Natural Resources and Violent Conflict - WaterWiki.net

164 winer and rouleand the technology required to individually monitor and inspect goodsin transit means that such initiatives will be long term in nature. Bycontrast, extending the new regimes covering the global financialservices infrastructure explicitly to cover abuses of natural resourcescould take advantage of initiatives that are well under way and alreadybeginning to have an impact in other areas important to global security.Although it may appear counterintuitive, the enforcement of documentaryrequirements and regulatory oversight over intangible goods(money) may be in certain respects relatively easier than the enforcementof such controls on tangible goods. Intangible goods require legalrules of recognition for validity: thus tightening such rules and insistingon their embodiment in the data-processing software necessary forelectronic fund transfers have the potential to regulate and monitor allthe funds that enter electronic payment systems.The growing literature on the relationship between resource abuseand conflict includes many studies of how commodities such as diamonds,oil and gas, and timber have been used to fund corrupt politicalleaders and parties, armies, guerrilla groups, and terrorists (de Soysa2001). The literature also provides insights into the economics of conflictand war. However, substantial gaps remain in articulating and assessinghow the money has actually moved, the nature of the personsand institutions handling it, and the mechanisms used to launder thefunds and avoid sanctions or other legal restrictions. This chapter seeksto provide an initial review of the financial infrastructure used to exploitnatural resources linked to conflict.The chapter first outlines a conceptual framework for viewing thefinancial infrastructure used in connection with violent conflict, corruption,and poor governance. It then turns to a series of case studiesinvolving different forms of resource exploitation in connection withthese phenomena and the mechanisms used to finance such exploitation.For each case study, the paper reviews the existing regulatory andenforcement capabilities within the affected jurisdiction or region andtheir adequacy in countering illicit resource exploitation. The paperthen reviews the existing initiatives created to address illicit resourceexploitation and their handling of the illicit money flows that arisefrom such exploitation. The paper seeks to address the implications ofthe typological similarities and differences in the financial mechanismsused to exploit different kinds of natural resources at different levels ofconflict. It also explores potential synergies between existing financialtransparency and anticorruption initiatives and their ability to be refocusedto combat resource exploitation in areas of conflict. Finally,the chapter articulates a series of possible initiatives that could be undertakento respond to the existing problems and capacity gaps by