Natural Resources and Violent Conflict - WaterWiki.net

166 winer and rouleorganizations, especially when both are involved in resource extraction.However, there are also important differences in the infrastructurethat tends to be available to governments, criminals, terrorists,and private security forces. Accordingly, it may be useful to distinguishthe principal types of exploiters in order to determine the financial infrastructurethat is most relevant to their exploitation. It is also importantto define the major differences between lawful and illicit resourceextraction in order to articulate more precisely what is illicit than thegeneral formulation “I know it when I see it.”Defining Legitimate Resource ExtractionNumerous legitimate governments license private sector entities to engagein resource extraction or, alternatively, engage in such extractionthemselves. The extraction of commodities as a legitimate function ofgovernment commonly includes (a) fairness in bidding for sales or leasing,so that the government receives the maximum possible revenue forthe resources sold; (b) transparency in the pricing and amounts of commoditiessold; (c) conservation measures designed to minimize the permanentloss of the commodities and to maximize the length of theextraction period; (d) reinvestment in the means of production forextracting the resources, such as investments in pipes or drilling equipmentfor oil or replanting of trees in logging concessions; (e) restorationof the environment from which the commodities have been extracted,to minimize the environmental damage and to maximize the long-termeconomic value of the extraction area; and (f) deposit of the fundsgenerated from the extracted resources in the state treasury, where theyare then used to fund government operations. 6Defining Illicit Resource ExtractionIllicit extraction by governments features the converse of the principlesof licit resource extraction. Ordinarily, illicit extraction involves(a) politicized or crony-based contracts for the sale of commodities,(b) limited or falsified information on pricing and quantities, (c) assetstripping with no regard to the future, (d) little to no investment inlong-term production, (e) failure to restore stripped areas, and (f) disappearanceof the revenues from the sale of the resources so that theycannot be traced, with minimal or no benefit to the state treasury.When all of these factors are present, a particular case of extraction islikely to be illicit.Other cases may be less clear. For example, a government thatissues contracts for the sale of commodities to insiders on a noncompetitivebasis to permit kickbacks to corrupt officials may still insist on a