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Natural resources

Mandatory standards

by Peter Hauff

In brief

Disclosure is only voluntary: observers from  the Extractive Industries Transparency Initiative visiting the Newmont Mine in Ghana

Disclosure is only voluntary: observers from the Extractive Industries Transparency Initiative visiting the Newmont Mine in Ghana

When oil, gas or valuable ores are produced, many governments still ignore the environmental and social impacts. Non-governmental experts recommend that German industry should verify whether certain standards are observed – preferably at the point of extraction.

Equatorial Guinea has everything a dictator could dream of: lots of oil, untapped deposits of gold, zinc and diamonds as well as rare metals. Even so, nearly one in ten newborns in this West African country has no chance of survival. Riddled with corruption and due to poorly performing agriculture, the country ranks alongside Gabon and Angola as a glaring illustration of the fact that natural resources alone do not mean prosperity. Many countries that are rich in natural resources are among the poorest in the world. The Südwind Institute, a non-governmental outfit based in Siegburg, has been studying the phenomenon since 2010 at the three levels of
– the impacts mining has on business and people in developing countries,
– the consequences for development co­operation and
– the attitudes of investors in the extractive sector.

A recent Südwind publication acknowledges that natural resource wealth can stimulate positive development. All too often, however, only small elites benefit; the broader population remains in poverty. The authors demonstrate how natural resource wealth affects producer countries in the Global South, and they identify what turns resource wealth into a national curse. They show that domestic issues such as poor governance and weak institutions are not the only ones that count. Tax havens for multinational exporters, un­equal terms of trade and lacking ethics on the part of foreign parties also have an impact. Botswana and Chile are considered counter-examples: both countries have not privatised mining completely; in each case, the government retains an interest in mining operations.

Many development cooperation projects today are geared to reducing the domestic risks of resource wealth. In many cases, however, other interests – including those of trade, foreign and security policies – prevail. In the second part of their study, the researchers therefore focus on the natural resource strategies of Ger­many’s Federal Government and the European Union.

Irene Knoke, one of the authors, writes in her summary that, though these strategies developed over the years, they basically still are no more than lists of cor­porate demands. Industrial nations, he argues, too rarely responded to resource scarcity by reconsidering their own consumption. Instead, trade policy-makers in Brussels and Berlin support corporate demands to apply more pressure on other nations to grant for free access to natural resources and waive of export tariffs.

“Developing countries’ interests are often not taken into account,” Knoke states. According to Südwind, global natural resource diplomacy should not shy away from making companies observe enforce­able environmental and social standards.

Peter Hauff