Natural Resources and Violent Conflict - WaterWiki.net

254 philippe le billonIn such a scheme, populations would benefit from tax transfers tosocial services, while the respective administrative and military structuresof belligerents would receive monitored budgetary support toimplement their effective integration into new government structures.Businesses themselves would be deterred from operating outside thescheme through a system of incentives, such as secure legal ownership,and deterrents, such as effective sanctions. If successful, and in theabsence of alternative sources of support, opting out of a peace processwould become a prohibitively costly alternative for belligerents. Severalresource revenue-sharing schemes, such as those in Iraq, Angola,and Chad, include supervision mechanisms and provide a model inthis regard. 39The Oil-for-Food Program, set up to assist in the implementation ofUN sanctions against Iraq and lessen their humanitarian impact, representsan early example of such a scheme. Although this program wascumbersome and achieved only limited results, a UN expert panel hasrecommended a similar program to prevent the proceeds of the Liberianshipping and corporate registry from financing the busting of armssanctions. 40 The UN Security Council has moved in this direction bycalling on the government of Liberia to establish transparent andinternationally verifiable regimes for auditing its use of revenues derivedfrom its shipping and corporate registry, as well as the timber industry,to demonstrate that these are not used for busting sanctions butfor “legitimate social, humanitarian, and development purposes.” 41Although not described in these terms, the attempt by the InternationalMonetary Fund (IMF) to audit the oil sector in Angola in 2000and 2001 was also aimed, in part, at improving the accountability ofpublic finances by a government at war (IMF 2002). Within the frameworkof a staff-monitored program including broader economic andinstitutional reforms, the IMF succeeded in obtaining this agreementfrom an Angolan government recently faced with minimal foreign reservesand growing pressure by international donors and advocacygroups. The resulting diagnostic study of the oil sector, conducted by aninternational audit firm, examined the channeling of oil revenues to thestate treasury, not their subsequent allocation, as well as the conduct,honesty, and integrity of the management of the revenues. Furthermore,the findings of the audit were to be confidential. Human rightsgroups criticized the audit for its lack of transparency and retroactivityand for its limitations (Human Rights Watch 2001). With higher oilprices, a victory against UNITA, and continued support from the oiland private banking sectors, the Angolan government stopped its reformprogram, which led the IMF to close its program. A leaked IMFreport estimated that about $4 billion had gone “missing” between