Natural Resources and Violent Conflict - WaterWiki.net

314 john braybe made safe. The prime outstanding risk to the company is reputational.The project is over, and the company wants to leave an acceptablelegacy, not least so that it has a favorable chance of beginning newprojects in the same region.From a social point of view, the main question is the future employmentof people whose livelihoods have depended on the projecteither directly or indirectly. That question is easier to answer if thegovernment and the operating company have helped to develop otherforms of employment, perhaps via a regional development plan or afoundation. Best practice is to plan for the closure of the mine or oilproject, with this and other considerations in mind, from the inceptionof the project.Strategic Relationships: Helping and HinderingThe question of how much influence companies have, or should have,on national and regional governments is an issue not only of powerbut also of legitimacy. Business associations may lobby governmentsover, for instance, tax policy. However, individual companies canscarcely claim a mainstream political mandate. Few business peoplepoint publicly to the deficiencies of government. Business arguably hasmore legitimacy when its voice is raised in association with that ofother actors. This section discusses the part played by both formal andinformal actors, within the host country and abroad.The National GovernmentThe most important relationship is with the host government. Companiescannot operate without government approval, and governmentsare responsible for the overall political, legal, and, to some extent,social environment within which companies work.After geological prospectivity and commercial viability, the qualityof a country’s governance is therefore the single biggest factor in investmentdecisions. To the extent that governments can raise standards,they automatically improve the environment for foreign business andmake it easier to negotiate investment from reputable companies onmore favorable terms.Relative Bargaining Positions. The balance of power betweengovernments and companies is widely debated, with many nongovernmentalorganizations arguing that the largest multinationals havegreater resources than small or even medium-size governments. Inpractice, the balance of power between them varies, but governments