Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 315enjoy what amounts to a trump card because they retain the ultimatesanction of withdrawing a company’s license.Companies are in a stronger position when the government believesthat their services are essential rather than optional (as in Chad) orwhen they have access to sophisticated technology that is not readilyavailable elsewhere (as may be the case in offshore West Africa). Theyare also in a stronger position before they make an investment, becauseat this stage they still retain the option of walking away. Theylose this negotiating advantage once the investment is made and theircosts are sunk in fixed assets.Companies can afford to take a more relaxed view of governance issuesat the exploration stage. If they find something, it takes severalyears for them to turn that discovery into a commercial project, andover that period the situation may improve. By contrast, the stakes, andthe political risks, are much higher when they move into production.The question of how much influence companies really enjoy hasbeen an important part of the debate about the resource curse inAngola and the question of whether companies should publish whatthey pay to government. In principle, the companies are in a strongerposition because relatively few firms have the skills to operate offshore.However, both in public and in private, company representatives constantlyrefer to the pressures of competition. If they antagonize thegovernment, it may revoke their contract and invite a competitor toreplace them. In practice, most governments hesitate to expel a mainstreamNorthern company in this way, but no company wants to calla government’s bluff.In making a deal with a foreign company, the government facespolitical risks of its own. Natural resources are part of a country’s“patrimony.” Selling those resources to foreigners can be portrayed asa betrayal. In practice, this kind of nationalism is often a form of protectionismput forward by the local commercial interests that havemost to lose from foreign competition. This is at least one of the factorsin the ongoing debate about the role of international mining companiesin the Philippines.Political leaders are conscious of the need to look after their domesticpower bases if they are to retain their positions. Domestic realpolitikmay or may not be consistent with liberal development strategies.National or Personal Interests? Companies rightly point out thattheir commitment is to a country or to the government as a collectiveentity rather than to the party or individual who happens to be in powerat any particular point. Rulers come and go, whereas the companyaspires to stay for decades. Western companies operating in Nigeria