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The Political Ecology of War and Resource Exploitation PHILIPPE LEBILLON £j bOdiedas a "girl's best friend" by Marilyn Monroe, diamonds have recently reappeared in the media in the guise of a "guerrilla's best friend:" precious stones financing armed groups responsible for tens of thousands of deaths in Angola, DR Congo, or Sierra Leone.! These so-called "conflict" or "blood" diamonds have come to symbolize the "heart of the matter" in the "heart of darkness:" the chief prize of greedy warlords rampaging a lost continent. The financial role of diamonds in several contemporary wars is not unique. Other extractive resources traded on the international market, such as oil, timber or coltan, have also earned the appellation of "conflict resources" for their role in sustaining the predatory economic behaviour and violence of many repressive governments and armed groupa- Nor is this role a recent phenomenon: natural resources "have been used in the past, and will be used in the future, as tools or targets of war and as strategic goals to be fought for."3 This current role is itself embedded in and, in many instances, prolongs the violent historical trajectory of defining and extracting "resources" such as slaves, rubber, or oil. What is recent is a post-Cold War context in which declining foreign sponsorship turn belligerents towards commercial and criminal sources of revenue, an international trade environment facilitating connections between local resources and global markets and the need for conflict analysts to fill a supposedly ideological vacuum with alternative sources of motivations for belligerents, such as "greed"or "ethnic hatred."4 Relocating the idea of "strategic resources" of the Cold War heydays into the contemporary setting of civil wars in Third World countries, the concept of "conflict resources" Studies in Political Economy 70, Spring 2003 59 Studies in Political Economy nevertheless deserves attention. Conflict resources do reflect upon the pattern of underdevelopment and violence affecting many countries in the global South. They also reflect on the nature of globalization and the reality of a liberalized international trade. In a dramatic showcase, "blood diamonds" demonstrate the ugly face of an economically "liberal" and political "neutral" trade linking killing fields to shopping malls. The concept of conflict resources also tells us about how "we" in the developed world come to see and understand the political economies of these remote places, and how "our" regulation of international trade could prove to help "them." This paper analyzes the political ecology of war, focusing on the ways in which the political economy, geography and materiality of resources can influence the incidence and course of war. Following an overview of arguments linking natural resources to armed conflicts, the paper discusses the role of extractive companies-often portrayed as the main intermediaries linking, through resource and financial flows, the killing fields to the shopping malls. The final section argues that in the context of globalization, economic deregulation requires political regulation because political accountability is the first victim of deregulated trade in primary commodities, with occasionally dramatic consequences for populations in producing countries. Natural Resources, Developmental Paths, and Armed ConOicts The recent literature on resources and armed conflicts has argued that the availability of a resource and the level of dependence upon it-understood as the large economic and political significance of a natural resource in exporting and importing countries-have potential consequences in the causes of conflicts at the domestic and/or international leve1.5 In terms of resource availability, with resources often described as "abundant" or "scarce," political scientists like Thomas Homer-Dixon have emphasized environmental scarcity as an underlying cause of armed conflicts through "social frictions" and "adaptation failure."6 Yet empirical evidence from a limited number of recent conflicts points out that war is more likely to be associated with resource abundance rather than scarcity? This finding com60 leBiUonlEcology of War plements the literature on the political economy of resourcerich states, which argues that a rich endowment of extractive resources such as oil and minerals appears more as a curse than a blessing in terms of economic growth and development.s The two concepts of abundance and scarcity are, however, largely relative, and to some extent only the terminology separates these two views. Political scientist RomerDixon, for example, has integrated "structural scarcity" into his model-the political economy of a resource can make it abundant for the most powerful groups and scarce for the marginalized ones-and shifted his writing away from environmental factors to social "ingenuity" ones. The limits of the concepts of abundance and scarcity point to the importance of dependence and its management as factors in conflicts. Building on studies of the economic functions of violence and the economic agendas of "warlords," economists Paul Collier and Anke Hoeffler identified primary commodity dependence as "the most powerful risk factor" of civil war in their search to devise which of "greed" or "grievances" was the chief motivation of rebellion.? They first interpreted this result as evidence that civil war resulted from greed over valuable and plentiful resources, rather than grievances over scarce resources. While Collier and Hoeffler recently revised their argument and placed natural resources as a contextual "opportunity" for rebellion rather than a primarily motivational factor, the "greed factor" is not the only one linking natural resources to violent forms of conflicts and appropriation. Despite a diversity of populations, cultures, and political systems, many resource-dependent countries share similar difficulties-induding poor economic growth, high inequalities, and political authoritarianism-all factors of grievances. In the light of the prominence of resource dependence as a characteristic of conflict-ridden countries, both greed and grievances need to be acknowledged; as does the influence of resource dependence on the vulnerability of institutional arrangements and the conflictuality of power politics. The exploitation of abundant natural resources has long been presented in mainstream development discourse as a positive factor, or even a driving force, not only in providing greater material wealth but also in building greater political consensus. Whether in the imagery of "benevolent colonial61 Studies in Political Economy ism" or postcolonial development, much hope was once placed in extractive sectors to "lift" countries in the South from their "underdevelopment." Incorporation into Northern-dominated trade would have the potential to assist poor countries in developing economically, and therefore to contribute to their political stability and security. In a modernizationist argument, poor countries short of financial capital to mobilize their surplus labour and provide public services would find the springboard of their economic development in the commodification of nature.i? After decades of often-predatory colonialism, international agencies and local governments engaged in massive projects of resource development, nationalization of resource sectors, or international producer organizations aiming for the capture of larger resource rents.it The restructuring of the oil sector for the benefit of producing countries, through massive nationalizations and the creation of the Organisation of the Petroleum Exporting Countries (OPEC), and its consequences for the global economy provide the most striking and enduring example.J2 The prevalence of cases of economic collapse and poor governance among resource-rich countries, and cases such as Angola, Congo/Zaire, or Peru in which the wealth of their natural endowment so sharply contrasts with the misery of their populations, have much discredited this modernizationist resource-based development paradigm.i- Radical political economists have continued to argue that this modernist developmental discourse has been constructed and motivated by the vested economic and power interests of the colonial and postcolonial ruling class and inherently biased leads to uneven empowerment, injustice, and environmental bankruptcy.t- Building on the contrasting rapid growth of resource-poor countries in Northeast Asia, the pattern of economic and political "underdevelopment" affecting most resource-dependent countries has given rise to the concept of "resource curse" or "paradox of plenty." In turn, the political and economic pattern of "underdevelopment" increases both the vulnerability to and risk of conflicts. Development economists understand this "paradox of plenty" as the result of inflation associated with a lack of supply in non-resource sectors, currency overvaluation due to larger foreign earnings, high exposure to price shocks, or a 62 leBiUonlEcology of War shrinkage of the manufacturing sector and the loss of production externalities due to a concentration of investment and talent into the resource sector.i> In Rwanda, the dependence of the ruling elite and many farmers on coffee exports was identified as a defining structural factor in the weakening of the state and the radicalization of exclusionary politics by Hutu extremists of President Habyarimana's regime into the mass murder of Tutsi and moderate Hutu politicians.to The decline in coffee prices from the mid-1980s, with earnings falling from US$144 million in 1985 to $30 million in 1993, increased hardship among farmers and strained state finances as well as the interests of many among the elite.i? The massacre in Burundi of tens of thousands of Hutus by the Tutsidominated army in 1972 after a long period of stable coffee prices demonstrates, however, the limits of such analysis. Economic policy instruments in resource-rich countries are also intensely politicized and oriented towards rent-seeking by certain elites, rather than towards economic liberalization favouring growth.tf The availability of the resource rent is also frequently associated with the corruption of state institutions, high economic inefficiency and subsidization of politicized schemes, as well as budgetary mismanagement.i? Over-optimistic resource revenue forecast and the use of future revenues as collateral for loans has led to high levels of debts difficult to reimburse, not only in case of resource price fall, but also due to outright embezzlement and the allocation of public revenues to unproductive activities.w Oil-rich Congo (Brazzaville), Nigeria or Venezuela present typical cases)l Finally, resource-rich states tend to spend more on defence, which reduces productive investments, often because of corruption opportunities or the threat of a resource grab by domestic or foreign competitors.v The oilrich Persian Gulf and more recently the Caspian region are typical examples.zs As with the economy, political institutions often become "resource dependent." In her study of petro-states, political scientist Terry Karl argues that "dependence on a particular export commodity shapes not only social classes and regime types ... but also the very institutions of the state, the framework for decision-making, and the decision calculus of policy makers."24 Studies of oil- and mineral-rich countries demon- 63 Studies in Political Economy strate that regimes tend to be more corrupt, ineffective, prioritize military expenditures, and more authoritarian than otherwise, thereby implying a causality factor between the context of resource dependence and these characteristicsz> While authoritarianism is more prone to civil war than strong democracies but less so than weak democracies, the fact that resource-dependent states are more inept than others at avoiding conflicts and becoming violent would thus indicate that their forms of authoritarianism are vulnerable.se Although political stability can result from the economic boom and increased patronage of rulers during periods of resource revenue windfall, such increased dependence may nevertheless weaken state capacities as states do not have to rely on broad-based taxation, and population and elites place unsustainable expectations on state-controlled resource rents. A tight economic and political control by the ruling elite of a resource sector dominating an otherwise poor economy leaves little scope for accumulating wealth and status outside state patronage, especially in the case of mineral and oil exporters. As the wealth and power gap between the ruling and the ruled increases, so does the frustration of marginalized groups seeing political change as the only avenue for satisfying their greed and aspirations, or expressing their grievances. In the absence of widespread political consensus-which cannot be maintained solely through a distribution of rents and repression-violence becomes for these groups the main, if not only route to wealth and power. Resource-dependent countries thus tend to have predatory governments serving sectional interests and face a greater risk of warP The vulnerability to rebellion of states such as Congo/Zaire, Liberia, or Sierra Leone can be seen in that light: countries where resources rents eroded by depletion, mismanagement, or falling prices remained dangerously at the core of political institutions. Politically, resource rents provide rulers with a classic means for staying in power by establishing a regime organized through a system of patronage rewarding followers and punishing opponents.28 Regimes in resource-rich states can divest themselves of the need for popular legitimacy by eliminating the need for broad-based taxation of a diversified formal economy, financing a repressive security apparatus, and 64 leBiUonlEcology of War rewarding a network of political supporters. Although a large state-controlled resource rent is neither necessary nor sufficient, it greatly facilitates such forms of political rule. While not dismissing the control of other revenues by single-party regimes or the role of ideologically aligned foreign aid, resource rents assisted long-lasting rulers, such as Abacha in Nigeria or Suharto in Indonesia. In Congo/Zaire in the early 1980s, the nationalized copper and cobalt mining parastatal Gecamines provided 51 percent of the total revenues of the state. Along with other "public" resources, it participated in President Mobutu's strategy of patronage that included some of the 43 government reshuffles he oversaw between 1965 and 1990.29 Even in the case of relatively benevolent, rather than predatory regimes, resource dependence leads to disproportionate reliance on the fiscal transfer of resource rents at the expense of statecraft.w Windfall rents may allow rulers to extend this clientelist circle to the general population-as in many oil rich microstates such as Brunei or Gulf emiratesestablishing a skewed impression of popular political legitimacy. Such an economic contract between a population and its rulers can become overstretched or give further ground for dissent. Benevolent governments coming under pressure from contests for resource rents often trade off coherent economic policies maximizing long-term welfare against the management of social tension.u This trade-off results in inefficient investment and low growth, which, if the resource rent proves insufficient to dampen conflictual demands for reform, increases both the vulnerability of the state and social tensions while lowering the opportunity cost of joining criminal gangs or insurgent groups. This is especially the case when there is significant disjuncture between popular aspirations and available means, as well as between the ideology of the regime, its actual practices, and the compromises necessary to maintain resource flowing. In Saudi Arabia, the oil rent and un diversifying economy did not keep pace with rising population size and aspirations, resulting in a significant decline of the per capita income and growing inequalities between the extended Royal family and the general population. Unsurprisingly, such situation and the oil-related presence of US troops on the "Holy Soil" of the Arabian 65 Studies in Political Economy Peninsula led to criticisms and were used by Osama Bin Laden to justify terrorism.v Finally, profitable resource sectors also provide little incentive for rulers to develop a diversified economy that could give rise to alternative sources of economic power strengthening political competitors. Besides the economic risk of "staple trap," resource dependence would thus have a backward political linkage. The risk of domestic political competition can be further curtailed by devolving the exploitation of the resource sector to foreign firms; a measure that also offers the advantage of satisfying international financial institutions and consolidating external political support, including through "private" diplomacy driven by business interests.P A large part of the population or informal business groups who are lightly taxed, or not taxed, are likely to be less concerned by a government's lack of accountability and legitimacy than heavily taxed ones, and therefore less motivated to promote gradual political changes and hold their government more accountable. Rulers can benefit through a tolerance or instrumentalization of corruption and the informalization of most of the economy. An alternative "organic social contract" can thus emerge between the population and its so-called "rulers" whereby the informal character of most of the economy allowing the survival of the population matches the plunder of state-controlled resources by the elite. Such was the arrangement under Mobutu, when he urged his citizens to fend for themselves and to "steal a little in a nice way" without aiming to become rich overnight or to transfer funds overseas, while keeping to himself and a coterie of generals and cronies the spoils of the industrialized mineral sectors.v The characteristics and vulnerabilities of resource-dependent states would be sufficient to explain why conflicts are more likely,but the mobilization of organized violence rarely simply results from economic and social grievances. Several poor resource-dependent countries such as Botswana did not experience armed conflicts over the last two decades, and most poor countries are economically dependent upon primary sectors, thereby conflating poverty and resource dependence. The Power, Violence and the Political Ecology of Resources 66 leBillonlEcology of War political economy perspective presented above (emphasizing the historical relations of resource dependence and polities and a sociocultural approach linking the wealth of resources and the behaviour of colluding predatory elite in the South and the North) needs to be complemented by a critical perspective upon the processes through which violence itself becomes linked to nature and its commodification. It also needs to incorporate the role of resources themselves through their material and geographic characteristics. To caricature, resources need to be given agency. In the process of becoming a resource and a commodity, nature acquires the power of money. But nature itself and the process of commodification also provide contested spaces resisting a homogeneous construction of power. By creating opportunities for alternative modes of violent appropriation or "looting," nature enters the social realm as resources. What is described here as the "political ecology of conflict resources" relates to the materiality of resources as well as the territorialization and political economy of their exploitation to the unfolding of war. Nature alone does not predetermine war. As anthropologist Paul Richards noted on the case of violence and endowment in diamonds in Sierra Leone: Violence is a social project-it has to be organized or opposed, accepted or rejected, by groups of human agents ... Environments select among social projects, like their select for genes, but they no more cause social life than they cause genes. A resource endowment is a circumstance, and not a social project.s> The role that nature plays as an endowment remains the choice of individuals made within the context of an historical trajectory of cultural politics and in particular the material and symbolic dimensions of violence.w Among social projects enabling the commodification of nature for the benefit of belligerents are profit-making business ventures usually defining their role as that of "neutral" economic agents, and limiting their political intervention to the protection of their most immediate corporate interests. Under both internal and external pressure, this stand is increasingly being challenged. Yet while the self-regulation of some major western corporations may address the reputation concerns of their share- 67 Studies in Political Economy holders, a globalizing economy without political accountability has already long demonstrated its tragic impact. In short, globalization requires new forms of political regulation linking consumption to the broadly defined security needs of populations in producer countries. Such regulation must not only address the opportunistic behaviour of war profiteers, but also the profound sense of grievance resulting from misery in the midst of plenty. The commodification of nature into tradable natural resources through a capitalist system generally entails a system of spatial, legal and economic enclosures that are deeply uneven in their (re )distribution of economic benefits and social power.s? Using a dependency framework, geographer Stuart Corbridge argues that "development in the core, and underdevelopment in the periphery, are two sides of the same global capitalist coin. Metropolitan capitalism depends on the exploitation and active underdevelopment of an already capitalist periphery."38 In his detailed study of underdevelopment in the Amazon region, Bunker argues that extractive systems "ultimately depend on processes that progressively decelerate the economy, disrupt the ecosystem, and simplify social organization in extractive regions."39 Because they develop few "linkages" within the regional political economy, while depleting the resources upon which it rests, Bunker characterized such extractive regions as "extreme peripheries" doomed to economic and social failure. Bunker's study seems to be perfectly illustrated by such apparently "extreme peripheries" as the killing and mining fields of Angola or Sierra Leone portrayed by the media. Yet, beyond explanations of state failure due to corruption, self-interest and conflicts within and between governmental agencies offered by Bunker also lies the specificity of conflicts and violence associated with the extractive sector. Although the transformation of nature into tradable commodities can be peaceful and consensual, ownership and loss of livelihoods due to forced displacement, land use or user rights changes, pollution, as well as resource-driven migration are all potential sources of conflicts. The conflicts over oil exploitation in the Niger Delta, for example, include oil spills and flaring, lack of employment and public services, forced displacement, fire and explosion hazards, brutal repression and extra-judicial 68 leBillonlEcology of War killings.w These conflicts often go well beyond the local setting and increasingly involve global networks.s! The pattern of social relations, the quality and legitimacy of institutions, as well as the nature of the resource extraction are involved in shaping the formation and arbitration of the conflict as well as the potential use of violence. Whether physical or structural, violence is frequently involved in resource exploitation in the form of resource appropriation, price manipulation, forced labour or population displacement, as well as a militarization of both licit and illicit exploitation schemes. In many developing countries, this violence is rooted in the pattern of resource extraction successively translated by mercantilism, colonial capitalism, and state kleptocracy that articulate networks of local elites, transborder commercial agents, and global markets. As Harvey notes, "productive inequalities become naturalized through cultural understandings of social hierarchy that encourage popular consent .... [and] struggles over symbolic processes are themselves conflicts over material relations of production, the distribution of resources in society, and ultimately power."42It is in this way that a violent and contested history of resource extraction and the persistence of resource dependence can increase the risk of war by sustaining conflicts, affect the pattern of their arbitration, and routinize the use of violence in social relations. With extracted resources, violence is most likely to take a physical form to achieve territorial control and safety. New ownership and user rights over resources have often been violently imposed on local communities. Forest resources are widely disputed and new rules imposed violently by state forestry or environmental agencies for logging or conservation purposes.P In many of the areas affected by resourcelinked war, there is often a long-established pattern of violent resource control. This was the case in the diamonds fields of Congo/Zaire prior to the conflicts of the late 1990s.During the 1970s,the paramilitary force of the diamonds state company MIBA routinely executed clandestine diggers authorized by customary authorities and local police.s- The liberalization of the diamonds sector in 1982 vastly increased the number of operators and networks of private political and military protec69 Studies in Political Economy tion, resulting in both greater economic opportunities and use of violence as well as an erosion of predatory state control welcomed by the popularion.s> Local communities in politically disputed areas are often seen as a threat, not only on production sites but along transport routes. Pipelines in particular have a history of violence; in Burma with a gas pipeline passing through ethnic minority areas, or in Indonesia for gas exploitation in Aceh and gold and copper extraction in West Papua. In Colombia, British Petroleum has been accused of supporting a military unit renowned for its murder of civilians for the sake of protecting an oil pipeline threatened by rebels.se Distrustful of local populations because of potential support for separatist armed movements, the Sudanese army and its local allies have killed or driven people out of oil areas in Southern Sudan after Canadian oil company Talisman and others engaged in oil fields development and pipeline construction in the late 1990s.Abandoned in the early 1980s by Chevron following attacks by southern insurgent movement SLPA, the oil areas have been the object of a military campaign of "pacification" involving the forced displacement of local populations, including aerial bombardment and helicopter-gunship attacks, as well as combat between anti- and pro-government militias.s? With produced resources such as cash crops, and more generally labour-intensive resource sectors, violence usually takes a more structural form, such as coercive forms of labour or controls over trade. Slavery is still practiced notably on agricultural plantations in Western Africa, mostly in the form of forced labour in which servitude is linked with debt repayments.ss The control or manipulation of prices at the farm gate, through state-controlled marketing boards or cartels, as well as conditions of access to resources can result in structural forms of violence such as poverty and marginalization. Like physical violence, such structural violence may have secondary effects involving armed conflict as an alternative to other expressions of grievances and everyday forms of lowkey resistance such as pilfering.s? In Chiapas, the rebellion by self-defense groups and the Zapatista movement staged a relatively peaceful "armed rebellion" to respond to the structural violence of a local political economy of dispossession 70 leBillonlEcology of War and neglect towards indigenous communities, challenge the "global neoliberal order" which supported it, and attract the attention of the government and medias to improve their bargaining position.v Not all resource exploitation will be conflictual and not all conflicts will result in large-scale violence. To some extent, the likelihood and viability of war will also depend upon the opportunities presented by the "lootability" of natural resources. Arguably, belligerents intent on financing or profiteering from war will loot and trade whatever they can. With the sharp drop in foreign military assistance to many governments and rebel groups resulting from the end of the Cold War, belligerents have become more dependent upon private sources of support to sustain their military and political activities. Although domestic and foreign state budgets continue to support armed conflict expenditures, major sources of funding include available natural resources, as well as protection rackets, diversion of relief aid, or Diaspora remittances.u Yet, it does not simply happen that natural resources often constitute the most valuable and available source of finance and reward. As sociologist David Keen remarks, economically motivated violence among rebels is more likely when the potential rewards are great and "can be exploited with minimal technology and without the need to control the capital or machinery of the state."52 Natural resources are specifically prone to looting because of their fixed location, often in remote areas, and the often-minimal bureaucratic infrastructure needed to tax them. Unlike manufacturing and to some extent agriculture, extractive activities cannot be relocated. Although extractive businesses may decide not to invest or to disengage from their current operations, they generally sustain their access to resources and protect their investments by paying "whoever is in power" -ranging from a few dollars to let a truck pass a checkpoint, to multimillion dollars concession signature bonuses paid to belligerents. Moreover, some resources can be extracted in wartime, even after the destruction of most infrastructures. While this is not the case for mechanized and capital-intensive mining projects-few investors will rush to rebuild a multimillion dollar plant soon after its destruction-some resources such as timber and high value alluvial minerals like diamonds or colt an can be 71 Studies in Political Economy extracted with minimal investments and traded without the need for massive transport capacities. Actual looting and involvement in trading are not necessarily needed to provide a source of finance and support to a rebellion. Armed groups can simply extract protection rents, motivating payments through threats of violence, destruction of equipment, or murders. Both the ELN in Colombia and the Renamo in Mozambique have been able to extract protection rents from companies by threatening or blowing up their pipelines. In forested areas affected by insurgency, many armed groups collect fees from venturing logging companies. In Cambodia, the Khmer Rouge established a set of monthly fees for logging companies to pay in order to operate a chainsaw,a truck, or a sawmill in areas they controlled, even if only sporadically. Loggers often provided goods, and in particular rice, instead of cash payments. Such sources of support were crucial to the viability of small guerrilla groups far from their bases. Similarly, government soldiers and authorities collected fees from the same loggers, thereby giving them an incentive to authorize logging in Khmer Rouge controlled forest areas. Kidnappings are also a major source of financing which does not requires looting as such. The staff of resource businesses is particularly exposed because operations in remote areas are often weakly controlled by the government; hence the use of bodyguards and the private militarization of resource projects. External parties such as businesses or regional powers have also invested in rebel factions in advance of actual looting with the hope that that they could control resource areas. From late 1996, foreign companies supported the Rwandan and Ugandan-backed Alliance des Forces Democratiques pour la Liberation du Congo (AFDL) as it gained control of eastern Congo/Zaire (including key mining sites). Its leader, Laurent Kabila, reportedly earned an estimated US$300million in contracts over future concession and by renegotiating those signed with Mobutu.f In Sierra Leone, future control of diamonds was amongst the motivations of Charles Taylor to provide military assistance to the RUE Signature bonuses, front payments, and loans collateralized with future resource outputs are several ways to rapidly raise incomes, even in relatively uncertain political and military conditions. 72 leBillonlEcology of War Furthermore, it is not unusual for businesses to pay both sides when the final outcome is not yet sure, as oil company Elf Aquitaine allegedly did in Angola by paying both UNITA and MPLA in the pre-electoral period in 1991.54 Using private brokers and international banks, the Angolan government was also able to secure oil-collaterized loans mortgaging up to seven years of government share in future oil productions. Such sources of finance linked to future resource incomes allowed it to finance massive arms purchases and contract private military companies such as Executive Outcomes or International Defense and Security, which were later granted shares in oil or diamonds concessions.55 Such front payments can command bargain prices and hefty commissions for brokers, but constitute speculative and highly risky investments. Over the last five years, many companies including Zimbabwean parastatal interests have lost their investments in DRC.56 The lootable character of a resource is also clearly related to lack of effectiveness in securing it. On one hand, underpaid soldiers and officers with poor logistical support tend to provide weak security for resource exploitation sites, while a lack of respect, low status, and absence of trust with local communities and businesses can compound the problem. Companies and central government attempt to increase security by hiring private military companies, or mercenaries, for the protection of economic assets. On the other hand, manpower, trucks, communication, and firearms can provide a "competitive advantage" to a class of military entrepreneurs with or without the support of the central government. In both cases, the commercialization of war starts with the commercialization of the security apparatus, through the privatization of protection or the organization of commercial ventures by military units. Lootability is not limited to poor countries, but can reflect interstate military imbalance, as demonstrated by the invasion of Kuwait by Iraq, and the subsequent US-led Gulf War in 1991.While Saddam Hussein's invasion of Kuwait can be seen in the light of looting as he sought a new source of revenues after his costly war against Iran, the US was not engaged in "looting" during the Gulf War but in preventing Iraq from controlling and threatening other oil sources in the Gulf, a crucial matter for its economy. 73 Studies in Political Economy While such security context is generally propitious to rebellion or a militarization of resource sectors, opportunities for armed groups also depend upon the specific locations, concentration, and nature of the resources. 57 The geography of resources plays a crucial role in shaping these networks and therefore conflicts through the production of territories linking resource location-in both spatial and political terms-with the practices of their exploitation in a condition of armed conflict. In short, the greater the distance, difficulty of access, or political dissent from the centre of power, the greater the cost of control and the higher the risk of losing the resource to an opponent group. Pure geographic distance, is, of course, not a determining factor in itself, as one needs to consider the technological and political "tools" of control that have allowed distant actors such as colonial powers or multinationals to gain such access to resources and to consolidate it.58 Furthermore, the concentration of resources, in both territorial and organizational terms, will influence the lootability of a resource. In Angola, if the rebel group UNITA wanted to control offshore oil, it had to control the state and gain the recognition of petroleum companies. UNITA could not even inflict major damages to the oil revenue of the government, as the overwhelming majority of the oil fields were offshore. Similarly, if the government wanted to control diamonds, it had to secure a monopoly of access over a vast territory. Even though the major mines are concentrated in the northeast, alluvial diamonds can be found in many riverbeds over a huge territory covered by bush and facilitating guerrilla activities and are accessible to a large number of firms and even small groups of garimpeiros-freelance diggers. 59 Although diffuse by geography and mode of production, the tight control exercized by UNITA over garimpeiros and mines in some regions is such that diamonds can also be considered as a point resource with regard to the concentration of profits. If diamonds had been found only in Kimberlite pipes, as in Botswana, or on the seabed along the coast, as in Namibiaboth of which requiring investments-access to diamonds by UNITA would have been complicated, not to say impossible. Different resources located in different places thus present different opportunities to belligerents. 74 leBiUonlEcology of War The materiality-physical characteristics-of resources in association with their exploitation and marketing characteristics also intervene. Coffee and cocoa are diffuse resources that can be easily looted, but are bulky, of low value, and require a large workforce. As such, while initial stocks have offered significant loot for rebels in both Congo/Zaire and Sierra Leone, the lack of manpower due to population displacement has greatly diminished their role as a sustainable source of funds. Alluvial diamonds are a diffuse resource that can be exploited at a variety of scales-from small teams operating over a 24-hour period through a single pit to groups of several thousands operating over several months. Highly valuable, remotely located, and easily mined through artisanal means when found in alluvial deposits, diamonds are a "resource of choice" for rebels. Small, light, easily concealable, as well as anonymous and internationally tradable, diamonds are also a "currency of choice" for money laundering and financing clandestine activities, including those of Islamic terrorist groups such as Bin Laden's al Oaeda.w Oil is a concentrated resource due to its mode of control and requires large-scale investments. As such, it is most likely an opportunity for governments, except as mentioned earlier through racket and futures contracts, provided to rebels. Timber is a bulky and diffuse resource of medium value, but logging can be mechanized and requires little workforce and time for exploitation if roads or rivers are accessible. Furthermore, forests offer a favourable terrain to guerrilla movements. As such, and because of its relatively common occurrence, timber is the natural resource most frequently involved in war economies. Cutting the Links Between Killing Fields and Shopping Malls Responsibility for conflicts and abuses lies first and foremost in the hands of the perpetrators: warring parties, yet businesses and consumers are not neutral economic actors and their influence is particularly significant for producer countries facing chronic political instability and armed conflicts.e! While war is overwhelmingly bad for most businessesbecause of the high uncertainty and insecurity putting at risk investment, staff, production, and trading-some maintain viable economic enclaves (e.g., offshore oil industry or militarily protected mines). In Angola, the US oil company Gulf 75 Studies inPolitical Economy Oil (now Chevron) thrived during 14 years of war of independence and 26 years of civil war. While much attention has been devoted to major transnational corporations in conflicts affecting resource-dependent countries, little attention has been devoted to risk-taking entrepreneurs, networks of brokers, and criminal outfits thriving by linking war zones to international markets. Tens of thousands of Congolese diamond diggers and traders flocked to wartorn Angola in search of diamonds, despite widespread dangers such as rape, beatings, landmines, and summary executions. Previously working under UNITA, many now work under the control of the government or rogue army generals.e- Whether siding with the government or the rebel, or straddling all parties for the sake of profit opportunities, the self-described "neutrality" of businesses can arguably be seen as complicity. The potential spectrum of business involvement in war is broad, from directly encouraging belligerence for the purposes of business to the loss of investment, and even staff, as a result of war. In some cases, entanglement can simply be the unintended consequence of doing business in a predatory environment where violence is an accepted part of business practice. Given that direct complicity only requires intentional participation with knowledge of foreseeable harmful effects-and not any intention to do harm-all businesses willingly associated with war criminals in the form of taxes or business deals are therefore complicit. Cases of indirect complicity is the unintentional participation in acts committed by someone else without knowledge but with benefits accruing to the businesses-as with the pre-emptive military eviction of potential rebels supported along a pipeline. Finally, silent complicity fails influencing the principal offenders, even if this does not accrue benefits.O Naturalizing the ethical problems they face, resource businessmen such as oilman and now US vice-President Dick Cheney have argued that "the good Lord didn't see fit to put oil and gas reserves where there are democratic governments" and have as such to continue engaging with some of the world's worst political environments.s- Besides the frequent historical relation between resources development and political instability in the first place, however, the successful management of political risks of war, political instability, or 76 leBillonlEcology of War international sanctions can provide businesses with a significant competitive advantage. Within the development of the oil industry itself, as Waelde noted, "At the beginning of most corporate or individual successes ... was usually some bold, rarely very ethical, exploitation of commercial opportunities blocked to competitors by politics."65Support to belligerents at an early stage of a conflict can provide concession bargains or future political favours. Shell, for example, is already in contact with separatist groups in West Papua, currently under Indonesian rule. In its search for old-growth forests, logging businesses cut deals with belligerents. In Cambodia, Thai and regional businesses engaged with both the Khmer Rouge rebels and corrupt government officials to export hundreds of millions of dollars worth of tropical timber.66 Similarly in Burma, Thai logging companies engaged with the SPDClSLORC regime to export timber from insurgent areas. Attracted by opportunities of "quick bucks" or "speculative market positioning" some businesspeople are ready to engage with illegitimate authorities, including war criminals. Conflict-affected countries thus constitute a "niche market" in which risk taking and often-unscrupulous businesses can thrive. Because of its own history of resource development and specialized financial markets, Canada is home to a large number of extractive companies. Many of these are small or middle-size "junior companies" (in contrast to multinational "majors") willing to take greater risks to venture into difficult markets because of political instability or reputation costs. War-affected countries constitute a "niche market" for many of these companies, especially if they integrate security components into their activities. Canadian junior company DiamondsWorks, for example, enjoyed close links with private military companies. such as Executive Outcomes for its work in Angola and Sierra Leone. Similarly,Heritage Oil was reportedly awarded a contract in relation to the military activities of Executive Outcomes.e? Most recently, Canadian oil company Talisman has been accused of fuelling the war by supporting the Sudanese government waging' a war on rebel movements in the South and motivating the clearing of population around oil fields by military means.s'' In Colombia, TransCanada and IPL Entreprises have been tarred with the 77 Studies in Political Economy same brush as British Petroleum and other oil companies accused of financing military death squads active in the protection of the oil pipeline.s? Private corporations, either domestic or international, need to assume their political role and to take a moral stand by demonstrating their "corporate citizenship."7o Yet such positions should not be cynically used by First World companies to exclude competitors in the Third World; for example by characterizing African diamonds in general as "blood" diamonds, and those of developed countries (e.g., Australia and Canada) as "clean" ones. Nor should resources produced by multinationals be systematically considered "peace-prone" and artisanal ones "conflict-prone;" with the risk of undermining local small-scale producers as happened in Cambodia as a result of a crackdown on small-scale logging mostly conducted by selfdemobilized soldiers and seasonal migrants.n Advocacy groups and governmental and intergovernmental agencies increasingly challenge the permissive or cynical attitude of external private actors. Many local and international Non Governmental Organizations (NGOs) campaign for greater transparency and accountability and investigate supply-chains linking battlegrounds to shopping malls. In the diamonds sector, the industry and producer/trader countries have understood the threat of a boycott resulting from the "conflict diamonds" campaign, and both acknowledged their role in fuelling war and engaged into regulating the practices in the· industry with the assistance of governments and NGOs.72 Yet once again, the nature of resources, their political economy and even social identity are important. Diamonds are "sexy" for the media, and loaded with positive social value such as love, eternity, and purity. Furthermore, they are dispensable luxury goods, at least for non-industrial purposes. As such, diamonds constitute a commodity vulnerable to boycott and regulation, even if the physical characteristics of diamonds and the discretion, if not clandestinity, characterizing the industry are likely to remain in the way of eradicating "conflict diamonds." Engaging more broadly with economic agendas and commodities sustaining wars, the United Nations Security Council is also taking steps to see member states enforce "smart sanctions," notably by establishing investigative 78 leBiUonlEcology of War expert panels and monitoring mechanisms having for prime responsibility the "naming and shaming" of sanction busters.T' While initiatives for corporate transparency and accountability are valuable, they should nevertheless avoid causing even more deterrence to investments by legitimate businesses in regions associated with conflicts-such as SubSaharan Africa. Nor should these initiatives be half-measures leaving a gap for even less scrupulous and accountable businesses to move in. In this regard, a global regulatory framework linking resources flows to political accountability in both producing and consuming countries is needed. Such framework can be the result of a number of sector specific negotiations-as for diamonds-but would be best addressed through an international agreement on transparency and accountability in extractive industries. Although recommendations for the (self)regulation of businesses in respect to armed conflicts fall outside the scope of this paper, some major directions can be noted.t- If there is not, for the moment, any international instrument specifically regulating business activities during war, international human rights and humanitarian laws as well as the Charter of the United Nations and resolutions of UN Security Council (UNSC) provide some foundations and regulatory instruments. The judicial prosecution of sanction busters and commercial actors engaging with war criminals is still in its infancy. Progress in the short term is most likely to come from national judicial systems in commodity-importing countries. There have already been some cases in Belgium involving arms and diamonds dealers with on-going trials." Human rights activists and victims of human rights abuses increasingly use extraterritorial jurisdiction over resource businesses involved in human rights violations, provided, for example, by the US's Alien Tort Claims Act,76At an international level, the most significant effective instrument measure could come from the International Convention for the Suppression of the Financing of Terrorism, which theoretically applies to businesses dealing financially with terrorists and war criminals.r? This convention could be applied to diamond dealers linked to al-Qaeda financing networks.ts In terms of global jurisdiction, the International Criminal Court could playa role that has not yet been fully explored. 79 Studies in Political Economy There are obvious difficulties in this regard, starting with the necessary expansion of the Court's subject matter jurisdiction and the likely resistance of the US.79 On the international enforcement side, a critical engagement has come out of the United Nations following innovative investigative and reporting work by advocacy NGOs such as UK-based Global Witness.s' Most notably, sanctions and war economies are now being monitored through panels of experts that do not hesitate to name and shame businesses and foreign political backers. It has been argued that the voluntary self-regulation of businesses has many advantages, given some of the apparent limits, costs, and constraints of a legalist approach. Selfregulation takes mainly the form of business and industrywide codes of conduct such as the "Voluntary Principles on Security and Human Rights" for the extractive and energy sectors agreed by the US and UK governments as well as a number of businesses and NGOS.81 Self-regulation schemes have the advantage of being internally defined and thus possibly better adapted to local circumstances, but they can be limited in scope-generally concentrating on core business activities- and lack external accountability through independent auditing. Given the paramount and necessary importance of profitability in the conduct of business, "voluntary" approaches in fact often find their roots in the normative pressure imposed upon businesses by evolving international ethical norms and rights as well as the "reputation" impact of advocacy work and media information on consumer and investor choices. As mentioned above, the recent flurry of "voluntary" initiatives in the diamond sector, for example, only came about following pressure from advocacy groups and the UN Security Council. Furthermore, some industries and many businesspeople are largely insulated from this type of pressure. There are further reasons to argue for an international regulatory framework. A weak judicial system, legal vacuum, or political interests at the highest level in the conflict-affected country can also limit the effectiveness of domestic regulation. An international regulatory framework can fill some of this vacuum, while international mechanisms for accountability can limit political collusion. Regulations can also have the advan80 leBillonlEcology of War tage of promoting a level playing field;that is,creating an environment in which legitimate businesses following "pro-peace" best practices are not at a disadvantage compared with their less scrupulous competitors. Finally,a constraining "war-time" regulatory framework can motivate businesses to promote peace and civil governance to achieve a more favourable regulatory environment. An international regulatory approach should not preclude self-regulation and pro-active engagement by businesses, but complement them. Businesses themselves need to receive clear and early regulatory signals from the international community, legitimate domestic authorities, and civil society to assist them in upholding relevant international law and to contribute to conflict prevention/resolution initiatives as well as economic development. Businesses often stress confusion resulting from conflicting and unclear rules of social responsibility.Not only is there a whole array of laws,government expectations, NGO demands, and corporate codes of conduct, but international businesses are expected to respect different ones simultaneously. Beyond the above-mentioned rationale for the international regulation of war economies and business practices, UN principles on human rights and labour set by international conventions (UN and ILO) already provide some basic benchmarks for the conduct of business, even in times of armed conflict. Similarly,the Geneva Conventions have been ratified by most states and they include articles relevant for the practices of businesses. Along with the statutes of the International Criminal Court, these texts provide the legal basis upon which to judge abuses and crimes. The general character of these rights would nevertheless require more precise definitions and norms directly related to business practices. For the moment, UN Security Council resolutions are the only international instrument with a capacity to regulate businesses by calling on member States to apply economic sanctions and other measures in the interest of peace and international security (Chapters VI, VII). Despite being legally binding for UN member states, the effectiveness of its resolutions depends on national level legislation and enforcement. The political and economic effectiveness of sanctions depends on monitoring and implementation. Badly designed or enforced, sanctions can prove benign for the targetted 81 Studies in Political Economy group or political regime or even counterproductive, leading to a criminalization of the economy aggravating suffering by populations, and prolonging conflicts.esRecent initiatives on those issues include urging all States to make sanction busting by their nationals a criminal offence and the creation of UN investigation teams. Building on the successful work of independent panels of experts publicly releasing information on sanction-busters, there is now a momentum to create a permanent sanction-monitoring unit under the UNSC, which would maintain permanent links with international and national intelligence and policing agencies through Interpo1.83 Individual governments or regional organizations have also regulated businesses by passing specific investment or trading bans; the Economic Community of West African States (ECOWAS) declared an economic embargo against areas controlled by warlords in Liberia in the early 1990s.84 Such measures aim to increase the leverage of states and international bodies-often first exercized through aid conditionality-by directly affecting the private sector. Mechanisms include, for example, a blanket ban on investment, a ban on official export credit and insurance, or a penalty surcharge on procurement contracts for companies investing in targetted countries. Several other regulatory instruments have also been used in the past. Aid conditionality can exert a certain degree of leverage upon a targetted country to influence its trade policy or the behaviour of the private sector, and donors and the IMF in the case of logging in Cambodia used this instrument repeatedly.s' Overall, unilateral or regional regulations are politically demonstrative. Devoid of effective enforcement, their impact is often limited and may be counterproductive. The increasing use of economic sanctions led both international and local NGOs to question their humanitarian impact. Following an extensive study, the Congolese group POLE argued that despite the clear links between war and coltan, as well as the need to stop the illicit economy organized and controlled by armed groups, "the people of the Kivu would not gain [from an embargo], but lose one of their very few remaining sources of income."86To this end, an ideal regulatory framework should address the dilemma of sustaining the local economy 82 leBillonlEcology of War in the interest of the population while weeding out activities supporting belligerents. At the same time, "buying-out" belligerents through economic incentives may be a necessary step towards achieving peace. This challenge thus entails both economic supervision and wealth sharing. Like demobilizing soldiers and monitoring elections, attendant to most peace processes, a war economy needs to be "demobilized" and "monitored" to avoid the resumption of conflict. Cease-fires and peace agreements offer the opportunity to implement such measures, but they are too frequently used as mere breathing spaces for military reorganization and rearmament-as was the case in Angola, Cambodia, Colombia, Liberia, Sierra Leone, and Sudan over the last decade. Beyond sanctions and global regulatory measures, it is thus imperative to set up practical regulatory frameworks depriving belligerents of revenues that allow them to follow a double agenda of peace transition and rearmament, as happened repeatedly in Angola, Cambodia, Colombia, Liberia, Sierra Leone and Sri Lanka. Although economic activities, even illicit ones, can contribute to social peace by increasing the well being of the population and changing the focus of groups in conflict, some nevertheless run the risk of fuelling future tensions. This economic aspect of peace processes is generally neglected and too often placed under the initiative of belligerents jockeying for key economic positions within the new authority or simply embezzling funds to re-arm. As mentioned earlier, Foday Sankoh either ignored the mineral commission he chaired following the Lome agreement, or used its legitimacy to advance his personal interests and to re-arm the RUF.87 Similarly, while UNITA handed over to the government the control of its main diamond areas in late 1997, the rebel movement continued mining and purchasing weapons. Diamonds will always remain a difficult commodity to control. But their malign exploitation can at least be limited through internationally supervised tax collection and budgetary allocation using escrow funds. In such a scheme, populations would benefit from tax transfers to social services, while the respective administrative and military structures of belligerents would receive monitored budgetary support to implement their effective integration into new government 83 Studies in Political Economy structures. Businesses themselves. would be deterred from operating outside the scheme through a system of incentives, such as secure legal ownership and deterrents, such as effective sanctions. If successful, and in the absence of alternative sources of support, opting out of a peace process would become a prohibitively costly alternative for belligerents. The "oil for food" program, set up to help implement UN sanctions against Iraq and lessen their humanitarian impact, represents an early example of such schemes. Despite being cumbersome and having achieved only limited results, the UN expert panel on Liberia has recommended a similar program to prevent the proceeds of the Liberian shipping and corporate registry from financing arms sanctions-busting.88 The Security Council moved in that direction by calling upon the government of Liberia to establish transparent and internationally verifiable audit regimes over its use of revenues derived from both its shipping and corporate registry as well as the timber industry, to demonstrate these are not used for busting sanctions but for "legitimate social, humanitarian and development purposes."89 The World Bank also has an indirect oversight role over the Chad-Cameroon Petroleum Development and Pipeline Project intended to prevent conflicts and prioritize the allocation of oil revenues to social sectors.w After nearly three decades of civil conflicts, negotiations between the northerndominated government and the main southern rebellion in the mid-1990s made it feasible for oil companies to develop fields in southern Chad. The oil companies' consortium viewed the World Bank as the "centrepiece of its risk reduction strategy" by attracting institutional funding as well as assisting the Chad government in revenue management and implementing social and environmental programmes.v' To manage the estimated $1.5 billion in forecasted revenue over the next 28 years, the Chad parliament put this revenue into an offshore escrow account, allocated it to social and environmental priority sectors, and submitted it to a public auditing and an oversight committee.vz President Deby, who came to power through a military coup in 1990,however, used four million dollars from the oil development "signature bonus" to purchase weapons, triggering an NGO outcry and leading the World Bank and the IMF to threaten exclusion from their 84 leBillonlEcology of War debt relief programme.vvAs "moral guarantor" of the scheme, the World Bank also established an International Advisory Group observing the implementation of the project and making recommendations to both governments.v- There remains a risk that the oil factor will bring about internal conflicts-a risk already clearly demonstrated in neighbouring Sudan. With an ongoing war, rising oil revenues and a viable (if fraught) peace process, Sudan is a strong candidate for a supervised wealth-sharing mechanism between the different parties and the population. The Government of Sudan was able to attract international investors and companies, in large part thanks to the 1997 Sudan/Khartoum Peace Agreement which was boycotted by the rebel Sudanese People's Liberation Army (SPLA) but established an effective ceasefire with some southern factions in control of the oil fields and involved a wealth-sharing accord between the parties that was incorporated into the 1999 constitution. Military threats to oil operations have dramatically increased since some of these southern factions rejoined the SPLA, but the logic of an agreement on peace- and revenue-sharing persists. Some government officials have declared that an "oil-sharing for ceasefire deal makes sense," but SPLAleader John Garang himself is against sharing oil revenues without a broader agreement.P> Some SPLA officials even acknowledge that without proper supervision, each party is likely simply to increase its military capacity, resulting in an intensification of the war.96 The key to long-term success, however, is strong democratic control over resource revenues, rather than a weak external mode of regulation.v? An external supervision scheme could increase the risk of resumed conflict if the scheme dampened pressure for democratization by providing a facade of legitimacy through a partial control of the resource rents by a few selected civil-society representatives and foreign advisors. Conclusion Natural resources have long been a strategic concern for states. Despite rising demand for raw materials and tensions related to resource access in key areas such as the Persian Gulf, the fear of shortages in oil or rare minerals that 85 Studies in Political Economy drove this concern eased when the Cold War ended and international trade became freer, more flexible and more reliable. There is a need to continue moving towards negotiated solutions, including resource sharing, conservation measures, and to avoid renewing a militarized approach. Apparent progress also has not resolved, and may even have aggravated, several other strategic issues involving the export of natural resources. The first strategic issue relates to the political economy and governance of resource-dependent countries, many of which face a similar pattern of growth collapse, corruption, and delegitimated state authority. Given the importance of natural resources in the economy and the economic potential of most developing countries, the issue of translating resource exploitation into political stability and economic development will remain central in the years to come, often for entire regions. The second concerns the scale. and number of economic, environmental or sociocultural conflicts related to resource exploitation that increasingly oppose the welfare of local populations, business interests, the state, and global environmental and human-rights networks.w While most of these conflicts are either peacefully terminated or are limited to social protest movements and small-scale skirmishes, in some cases violent traditions and a radicalization of ideologies have turned them into full-scale civil wars. Growing opposition to economic and increased demand for raw materials is likely to increase such adversarial politics and the need for more effective dialogue. The last but most pressing issue is the operational and motivational dependence of armed groups on natural resource exploitation. Accessible and internationally marketable resources such as diamonds and timber, not to mention drugs, have figured prominently in conflicts in at least 20 countries during the 1990s.Even if "conflict resources" come under greater regulatory pressure, given the high incidence of wars in poor countries with few foreign-earning sources, natural resources are likely to remain an economic focus of most belligerents. This paper has examined some of the reasons, processes and possible solutions relating to these issues, with a focus on 86 leBillonlEcology of War the characteristics and role of "conflict resources" in fuelling wars. The cases examined here suggest that the vulnerability of populations and the need for political and economic accountability in resource management should be taken seriously at both local and international levels.There is no simple and comprehensive measure that can reduce the prevalence of conflicts in resource-dependent countries, but several factors can assist in this regard. The UN Security Council, national governments, business associations, and advocacy NGOs have been developing an array of rules, investigation, sanctions, and implementation measures targetted at specific commodities over the past few years. These initiatives need support and encouragement.P? Most noticeably, diamonds have been the target of unprecedented regulatory measures. In the absence of sustained monitoring, however, these efforts will most probably remain plagued by difficulties inherent in the physical and market characteristics of the commodity. In other cases, vested commercial and economic interests, as well as the potential humanitarian impact on the targeted "conflict resource," have continued to limit sanctions, with mixed results. Although isolating the resources that fuel war from international markets is generally necessary, it should remain a short-term measure that could otherwise prove counterproductive. To sustain the economy of affected countries while limiting the possibilities of further hostilities, alternative mechanisms associating targetted sanctions and economic supervision are required. Beyond regulating war economies, an array of innovative policies is also needed to prevent resource-driven conflicts. International financial mechanisms and trade rules should give renewed attention to the stabilization of primary commodity prices and continue to open the markets of rich countries to processed commodities from developing countries. A revolutionary move in this direction would be the inversion of trade tariffs that long protected and still continue to protect the wealthiest economies. An international trade agreement imposing tariffs on the importation by industrialized countries of raw materials rather than processed goods could motivate investors to consider more seriously downstream processing in resource-dependent and poor countries. 87 Studies in Political Economy Downstream industrialization, however, has a poor record in developing countries and the movements in this direction should be made with especial caution and deliberation. Ultimately, however, value- adding industries and services remain the main way out of poverty for Third-World countries. Since many resource-dependent countries are likely to remain so over the coming decade, it is imperative to maximize the capture of revenues by resource-exporting countries while strengthening the quality of their governance and the legitimacy of their institutions. Such a policy would involve democratization and improved communication among different stakeholders as well as respect for human rights and mechanisms of transparency and accountability starting at the project level, and extend to final customers to ensure greater and more diverse leverage. In this connection, businesses can be both victims and beneficiaries of the "politically sensitive environment" in which they operate, having to cope with higher risks but possibly reaping higher profits from the deterrent effect of those risks on competitors.Iw Left to its own devices, the current process of economic globalization risks following the colonial tradition of distinguishing between "useful" and "useless" areas in resource-dependent countries, creating commercially driven enclaves around the most profitable resource reserves and ignoring the rest. Sustaining relatively benevolent autocracies has so far been the principal recipe for securing minimal and profitable political order, but democratic pressure is challenging this arrangement, sometimes with dramatic consequences after years of predatory regimes. Isolating countries by branding them as "pariah states" is not a long-term solution either. Reinforcing an exclusionary form of "globalization" barring countries from investments and legitimate trade will only further promote their re-inclusion in the international arena in the form of illegal immigration and fraud or, now, "terrorist havens," and condition political instability through poverty. This situation has become untenable. Both businesses and international regulators need to promote an alternative framework in which trade comes to reinforce governance. If outside involvement is to succeed in mitigating the economic 88 leBillonlEcology of War vulnerability and dampening effects of resource-dependence on domestic politics in producing countries, the call of UN Secretary-General Kofi Annan "to unite the powers of markets with the authority of universal ideals" must be heeded. So far, unfortunately, this call has led only to the creation of the value-based platform of the "Global Compact," which essentially demonstrates the relative strength of businesses in the new mode of engagement by international institutions. A global regime of governance for resources is thus required to level the playing field for populations, governments and businesses. To take the example of accountability in the oil sector: the demand of the local population for full fiscal transparency is more likely to be conceded by the host government if it is legally imposed on oil companies by stockexchange regulators and commercially urged by consumers. Such a global regime entails a custody-chain securing accountability through a systematically ethical consumption. Inspiration for such schemes can be found in the Kimberley certification process on diamonds, the Forest Stewardship Council certification of "sustainable timber harvesting," or in the fair trade movements for coffee or garments.tvt The essential difference in the preambles of the 1947 GATT and 1994 WTO agreements was the inclusion in the later text of an environmental protection clause based on the principles of sustainable development and economic level of development. While the social objectives of both agreements refer to "raising standards of living" and "ensuring full employment," one might argue that "trade and economic endeavour" should also be conducted with a view to increase the safety of populations from poor governance and violence sustained by international trade. While WTO may not be the best place to start reforming the international political economy in favour of such "human security" agenda, at least it should not stand in the way. Notes 1. UNITA (National Union for the Total Independence of Angola) is a rebel movement in Angola dating back to the early 1960s,supported by apartheid South Africa and the USA until the early 1990s.The RUF (Revolutionary United Front) is a rebel movement in Sierra Leone dating back to the early 1990s,initially supported by the government of 89 Studies in Political Economy Burkina Gberie, Faso and Charles Ralph Hazleton, Taylor in Liberia. See Ian Smillie, Lansana The Heart of the Matter: Sierra Leone, Diamonds, and Human Security (Ottawa: Partnership Africa Canada, 2000); "Diamonds Are a Guerrilla's Best Friend," Globe and Mail (13 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 90 January 2000). The term "conflict resource" was first used for diamonds by the advocacy NGO Global Witness. The term "predatory" refers here to the unsustainable appropriation of economic assets. Coltan is a metal ore particularly used in the mobile phone industry. Peter H. Gleick, "Environment and Security: The Clear Connections," Bulletin of the Atomic Scientists 47/3 (1991), pp. 18-22; see also Ian O. Lesser, Resources and Strategy: Vital Materials in International Conflicts, I600-Present Day (Basingstoke: Macmillan 1989); Arthur H. Westing, (ed.), Global Resources and International Conflict: Environmental Factors in Strategy Policy and Action (Oxford: Oxford University Press 1986). See for example, Michael T. Klare, Resource Wars: The Changing Landscape of Global Conflict (New York: Henry Holt, 2001); Robert D. Kaplan, "The Coming of Anarchy," The Atlantic Monthly (February 1994). For a critique, see the introductory chapter of Nancy L. Peluso and Michael Watts, (ed.), Violent Environments (Ithaca, NY: Cornell University Press, 2001), pp. 3-38. Resource dependence is generally defined in terms of percentage of total exports or GDP and often benchmarked at 30 percent. Thomas Homer-Dixon, Environment, Scarcity and Violence (Princeton NJ: Princeton University Press, 1999). A critique of Homer-Dixon's model falls outside the scope of this paper, see Simon Dalby, Environmental Security (Minneapolis, MI: University of Minnesota Press, 2002); Nils Petter Gleditsch, "Armed Conflict and the Environment: A Critique of the Literature," Journal of Peace Research 35/3 (1998), pp. 381-400. Indra de Soysa, "The Resource Curse: Are Civil Wars Driven by Rapacity or Paucity"," in Mats Berdal and David Malone, (eds), Greed and Grievance: Economic Agendas in Civil Wars (Boulder, CO: Lynne Rienner, 2000) examines all conflicts resulting in over 25 battle-deaths between 1989 and 1998. Alan H Gelb, (ed.), Oil Windfalls: Blessing or Curse (Oxford: Oxford University Press, 1989); Richard M. Auty, Sustaining Development in Mineral Economies: the Resource Curse Thesis (London: Routledge, 1993); Michael L. Ross, "The Political Economy of the Resource Curse," World Politics 51/2 (1999), pp. 297-322. David Keen, The Economic Functions of Violence in Civil Wars, Adelphi Paper No. 320 (Oxford: Oxford University Press, 1998); William Reno, Warlord Politics and African States (Boulder CO: Lynne Rienner, 1998); Paul Collier and Anke Hoeffler, "Greed and Grievance in Civil War" (Washington DC: World Bank, 2001). Canada and the US provided examples of success and led to a debate over staple theory of growth and the risk of staple trap, see Harold A. Innis, Essays in Canadian Economic History (Toronto: University of Toronto Press, 1956). Judith Rees, Natural Resources: Allocation, Economics and Policy (London: Routledge, 1990). Jahangir Amuzegar, Managing the Oil Wealth: OPEC's Windfalls and Pitfalls (London: LB. Tauris, 1999). leBiUonlEcology of War 13. For minerals and oil, see Michael Ross, "Extractive Sectors and the Poor," Oxfam America Report (New York: Oxfam America, 2001). Resource dependence is measured as a ratio of resource exports to its gross domestic product, while standard of living is measured through the Human Development Index, which combines income data with life expectancy and education. 14. David Pepper, The Roots of Modern Environmentalism (London: Croom Helm, 1984);Adam Swift, Global Political Ecology: The Crisis in Economy and Government (London: Pluto Press, 1993); Martin O'Connor, Is Capitalism Sustainable? Political Economy and the Politics of Ecology (New York: Guilford Press, 1994). 15. Jeffrey D. Sachs and Andrew M. Warner, "Natural Resource Abundance and Economic Growth," National Bureau of Economic Research Working Paper 5398 ( 1995). 16. Gerard Prunier, The Rwanda Crisis: History of a Genocide, (New York: Columbia University Press). 17. Peter Uvin, "Rwanda: the Social Roots of Genocide," in E. W.Nafziger, F. Stewart and R. Vayrynen, (eds.), Weak States and Vulnerable Economies: Humanitarian Emergencies in Developing Countries 2 (Oxford: Oxford University Press, 2000). 18. Gustav Ranis, "Towards a Model of Development for the Natural Resources Poor Economy," Discussion Paper 529 (Yale: Yale Economic Growth Center, Yale University, 1987). 19. Karl, The Paradox of Plenty; Amuzegar, Managing the Oil Wealth. Corruption is understood as a violation of public duties by private interests when rules or norms objectively define these two realms. The violation, however, often has an endogenous character that serves functions other than simple financial self-interest, such as political ordering; see Philippe leBillon, "Fuelling War or Buying Peace: The Role of Corruption in Armed Conflicts," Discussion Paper 2001165 (Helsinki: UNU/WIDER, 2001). 20. Many primary commodity prices dropped from the mid 1980safter high price rises in the 1970s; see, Osmel Manzano and Roberto Rigobon, "Resource Curse or Debt Overhang?," NBER Working Paper 8390 (Washington DC: National Bureau of Economic Research, July 2001). 21. World Development Indicators Database, World Bank, July 2001, devdata.worldbank.org 22. Ross, Extractive Sectors and the Poor, p. 15. 23. Bjorn Moller, "Resolving the Security Dilemma in the Gulf Region," Emirates Occasional Papers. 10 (Abu Dhabi: Emirates Center For Strategic Studies and Research, n.d.). 24. Karl, The Paradox of Plenty, p. 7. 25. On oil see Michael L. Ross, "Does Oil Hinder Democracy?," World Politics 53 (2001), pp. 325-41. 26. Helen Fein, "More Murder in the Middle: Life-Integrity Violations and Democracy in the World, 1987," Human Rights Quarterly 17/1 (1995), pp. 170-191;Patrick M. Regan and Scott Sigmund Gartner, "Threat and Repression: The Non-Linear Relationship Between Government and Opposition Violence," Journal of Peace Research 33/3 (1996), pp. 273287. War or 'military intervention' by democracies, such as the US, against non-democratic states or political groups however is common. 27. War is generally defined as armed conflicts involving more than 25 or 1,000 battle-related deaths. 28. Robert H. Bates, Markets and States in Tropical Africa: the Political Basis of Agricultural Policies (Berkeley, CA: University of California 91 ------------------ ---- Studies in Political Economy Press, 29. 30. 31. 32. 33. Berkeley CA, 1981); Raymond L. Bryant and Michael J. P. Pamwell, (eds), Environmental Change in South-East Asia: People, Politics and Sustainable Development (London: Routledge, 1996). Kisangani N. F. Emizet, "Zaire After Mobutu: A Case of a Humanitarian Emergency," Research for Action 32 (Helsinki: WIDER, 1997). Karl, The Paradox of Plenty. Auty, Resource Abundance. Michael Dobbs, "Inside the Mind of Osama Bin Laden. Strategy Mixes Long Preparation, Powerful Message Aimed at Dispossessed," Washington Post (20 September 2(01), p.AOI. William Reno, "Foreign Firms, Natural Resources, and Violent Political Economies," Social Science Forum, 2000, on-line: http://www.social-sci- ence-forum.org. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 92 Cited in Emizet, Zaire after Mobutu, p. 35. Paul Richards, "Are 'Forest Wars' in Africa Resource Conflicts? The Case of Sierra Leone," in Peluso, N.L. and M. Watts, (eds.), Violent Environments (Ithaca, NY: Cornell University Press, 2001), pp. 65-6. Nancy L. Peluso and Emily Harwell, "Territory, Custom, and the Cultural Politics of Ethnic War in West Kalimantan, Indonesia," in Nancy L. Peluso and Michael Watts, (eds), Violent Environments (Ithaca, NY: Cornell University Press, 2(01), p. 83-116. 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Hugues Leclerc, "Le Role Economique du Diamant dans Ie Conflict Congolais," in Lauren Monnier, Bogumil Jewsiewicki, and Gauthier de Villers, (eds.) Chasse au Diamant au Congo/Zaire (Paris: L'Harmattan, 2001), p. 60. Michael Gillard, Ignacio Gomez and Melissa Jones, "BP Hands Tarred in Pipeline Dirty War," The Guardian (17 October 1998). Sudan: The Human Price of Oil, Report no. AFR 54/01100 (Washington DC: Amnesty International, 2000). "Stopping Forced Labour" (Geneva: International Labour Office, 2(01), p. 21. James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven CT: Yale University Press, 1985). Neil Harvey, The Chiapas Rebellion: The Struggle for Land and Democracy (Durham NC: Duke University Press, 1994). For a review of the literature on the political economy of war, see http://www.odi.org.uklhpglwarecons. leBillonlEcology of War 52. Keen, Economic Functions, p. 41. 53. Jean-Marie Balancie and Arnaud de La Grange, Mondes Rebelles. Guerres Civiles et Violences Politiques (Paris: Michalon, 1999),p. 420. 54. Jean-Francois Medard, "Oil and War: Elf and 'Francafrique' in the Gulf of Guinea," mimeo (2002). 55. Interviews with AMF and Diamonds Works staff (London, November 2(00). 56. Michael Nest, "Ambitions, Profits and Loss: Zimbabwean Economic Involvement in the Democratic Republic of Congo," African Affairs 100/400(2001),pp. 469-90. 57. Philippe leBillon "The political ecology of war: natural resources and armed conflicts," Political Geography 20/5 (2001),pp. 561-584. 58. Daniel Headrick, Tools of Empire: Technology and European Imperialism in the Nineteenth Century (Oxford: Oxford University Press, 1981). 59. Filip de Boeck, "Domesticating Diamonds and Dollars: Identity, Expenditure and Sharing in Soutwestern Zaire (1984-1997)," Development and Change 29/4 (1999),pp. 777-810. 60. Douglas Farah, "AI Qaeda Cash Tied to Diamond Trade" Washington Post (2 November 2001), p. AOl; Financial Action Task Force VIII "Money Laundering Typologies Exercice Public Report" (1996) http://www. ustreas.gov/fincen/fatf.pdf. 61. Peter Frankental and Frances House, Human Rights: Is It Any of Your Business? (London: Amnesty International and The Prince of Wales Business Leaders Forum, 2000). 62. Field study in Angola (July 2001). 63. Andrew Clapham and Scott Jerbi, "Categories of Corporate Complicity in Human Rights Abuses," http://www.businesshumanrights.org/Clapham-Jerbi-paper.htm. 64. Dick Cheney, former Chairman of Halliburton and US Vice President, cited in Petroleum Finance Week (1 April 1996); see also Shell (2000) Operating in Politically Sensitive Regions. On-line: http://www.shell. comJroyal-en/contentI0,5028,25547-51060,00.html 65. Thomas Waelde, "Legal boundaries for extraterritorial ambitions," in John V. Mitchell, (ed.), Companies in a World of Conflict: NGOs, Sanctions and Corporate Responsibility (London: Royal Institute of International Affairs and Earthscan, 1998),p. 178. 66. Philippe leBillon, "The Political Ecology of Transition in Cambodia 1989-1999: War, Peace and Forest Exploitation," Development and Change 31/4 (2000), pp. 785-805. 67. David Shearer, Private Armies and Military Intervention,Adelphi Paper 316 (Oxford: Oxford University Press for the International Institute for Strategic Studies, 1998). 68. John Harker, Human security in Sudan: the Report of a Canadian Assessment Mission (Ottawa: Canadian Ministry of Foreign Affairs, 2000). 69. Michael Gillard et al., "BP Hands "Tarred in Pipeline Dirty War." 70. For an exploration of the concept from a business-friendly perspective, see the Journal of Corporate Citizenship 1/1 (2000). 71. leBillon, "The Political Ecology of Transition." 72. See http://www.globalpolicy.org/security/issues/diamond. 73. UN Department of Political Affairs official, interview with the author, March 2001. 74. See Philippe leBillon, "Regulating Businesses During Armed Conflicts," (London: Overseas Development Institute, forthcoming); 93 Studies in Political Economy 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 94 Jane Nelson, The Business of Peace. The Private Sector as Partner in Conflict Prevention and Resolution (London: International Alert, Council on Economic Priorities, and the Prince of Wales Business Leaders Forum, 2000). Andrew Osborn, "Brussels Holds Kenyan Wanted by UN and UK for Fuelling Civil War," Guardian (16 February 2002). In the John Doe Iv. Unocal Corp. case, the plaintiff alleged that the oil company Unocal was complicit in human rights abuses while building a gas pipeline in Burma, see http://www.earthrights.orglunocal/. Adopted at the UN General Assembly in December 1999,and currently been under the process of ratification by member states. See www.un.org/law/cod/finterr.htm. War criminals are included in the broad definition of the original convention but the EU, among others, greatly narrowed it; interview with Anthonius de Vrie, EU commission (Ottawa, March 2002). Douglas Farah, "AI Qaeda Cash Tied to Diamond Trade," Washington Post (2 November 2001), p. A01; Christian Dietrich and Peter Danssaert, "Antwerp Blamed, Again" (Antwerp: IPIS and Diamondstudies.com; November 2001). Offences of financial complicity in genocides, war crimes, and crimes against humanity are not included in the jurisdiction of the ICC, but could be defined by the Review Conference pursuant to article 123 of the Final Act. See http://www.globalwitness.org. These principles, adopted in December 2000, deal with risk assessment (identification of security risks, potential for violence, human rights records, rule of law, conflict analysis, equipment transfer), and interactions between companies and public as well as private security (security arrangements, deployment and conduct, consultation and advice, responses to human rights abuses). While this initiative provides a standard of engagement on security issues for corporations, it does not carry force of law,nor provides commitment of compliance assessment by the US and UK governments. Pierre Kopp, "Embargo et Criminalisation de l'Economie,' Economie des Guerres Civiles, F. Jean and J.-c. Rufin, (eds), (Paris, Hachette, 1996),pp.425-65. United Nations, Report of the Panel of Experts on Violations of Security Council Sanctions Against UNITA S/2000/203 (New York: United Nations Secretariat, 2000). Emmanuel Kwesi Aning, "Regulating Illicit Trade in Natural Resources: The Role of Regional Actors in West Africa," Review of African Political Economy (Forthcoming December 2002). "IMF Playing 'Delicate Game' Over Logging," Phnom Penh Post (29 November 1996),p. 13. "The Coltan Phenomenon" (Goma: POLE, 2001), p. 4. Report of the Panel of Experts Concerning Sierra Leone S/2000/1195 (13 December 2000), para. 90-8. S/2001/1015,para. 59. UN Security Council resolution S/RES/1408 (2002), art. 10. The oil development involves the construction of a pipeline through Cameroon. Korinna Horta, "Questions Concerning The World Bank and Chad/Cameroon Oil and Pipeline Project," Environmental Defense Fund (March 1997). leBillonlEcology of War 92. Act n.lIPR/99 Concerning Oil Revenues Management, N'Djamena (11 January 1999). 93. "Note on the Use of Petroleum Bonus," The Chad-Cameroon Petroleum Development and Pipeline Project (Washington DC: World Bank, June 2001). 94. http://www.worldbank.org/afr/ccproj/project/iag_tor_en.pdf. 95. Cited in "God, Oil and Country. Changing the Logic of War in Sudan," (Brussels: International Crisis Group, 2002), p. 195. 96. Interview with SPLA official, Nairobi (November 2001). 97. Interview with Charmian Gooch, Global Witness (London, June 2002). 98. Al Gedicks, Resource Rebels: Native Challenges to Mining and Oil Corporations (Cambridge MA: South End Press, 2001). 99. Philippe leBillon, Jake Sherman, Marthia Hartwell, "Controlling Illicit Resource Flows to Civil Wars: A Review and Analysis of Current Policies & Legal Instruments" (New York: International Peace Academy, 2002). 100. Jedrzej G. Frynas, "Political Instability and Business: Focus on Shell in Nigeria," Third World Quarterly 19/3,pp. 457-78. 101. Michael B. Brown, Fair Trade: Reforming the International Trading System (London: Zed Books, 1993). 95