Natural Resources and Violent Conflict - WaterWiki.net

58 swanson, oldgard, and lundeSimilarly, some 10 percent of Chilean Codelco’s copper export revenuesapparently continue to go directly to the Chilean armed forces.This arrangement, which was established by the Frei government ofthe late 1960s, may have accounted for about one-third of Codelco’s“tax” obligations during the 1980s. The arrangement “reflected apolitical convenience for the president, congress, and the armed forcesto have an automatic appropriation rather than having to debate andjustify the full military budget each year . . . . Executives and legislatorswere no longer held accountable for this component of militaryspending” (Ascher 1999, p. 165).In general, there is a wide body of research on the negative implicationsof earmarked funds for good governance. Essentially, earmarkingmeans that society is not able to evaluate the marginal social benefitsof all programs and rearrange spending as priorities change. Givingprograms their own source of revenue makes them less accountable tosociety as represented by Parliament and central budget authorities.Lack of accountability by the military to the civilian authorities isparticularly worrisome in this regard.Arelated problem is the use of natural resources to fund rebel movements(and in some cases governments), usually involving resourcesthat are technically relatively easy to extract, such as alluvial diamondsand timber. There is a growing body of research on the influence ofsuch resources on the length and nature of civil conflicts in variousdeveloping countries and how they should be addressed. 12Initiatives That May Improve Transparencyof Resource RevenuesThis section describes important international public and privateinstruments and initiatives that could have a positive impact on thetransparency of resource revenue flows. 13 The initiatives fall into twobasic groups: initiatives primarily relevant for host-government reportingand initiatives primarily relevant for company reporting. There issome degree of overlap for several of the initiatives. Some also containarole for companies’ home governments, which in principle could beencouraged to influence companies based in their jurisdictions.Initiatives Relevant for Host-Government ReportingIn this section, we consider three groups of initiatives aimed at promotinghost-government reporting of the resource revenues they receive:several initiatives of the International Monetary Fund, the Forest Law