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Introduction
Resource nationalism is characterised by the tendency
for states to take (or seek to take) direct and
increasing control of economic activity in natu
ral resource sectors. Practitioners of resource
nationalism can be found in countries from Russia to Venezuela and Guinea and many in between.
Increasingly, resource nationalism encompasses not only producer countries but also a variety of
approaches adopted by consuming countries seeking to increase their access to natural resources in
other countries. Additionally, worries about the st
rategies behind investments by sovereign wealth
funds that are built on natural resource revenues ar
e giving rise to defensive reactions from some
investment target countries. These may mark the emergence of a third kind of ëresource
nationalismí that is only indirectly linked to the
exploitation of natural re
sources (and the revenues
generated by them) elsewhere.
Traditionally understood as an effect of upward commodity price curves, or a symptom of
developing country backlash against former coloni
al masters, todayís resource nationalism seems
surprisingly resistant to the commodity pric
e collapse of the second half of 2008.
In reality, as this paper shows, resource nationalism
is driven by a far more complex and varied set of
factors than price alone. Todayís resource nationalism, unlike that of the 1970s, needs to be
understood in the context of global concern for resource security, climate change, sustainable
development and poverty reduction. All are inter
‐
related.
The aim of this paper is to place sustainable development at the centre of an analysis of resource
nationalism. This is not a subject that has been explored in any detail to date, and as such this paper
simply offers a primer on some of the key issues
in the relationship betw
een resource nationalism
and sustainable development, and areas for further analysis.
The underlying idea of sustainable development is as resonant today as when it was first
encapsulated in the report of
the World Commission on Environment and Development in 1987.
Then, sustainable development was described as: ì
Development that meets the needs of the present
without compromising the ability of
future generations to meet their own needs. It contains within it
two key concepts: the concept of 'needs', in partic
ular the essential needs of the world's poor, to
which overriding priority should be given; and the idea of limitations imposed by the state of
technology and social organizations on the environm
ent's ability to meet present and future needs.
"
1
Many obstacles continue to hamper efforts to purs
ue sustainable development. Four in particular
stand out:
•
Dominant economic grow
th models. Too often it is thes
e models which are considered
inviolable, not peoplesí rights and welfare, or environmental processes and limits
•
Environmental costs and benefits of human activity are ëexternalisedí (i.e. the environmental
impacts of transactions of various kinds are no
t reflected in market prices, so they tend not
to be taken account of in decision
‐
making)
•
Poor people are marginalized, and inequities entrenched
•
Governance regimes are inadequately designed in terms of internalising environmental
factors, ironing out social inequities, and developing better economic models.
2
Resource nationalism can be variously a symptom, a cause and a result of each of these obstacles to
sustainable development. A key question then is this: what contributions, positive and negative, do
various kinds of resource nationalism make to sustainable development? There are difficult framing
issues involved in answering this question; both be
cause resource nationalism is difficult clearly to
define, and because unlike foreign direct investment or
privatisation, it has not yet been assessed in
terms of its impacts on sustainable development.
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Resource nationalism can be found in a variety of
natural resource sectors, including food and
agriculture, fisheries, mining and minerals and oil and gas. However, the current visibility of energy
security and climate change considerations on the global stage has meant that it is the oil and gas
sector that dominates much contemporary analysis of resource nationalism. In this paper, the
detailed investigation needed effectively to ana
lyse resource nationalism across all the sectors
where it has been practised is beyond the scope of the paper ñ oil and gas dominates in this paper
too ñ but where possible examples are drawn from a wider range of sectors.
The paper positions resource nationalism in its con
temporary global context. It highlights a range of
definitional approaches to resource nationalism and their pluses and minuses in terms of
ësustainable development policy analysisí, and the range of motivations for resource nationalism.
Throughout, avenues for further exploration are high
lighted, as well as a number of conceptual and
practical implications of efforts to assess the
sustainable development implications of resource
nationalism.
Resource nationalism as the flip
side of ëresource privatismí
Resource privatism
Resource nationalism and economic liberalisation are uneasy bedfellows. So it is helpful to explore
some of the ways in which resource nationalism is linked to other kinds of backlash against
economic liberalisati
on ñ including critiques of the perceived power of multinational corporations in
the global economy. For these pu
rposes, resource nationalism can usefully be positioned as a
counterpoint to what might usefully be termed ëresource privatismí.
3
Resource nationalism lies at
the opposite end of a ëhost state influence vers
us investor influenceí spectrum to ëresource
privatismí.
Multinational corporations and non
‐
governmental organisations that work on corporate and
corporate accountability are familiar with the accusation that businesses exercise behind the scenes
political influence in order to secure the best
investment deals for themselves. Sometimes these
accusations acquire precision beyond conjecture,
for example when they
are mirrored in Foreign
Corrupt Practices Act proceedings in the United States which uncover corrupt payments from
companies working in the natural resources sector to officials (see
Box 1
below for an example).
Almost all analysts would agree that transactions based on these kinds of underhand tactics not only
deprive countries of legitimate revenues, but
that they also harm equitable development and
threaten to unseat companies that play fair in their efforts to win long
‐
term investment projects.
In natural resources sectors, ëresource privatismí might be coined as a shortcut for describing a
situation in which the interests of private enterp
rises so dominate negotiations with host country
governments over access to or management of na
tural resources, or the
way in which deals are
done, that the public interest of the nation endowe
d with the resources is squeezed into a corner.
ëResource privatismí, defined in this way, is closely linked to another kind of abuse of power; when
companies use their economic might in untransparent ways to secure political goals that are aligned
with their commercial interests
or to destabilise democratic processes. Among the most extreme
examples of this kind of ëprivatismí, since it involv
ed both lack of transparen
cy and opposition to the
outcomes of a democratic process (though not a natu
ral resource sector), were allegations that US
conglomerate ITT Corporation had provided financial support for opponents of Salvador Allendeís
socialist government in the period le
ading to the military coup of 1973.
In the 1970s, concerns about corporate abuses of their economic power fed into broader developing
country calls for a ëNew International Economic Orderí. The New International Economic Order
(NIEO) was an idea promoted by post
‐
colonial newly independent states and developing countries. It
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was also reflected in a number of internationally agreed (though controversial) United Nations
documents adopted during the 1970s. Essentially,
the NIEO reflected a set of economic policy
concerns and approaches held in common by a number of developing countries, many of which
faced considerable ongoing economic influenc
e from their former colonial masters.
The overall dynamics of the NIEO debate were characterised by a positional North
‐
South dividing
line on economic development concerns related to issues such as commodities trade, debt,
industrial development and technology transfer. Rather than interdependent cooperation among
nations, a key priority was enshrining the right to the full and independent expression of territorial
sovereignty. So too was the right of developing countries to control fully the activities of
multinational corporations in their territories.
These underlying NIEO era concerns about corporate abuse of power resonate in contemporary civil
society demands that companies ñ particularly la
rge multinational corporations ñ be transparent
about their lobbying.
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Resource nationalism
This paper centres not on ëresource privatismí bu
t on the other end of the spectrum of investor
versus host country influence: ëresource nationalis
mí. Like resource privatism, resource nationalism
is often associated with accusations and complaints
of foul play. Here though, the central accusation
is that the governments of natural resource
‐
rich countries insist on governing natural resources, or
doing deals, in a way that places national interests ñ or national political interests ñ significantly
Box 1: ëResource privatismí in action: Baker Hughes Services International in Kazakhstan
In April 2007, the US Securiti
es and Exchange Commiss
ion (SEC) filed a ësettled actioní against
Baker Hughes Incorporated, a major contractor pr
oviding oil products an
d equipment worldwide.
The SECís civil charges were laid in connection with allegations of major bribery and kickback
payments (involving some $5.2 mln). In parallel, the US Department of Justice filed criminal
charges against Baker Hughes Incorporated and a Kazakhstan
‐
based subsidiary on grounds of
violating the Foreign Corrupt Practices Act in relation to activities in Kazakhstan.
In one case an agent retained
to influence officials of state
‐
owned oil companies was allegedly
paid a total of $4.1 mln in order to ensure secu
ring contracts for provision of services to the
Karachaganak consortium in Kazakhstan after a major tender process had closed. The approval of
the state oil company, Kazakhoil, was sought by
the consortium at various stages of the tender
process for the award of a very substantial oil serv
ices drilling contract. Af
ter retaining the agent,
Baker Hughes was awarded an oil services contract worth $219.9 mln in gross revenues over the
period 2001
‐
6. In a second set of facts in the SEC case, the SEC alleged that from 1998
‐
1999
payments to an agent of nearly $1.1mln were made ëat the direction of a high
‐
ranking executive of
KazTransOil.
In the SEC case, Baker Hughes agreed to disgorge a total of $23 million ëill
‐
gotten gainsí, in any
event without admitting or denying allegations in
the complaint. In the criminal FCPA case, the
company pleaded guilty and paid $11 mln in criminal fines, whilst agreeing to retain a monitor to
review and assess the companyís compliance and implementation program in accordance with
new internal policies.
Sources:
http://www.sec.gov/litigation/
litreleases/2007/lr20094.htm
http://www.reuters.com/article/governmentFi
lingsNews/idUSN2728075120070827?pageNumber
=2
,
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above established good practice norms for doing business with investors in a partially liberalised
global economy.
In this paper, the initial analytical scope of ëresource nationalismí is drawn by observable, publicly
accessible suggestions that this term is relevant
in understanding a particular government action. In
this sense, it is self
‐
defining, though the paper also offers
thoughts on definitional issues.
In contrast to ëresource privatismí, the principal
complainants in cases of ëresource nationalismí tend
to be foreign investors or consuming countries, not
ideologues or civil society campaigners. Typically
resource nationalism has been analyzed, almost always critically, from an economic or investor
perspective. To borrow from Andreas Pi
ckelís analysis of economic nationalism,
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ì
neoliberal
discourse treats economic nationalism as a pernicious doctrine, and its proponents as the political
enemy
ì. Serious analysis in favour of enhanced ër
esource nationalismí is
thin on the ground ñ
perhaps because at national level such analysis might tend instead to be couched in terms of
ënationalismí plain and simple.
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Three resource nationalisms
It is perhaps helpful to think of three distinct
resource nationalisms: the
resource nationalism of
producer countries (which is the focus of the bulk of the analysis in this paper ñ in which producer
countries increase control of economic activity in
their natural resource sectors); consumer country
resource nationalism (in which consumer countries seek to gain greater control or increased access
to natural resources in other countries), and a relatively new form of ëresource nationalismí, namely
the nationalism of investment target countries wh
ose territories are a target for investment by
sovereign wealth funds derived from natural resource
revenues. Each is cons
idered briefly in turn
below. In practice, producer country resource na
tionalism has tended to be more widely analysed
than the resource nationalism practices of cons
umer countries or (mor
e recently) the ëtarget
countriesí of natural resource
‐
derived sovereign wealth funds.
Producer country resource nationalism
Much of this report focuses on producer country
resource nationalism. This introductory section is
intended to show the breadth of the policy
tools associated with the phenomenon.
The most far
‐
reaching instances of ëresource nationalismí such as Bolivia or Venezuelaís partial
ënationalisationsí of their oil and gas sectors, mining contract renegotiation in the Democratic
Republic of Congo, or Shellís forced
sale of its stake in the Sakhalin
‐
II project are widely reported in
the mainstream press. But there are many more exampl
es of policy initiatives or tools that might be
dubbed ëresource nationalismí around the world. It is important that extremes do not define
approaches or policy responses to what is in real
ity a relatively every day phenomenon. The tools of
producer country resource nationalism are extremely wide
‐
ranging. A brief run
‐
down of some of the
available tools shows how diverse the range of approaches has been:
•
renegotiation or cancellation of existing natu
ral resource contracts (as in the Democratic
Republic of Congo or Guinea (see
Boxes 10
and
18
below));
•
rejection of particular kinds of governance frameworks (such as production sharing
contracts) considered less favourable to producer countries (as in Russia, Kazakhstan and
popular sentiment in Iraq)
•
nationalisation (as in Bolivia (see
Box 19
below) and Venezuela);
•
outright prohibition on international oil company production (Saudi Arabia) or increasingly
stringent demands for national shares in natural resource joint ventures (as in Kazakhstan,
Algeria or Russia) or for regulatory scrutiny and prior approval of commercial disposals or
acquisitions in the natural resource sectors (as in Kazakhstan);
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