Natural Resources and Violent Conflict - WaterWiki.net

294 john brayIt may be appropriate to invest today, given that the perception of thesecurity risk in the country might improve significantly in the future”(Ecopetrol 2002).However, it will be harder to win financial backing for such investmentsat a time when the wider market has been influenced by fearsof terrorism in the wake of the September 11 attacks and the threat ofa Middle East conflict. The World Bank’s Multilateral InvestmentGuarantee Agency’s Foreign Direct Investment Survey published inJanuary 2002 found that 85 percent of the companies surveyed wereeither “very concerned” or “somewhat concerned” about physicalsecurity (MIGA 2002).Ethics and ReputationThe most significant new political risks since the 1990s relate to therisk of reputational damage to companies operating in regions with arecord of human rights abuses or corruption. This is not completelynew: companies operating in South Africa in the 1970s and 1980sfaced the risk of boycott from activists in the West. Nevertheless, improvementsin communication and especially the expansion of the Internethave made it much easier for nongovernmental organizationsfirst to gather information about companies’ international activitiesand then to mobilize effective campaigns (Bray 1997).A symbolic turning point came in 1995 when Shell faced hostile campaignsfirst over the disposal of its Brent Spar offshore installation andthen for its failure or inability to prevent the execution of Ogoni activistKen Saro-Wiwa in Nigeria. As John Mitchell and his fellow authorspoint out in a recent study for the Royal Institute of InternationalAffairs, companies now have to consider not only whether resourcesare available, but also whether they are acceptable to powerful constituenciesin their home countries (Mitchell and others 2002). Investmentcan be problematic in countries where the host government isaccused of extensive human rights abuses, democratic processes areabsent or weak, or revenues are used for controversial purposes. AsMitchell comments, “To develop new supplies under these circumstancesmay not be acceptable for the companies concerned unlessthey can satisfy potential international critics that their intervention isserving the wider developmental purposes of promoting the expansionof freedom for the people affected” (Mitchell and others 2002,p. 270). ChevronTexaco Chairman Dave J. Reilly makes a similar pointin a recent interview: “Success is no longer determined solely by traditionalfinancial or operational metrics. Today we are held to new standardsfor corporate citizenship, human rights, and the environment