reduce poverty and foster development. Responsible governments and corporations ought to protect the environment, respect the rights of the population and invest the proceeds from the resource sector in development. All participants, not only governments of resource producing countries but also companies, the governments of resource-importing countries and financing institutes that provide resources companies with loans should consider it their duty to act accordingly.

National rules and regulations

On a national level, the main responsibility for good governance of the resource sector lies with the government. The government is responsible for passing laws and regulations and for monitoring adherence. This affects taxes and other levies that companies have to pay, as well as binding environmental and social standards. And, finally, it affects the use of the state revenues generated.

When a government uses the proceeds from the resource sector for the benefit of the population, conflicts around the distribution of these moneys are quite unlikely. Ideally, a government establishes a resource fund whose income is invested in sustainable and diversified development (such as in Norway).

When governments impose high requirements in the protection of the environment and the social sector (and monitors them strictly) there will be less conflict potential. It also serves to prevent the pollution of the environment, the destruction of the livelihoods of the population and social grievances.

A regulation of the resource sector on the national level offers a great potential for conflict prevention.

But governments of the importing countries can also influence the behaviour of governments and companies in resource-rich countries. They can require companies to adhere to social and environmental standards in the entire delivery chain. They can also set rules and regulations on transparency and base their decisions on whether to grant guarantees or not on the outcome. The same holds true for financing institutions: The creditworthiness of a company could further be measured against its environmental and social balance and its freedom from corruption. Additionally, countries, such as Germany, that import large amounts of natural resources, can insist that resource-exporting countries mine these in an environmentally and socially responsible manner. Bilateral cooperation can also lead to a support of resource sector governance.

The Dodd-Frank-Act in the United States follows a similar approach. This national law requires companies that want to import certain minerals from the Democratic Republic of the Congo to publicly provide proof of their conflict-free origin. (See infotext "National regulation of activities by international corporations".)

International initiatives

Many national regulatory measures are aligned to those on the international level. They establish rules for certain economic sectors or give recommendations. The aim of the Kimberley Process Certification Scheme, for instance, is to solely stop the trade in conflict diamonds. The OECD guidelines for multinational companies, in turn, set standards for business and operation practices, transparency, fight against corruption, consumer protection, human rights and environmental protection. These guidelines address companies that operate in or from OECD countries. If a company does not adhere to these guidelines, trade unions and NGOs can file a complaint with their government (or the national contact point). Whether or not or how this case is pursued, however, depends on the respective national contact point.

Apart from the Kimberley Process, whose regulations enter into national legislation, and which is the only legally binding international agreement on the resource sector, there are only principles, standards and certification systems that companies can volunteer to adhere to. The fact that many of these norms have been elaborated by more than one party (governments, companies, civil society, international organizations) gives them a certain importance. A more binding character would be desirable to increase the effectiveness and importance of the many initiatives that there are. Independent inspections could be one step in this direction. Another step would be the establishment of mechanisms that foresee sanctions as a consequence of violations. In the current debate on control regimes in the resource sector, international agreements on the level of the United Nations are also taken into consideration.

International norms, therefore, address governments and/or companies. A distinction must be made between voluntary and binding agreements as well as sectoral or general norms. The table below gives an overview of select initiatives.

Name of initiative Target group Scope Binding character
OECD Guidelines for Multinational Enterprises Businesses Employment and business relations, environment, human rights, transparency in information, fight against corruption, consumer protection, science and technology, competition and taxation voluntary
UN Global Compact Businesses Environment, human rights, workers’ rights voluntary
UN Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with Regard to Human Rights Businesses Human rights, fight against corruption, consumer protection, environmental protection voluntary
Equator Principles Banks Environment and social issues voluntary
ISO standard 26000 “Guidance on Social Responsibility” Organizations, businesses Environment and social issues voluntary
ILO Core labour standards Countries Social issues Binding
Voluntary Principles on Security and Human Rights Extractive and energy sector companies Security and human rights voluntary
Protect, respect and remedy: A Framework for business and Human Rights Countries, businesses Human rights voluntary
EITI and PWYP Countries, businesses Transparency and fight against corruption in the extractive sector Voluntary
Kimberley Process Certification Scheme Countries, businesses Stop of the trade with conflict diamonds Voluntary (international level); binding (national level)
Forest Stewardship Council Certification Businesses Environment and social issues in the timber trade Voluntary
Dodd-Frank-Act Businesses Transparency in the trade with conflict minerals (gold, tungsten, tin, coltan) from the DR Congo Binding
International Council Standard on Mining and Metals Businesses Sustainability standards for mining companies voluntary
FLEGT - Forest Law Enforcement, Governance and Trade Countries Fight against illegal logging, more sustainable forestry in timber exporting countries Voluntary (international level), binding (national level)

Sources and further information:


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