Economics of conflict phần 3 doc

19 on the grounds of improving the capacity of the host government to provide secu- rity for oil installations. Oil production in situations of armed conflict usually places investment in harms way and the company remains at the mercy of the shifting balance of military forc- es during the conflict. 9 Oil production requires the investment and the guarantees (contracts, security, etc.) that only an alliance between oil companies and govern- ments can provide. Most companies, dependent upon the host government for concessions and protection, find governments to be their natural allies: “Common accusations are that companies have allowed militaries to use airstrips, helicopters, roads and other oil company infrastructure for offensive military purposes. In some cases host governments even appear to be using oil company security as a cover for waging military campaigns against political or ethnic en- emies. Some of the most serious accusations levelled against international oil companies have involved direct or indirect assistance in procuring weapons for host country governments, and in some cases even for rebel groups.” (Fuelling Conflict, 2002). Thus, the militarization of oil production in armed conflict is indirect. Companies may provide logistical or other support - usually to governments - but rebels or government troops are unlikely to be involved in the production of oil, or even the management or oversight of production facilities. However, military activity assures access to the resource through the control of territory, provides security to the pro- duction processes and investments, and enables local or regional marketing activi- ties. In the diamond and timber industries, the nature of the production process means that, access to the resource and control of marketing routes are enough to make them a viable economic activity for rebels and government forces. The extrac- tion of rough diamonds in armed conflict zones is often an informal affair, run al- most entirely by the military power in control of the region. In the timber industry, logging companies play a crucial role, but where they operate they tend to “side with whoever controls forest territory…in many instances insurgent groups…political, military and criminal groups” (The Logs of War, 2002). Where it occurs, the milita- rization of diamond and timber production is direct, in the sense that state or rebel militaries are more often than not integral to the production process. For all three commodities, exploitation is in large part determined by the extent to which the commodity can be said to have become of strategic value to the force in question. Usually, the opportunity for profitable exploitation – defined as access 9 The usual exception being off-shore oil installations which can become targets during intra-state wars. 20 to a high value resource and to their markets – is the deciding factor, but invest- ment may also be necessary to make access and marketing viable. Still, the central- ity of military activity to the production of all three of these commodities is hard to avoid. In some cases, where there is ready access to the resource, the military is the company and its troops are the labour pool. In others, they operate as sector-wide protection rackets, determining the production cycles, ‘managing’ or victimising labourers and protecting or attacking investments. Over time, and to the extent that a force exercises continuous control of a territory and roads, they can influence pro- duction cycles and determine the viability of investments. This is, in a phrase, mil- itarized production. Production may be considered to have been militarized once military personnel or military activity become a direct or indirect part of the pro- duction process. 2.4 Conflict Commodities With the rise to prominence of ‘conflict diamonds’, and to a lesser extent ‘conflict timber’, there is a growing sense that goods produced in an economy torn by armed conflict are, or should be, morally suspect. Indeed, the activities of companies dealing in such commodities are increasingly viewed as illegal or a challenge to international security. The Security Council, through its panels of experts and/or monitoring mechanisms, has described the sanctions busting activities of a number of compa- nies. As described in the reports summarised here, the law courts in a number of countries have heard cases involving allegations of dubious and illegal behaviour by much larger multinational corporations. The news media in many more countries have reported similar activities by otherwise legitimate companies operating inter- nationally, sometimes forcing government action in response. It is arguable that this activity represents the gradual emergence of an interna- tional moral and political norm under which private sector activity that sustains armed conflict is unacceptable. The growing tendency to view certain products as ‘conflict commodities’ is a direct result of an increase in consumer sensitivity resulting from successful campaigns on issues related to corporate social responsibility and human rights. Yet, there is no agreed definition of what constitutes a conflict com- modity. The definitions that have emerged to date have originated as a result of attempts to grapple with the role of specific commodities in fuelling armed conflict, most notably diamonds. The term ‘conflict diamonds’ was an invention of the media, an attempt to summarize a phenomenon confronting the UN, the industry and NGOs. Like all media shorthand, it has its drawbacks, but its usefulness as a category has 21 been confirmed by the fact that definitions have been suggested both by the UN General Assembly and by the inter-governmental series of meetings, known as ‘the Kimberley Process’. The UN GA defined conflict diamonds as ‘rough diamonds which are used by rebel movements to finance their military activities, including attempts to under- mine or overthrow legitimate governments.’ The Kimberly Process settled on the following: Conflict Diamonds means rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments, as de- scribed in relevant United Nations Security Council (UNSC) resolutions inso- far as they remain in effect, or in other similar UNSC resolutions which may be adopted in the future, and as understood and recognised in United Nations General Assembly (UNGA) Resolution 55/56, or in other similar UNGA reso- lutions which may be adopted in future. Two common aspects of these definitions are immediately apparent. First, both are concerned with the use of diamonds as a source of finance. This is accurate, as the financial exploitation is arguably the single most important role that diamonds play in sustaining armed conflict. However, the definition ignores the impacts of dia- mond wars (battles for control of diamond territory) or the toll which military con- trol of a diamondiferous region may have on the population and how that may contribute to perpetuating the conflict. Second, both definitions have a clear pro-state bias. This is to be expected as both definitions have emerged from fora in which states play a dominant role. As already noted, there is nothing in international law that might prevent states from exploit- ing natural resources to finance their war fighting capacity. In fact, principles of state sovereignty entail a responsibility on the part of governments to provide security and to retain a monopoly on the means violence. Similarly, state sovereignty entails the right of a government to exploit its natural wealth to this end. But are all states or government forces in armed conflict necessarily practicing legitimate production or exploitation of a resource? Would this hold true for a commodity-financed re- pressive regime, one that put its profits towards maintaining the machinery of re- pression and war? The definition for ‘conflict timber’ offered by The Logs of War takes a more bal- anced approach. It is based less on the principles of international relations and bet- ter reflects the economic and logistical processes as work: “For the purposes of this study, conflict timber refers to timber that has been traded at some point in the chain of custody by armed groups, be they rebel factions or regular soldiers, or by a civilian administration involved in armed 22 conflict or its representatives, either to perpetuate conflict or take advantage of conflict situations for personal gain.” (The Logs of War, 2002). This definition specifically strikes a balance between states and rebels. It seeks to define conflict timber by virtue of logs having been traded or controlled at some point by an armed group or parties to a conflict. However, while true to the reality of conflict timber, this approach to conflict commodities also runs up against state sovereignty, albeit from a different angle from that of conflict diamonds: in a situ- ation of armed conflict, military force will almost certainly be required to ensure the marketing and possibly also the production of timber. Given the acknowledged right of a state to exploit its natural resources, it must be assumed that a state’s mil- itary could at some point be involved in timber transactions in, for example, man- aging or securing production or marketing of timber (see militarised production above). Governments are unlikely to accept a definition of a conflict commodity that may prevent it from exercising its right to exploit. To get around this, The Logs of War qualifies its definition by seeking to ascribe intent. Rebels or government soldiers could be considered to be handling conflict timber if the trade was intended “to perpetuate conflict or take advantage of con- flict situations for personal gain”. This, too, is more balanced than the conflict dia- monds definitions, which describes the “overthrow” or “undermining” of govern- ments as the sole problematic objective. It is useful, too, because it specifically identifies the criminal dimension of “personal gain”, which would almost certainly capture most repressive elites (assuming “personal gain” includes the use of profits for patronage to accrue political power, not just enrichment). But this definition would also fall prey to the principles of states rights, which include the right to self- defence if attacked and assumes the right to exploit its natural wealth to this end. “Perpetuating” and “taking advantage” of armed conflict may be morally suspect, but, in a situation of armed conflict, it would difficult to impute this intent to a government that asserted its right of self-defence. What emerges from the Economies of Conflict studies completed to date is that a definition of conflict commodities should probably be based on activities involved in the production and marketing of such goods, rather than on the actors involved. The categories outlined above suggest that a definition of a conflict commodity would include reference to commodities made possible by anarchic exploitation, criminalized transactions and militarised production. These categories are only preliminary and require further development. They appear at first to be far too broad and therefore unlikely to be politically viable. Certainly, further research into industry activities is needed to provide greater clar- ity as to definitions, as well as to identify the approximate volume of trade in con- flict commodities. However, when applied to a particular commodity in the specific 23 context of the armed conflict (e.g. Sierra Leone diamonds, Liberian timber, Suda- nese oil, etc.), these criteria might offer a more specific understanding of the nature of the role of the private sector in sustaining conflict. By identifying activities and transactions that help sustain armed conflict, such definitions help clarify the na- ture of culpability rather than trying to generalize about the character of parties to a conflict or their private sector allies. A focus on activities also makes it easier for concerned citizens, shareholders, industry associations and others to hold governments and companies accountable for their actions. This would enable all concerned – NGOs, multilateral organisa- tions, companies and governments - to develop definitions of complicity in armed conflict that would be relatively transparent and comprehensible across the differ- ent sectors. In using the categories suggested here, the objective should not be to cast the analytical net as widely as possible, but to enhance the predictability of demands for regulation or socially responsible corporate behaviour. These catego- ries suggest an ability to refine the analysis to enable characterizations to be made about investments and transactions. 2.5 Rogue Companies Armed conflicts have created a niche market for companies willing to avoid regula- tion and assume greater levels of risk. These companies - some relatively small in size but operating internationally – use conflict as a cover for their operations, or profit from supplying the combatants, or both. The companies operate illegally in many cases, but many other times they are not technically in violation of any law. The work of the UN sanctions committees’ independent panels of experts and/or monitoring mechanisms has shown that they are often closely connected with the repressive powers at the head of rebel movements or governments, often in direct contradiction to UN sanctions, or other efforts to promote security or peace. They are, in a sense, rogue companies. Rogue companies are involved in all three categories of activity that define con- flict commodities: anarchic exploitation, criminalized transactions and militarised production. Yet, the Economies of Conflict studies identify activities carried out by companies with legitimate business interests that would fit into these same catego- ries. As the activities and consequences associated with conflict commodities begin to be better understood, and as the consensus around notions of conflict commod- ities begins to solidify, a number of companies engaged in otherwise legitimate ac- tivities could find themselves on the wrong side of international opinion. 24 The Economies of Conflict studies portray a complex range of licit and illicit activi- ties resulting – directly and indirectly - in a number of intended and unintended consequences. The elaboration of a clearly defined concept of ‘rogue companies’ would have considerable utility with regard to private sector CSR initiatives. It would help all sides – industry, NGOs, and government – by providing some transparen- cy to the negotiation of CSR and armed conflict standards. Judging from the pace of recent policy developments, it is possible that, sooner rather than later, those international firms which have taken on CSR initiatives related to human rights or the environment will have to add the armed conflict lens to their collection of due diligence perspectives. Eventually, companies will need to adopt clear, verifiable positions on core issues about their operations in situations of armed conflict or risk being tarred with the same brush as rogue companies. As policy and law develop, it is not inconceivable that rogue companies will one day find themselves named by the Security Council as threats to international peace and security and treated accordingly. Ultimately, rogue companies could face a range of targeted sanctions that would affect their management and operations interna- tionally with a view to influencing their behaviour in relation to one or more armed conflicts. The utility of such measures for the Council might increase if corporate sanctions proved effective in targeting specific economic and political interests, could be shown to have relatively minor consequences for civilian populations. What companies might qualify as rogue companies? To the extent that compa- nies have participated in the conflict sustaining activities outlined above, the as yet simplistic definition of rogue companies offered here would encompass large parts of the tropical timber industry, a number of international banks, certain compa- nies dealing in rough diamonds, and certain multinational oil companies. Thus, to the extent that they have handled finances related to armed conflict, certain banks operating in problematic jurisdictions identified by the OECD’s Financial Action Task Force (FATF) may qualify as rogue companies. However, a company that looms large in the trade in rough diamonds may not qualify as a rogue company if it has participated in attempts to address those aspects of the trade that lend themselves to the creation of conflict commodities. Similarly, oil companies that have attempted to deal with aspects of the militarization of oil production – for example, through implementation of the Voluntary Principles on Security and Human Rights – may also be excluded. As indicated above, the definition of conflict commodities - and its corollary, rogue companies – may be too broad. For example, the categorisation presented above does not distinguish between activities that are directly or indirectly linked to sustaining conflict. In addition, it remains unclear as to where responsibility lies for making a determination as to the status of a commodity or a company. 25 The result is that, in the presently fluid policy context, and in the absence of sharp- er definitions of the activities that create conflict commodities, simple participation in the economy of a country in armed conflict could implicate companies involved in certain industries in the production of conflict commodities as they are defined above. Clearly, the risk to reputations of companies could present a significant dis- incentive for investment by some companies. In fact, the risks will continue to rise for all concerned so long as the actions of the worst of the rogue companies are not checked and some clarity is not brought to the debate. For developing countries, where the bulk of some primary commod- ities are to be found, the danger of a foreign investment freeze - driven by fears over damaged company reputations or brand profiles - may become an increasingly fright- ening possibility. Similarly, industrialised countries – whether primary commodity producers or not - will need to pay greater attention to the involvement of their companies abroad, or risk feeling the political fall-out from actions over which they have hitherto had little control. Before the agenda can move much further, howev- er, additional research and dialogue is necessary in order to identify precisely what activities would cause a good to be classified as a conflict commodity and a compa- ny to be considered a rogue. 2.6 Emerging Conclusions • The kinds of activities described in the Economies of Conflict studies completed to date represent significant challenges to the effective exercise of state sovereignty, corporate social responsibility and international peace and security. • Private sector activity in armed conflict is marked by the convergence of anar- chic exploitation, criminalized transactions, and militarized production. • Goods exploited to sustain armed conflict and produced or brought to market by anarchic exploitation, criminalized transactions, and militarized production could be described as conflict commodities. • Companies involved in the production, marketing or payments related to con- flict commodities could be described as rogue companies. Company involvement in the activities related to conflict commodities may be direct or indirect. • The distinction between licit and illicit goods or transactions is misleading. In the production or marketing of goods from armed conflict situations, there are perfectly legal actors involved in dubious transactions, and known criminals involved in legal activity. 26 • While understandable, the moral-political distinction between rebels and states that appears in most inter-governmental action in this regard is probably un- helpful for effective policy formulation. The evidence indicates that both state and non-state actors alike have been engaged conflict sustaining private sector activity. • The complexity of the subject implies that, in the development of analytical tools, priority should be placed on the need for transparency of analysis, rather than on achieving consensus on definitions. • Transparency of analysis is probably best achieved through a focus on the activ- ities involved in sustaining conflict, rather than on the actors involved. • Definitions of conflict sustaining activity should be deployed as analytical tools and regulation pursued through the appropriate frameworks. • The complexity of the activities and interests involved indicates that there is no simple or single regulatory option. The political hurdles, too, suggest govern- ment and business would oppose a simplistic solution. Therefore, an array of remedies, voluntary as well as coercive, may be required. • Where regulatory gaps exist, new options will need to be formulated to address the problematic activities. These should be developed through multi-party dia- logue. 27 3 Executive Summaries This section contains the executive summaries of the four reports from the Econo- mies of Conflict series that are included on the compact disk enclosed. These reports will be published separately in printed format during the spring of 2002. 28 Dirty Diamonds Ian Smillie This study examines the origins of conflict diamonds, suggesting definitions and surveying ways that the diamond trade is linked to armed conflict. The paper looks at how aspects of the trade in rough diamonds help sustain armed conflict and de- scribes attempts to come to grips with the problem by the diamond industry, NGOs, and governments. The effort to develop an international certification system for rough diamonds, known as the ‘Kimberley Process’, is dealt with in detail. By way of conclusion, the paper reflects on analytical considerations related to understanding the links between conflict diamonds and armed conflict, asks if conflict diamonds are ‘easier’ to deal with than other commodities, and offers some recommendations for future action. Conflict Diamonds The term ‘conflict diamonds’ is shorthand to describe a phenomenon researched and brought to international attention by two NGOs, Global Witness and Partner- ship Africa Canada, and a UN Security Council Expert Panel dealing with Angola in 1999 and 2000. The UN General Assembly has subsequently defined conflict diamonds as “rough diamonds which are used by rebel movements to finance their military activities, including attempts to undermine or overthrow legitimate gov- ernments.” An inter-governmental series of meetings, known as ‘the Kimberley Proc- ess’, settled on something more legalistic and less comprehensive: Conflict Diamonds means rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments, as de- scribed in relevant United Nations Security Council (UNSC) resolutions inso- far as they remain in effect, or in other similar UNSC resolutions which may be adopted in the future, and as understood and recognised in United Nations General Assembly (UNGA) Resolution 55/56, or in other similar UNGA reso- lutions which may be adopted in future. Diamonds have an obvious attraction for combatants and the suppliers of their weapons. Diamonds are a low-volume, high-value commodity. They are highly portable, they keep their value, and all too often, they are readily accessible. Cus- toms departments in most countries have no capacity to examine diamonds to determine origins. There is very little government oversight on the international trade, and there is a paucity of consistent, reliable trade and production data that . criteria might offer a more specific understanding of the nature of the role of the private sector in sustaining conflict. By identifying activities and transactions that help sustain armed conflict, . maintaining the machinery of re- pression and war? The definition for conflict timber’ offered by The Logs of War takes a more bal- anced approach. It is based less on the principles of international. administration involved in armed 22 conflict or its representatives, either to perpetuate conflict or take advantage of conflict situations for personal gain.” (The Logs of War, 2002). This definition