Natural Resources and Violent Conflict - WaterWiki.net

256 philippe le billoncomplexity of the administration of such an instrument, its transactioncost, and the many possible loopholes should not be underestimated.Corporate Conduct InstrumentsMost resource businesses argue that they are neutral economic actorsdisengaged from the “business of war” (Bray 1997, p. 3). Businesses canhave a positive influence in preventing or attenuating conflicts by generatingeconomic and employment opportunities, raising standards inlabor practices and social relations, and participating in political stabilityand even economic justice. Yet businesses can also have negativeinfluences and exacerbate conflicts. If investment and commercial activitiesare essential to economic and human development, resource businessesneed to recognize that they can produce—often unintentionally—a number of negative consequences, including the following:• Increasing inequalities and economic rents amenable to factionalcontrol• Sustaining poor governance by participating in the corruptionand legitimization of unrepresentative and repressive authorities• Contributing, either directly or indirectly, to human rights abuseby degrading local livelihoods and resource entitlements and turningablind eye to forced or child labor or to the use of disproportionateforce by security forces protecting their operations and staff• Hindering peace processes by voluntarily or involuntarily bankrollingbelligerents and thereby reducing the leverage of local populations,international institutions, and foreign powers (that is,commercially driven diplomacy).Once a conflict has started, businesses often play the role of financialintermediary for belligerents. Although some businesses simply attemptto cope with a degrading political and security environment, others seein the situation an opportunity for competitive advantage. The complicityof businesses in conflicts varies from simple economic intermediariesto complex forms of influence, including political and militarysupport. Operating in unstable areas, businesses are frequently able toact as financial supporters and brokers for arms deals. With a huge demandfor arms and income from mineral resources, Angola, for example,became a prime target for savvy businesses juggling politicalrelations, arms dealing, and natural resources brokering in the 1990s.Countries in conflict also constitute a valuable “niche market” forbusinesses whose competitive advantage lies in their risk-takingapproach, political savvy, or connections with security services. Toaccess and secure resources in these markets, businesses often associate