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Abstract
Many ‘post-conflict’ countries face difficulties in reaping the full benefits of their natural resource wealth for reconstruction and development purposes. This is a major issue given these countries’ needs and the risk of seeing ‘mismanaged’ primary sectors undermine a transition to peace. Bringing together debates about the ‘inequality-mistrust-corruption’ trap and relationships between natural resources and corruption, this paper suggest that some resource sectors may be more likely to foster inequalities, and thereby increase corruption and distrust, while others are less likely to do so. Reviewing arguments and empirical evidence, I point to the relative importance of transition contexts, stakeholder incentives and resource sector characteristics, and suggest how resource-related corruption may be better understood in relation to trust-building and reconciliation processes.
Acknowledgements
This work was supported by the Social Sciences and Humanities Research Council of Canada.
Notes
1. Uslaner, Corruption, Inequality, and the Rule of Law; and Rothstein, The Quality of Government.
2. Voors et al., “Violent Conflict and Behavior.”
3. Mitchell, Carbon Democracy; and Ross, The Oil Curse.
4. Bryceson et al., Mining and Social Transformation in Africa.
5. Di John, “Is there Really a Resource Curse?”; and Saad-Filho and Weeks, “Curses, Diseases.”
6. Cramer, War is Not a Stupid Thing; and Di John, “Oil Abundance and Violent Political Conflict.”
7. Interview with EU official, Freetown, 2006. See also press release “Titanium Resources Group Draws down Balance of European Union €24.75 million Loan,” January 10, 2006.
8. Based on the World Bank’s ‘Wealth of Nations’ data. These ‘non-renewable resource rents’ do not correspond to the revenues accrued by host governments but to the estimated value of production minus production costs. As such they also include profits by corporations. Countries include: Afghanistan, Algeria, Angola, Azerbaijan, Bosnia and Herzegovina, Burundi, Cambodia, Chad, Colombia, DRC, Congo Republic, Côte D'Ivoire, Croatia, El Salvador, Eritrea, Guatemala, Iraq, Liberia, Mozambique, Burma, Nepal, Nicaragua, Rwanda, Serbia, Sierra Leone, Somalia, Sudan, Timor-Leste and Uganda.
9. Guidolin and La Ferrara, “Diamonds are Forever.” Nevertheless, some companies appear to welcome the arrival of other companies so as to lower the pressure to take bribes from officials. Interview with employee from diamond mining company operating in Angola, London, 2001.
10. Interview by the author with a senior official from a European country during a presidential visit to Angola, 2001. Studies have generally found that most donors do not account for levels of corruption by recipients. See Easterly and Pfutze, “Where does the Money Go?”
11. Acemoglu and Robinson, Economic Origins of Dictatorship and Democracy.
12. Lujala and Rustad, High-value Natural Resources.
13. Campbell, “Revisiting the Reform Process”; Kolstad and Soreide, “Corruption in Natural Resource Management”; and Le Billon, Extractive Sectors and Illicit Financial Flows.
14. Soares de Oliveira, Magnificent and Beggar Land; and Nino and Le Billon, “Foreign Aid.” Electoral support for the mpla nevertheless declined by 10% between 2008 and 2012, while public protests increased.
15. Le Billon, Wars of Plunder.
16. “South Sudan ex-vp Denies Coup Attempt, Labels Kiir ‘Illegal President’,” Sudan Tribune, December 18, 2013; Sidahmed, “Oil and Politics in Sudan,” 103–120; and figures from imf country reports and Ministry of Finance data collected in Juba, July 2012.
17. Letter accessible through http://paanluelwel.com/2012/06/01/letter-from-president-kiir-on-corruption-4-billion-dollars-stolen/.
18. Interview, Jok Madut Jok, co-founder of the Sudd Institute, Juba, May 2012.
19. Watts, “Righteous Oil?”; and Schiavi, “Mining Corporations and ‘Active Trust’.”
20. Taylor, “Environmentalism and Social Protest.”
21. Kolstad and Soreide, “Corruption in Natural Resource Management”; and Cheng and Zaum, “Corruption and the Role of Natural Resources.”
22. Global Witness, Digging in Corruption; Global Witness, New Evidence; Kolstad and Soreide, “Corruption in Natural Resource Management”; and Le Billon, Extractive Sectors and Illicit Financial Flows.
23. Cheng and Zaum, “Corruption and the Role of Natural Resources.”
24. Lujala and Rustad, “A Price Worth Fighting For?”; and Gupta et al., “Does Corruption Affect Income Inequality?”
25. Gillies and Dykstra, “International Campaigns”; Lujala and Rustad, High-value Natural Resources; and Le Billon, Wars of Plunder.
26. Johnston, “The Political Consequences of Corruption.”
27. Fjelde and Hegre, “Political Corruption,” 24.
28. Désiré, “Oil Rents and Tenure of Leaders”; Basedau and Lay, “Resource Curse or Rentier Peace?”; and Fjelde, “Buying Peace?”
29. Neudorfer and Theuerkauf, “Buying War Not Peace,” 22.
30. See Kolstad and Wiig, “Testing the Pearl Hypothesis.” Social trust as estimated by the World Values Survey. www.worldvaluessurvey.org.
31. O’ Higgins, “Corruption, Underdevelopment, and Extractive Resource Industries”; and Kolstad and Soreide, “Corruption in Natural Resource Management.”
32. Leite and Weidmann, “Does Mother Nature Corrupt?”
33. Uslaner, Corruption, Inequality, and the Rule of Law, 177. Petty corruption consists of small payments paid to or demanded by low ranking officials, while grand corruption represents large-scale corrupt practices committed by senior public officials. Others argue ‘it is a mistake to assume that petty corruption is less serious than grand corruption’, notably because its unreliability fosters distrust (and more so than the payment of large predictable bribes which can be ‘expected’, for example by international investors). See Alford, “A Broken Window Theory.” Petty corruption is also often seen as immoral, as in the case of police demanding a bribe to investigate a crime. See Smith, “Critical Dialogue.”
34. Isham et al., “The Varieties of Resource Experience”; Petermann et al., “Mining and Corruption”; Bhattacharyya and Hodler, “Natural Resources”; and Andersen et al., Petro Rents and Hidden Wealth.
35. Petermann et al., “Mining and Corruption.” Oil states had better indicators of control of corruption than non-oil states in 2006.
36. Collier and Hoeffler, “Testing the Neocon Agenda”; and Bulte et al., “Resource Intensity.”
37. Ross, Timber Booms and Institutional Breakdown.
38. Kodi, Corruption and Governance; Le Billon, “Contract Renegotiation and Asset Recovery”; and interview with Chairman of the DRC parliamentary commission, December 2008. See also Chêne, Corruption in the Renegotiation of Mining Contracts.
39. Le Billon, Wars of Plunder.
40. Ibid. The resulting stability can provide local authorities with a stronger bargaining position in their dealings with international resource companies, to a point where the destabilisation of such regimes may be seen as beneficial to foreign corporate interests.
41. Andersen and Ross, “The Big Oil Change.”
42. Brunnschweiler and Bulte, “The Resource Curse Revisited”; and Van der Ploeg and Poelhekke, “The Pungent Smell of ‘Red Herrings’.”
43. Ross, The Oil Curse, 215.
44. Hutchison and Johnson, “Capacity to Trust?”
45. Admundsen, “Drowning in Oil.”
46. Uslaner, Corruption, Inequality, and the Rule of Law, 82.
47. Watts, “Resource Curse?”
48. Ross, “How Mineral-rich States can Reduce Inequality.”
49. Uslaner, “Corruption and Inequality.”
50. Dunning, Crude Democracy.
51. Uslaner, “Corruption and Inequality”; and Rothstein, The Quality of Government.
52. Le Billon, Wars of Plunder.
53. Lujala, “The Spoils of Nature”; and Andersen and Aslaksen, “Oil and Political Survival.”
54. Voors et al., “Violent Conflict and Behavior.”
55. Hutchison and Johnson, “Capacity to Trust?”
56. Binningsbo and Rustad, “Sharing the Wealth,” 547. See also Le Billon and Nicholls, “Ending ‘Resource Wars’.”
57. Bolongaita, Controlling Corruption in Post-conflict Countries; and Cheng and Zaum, “Corruption and the Role of Natural Resources.”
58. Bolongaita, Controlling Corruption in Post-conflict Countries; and Harvey, “What makes Post-conflict Situations?” See also the following opinion polls. For the Balkan region: South East Europe Democracy Support, “South East Europe Public Agenda Survey,” 2002 http://archive.idea.int/balkans/policy_brief_balkans_2.pdf; Nicaragua: ciet International, “National Integrity Survey”, http://www.ciet.org/en/project/nicaragua-national-corruption-survey-1998/; Sierra Leone: World Bank, Governance and Anti-corruption Report, http://siteresources.worldbank.org/INTANTICORRUPTION/Resources/383901-1317672198081/sl_gacreport.pdf; and Cambodia: Song et al., Cambodia Governance and Corruption Diagnostic, http://www.worldbank.org/wbi/governance/capacitybuild/pdf/guide_pdfs/05b-hh_survey.pdf.
59. Cheng and Zaum, “Corruption and the Role of Natural Resources.”
60. Le Billon, “Fueling War or Buying Peace?”; and Cheng and Zaum, “Corruption and the Role of Natural Resources.”
61. Koechlin, Corruption as an Empty Signifier; and Duffield, Global Governance and the New Wars.
62. Cheng and Zaum, “Corruption and the Role of Natural Resources.”
63. Reno, Warlord Politics and African States. Furthermore, many of the donor-driven liberalisation reforms and even anti-corruption initiatives are reported to be implemented to sustain corrupt and patronage practices.
64. Reno, “Anti-corruption Efforts in Liberia,” 387.
65. Gillies, “Fuelling Transparency and Accountability.”
66. Martin and Park, “Global Petroleum Industry Model Contracts Revisited.”
67. Bridge, “Mapping the Bonanza.”
68. Curtis, Sierra Leone at the Crossroads.
69. Personal communication, Centro de Integridade Publica, Maputo, 2013.
70. Muttit, Fuel on Fire. Liberalisation reforms were in large part successfully resisted by Iraqi parliamentarians.
71. Griffiths Energy, “Agreed Statement of Facts,” Court of Queen’s Bench of Alberta, 2013.
72. Le Billon, “Drilling in Deep Water.”
73. Le Billon, “Contract Renegotiation and Asset Recovery.”
74. Global Witness, China and Congo.
75. Lujala and Rustad, “A Price Worth Fighting For?”
76. Arezki and Gylfason, “Resource Rents, Democracy, Corruption and Conflict.”
77. Bodea, Natural Resources, Weak States and Civil War.
78. Basedau and Lay, “Resource Curse or Rentier Peace?” 768–769. Two countries have experienced a civil war beyond the time period covered (1990–2005) – one above that criterion, Libya, and one under that criterion, Syria. See also Ross, The Oil Curse.
79. Bjorvatn and Naghavi, “Rent Seeking and Regime Stability,” 748.
80. Rothstein, The Three Worlds of Governance.
81. Soares de Oliveira, “‘O Governo Esta Aqui’.”
82. Johnston, “The Political Consequences of Corruption.”
83. Uslaner, “Corruption and Inequality.”
84. Ibid., 23
85. Kolstad and Wiig, “Is Transparency the Key?”
86. Carbonnier et al., “Global and Local Policy Responses.”
87. Uslaner, Corruption, Inequality, and the Rule of Law.
88. Le Billon, Extractive Sectors and Illicit Financial Flows.
89. Kolstad and Wiig, “Testing the Pearl Hypothesis.” The World Bank Governance indicator ‘control of corruption’ includes indicators of perceptions of corruption and anti-corruption measures. Uslaner, Corruption, Inequality, and the Rule of Law. High trust could reflect the positive impact of informal institutional barriers to corruption, as well as the disconnection between petty corruption and social trust.
90. Reno, “Anti-corruption Efforts in Liberia.”
91. Hilson and McQuilken, “Four Decades of Support.”
92. Lujala and Rustad, “A Price Worth Fighting For?”