Normative Narratives


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Economic Outlook: African Leaders Demand Better Deals in Chinese Extractive FDI

Original Article:

In Niger, government officials have fought a Chinese oil giant step by step, painfully undoing parts of a contract they call ruinous. In neighboring Chad, they have been even more forceful, shutting down the Chinese and accusing them of gross environmental negligence. In Gabon, they have seized major oil tracts from China, handing them over to the state company.

China wants Africa’s oil as much as ever. But instead of accepting the old terms, which many African officials call unconditional surrender, some cash-starved African states are pushing back, showing an assertiveness unthinkable until recently and suggesting that the days of unbridled influence by the African continent’s mega-investor may be waning.

For years, China has found eager partners across the continent, where governments of every ilk have welcomed the nation’s deep pockets and hands-off approach to local politics as an alternative to the West.

Now China’s major state oil companies are being challenged by African governments that have learned decades of hard lessons about heedless resource-grabs by outsiders and are looking anew at the deals they or their predecessors have signed. Where the Chinese companies are seen as gouging, polluting or hogging valuable tracts, African officials have started resisting, often at the risk of angering one of their most important trading partners.

“This is all we’ve got,” said Niger’s oil minister, Foumakoye Gado. “If our natural resources are given away, we’ll never get out of this.”

“We’ve got to fight to get full value for these resources,” Mr. Gado said. “If they are valued correctly, we can hope to bring something to our people.”

“The Chinese are genuinely unprepared for this degree of pushback,” Mr. Soares de Oliveira said.

China’s Foreign Ministry rejected the notion that its role had been anything but fruitful. In Niger, it said, it has improved the economy, has hired local residents and is building schools, digging wells and carrying out other “public welfare activities.” In Chad, it said, it has urged companies to protect the environment and will seek to resolve the dispute through “friendly negotiation.” In Gabon, as elsewhere, it said, it supports cooperation “on the basis of equality, amity and mutual benefit.”

Few nations in the world are as weak as Niger, where nearly half of the government budget comes from foreign donors. But the nation long had unfulfilled oil dreams that were largely ignored by major companies. In 2008, two partners came together secretively — the country’s autocratic ruler, Mamadou Tandja, and China National Petroleum — and signed an unpublicized deal that seemed to give both parties what they wanted.

But far less clear, then and now, was whether Niger — one of the world’s most impoverished countries, regularly threatened by famine — would substantially benefit from the deal.

Mr. Tandja got a costly oil refinery in an area of Niger that he needed to win over with the promise of development, but the need for such a project in this low-energy-consuming nation has been sharply questioned by experts, not to mention the mysterious $300 million “signing bonus” Mr. Tandja’s administration received….The refinery has a capacity that is three times Niger’s consumption, and the overall cost should have been only $784 million, according to a United Nations expert. Niger must still pay 40 percent of the original cost, with money lent to it by the Chinese.

In return, the Chinese got access to untapped oil reserves in the remote fields on Chad’s border on terms that still make Oil Ministry officials here wince. Beyond that, local residents have protested that the Chinese presence has brought few jobs, low pay and harsh working conditions.

“In the context of this fight, we are revisiting these contracts to correct them,” said Mr. Gado, the oil minister in the new democratic government led by an opponent of Mr. Tandja. “In the future, we will pay closer attention, to not make the same mistakes.”

“This is a lesson we are giving to the Chinese: we are keeping a close lookout on them,” said Mahaman Gaya, the Oil Ministry’s secretary general. Mr. Gado has not made his last trip to Beijing.

Niger’s lesson is being applied elsewhere as well: African governments, grateful as they are for Chinese-built roads and ministry buildings, are no longer passive partners.

“Are we going to continue to ignore what the Chinese companies are doing?” asked Mr. Doudjidingao, the Chadian economist. “I think this is the beginning of a change between African states and the Chinese. It’s a consciousness-raising, so they won’t be guilty in the face of history.”

Natural resources need not be a “curse”, but avoiding human rights violations in extractive industries takes political will, government oversight, and corporate accountability. In order to help African governments, which tend to be underfunded and sometimes corrupt, the Chinese government should hold it’s companies accountable for their extra-territorial human rights obligations (especially considering these companies are state-owned!). Sure this may result in higher costs in the short-run, but businesses thrive on consistency and stability; it is better to pay a little more now then have no idea what the cost may be in the future.

Commitments must be made on the side of the African government’s too; if the Chinese agree to work with them on vetting extractive contracts for human rights implications, then the terms agreed upon will be honored for the life of the contract. This is admittedly challenging in an unstable political climate, where the government of today may not necessarily be the government tomorrow. I am not talking about regime changes, I am talking about revolutions, coups, and other means of fundamentally altering the structure of the government. But still, deals should be made with a mutually beneficial long-term view.

Certain types of foreign direct investment, known as “market-seeking” FDI, are characterized by better deals for host-countries. Willing to forgo some of the labor and regulation saving costs, companies pay a little more because they wish to not only produce at a cheaper cost, but to also empower locals to become future customers. Unfortunately, “extractive” FDI does not lend itself to such benevolent partners. It is therefore the job of the government(s) involved to ensure that human rights obligations are upheld; in an industry with tens of billions of dollars in annual profits, paying to ensure the local poor are receiving a fair deal should not be an issue.

It is not only foreign powers that wish to exploit Africa’s natural resources, cheap labor and lax environmental standards. Natural resources can be easily stolen, especially in countries with lax security / highly organized criminal networks. Furthermore, often times corrupt government officials are willing to provide protection for oil thieves in exchange for personal riches:

Thieves steal an estimated average of 100,000 barrels a day, the report said; working in elaborate networks and protected by corrupted security officials, they tap into the huge and isolated network of pipes that crisscross the country’s swampy southern Niger Delta region. The price of oil fluctuates, but a hypothetical per-barrel price of $100 would mean an annual loss of $3.65 billion. Oil closed at $107.28 per barrel on Thursday.

“Top Nigerian officials cut their teeth in the oil theft business during military rule,” it said. “Over time, evidence surfaced that corrupt members of the security forces were actively involved. The country’s return to democracy in 1999 then gave some civilian officials and political ‘godfathers’ more access to stolen oil.” Security officials are said to extort payments from the oil thieves in return for protection, according to Chatham House.

There is no easy answer to sustainable human development in Africa. However, it is self-evident that the presence of natural resources should expedite the development process, not slow it down or reverse it. This requires political will from both host countries and governments representing foreign investors. But political will is not enough, multiple layers of accountability are needed to ensure the gains of resource extraction go to help the people in the countries which own these resources. Corporate accountability is one aspect which, alongside political accountability, can help ensure that the rule of law is upheld with respect to contracts, and that deals are properly vetted for human rights considerations.

There is, however, another part of the story. African governments would be right to instill the idea within their citizenry’s that profits from natural resource production indeed do belong primarily to the people. Bad contractual terms are more easily remedied than organized criminals and corrupt officials stealing resource rents. In order to remedy this issue, social accountability could go a long way. Empowering people with political rights, and institutions for voicing grievances (such as ombudsman offices and / or NHRIs, or institutions created specifically for extractive industry grievances) can help turn nationalism and self-interests into meaningful accountability on a scale that is otherwise unachievable.

If people in the developing world are convinced resource profits will go to development programs, and governments are committed to these programs and institutions that promote social accountability, then perhaps we can move past the point in history where the presence of natural resources is considered a “curse” and move toward a future where natural resource profits help expedite human development (as they should!). It appears the political will is slowly accumulating throughout Africa, this is great news as tighter regulations always work better when imposed regionally in order to avoid a “race to the bottom”. The UN Post-2015 Development Agenda will also help achieve this goal, as it is set to have human rights considerations and accountability at it’s core.

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Transparency Report: You’ve Gotta Fight, For Your (Human) Rights

This past week marked the well documented 50th anniversary of Dr. Martin Luther King’s March on Washington For Jobs and Freedom and the “I Have a Dream” speech. Despite being known as a civil rights leader, Dr. King was irrefutably a human rights activist. Human rights include the economic and civil rights, as well as social, political, and cultural rights. Human rights, Dr. King realized, we indivisible, interdependent,non-excludable / universal (human rights are for all people, and are rooted in our common humanity) and mutually reinforcing; upholding certain rights (for example freedom of assembly, speech, political rights, the right to employment, access to information) empowers people to claim other rights, while one human rights violation tends to beget others (culminating in a life of poverty and social exclusion). Today, these concepts are largely accepted by the international community and domestic development organizations–in Dr. King’s time they were pioneering concepts. Dr. King understood the difficulty of claiming rights, which involves mobilizing an oppressed group to overcome vested interests, power asymmetries, and collective action problems which sustain these human rights violations.

Furthermore, Dr. King understood the role an accountable and effective democratic government plays in upholding human rights obligations–as evidenced by the location of this historic rally. An effective democracy creates an enabling environment for people to claim their rights, which is one of the main reasons that democracy and human rights are so closely related. However, this enabling environment is only the beginning of the determination and thick-skin needed to make meaningful advances in human rights.

There is no doubt in my mind that, had Dr. King not been assassinated, he would have continued his work both for civil rights specifically and human rights more generally. Dr. King would have undoubtedly endorsed UN Human Rights Treaties enshrining the rights to development and employment, as well as other economic, social, cultural, civil and political rights. As a man, Dr. King died to young; as a symbol he will live forever–I hope in some small way I am helping to further the work of this great American hero.

I would like use this blog as anopportunity to reflect on two themes I have noticed in my time as a student of the political economy of development, as a human rights worker for the UNDP, and as a generally informed global citizen:

1) You’ve got to fight for your rights:

A play on a popular Beastie Boys Song, but the message is 100% true. When I think of advances in human rights in America (the civil rights movement, the women’s suffrage movement, the gay rights movement), they all have in common a struggle to mobilize people to claim their rights. Furthermore, sacrifices must be made–Dr. King made the ultimate sacrifice for his cause. Progress will not be linear or fast, but through hard work over time meaningful progress can be made.

2) The dehumanization of minorities:

We live in the “age of human rights”. A quick historic overview: the concept of human rights in international governance and development took root in the aftermath of WWII. However, it was not until the end of the Cold War that the opportunity to champion human rights globally presented itself. Since that point, the UN and other similar government and non-governmental organizations have taken up this call. This summer, as an intern with the UNDP democratic governance group’s human rights team, I had the opportunity to participate in an event commemorating the 20th anniversary of the Vienna Declaration and
Programme of Action
, which commemorated advances in human rights and mapped out future opportunities in human rights advocacy.

This “age of human rights” does not mean that human rights violations no longer occur. If anything, advances in ICTs and social media have exposed the extent to which human rights violations take place, particularly in least developed / authoritarian countries. Here at NN, I have written extensively on how human rights violations are at the heart of the majority of armed conflicts today; it is worth mentioning that development goals are rarely sustained in a conflict-affected country.

In this day and age, human rights violators justify their actions by dehumanizing the people whose rights are being violated. In Egypt and Syria, opposition groups are deemed terrorists by those in power. Just as media independence is a feature of a pluralistic democratic society, controls on media outlets–combined with propaganda campaigns–aim to drive home dehumanization in order to justify virtually any human rights violation (including murder). Racism, stereotyping and scapegoating can reinforce dehumanization campaigns.

We see dehumanization take place most often in the name of religion or “traditional values”. Any governing document, be it the Constitution of the United States, the Koran, or the Bible, interpreted too strictly, can be used to justify human rights violations; extremists may argue that if you do not subscribe to their beliefs, then you are less than human and do not deserve basic rights.

Governing documents are meant to be living, amenable to the context of the times. They are amended and reinterpreted to reflect changing societal norms; religion tends to be less adaptive, perhaps explaining part of the decline in religious observance in America. Islam’s  inability to reinterpret itself for modern times is a root cause of Islamic extremism.

I too have a dream, or a normative vision, for the world. This vision depends on greater investments in human rights education and human capital at a young age, recognizing youth as an extremely important period of personal development. It depends on an understanding of the importance of sustainable human development and both domestic and extra-territorial human rights obligations. Sustainable human development cannot take place to the detriment of future generations or at the expense of the world’s most vulnerable people.

Anybody can do their part to help realize this normative vision; challenge anybody trying to sell a strict interpretation of any ideology and / or trying to dehumanize any group with stereotypes / racism. The vast (silent) majority of the global community wants peace and prosperity for all–together we can overcome this global collective action problem in the years and decades to come.


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Transparency Report: Notification, You Have 5 Billion New FB Friends; The Human Right To Internet Access

At the beginning of my internship at the UNDP, I was lucky enough to get the chance to volunteer at and then attend the ECOSOC Partnerships forum. I was assigned to write a few blogs for the event, among a number of other blogs I have written about events at  the UN which for some reason I have never shared on NN. Perhaps someday I will release the rest of the “lost UNDP blogs”, but that day is not today. Here are notes from the event Policy Dialogue: “The Changing Face of Technology and Innovation” (full blog):

The second policy dialogue at the ECOSOC youth forum focused on how technological innovations in recent years have helped bridge the “digital-divide” between developed and developing countries. While the gap has not been fully closed, partnerships between the private sector, governments, non-governmental organizations and civil society groups have helped identify challenges and opportunities in the developing world. By creating differentiated products at lower costs, private companies can gain access to new markets while simultaneously empowering the people in those markets.

Internet access is considered one of the great technological advances of our time. Internet access empowers people; the possibilities are constantly evolving and literally endless. It is an essential component of “E-Governance”, which includes the dissemination of information and a more inclusive and democratic government agenda-setting process. With a greater push for accountability and inclusiveness mechanisms in the Post-2015 Development Agenda, internet access, bolstered by innovations in mobile technology, has become an increasingly important tool for achieving sustainable human development.

But not enough has been done to make internet access affordable for a large portion of the world’s population. According to Mr. Tuli, 3 billion people have mobile phones but no internet access. This is not because of a lack of electricity or communication networks (as evidenced by the fact that they do have cell phones), but because they are priced out of the market. Mr. Tuli went on to call basic internet access a “human right”, to resounding applause from the hundreds of participants in the ECOSOC chamber.

While mobile technology was originally thought of as an educational tool, it has since evolved beyond that (although mobile education is still a proposed root for overcoming education deficits in Least Developed Countries (LDCs)). E-Governance can help disseminate information and promote inclusive governance, creating an enabling environment for sustainable human development. Healthcare providers can connect to information and expert advice in ways that can save lives. E-Finance can help provide capital in a much cheaper and convenient way to previously isolated groups, unlocking the entrepreneurial spirit in the developing world (and making such endeavors potentially much more profitable). Even people who are off traditional power grids (the least developed places in the world without basic infrastructure), mobile renewable energy generators and wireless internet capabilities can help bring ICTs virtually anywhere in the world.

Mobile technology penetration can be very rapid. Competition between private sector actors can drive prices down to affordable levels, and in some cases subsidies can help. Mr. Ogutu told the story of mobile phone penetration in Kenya; 5 years ago there were 20,000 users, today there are over 30 million users. This was made possible by M-Kopa, a company that utilized E-finance to provide pay-as-you-go mobile solar powered electricity to poor people who are not on a conventional power grid. Financing—secured through PPPs—allowed the founders of M-Kopa turn their vision into reality.

The narrative on bringing internet access to the least developed areas of the world continues a few months later. Not surprisingly, behind the initiative is a large-scale public-private partnership, with publicity magnet Facebook at its core (original article):

Mark Zuckerberg, chief executive of Facebook, announced the launch of Internet.org Wednesday, a project aimed at bringing Internet access to the 5 billion people around the world who can’t afford it. The project is the latest initiative led by global-communications giants to combat market saturation in the developed world by introducing the Internet to remote and underprivileged communities.

“The goal of Internet.org is to make Internet access available to the two-thirds of the world who are not yet connected and to bring the same opportunities to everyone that the connected third of the world has today,” Zuckerberg said.

“There are huge barriers in developing countries to connecting and joining the knowledge economy,” he added. “Internet.org brings together a global partnership that will work to overcome these challenges.”

The project will develop lower-cost, higher-quality smartphones and deploy Internet access in underserved communities, while reducing the amount of data required to surf the Web. Other founding partners include Samsung, Qualcomm, Ericsson, MediaTek, Nokia and Opera.

Facebook and other tech giants, of course, have a significant financial stake in expanding in the developing world. With tech companies reaching market saturation in the United States, countries in Latin America and Africa, for example, offer a big opportunity to attract a steady stream of new users, whose data can be mined by advertisers.

Connecting more people globally has important implications for how people organize their lives, said Patrick Meier, co-founder of the Harvard Humanitarian Initiative’s program on Crisis Mapping and Early Warning. Social media has become a lifeline to people affected by earthquakes, floods and conflicts in the developing world, he added.

In places where the state is limited, Meier added, the Internet becomes a way to make up for services the government fails to provide. “When the state is not there, when you talk about limited statehood, you get a void,” he said.

In addition to acting as a substitute for the state in the context of “bad governance” / conflict / crisis environments, mobile technology should be a tool utilized by the state to promote inclusive and indiscriminate human rights based governance for sustainable human development. ICT connects people, enabling social accountability (people claiming their rights) by overcoming collective action problems. There are also myriad standard of living benefits associated with bringing ICT in the developing world–micro-financing, healthcare, education, media, etc. (OK maybe I am a little biased, I want those 5 billion readers too 😛 ).

Furthermore, by utilizing open-source technology and the collective will and creativity of 5 billion people facing similar problems, innovations in one part of the developing world can be adapted to the local needs of other developing regions. This would further expedite the global development process–open-source technology should be a core feature of the global internet connectivity push.

The possibilities are literally endless, as the utility and functions of the internet continue to evolve at ever faster rates. It should also be noted that new technological capabilities in LDCs will necessitate new policies, laws and oversight mechanisms to ensure gains are shared fairly. However, since these technologies are only new to certain regions, digital accountability mechanisms already exist for these regions to build on.   

I cannot stress enough how important bringing mobile ICTs to least developed countries is for sustainable human development, nor can I know how the technology will evolve in the future. Providing access to mobile information and communications technology empowers people, creating an enabling environment for a multitude of interrelated development objectives. These positive forces will naturally synergize, empowering people to challenge power-imbalances and hold powerful groups accountable for their human rights obligations.

ICTs are a natural fit for a large scale public-private-partnership (PPP). Companies can provide most of the start-up capital and technical know-how. Governments can create an education campaign about the benefits of ICTs and how to use them, while also guaranteeing companies market access and security of any capital / infrastructure installations (extremist groups will not like this idea as closing government service gaps will restrict their ability to buy goodwill and recruit new members). As ICTs help sustain the development process, new markets will emerge for communications companies to sell their products and services. This means more profits for companies, more tax revenue for governments, and a higher standard of living for people in LDCs. Not to suggest vested interests will not try to play spoiler (my regular readers by now know this is not the case), but overall a this is a win-win-win partnership.

Due to the indisputable importance of ICTs for sustainable human development, internet access should become an internationally recognized human right. Human rights obligations are primarily the responsibility of the state; in this case however, it seems that states have a willing and capable partner in the private sector. I will continue to keep the NN community up-to-date on this potentially-world-changing initiative.