Normative Narratives


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The Evolution of the Post-WWII International Order

As representatives from the IMF, World Bank, and the G20 converged on Washington last week, there was a sense that America may be losing its position as the main guarantor of international order:

As world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concern is rising in many quarters that the United States is retreating from global economic leadership just when it is needed most.

Washington’s retreat is not so much by intent, Mr. Subramanian said, but a result of dysfunction and a lack of resources to project economic power the way it once did. Because of tight budgets and competing financial demands, the United States is less able to maintain its economic power, and because of political infighting, it has been unable to formally share it either.

Other experts and historians, however, say too much can be made of the moment. Walter Russell Mead, a professor of foreign affairs at Bard College, noted that the rise of China as an economic force was inevitable, and that its establishment of a rival lending institution was far different from the international behavior of the Soviet Union and communist Chinese during the Cold War.

Then, he said, America’s rivals were trying to destroy and replace the economic order established by the United States and Britain after World War II. Now, emerging powers are emulating it, however imperfectly.

Sure other countries have risen in prominence since America stood as the lone super-power after the Cold War, but has this really resulted in America’s decline? I would argue that building up strong allies to help promote America’s vision of international order–one based on democracy, human rights, economic and defensive interdependence, and more recently environmentally sustainable economic development–was exactly why the U.S. took the lead in setting up the United Nations and the Brenton Woods Institutions (the World Bank, IMF, and GATT).

Therefore, in assessing America’s influence over international order, we should consider how these institutions have evolved. While they were all conceived with the best of intentions, good intentions do not always lead to good outcomes. Have these institutions been able to learn from their mistakes and make meaningful contributions to maintaining international order? Lets consider them on a case by case basis:

The International Monetary Fund (IMF):

The IMF was originally conceived to promote currency stability and help countries overcome short-term balance of payments issues. But as technological advances made the world smaller, the IMF took on a much larger mandate, and began extending loans to help developing countries modernize. The so called “Washington Consensus” linked development loans to “ex-post” (after the fact) conditions such as hitting fiscal targets (reducing the size of government) and liberalizing trade.

While these policies by and large do promote growth in already developed countries, they ignored the historic lessons of the world’s developed countries. Every advanced country relied on some degree of protectionism to cultivate its own industries and government spending to build both physical infrastructure and a skilled workforce as it modernized.

The “Washington Consensus” programs did not allow for policy space based on the historical experiences and current realities in the countries they intended to help. As I have often written, economics–particularly development economics–is highly context-sensitive; the “Washington Consensus” was simply to rigid and narrow-sighted to work.

The “Washington Consensus” was a consensus failure, and left many countries worse off than before they accepted this “help” (see “the lost decade” in Latin America). Thankfully the IMF abandoned this flawed set of policies.

The failure of the Washington Consensus led to IMF to reconsider how it does business–the “conditionality” attached to its loans. Instead of relying on a rigid set of targets a country must meet in order to continue to receive support, the IMF now focuses on pre-set “ex ante” conditionality. If a country has a sound macroeconomic position, it can tap into IMF financing while maintaining the policy space needed to address the needs of its citizens (and ultimately maintain its legitimacy).

The IMF will have to deal with the specter of the Washington Consensus for some time, but going forward it has evolved in meaningful ways.

The World Trade Organization (WTO):

The General Agreement on Tariffs and Trade (GATT) officially became the World Trade Organization (WTO) in 1995. The WTO sets rules for global trade and provides a forum for airing grievances. With membership covering 96.4% of global trade and 96.7% of global GDP, the WTO is unquestionably an important institution.

Critics often argue the WTO is ineffective, but any organization whose stated goal is the resolve international trade disputes is by definition going to be contentious. I would argue that the WTO has helped keep trade disputes trade disputes, and that without it many of these disputes could have ended in armed conflict.

In recent years, international trade news has been dominated by two proposed regional agreements, the trans-pacific partnership (TPP) between the U.S. and Asian economies, and the trans-atlantic trade and investment partnership (TTIP) between the U.S. and Europe.

There is no consensus as to whether regional free trade agreements (FTA) such as these undermine the global free trade movement, or if they are building blocks towards this goal. But one thing is for certain–free trade agreements create winners and losers. The winners tend to be the wealthy who are positioned to benefit from greater market access; the losers tend to be wage earners.

In the context of political dysfunction and simmering class-warfare in America and beyond, it is necessary that policies to transfer some of the gains from the “winners” to protect the “losers” of any FTA are baked into the agreements themselves. The ability of governments to address the inequality and environmental impacts of any FTA will greatly affect its historical legacy.

The United Nations (UN):

The United Nations is arguably the most important of the international institutions. In addition to providing a forum for countries to address one another, the UN also serves a global policy adviser, giving it the strongest normative mandate of any of these organizations.

The Millennium Development Goals (MDGs) are 8 specific goals whose intent is to guide the trajectory of the developing world. The successes of these goals has been uneven–some countries have a great record, while others not so much. As these goals are set to expire at the end of 2015, they are commonly viewed as beneficial but imperfect. Their successors, the Post-2015 Sustainable Development Goals (SDGs), aim to build on their successes while learning from their short-comings.

There are a number of ways the SDGs deviate from the MDGs. For one, they are much more inclusive and consultative. Seen as being drafted behind closed doors by the global elite, the MDGs were hampered from the start. Conversely, the SDGs are being drafted with input from numerous thematic and national consultations with the very people they are intended to benefit.

There is also greater emphasis on the roles of various stakeholders (governments, private sector, NGOs, civil society, and international organizations) with regards to both financing the agenda and being accountable for their operations in the developing world. “Who Will Be Accountable?” highlights these common but differentiated responsibilities, providing general guidelines for holding those who violate the SDGs accountable.

Between the launch of the Post-2015 Development Agenda (the SDGs) and the 2015 UN Climate Conference in Paris (which is expected to result in the first universal global climate treaty), 2015 will prove to be a pivotal year for sustainable human development initiatives.

One area the U.N. has not reformed sufficiently is in promoting global security. Given that security is a necessary precondition for sustainable human development, the significance of this shortcoming cannot be understated.

Nowhere has this problem been more acute than in the Middle East, where armed conflict has left 1 in 4 children out of school, led to immeasurable economic, physical, and psychological damage, and has completely overwhelmed the international humanitarian assistance network. The inability to protect children is especially alarming, as it plants the seeds for future conflicts.

The United Nations needs to respond more decisively against regimes that commit gross human rights violations. The concept of national sovereignty is meant to protect a country from outside invasion, not act as a shield for human rights abusers.

The Responsibility to Protect (R2P) was supposed to put peoples rights before national sovereignty, but it has proven to lack the teeth needed to provide meaningful protection. The need is clear, as I have called for in the past, for the UN General Assembly to have a mechanism for overruling UN Security Council vetoes. Such a reform would give the R2P the power it needs to fulfill its important mandate to prevent / end gross human rights violations.

The World Bank Group (WB):

The World Bank Group is responsible for financing development projects in the developing world. While its existence has been a “net benefit” for developing countries, the World Bank has had issues enforcing “good governance” standards on its projects, often resulting in adverse consequences for the worlds most vulnerable people:

The World Bank regularly fails to enforce its own rules protecting people in the path of the projects it bankrolls, with devastating consequences for some of the poorest and most vulnerable people on the planet, a new investigation by the International Consortium of Investigative Journalists, The Huffington Post and more than 20 other media partners have found.

The investigation’s key findings include:

  • Over the last decade, projects funded by the World Bank have physically or economically displaced an estimated 3.4 million people, forcing them from their homes, taking their land or damaging their livelihoods.
  • The World Bank has regularly failed to live up to its own policies for protecting people harmed by projects it finances.
  • The World Bank and its private-sector lending arm, the International Finance Corp., have financed governments and companies accused of human rights violations such as rape, murder and torture. In some cases the lenders have continued to bankroll these borrowers after evidence of abuses emerged.
  • Ethiopian authorities diverted millions of dollars from a World Bank-supported project to fund a violent campaign of mass evictions, according to former officials who carried out the forced resettlement program.
  • From 2009 to 2013, World Bank Group lenders pumped $50 billion into projects graded the highest risk for “irreversible or unprecedented” social or environmental impacts — more than twice as much as the previous five-year span.

Days after ICIJ informed the World Bank that the team’s investigation had found “systemic gaps” in the bank’s enforcement of its “social safeguard” rules, World Bank Group President Jim Yong Kim acknowledged “major problems” with the bank’s resettlement policies and vowed to seek reforms.

Being a “net benefit” for the developing world is not a high enough standard for the World Bank, it must adopt a “do no harm” principle in all its projects. To achieve this goal, the World Bank should emulate the UN in consulting with those who will be affected by their projects.

The World Bank has an important role to play in promoting the SDGs, but first it must get its own house in order.

Some may point to the recent rise of parallel international organizations such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) as further signs of the deterioration of an American led international order. Indeed, there are serious governance questions these institutions must address, lest they be counter-productive in the pursuits of promoting peace and eradicating extreme poverty.

It would be most constructive to have the UN promote these values (accountability, good governance, etc.) to emerging international institutions, not the US. The UN has international legitimacy; the same message coming from the UN would likely be much more well received.

US-centric international organizations are free to work with these parallel institutions or not, and their positions can evolve as these new institutions reveal their values through their actions. But as professor Walter Mead aptly points out, these institutions are not challenging America’s Post WWII vision of international order, they are doubling-down on it. As the saying goes, imitation is the greatest form of flattery.

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Transparency Report: Anti-Corruption Movements and Populism

World Bank President Dr. Jim Yong Kim called corruption “Public Enemy Number One“:

“In the developing world, corruption is public enemy number one,” said Kim, speaking at an event hosted by the World Bank’s anti-corruption investigative arm, the Integrity Vice Presidency. “We will never tolerate corruption, and I pledge to do all in our power to build upon our strong fight against it.”

“Every dollar that a corrupt official or a corrupt business person puts in their pocket is a dollar stolen from a pregnant woman who needs health care; or from a girl or a boy who deserves an education; or from communities that need water, roads, and schools. Every dollar is critical if we are to reach our goals to end extreme poverty by 2030 and to boost shared prosperity.”

An important step toward fighting corruption and helping more people lead better lives is to build institutions with greater integrity, Kim noted.  He described three key elements in the World Bank Group’s approach:

“First, we need to improve the way we share and apply knowledge about building institutions with greater integrity; second, we need to empower citizens with information and tools to make their governments more effective and accountable; and third, we need to build a global movement to prevail over corruption.”

In addition to governmental action in anti-corruption, Kim called on other partners to join the fight, including the private sector. 

“The private sector has to be part of the solution as well. Oil, gas, and mining firms are increasingly disclosing their contracts with governments. This gives everyone a chance to scrutinize the behavior of corporate and public officials.”

This transparency and accountability approach to development marks a stark contrast from the World Bank of 1990s. The IMF has recently also taken a more context-sensitive approach compared to “Washington Consensus” policies of the 1990s. This trend points to greater policy coherence between the World Bank, the IMF, and the U.N. as the Post-2015 development agenda is finalized.

These organizations have fully embraced the importance of the political economy of development. Without considering “good governance”, economic gains can be embezzled or misused. Corruption retards growth, increases inequalities, and causes grievances which can boil over civil if not regional conflicts. Economic growth and poverty reduction cannot be achieved on a large scale without considering political factors.

Ultimately, there are limits to even what global organizations can accomplish. To sustain social progress, people must be able to hold “duty bearers” (generally governments, but also private sector actors and social service providers) accountable for their human rights obligations. The role of international organizations and governments is mainly an empowering / enabling one–provide access to information, advocate for avenues / institutions to meaningfully voice grievances, and let people-power do the rest.

The anti-corruption push has recently taken hold in a number of countries. Below are a few notable examples:

India:

“Today, the common man has won,” Kejriwal said in a triumphant speech at Delhi’s Ramlila grounds, the very place were huge protests over corruption erupted in 2011, opening the way for the birth of the AAP.

“This truly feels like a miracle. Two years ago, we couldn’t have imagined such a revolution would happen in this country.”

In a December 4 election to the legislative assembly of Delhi, a city of 16 million people, no party won the majority of seats required to rule on its own.

Wearing a simple blue sweater and with a boat-shaped Gandhi cap on his head, Kejriwal pledged to set up an anti-bribery helpline.

“If anyone in the government asks you for a bribe, don’t say ‘no’,” he said. “You report it on the phone number and we’ll catch every bribe-taker red-handed.”

 Kejriwal, who has tapped into a vein of urban anger over the venality of the political class and the neglect of citizens’ rights in the world’s largest democracy, has promised to expand his movement across the country.

Along with a pledge to send Delhi’s corrupt lawmakers to jail, the AAP has also promised free water for every family in the capital and a sharp reduction in their electricity bills.

business lobby group said on Saturday the unorthodox ideology was not important as long as results were delivered.

“We feel that though the promises made by it may look tall, they can still make a good economic sense if the objective … is achieved by bringing in operational efficiencies,” Rana Kapoor, president the Associated Chambers of Commerce and Industry of India, said in a statement.

Turkey:

The allegations of high-level corruption threaten to undo Mr. Erdogan’s accomplishment of wresting Turkish politics from the military and overseeing a long period of economic growth. Like a Moses in the wilderness, he has led his people from one sort of bondage but appears unable to deliver them to a promised land of transparent government where people are ruled through consensus rather than bullying and threats.

Mr. Erdogan does not know how to play defense. Last weekend, he addressed rally after rally and cursed the “international groups” and “dark alliances” trying to undermine Turkey’s prestige.

The government is treating the crisis as nothing short of a coup by those jealous of its success. This is nonsense.

The opposition it faces has emerged because of the A.K.P’s own lack of respect for the rule of law and a cynical disregard for public accountability. It can no longer hide behind conspiracy theories and bluster.

Indonesia:

Since its establishment in 2002, the KPK (Corruption Eradication Commission) has become, contrary to all expectations, a fiercely independent, resilient, popular and successful institution that is a constant thorn in the side of Indonesia’s establishment.

[In 2009] police arrested two KPK commissioners for extortion and bribery. The charges were dropped after nationwide street protests and a Facebook campaign that gathered one million supporters.

“The KPK’s only friend is the public,” says Dadang Trisasongko, secretary general of the Indonesian chapter of global corruption watchdog Transparency International.

The international business community is watching this tussle closely. Executives surveyed in the World Economic Forum’s Global Competitiveness Report 2011-12 said corruption remained “the most problematic factor for doing business” in Indonesia.

The World Bank has said corruption across the world costs $1 trillion. No one has done a thorough study of the costs in Indonesia, the world’s fourth-most populous country and one of the hottest emerging markets with an economic growth rate of 6 percent. The Anti-Corruption Studies Center at Gadjah Mada University in Yogyakarta put the losses to the state at $1 billion over the past five years alone.

Thailand:

Thailand protests are different in the sense that the opposition is arguing for less democracy and less populist economic policies. Opponents of Prime Minister Yingluck’s Pheu Thai party cite corruption as their main grievance.

Populist economic policies, while generally beneficial in the long run, do have a common pitfall of corruption. Populist policies rely on the government signing many contracts for social goods and services. Without proper oversight, these contracts themselves present many opportunities for corruption / embezzlement of tax-payer money.

I do not know if this is what has happened in Thailand, or whether these claims are unfounded (it is worth noting that Thailand does not score well on Transparency International’s “Corruption Perception Index“. Regardless, the Pheu Thai party should consider setting up social accountability mechanisms to allay the fear of corruption.

Anti-corruption measures are themselves populist policies. Enabling people to hold corrupt government officials accountable realizes a key political right. Moving money from corrupt politicians pockets to social services helps fulfill economic and social rights. Therefore, the anti-corruption movement is an indispensable aspect of the human rights based approach to development.

The near universal embrace of anti-corruption measure–from the highest level of global governance to local politicians and their constituents on the ground–bodes well for the Post-2015 development agenda. While much work remains to be done, every anti-corruption / accountability / civilian empowerment policy is a step in the right direction.


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Transparency Report: Thailand’s Anti-Democracy Protests

Original article:

In a world now accustomed to democratic upheavals, including the Arab Spring and the Saffron and Orange Revolutions, the weeks of political upheaval in Thailand stand out for one main peculiarity. Protesters massing on the streets here are demanding less democracy, not more.

From their stage beneath the Democracy Monument, a Bangkok landmark, protesters cheer their campaign to replace Parliament with a “people’s council” in which members are selected from various professions rather than elected by voters.

The embattled prime minister, Yingluck Shinawatra, has proposed new elections as a solution to the turmoil. But that is just what the protesters do not want.

In today’s fractured Thailand, a majority wants more democracy, but a minority, including many rich and powerful people, is petrified by the thought of it.

Because a number of the protest leaders are members of Thailand’s wealthiest families, some have described the demonstrations here as the antithesis of the Occupy Wall Street movement. This is the 1 percent rebelling against the 99 percent, they say.

The reality is more complicated — the protesters include rich and poor, Bangkok residents and many people from southern Thailand who feel disenfranchised by the current government and its northern power base. What unites the protesters is the desire to dismantle Ms. Yingluck’s Pheu Thai Party, which has won every election since 2001.

The anti-democracy protests, which have been some of the largest in Thai history, call into question the commonly held belief that a rising tide of wealth in a society will naturally be followed by greater demands for democracy. Thailand today is much richer than it was two decades ago, but it is also much more divided.

On the face of it, the crux of the protest appears to be a classic power struggle between a dominant majority and a minority frustrated by its losing streak in elections and its inability to influence national policies in a winner-takes-all, highly centralized system.

But Thailand’s crisis is multifaceted and tightly intertwined with the fact that King Bhumibol Adulyadej, the country’s 86-year-old monarch, who during more than six decades on the throne has been revered to the point of quasi-religious devotion, is ailing and that the country is bracing for his death.

More broadly, Somsak Jeamteerasakul, a leading Thai scholar on the monarchy, argues that Thailand’s protracted political turmoil has been exacerbated by the contrast between a deified king and politicians who appear crass and venal in contrast. “We have an image of monarchy that is flawlessly excellent in everything,” he said in 2010. “If we had not built this image in the first place, we would not have so many problems and complaints with politicians.

Respect for the king, and the notion of his near-infallibility and beneficence, are deeply ingrained in Thais from the earliest years of schooling.

This blog is concerning the legitimacy of protests calling for replacing the democratically elected government with an appointed “peoples council”. There are two central tenets of liberal democracy I will base this analysis on:

1) Liberal democracy is meant to uphold the will of the majority, while protecting the rights of the minority.

2) Everyone is viewed as equal in the eyes of the government; no one person has more or less influence over political outcomes than another.

Based on uncontested election results, and the fact that protesters are not satisfied with the proposition of early elections offered by Prime Minister Yingluck Shinawatra, one can assume the protesters represent a minority of Thailand’s population. Based on this article, there is no evidence that the rights of this minority are being infringed upon.

Protesters cannot claim a mismanagement of the economy, as the per capita GNI has more than doubled over the past decade. Thailand’s HDI has been trending upwards for decades, and it’s poverty rates have been going down for years (accompanied by a decline in the Gini inequality index)–the current democratic governance structure surely has some merits.  One particular area of concern is Thailand’s level of perceived corruption / lack of transparency, however a move away from democracy would likely exacerbate this problem.

It seems rather that protesters, unhappy with populist policies that do not directly benefit them, are trying to change the policy making process to one which they can control. Such a move would be a violation of the two tenets of liberal democracy listed above. It would amount to upholding the will of the minority while violating the political rights of the majority. It would also give more power to the desires of select individuals.

To appease the opposition, the government should consider changing its parliament from a “first past the poll” system to a proportional representation system, to ensure a plurality of opinions in policy making. The government should also consider expanding civilian oversight mechanisms, to increase transparency and allay fears of corruption / embezzlement.

To become a more effective political party, the opposition should consider embracing policies which have had success in reducing poverty / inequality while simultaneously increasing economic growth. Such pragmatism is a necessary component for the continued relevance of any political party; in democracies everywhere, parties which do not embrace popular and effective policies tend to fall by the wayside.  

So far, the King and the military have stayed out of this fight, hopefully they will continue to do so and allow the democratic process to fix the unrest it has caused. Thailand should not dismantle its democratic system, which has a long history of effective governance.

 


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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.