Volume 1 Cedric - revised luca Final - RUIG-GIAN

into the armies are thereby also attributed to the resource-based industries. 35 The revenuesfrom the exploitation of the resources have been diverted in non-transparent ways forprivate benefit and for use by governments and rebel movements to sustain their militaryefforts aimed at prevailing in an internal conflict. This pattern has been seen withdiamonds in Angola and Sierra Leone, gold in the Democratic Republic of Congo, and oilin a number of countries including Angola and Sudan. If monies paid by the MNEs to hostgovernments, or to armed movements that control the territories where their operationstake place, are stolen or used in illegitimate ways, then the question arises whether thecompany concerned has been complicit in human rights abuses. In such circumstances it isalso difficult to maintain that the companies’ activities are contributing to economicrecovery and peace-building.The second concern is that the resource-based sectors generate little employment,especially for local workers, that they are often not effectively linked to the localeconomies, that the resulting exports lead to an over-valued real exchange rate withharmful effects on farmers and other producers of tradable goods, and that the result islikely to accentuate income and wealth disparities and aggravate the problem of poverty. Insome countries with a high absorptive capacity, based on a relatively large population andsomewhat developed industrial base, these negative effects may be less pronounced, sothat they are offset by the undoubted positive ones, such as the contributions togovernment revenue and the foreign trade balance. But oil and mineral resources arecommonly found in otherwise poor countries which are not populous or industrialized. 36Both of these concerns have developed in recent years in parallel with the elaborationof the concept of corporate social responsibility, and the corporate world has initiated orparticipated widely in initiatives taken to respond to them, as befits their endorsement ofthat concept. Participants in these actions have included the companies themselves,individually or through their associations; and the associations have included both preexistingbodies with general or sectoral mandates and ad hoc groupings of companiesformed for a specific initiative. Also participating have been a wide variety of NGOsincluding International Alert, the Clinton Foundation and Human Rights Watch; and anumber of intergovernmental organizations, including the UN, the World Bank/IFC andthe IMF. While the companies are concerned to protect their reputations and their businessinterests, the international financial institutions are concerned to protect the integrity oftheir lending operations.The initiatives are both general and specific. An example of the former is the conceptof “conflict-sensitive” business practices, which has been developed in response to theexperiences of countries like Angola, Sierra Leone and the Democratic Republic of Congowhere, in effect if not necessarily intent, revenues derived from companies’ naturalresource exploitation served to finance the armies and weapons that waged the wars andthus sustained if they did not actually cause the conflicts. This concept reflects a belief thatif companies are sensitive to the ways in which their economic activities relate to thebroader politico-military situation, they will be better able to conduct their affairs so as to(a) at a minimum “do no harm” and (b) play a role in preventing the conflict, assisting its35 See for example Human Rights Watch, Some Transparency, No Accountability: The Use of Oil Revenue inAngola and its Impact on Human Rights, January 2004, Vol. 16, No. 1(A); and Human Rights Watch, The Curseof Gold: Democratic Republic of Congo, 2005. http://www.hrw.org.36 See Alan Gelb et al, Oil Windfalls: Blessing or Curse (New York: World Bank and Oxford University Press,1988; Jon McLin, Social and Economic Effects of Petroleum Production in non-OPEC Developing Countries,Geneva: ILO, 1986; Carlos Leite and Jens Weidmann, “Does Mother Nature Corrupt? Natural ResourcesCorruption and Economic Growth,” International Monetary Fund Working Paper, July 1999; and Terry LynnKarl, The Paradox of Plenty: Oil Booms and Petro States, Berkeley: University of California Press, 1997. Recentliterature and web sites dealing with this issue are referenced and discussed in “The devil’s excrement: Is oilwealth a blessing or a curse?”, The Economist, 22 May 2003. A succinct recent statement of the issue as it pertainsto Africa is found in Pierre Jacquet, “Pétrole maudit”, Le Monde, 19 September 2005.26