Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 319International InterestsNorthern governments are a source of support for Northern companiesin developing countries with poor governance but also present risks oftheir own. As with commercial companies, there may be questionsabout the extent to which external political influence is legitimate.The greatest risk—particularly for U.S. companies—is the possibilitythat their “home” government may impose sanctions on the countrywhere they are operating or hope to operate. The impetus for sanctionsusually comes not so much from the executive branch of government asfrom members of Congress and their supporters. Diplomats are morelikely to argue that sanctions create an unwelcome check on theirfreedom of maneuver.Diplomatic representatives help companies by identifying people ofinfluence in the host country and by giving guidance on how the localsystem works and the chances of success. They may also exercisepolitical pressure to help their companies gain commercial advantage.In Control Risks Group’s 2002 survey, there was a general perceptionthat both the United States and other OECD countries resorted to thisapproach either “occasionally” or “regularly” (table 7.5; Control RisksGroup 2002, p. 58).Another issue is tied aid. In the past, Northern governments havelinked development aid to commercial opportunities for their companies.They may do so by offering tied aid, where development funds arespecifically designated for companies and experts from the donor country.Alternatively, they may offer the prospect of substantial aid grantsin return for contracts in another sector. As Control Risks Group’s surveyshows, there is a widespread perception that both the U.S. and otherOECD governments resort to such strategies either “occasionally” orTable 7.5 How Often Do International Companies UsePolitical Pressure from Their Home Governments to GainBusiness Advantage?(percent)Companies’home Nearly Don’tgovernment Never Occasionally Regularly always knowUnited States 7.6 48.4 25.2 6.0 12.4Other OECDcountries 9.2 54.8 25.6 2.0 8.4Source: Control Risks Group (2002).