Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 313of unprofitable gas may cause air pollution. Damage to pipelines—whether caused by genuine accidents or by sabotage, as in Colombia—causes ground pollution. It is not surprising that the main conflictsoccur at this stage.The host government is the guarantor of the operating environment,but its interests may diverge from those of the company. Thepolitical risks are high, particularly if the government believes that thecompany’s profits are “excessive.”The security risks also are higher than at any other point. The companywill have to defend vulnerable fixed assets, and there is likely tobe considerable movement to and from the site. As Colombia’s experienceshows, it is almost impossible to ensure full security to oil and gaspipelines. In such circumstances, companies concentrate on providingrapid repair services when pipelines are damaged.The company’s relationships with government security forces areparticularly important and particularly sensitive. Companies have facedsevere criticism when security forces are accused of human rightsabuses while protecting their assets. Companies are typically held accountableeven when—as is usually the case—the security forces areoperating outside any kind of company control.Large projects attract people looking for work, whether or not theyfind it. New roads may open up new parts of the country to settlement.And economic development attracts different kinds of rent seekers,whether these are corrupt officials hoping to take a share of governmenttaxes or guerrillas seeking to levy their own “revolutionary taxes.” Disputesover the proceeds of the development are common even if therewas no conflict in the region in the first place. The combination of sensitiveenvironmental issues, delicate political relationships, and securityproblems makes the company all the more vulnerable to criticism.The financial risks to the company decline as income flows in, and itcomes closer to payback. Once it reaches payback, it wants to benefitfrom the flow of profits for as long as possible, unless it receives a particularlygood purchase offer. Normally, it withdraws only if the projectbecomes commercially unviable—for example, because of a fall incommodity prices—or the political and security situation becomesuntenable because of a government takeover or a sustained threat tothe lives of employees.ClosureThe main questions at this stage are environmental rehabilitation andthe project’s social legacy. It may not be possible to restore an opencastmine site to its original pristine state, but the site should at least