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RESEARCH ARTICLES

Oil Extraction and Benefit Sharing in an Illiberal Context: The Nenets and Komi-Izhemtsi Indigenous Peoples in the Russian Arctic

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ABSTRACT

How can indigenous communities in illiberal regimes benefit from oil production? This paper compares the experience of two indigenous peoples in the Russian Arctic, the Nenets and the Komi-Izhemtsi, in their quest for environmental protection and the development of benefit-sharing arrangements with Lukoil, a Russian oil company. The Nenets people, recognized by the Russian state as indigenous, are marginalized political actors who identified a route to receiving compensation for loss of land and damage to the environment as well as economic benefits under the auspices of Russian law and Lukoil’s corporate policies. In contrast, the Komi-Izhemtsi, despite indigenous status in global institutions including the United Nations and the Arctic Council, are unrecognized as indigenous domestically and initially received no compensation. Their path to benefit sharing was more challenging as they partnered with local nongovernmental organizations and global environmentalists to pressure Lukoil to sign a benefit-sharing agreement. Ultimately, the comparison illustrates how transnational partnerships can empower indigenous people to gain benefits from natural resource exploitation even in illiberal political systems.

Introduction

How do indigenous communities in illiberal regimes attempt to influence natural resource governance domestically to improve benefit sharing and environmental outcomes? The scholarly literature on the “resource curse” focuses mostly on illiberal regimes to explain why oil-rich countries generally have a poor economic performance and undemocratic politics (Humphreys, Sachs, and Stiglitz Citation2007). Illiberal regimes dependent on natural resources often violate the rights of local communities and indigenous peoples in their quest for economic growth. However, natural resources may be an important asset for development for indigenous communities as well as for the state as a whole (Gunton Citation2003).

This paper analyzes the development of benefit-sharing arrangements between the Russian oil company, Lukoil, and two groups of indigenous people in the Russian Arctic, the Nenets and Komi-Izhemtsi. It examines how indigenous communities seek benefits from the oil industry in the context of Russia’s illiberal political regime in which social groups tend to be marginalized. The Nenets case highlights the importance of the group’s domestic legal status as indigenous which provides a benefit-sharing path despite the illiberal context. The case of Komi-Izhemtsi demonstrates that transnational connections and global standards offer an alternative means for unrecognized indigenous communities to demand benefits by appealing to indigenous rights and corporate social responsibility (CSR). Komi-Izhemtsi mobilization, in partnership with environmentalists, occurred in a region where grassroots activism was initiated in the late 1980s, when the Soviet regime liberalized. However, due to the implementation of Russia’s 2012 foreign agent law, this mobilization path may be more challenging to pursue in the future. The cases illustrate the importance of regional variation in a federal regime, even in a context of illiberalism.

Illiberalism and Natural Resource Governance

The Russian Federation is widely regarded as an illiberal political regime. Russia has been described variously as a managed democracy, a hybrid regime, and a fully authoritarian regime (Fish Citation2005; McFaul and Stoner-Weiss Citation2008; Gel’man and Ross Citation2010; Zimmerman Citation2014; Gel’man Citation2015). These regime types share elements of what Levitsky and Way call “competitive authoritarianism” in which “formal democratic institutions are widely viewed as the principal means of obtaining and exercising political authority. Incumbents violate those rules so often and to such an extent … that the regime fails to meet conventional minimum standards for democracy” (Levitsky and Way Citation2002, 52). Russia has a constitution enshrining democratic principles and regularly holds multiparty elections across its federal system. Yet Russia’s scores in the Freedom House Nations in Transit report have declined steadily since the 1990s. The regime is now classified as “not free,” receiving a 6 on a 7-point scale, with 1 being the most democratic. As defining features of Russia’s illiberalism, scholars point to the centralization of power in the executive branch, limits on regional authorities, harassment of opposition figures, intimidation of civil society organizations, and the use of state-controlled resources—including the media—to benefit the regime (Petrov, Lipman, and Hale Citation2014; Gel’man Citation2015).

From the early 2000s, the consolidation of state control of the political sphere was legitimized by rapid economic growth. The country’s economic model has been characterized as “state capitalism” undergirded by the energy sector (Aslund Citation2007). Since the partial privatization of the oil and gas industry in the 1990s, the Russian government has renationalized several companies and minimized the role of foreign partners. The Russian state holds a majority stake in Rosneft and Gazprom, ranked among the world’s largest oil and gas companies. The oil and gas industries play an outsized role in Russia’s economic growth. Using data from the Bank of Russia, Cooper states:

Deliveries of crude oil, oil products and natural gas accounted for just over half of all exports by value in 2000, in 2005 the share had increased to 62 percent, in 2010 to 65 percent and during the first nine months of 2014 the share rose to over two-thirds (Cooper Citation2014, 3).

This revenue has declined due to lower energy prices and Western sanctions, creating challenges for the Russian government.

Illiberalism manifests itself in Russia’s natural resource and environmental governance. Russia has comprehensive environmental legislation that articulates relatively strict standards. However, these laws often are written broadly and lack measures to facilitate their implementation (Kotov and Nikitina Citation2002). Russia’s Ministry of Natural Resources is charged with environmental protection, but its primary role is to oversee the exploitation of the country’s resource wealth. Critics charge that oil and gas companies operate with relative impunity, citing pollution from oil and gas flaring, spills, and damage due to the industrial infrastructure (Greenpeace International Citation2016). Opportunities for public hearings on projects with environmental impacts are limited (Bellona Citation2014).

In liberal democratic systems, demands for environmental protection are channeled through public opinion and activism. In Russia, environmental and social NGOs, including indigenous groups, have difficulty participating meaningfully in policymaking, due to formal and informal restrictions on civil society actors (Henry Citation2010; Evans Citation2012). Russian laws on extremism and “foreign agents” allow for selective prosecution of NGO critical of the state. The 2012 foreign agent law targets NGOs that receive funding from abroad and engage in “political activity”; since its enactment more than 150 NGOs have been labeled foreign agents and reportedly one-third of NGOs in Russia have ceased operating (Interfax Citation2015; Luhn Citation2016a). Despite this unfavorable context, federalism allows for variation in the nature of illiberalism. Many Russian NGOs maintain cooperative relations with government officials at lower levels, including regional and municipal authorities, and continue to push the boundaries for civil society activism. To satisfy investors and shareholders concerned with CSR, natural resource companies generally try to avoid local protests which could damage their reputations. As a result, space for grassroots activism varies significantly across Russia (Henry Citation2010; Crotty and Rodgers Citation2012).

The few indigenous people’s organizations in Russia also have been targeted under the foreign agent law (Ministry of Justice Russian Federation, Citationn.d.). For example, the International Fund for the Development of Indigenous People of the North, Siberia, and the Far East (“Batani”) was targeted by the Ministry of Justice for receiving foreign funding (Weir Citation2016). Under pressure from the state, the Russian Association of Indigenous Peoples of the North (RAIPON) reorganized itself under new leadership. In addition, the Center for Support of Indigenous Peoples of the North/Russian Indigenous Training Center (RITC) and the indigenous association Yasavey Mansara were declared foreign agents (Pettersen Citation2016). Russia has abstained from adopting the United Nations Declaration on the Rights of Indigenous Peoples. Indigenous people who face significant environmental risks due to activities of the oil and gas industry thus have little recourse to address this risk domestically—or to claim natural resource revenues for their own benefit.

The challenge of indigenous marginalization is global, but is magnified in an illiberal political context. Russian indigenous communities that want to address environmental or social issues must either navigate Russia’s illiberal politics or look beyond it to pressure companies using global rules and international allies to achieve their goals. For indigenous peoples in Russia and elsewhere, it has been advantageous to join an international movement around indigenous identity to enhance “legitimation and leverage to shape national political outcomes” (Kingsbury Citation1998, 428; Xanthanki Citation2004; Lightfoot Citation2016). However, it also may be possible to gain domestic and international leverage over 3companies using the language of benefit sharing and CSR.

Benefit Sharing and Corporate Responsibility

Globally, benefit sharing offers a means to build relationships between indigenous peoples and natural resource companies, including oil and gas companies. As such, it represents one way to turn the resource “curse” into a developmental asset. The concept of benefit sharing was formalized in the Convention on Biological Diversity (CBD) in 1992 and further developed in the 2010 Nagoya Protocol, a supplementary agreement to the CBD.Footnote1 Originally concerned with pharmaceutical companies’ use of indigenous knowledge, the concept highlights the need to share the benefits arising from utilization of human and nonhuman resources with the parties who provide access to those resources (Convention on Biological Diversity, n.d.).

Ethically, benefit sharing emphasizes principles of social justice by highlighting inequalities between resource providers and those who commercialize resources (Tysiachniouk and Petrov Citation2017). However, the term “benefit sharing” has not been adequately defined. Providing benefits merely may be one aspect of CSR, yet ideally benefit sharing encompasses a more robust notion of social justice, reducing the gap between local resource providers and global beneficiaries (Schroeder Citation2007). In principle, benefit sharing also enhances the well-being and long-term economic development of communities (Cernea Citation2008). Even as oil companies commit to benefit sharing and environmental protection at the transnational level, how they negotiate and implement these commitments in a given locality varies significantly. Benefit sharing is especially challenging in developing countries with severe economic and social inequality and in illiberal political systems where citizens’ rights are violated.

In Russia, benefit-sharing arrangements are diverse and governed by a complicated and inconsistent network of federal, regional, and local regulations as well as by less formal arrangements between oil companies and regional and local authorities (Pika Citation1999; Rohr Citation2014). Benefit-sharing arrangements in Russia range from innovative tripartite agreements (Wilson Citation2016) to minimal compensation for damages. The most common forms of benefit sharing are found in taxation, production-sharing agreements (PSA), and socioeconomic agreements with different levels of government and/or indigenous communities that transfer resources above and beyond taxation, and in-kind provision of infrastructure (such as roads, schools, or sports venues) or support for social services (such as transportation costs, healthcare provision, or educational scholarships) (Tulaeva and Tysiachniouk Citation2017). Benefit-sharing arrangements depend on indigenous peoples’ control of their land and recognition by the state. In Russia, negotiations over benefits also are shaped by companies’ need to fulfill CSR obligations and on indigenous communities’ expectations of welfare provision formed during the Soviet period (Henry et al. Citation2016; Tysiachniouk Citation2016).

In practice, oil revenues accrue to actors located far beyond extraction sites, while indigenous people find it difficult to obtain benefits and receive compensation for damage to the environment. These challenges are magnified in an illiberal political context. Most obviously, illiberalism constricts avenues for public participation, negatively affecting communities’ ability to advocate for themselves and reducing the likelihood of local empowerment through the process of benefit sharing; however, there may be countervailing pressures as well. If an illiberal regime legitimates, its authority in part by providing steady improvements in living standards or social services, the state may pressure companies to partially fulfill this role. In this case, benefits may increase in quantity, but with little regard for community preferences. Alternatively, the constraints of illiberalism may propel disadvantaged actors to pursue leverage through transnational networks and norms. The cases below analyze two paths to benefit sharing in Russia.

Methodology

This paper compares benefit-sharing arrangements between Lukoil, a Russian oil company, and the Nenets and Komi-Izhemsti indigenous communities, respectively. The Nenets autonomous okrug (NAO) is located in northwestern Russia ().Footnote2 An autonomous area of the Russian Federation, the NAO, has a total population over 48,000, including members of the Russian and Komi ethnic groups, and approximately 7500 Nenets who are classified as an “indigenous small-numbered population of the north.”Footnote3 The Komi Republic borders the Ural Mountains on the west and the NAO on the north. Half of its approximately 881,000 residents identify as Russian; the Komi ethnic group makes up less than one-quarter of the population. Of the Komi, 15,000 individuals identify as indigenous Komi-Izhemtsi (Shabayev and Sharapov Citation2011).

Figure 1. Map of the Nenets autonomous okrug and Komi Republic.

Figure 1. Map of the Nenets autonomous okrug and Komi Republic.

The Russian state does not recognize the Komi-Izhemtsi as indigenous (Rohr Citation2014). Scattered throughout several regions of the Russian Federation, the Komi-Izhemsti need officials from Komi, the NAO, Khanti-Mansiiski, Yamalo-Nenetski, and Murmansk oblasts to petition the federal government on their behalf to gain indigenous status; so far, only the Komi administration has done so (Pierk and Tysiachniouk Citation2016). In addition, relatively few Komi-Izhemtsi continue to engage in the traditional practice of reindeer herding, a marker of indigeneity domestically. Nevertheless, the Komi-Izhemtsi self-identify as indigenous, speak a dialect of Komi, and see their culture as distinct (Shabayev and Sharapov Citation2011).

The present study is based on qualitative research methodologies including semistructured interviews, participant observation, and document analysis. Interviews were conducted with more than 150 informants, including oil industry representatives, members of indigenous peoples’ organizations, NGO experts, representatives of regional and local authorities, and local residents in the NAO, Komi Republic, and Moscow between 2011 and 2016 (). A snowball sampling strategy was used to identify local stakeholders—early interviewees and community leaders helped to identify other informants. Separate interview guides were developed for civil society activists, company representatives, and government officials. Interviews were designed to elicit a range of stakeholder perspectives on company–community relations, benefit-sharing arrangements, and CSR. The interviews were transcribed, coded, and analyzed to reveal themes, patterns, and relationships across actors. Interviews with actors from local to global levels illuminated the interplay between different scales of decision-making and mobilization. Other data collection methods included participant observation; and analysis of records of meetings organized by Lukoil, agreements proposed by activists, and of Lukoil’s CSR policies, submissions to the global reporting initiative (GRI), annual reports, and codes of conduct.

Table 1. Interviews and focus groups.

Oil Company–Community Relations: Coexistence and Complaint

Traditionally many Nenets and some Komi-Izhemtsi people engaged in reindeer herding for their livelihoods. In the Soviet period, the state subsidized indigenous communities in the Arctic and provided goods and services to reindeer herders’ collective farms. Perestroika disrupted this state support as budget deficits and hyperinflation eroded benefits and farms were privatized (Pika Citation1999). As of the mid-2000s, approximately 2500 Nenets were still engaged in herding 120,000 reindeer in the region (Stammler and Forbes Citation2006, 51). Additionally, a small number of Komi-Izhemtsi herders migrate annually with their reindeer across NAO territory to the Barents Sea.

Commercial oil production began in the NAO and Komi Republic in the late 1980s and early 1990s, respectively. Estimated reserves in the NAO are 1.2 billion metric tons of oil and 525 billion cubic meters of gas (Sukhanovskii Citation2013). The NAO economy is dependent on oil for growth (Centre for Strategies Development, 2008–2009). Oil is the Komi Republic’s main export as well; oil, coal, and gas make up 50% of Komi’s GDP (Alexander Citation2009). The town of Usinsk, informally called “the oil capital of Komi,” is where 70% of the oil is produced (Usinsk Municipality Citation2014). Lukoil-Komi, a subsidiary of Lukoil, plays a significant role in the region’s oil industry, operating in the NAO and in the Usinsk and Izhma districts of the Komi Republic. The firm maintains offices in Usinsk and Narian-Mar, the capital of NAO. The environmental impacts of oil drilling are much greater in the Komi Republic, where 89 spills were reported between 2011 and 2013 alone (Staalesen Citation2014). A Greenpeace-sponsored patrol of the Usinsk region in 2014 claimed to have found 201 spills; after conducting their own investigation, Lukoil-Komi representatives disputed the existence of only 67 of these oil spills (Luhn Citation2016b).

Indigenous communities in the Russian Arctic have had mixed responses to the growth of the oil industry on their territories. The arrival of oil companies threatens traditional ways of life due to damage to the tundra ecosystem. At the same time, residents also recognize the opportunity to obtain financial benefits from oil companies. Both the NAO and Komi governments have come to rely on companies to support infrastructure and services on their territory as a partial substitute for the crumbling Soviet welfare system. Moreover, local indigenous communities have shifted some of their expectations for social support onto the oil companies.Footnote4 Companies are not always responsive to these expectations. Studies of oil producing regions in Russia show that, in general, industry representatives know little about indigenous land use rights and traditional economies, have little incentive (beyond state pressure) to engage in indigenous issues, and generally do a poor job engaging the public (Yakovleva Citation2011, 715, 717).

Benefit-sharing arrangements in Russia are shaped in part by domestic laws and politics. Oil companies transfer resources to communities primarily through compensation for damages and socioeconomic partnerships (public–private agreements) at different levels of government, from regional to municipal, but also through direct agreements with indigenous groups. Socioeconomic agreements with the state are negotiated privately, without the participation of communities. Provisions of the agreements vary, as companies are not legally bound to work directly with communities (Committee on the Elimination of Racial Discrimination Citation2013; Wilson Citation2016). Lukoil-Komi engages in benefit sharing in the NAO and Komi. Under the auspices of its CSR policy, the company receives approximately 100 million rublesFootnote5 from Lukoil’s national headquarters to be distributed among regional governments and municipalities in both regions through socioeconomic agreements, voluntary giving, and compensation to indigenous reindeer herders.Footnote6

Reindeer herding collectives from both the NAO and Komi Republic have benefited from such socioeconomic agreements, mostly through in-kind support. They also have sought direct agreements and compensation for damages from the oil industry, but their experiences have been different. In the NAO, indigenous reindeer herders negotiated direct socioeconomic agreements with Lukoil and receive financial compensation for damages to their territory. Lacking state recognition as indigenous, the Komi-Izhemtsi are not entitled to receive direct benefits or compensation unless they actively herd reindeer through NAO territory. However, after a prolonged social movement that united indigenous and environmental actors in Russia and beyond, in 2015, Lukoil concluded a socioeconomic agreement with Izvatas, a Komi-Izhemtsi association.

Benefit-Sharing Arrangements in the NAO

In the NAO, oil company representatives negotiate with officials such as the governor and mayors to determine the level and type of social support to be provided through socioeconomic agreements, leading to significant budgetary contributions at all levels. Financial support for NAO communities including indigenous residents is much higher because of a PSA between the NAO and the oil companies Zarubezhneft and RusVietPetro that allows NAO to keep more tax revenue, rather than sending it to the federal center. In 2016, the PSA provided 2.06 billion rubles (16%) of overall revenue at the regional level, with an additional 396.1 million rubles of revenue from corporate taxes (NAO administration Citation2017).Footnote7 The NAO government uses these funds to sponsor annual grant programs for indigenous groups and civic institutions. In addition, a socioeconomic partnership agreement between the NAO government and Lukoil provides assistance for regional infrastructure. This included, for example, 13 million rubles for construction of a new sports arena in Narian-Mar in 2017 (Nenets TV Citation2017). In the NAO, oil companies voluntarily provide funds for cultural and sporting events, education, and social programs. For example, Lukoil provided funding for the “Krasnyi Chum” public health program which has treated approximately 2500 reindeer herders in remote areas since 2002. Benefit sharing has improved the quality of life in Narian-Mar and some NAO villages (Henry et al. Citation2016). However, although an NAO law establishes rules and procedures to guide socioeconomic agreements, the rules do not regulate the financial amounts companies are required to contribute. Benefit sharing is the product of a closed-door negotiation process. The level and type of benefits depend on the outcome of negotiations that generally do not include input from indigenous communities (Henry et al. Citation2016).

Companies need a license to exploit resources on state-owned territories. Based on the Land Code of the Russian Federation (2001), if land designated for agriculture is leased by reindeer herding enterprises, companies also need to obtain consent from the reindeer herders and provide compensation for the loss of land (Novikova Citation2014). Under Russian federal law, indigenous people can receive compensation for damages to their traditional ways of life, but statutes vary regionally and can be challenging to use.

In the late 1990s and early 2000s, the Nenets protested environmental damage in the NAO. With close ties to the regional government, Yasavey, the major Nenets indigenous association working on cultural preservation and socioeconomic development, helped to mediate and end the protests. In the early 2000s, Yasavey organized roundtable discussions which created rules for compensation, pre-empting further indigenous mobilization in the region. As a result, the NAO developed regional legislation on the rights of indigenous peoples. Article 29 of the Land Law of the NAO (2005) entitles indigenous groups or individuals to claim damages, while the Law on Reindeer Herding (2002, Article 17.4) allows Yasavey to assist communities in providing consent to oil companies. Following this, Lukoil agreed to continue a modest 3-year socialeconomic agreement negotiated between Izhemski Olenevod, a herding cooperative, and Narianmarneftegaz after it took over the smaller company’s operations.Footnote8 Put’ Ilícha, another reindeer collective, had a long-term social economic agreement with the oil company, RusVietPetro, until 2014, and then pursued compensation for damages in 2015.Footnote9

In the NAO, Nenets reindeer cooperatives (and several Komi-Izhemtsi cooperatives based in the NAO) also possess 99-year leases to state agricultural land, giving them greater influence over its use and the right to compensation for damages (Dahlman, Peskov, and Myrashko 2011). Since 2013, the majority of Nenets reindeer enterprises have calculated damages using a federal-level methodology and almost all NAO reindeer herding brigades (with the exception of those on Kolguev Island) have received greater compensation than in the past, which has allowed herders to build new slaughter facilities and processing plants.Footnote10 In sum, Nenets reindeer herders, assisted by their indigenous association, have achieved benefit sharing using federal and regional laws.

Benefit-Sharing Arrangements in the Komi Republic

In the Komi Republic, socioeconomic agreements with oil companies at the regional level are similar to those in the NAO. The Komi Republic receives 286 million rubles annually from natural resources use payments, including lease payments, from companies. In 2016, Lukoil contributed 8,012 and Gazprom 9,683 million rubles in tax revenue to the region (Ministry of Finance Komi Republic Citation2017). In addition, between 2003 and 2015, Lukoil provided more than 3 billion rubles for infrastructure in Komi municipalities as part of socioeconomic agreements (Mian Izрma Medsia Dona Citation2015). In 2016, Lukoil signed a new Agreement of Cooperation with the Komi governor, in which the company promised to construct residential housing in Usinsk and the village of Yarenga and to improve road infrastructure and fund charity projects (Lukoil Citation2016). Lukoil also signed an agreement with the local administration in the Usinsk district.Footnote11 As the only oil company operating in Komi’s Izhma district, Lukoil-Komi concluded a socioeconomic agreement there as well, providing 1.5 million rubles to the Izhma local administration in 2014.Footnote12 Moreover, Lukoil-Komi has engaged in various initiatives related to education, culture, environment, health, agriculture, and small business development in the Komi Republic and has sponsored cultural and sport events (Lukoil, Citationn.d.).Footnote13 As in the NAO, socioeconomic agreements in the Komi Republic generally are not open to public input or scrutiny. Lukoil representatives and state officials decide on the level and direction of financing. Komi indigenous activists complain that their communities do not receive funding directly, and that the distribution of funding is not transparent.Footnote14 Lukoil-Komi pays compensation to Komi reindeer herders for damage to their territory, but only if the herding enterprise is registered and leases land in NAO where laws favor indigenous leaseholders.

The Komi-Izhemtsi are not legally recognized as indigenous by the Russian state. This notwithstanding, through its membership in the Russian indigenous peoples’ association RAIPON,Footnote15 Izvatas, the Komi-Izhemtsi indigenous association, has gained access to global institutions, such the United Nations (UN) and the Arctic Council.Footnote16 The group also has cooperated with the International Work Group for Indigenous Affairs (IWGIA), and the Institute for Ecology and Action Anthropology (INFOE), a German NGO. INFOE has published reports on Izvatas.Footnote17 They argued that the Russian state is denying indigenous peoples’ right to practice traditional livelihoods, that authorities and private corporations fail to obtain prior and informed consent about extractive activities, and that indigenous communities face restrained access or rights to fish, hunt, and collect vital resources. Furthermore, the privatization of natural wealth combined with the poorly enforced nature protection regime discriminates indigenous communities by maintaining their deprived and disenfranchised status (Pierk and Tysiachniouk Citation2016). As of this writing, these appeals had had little effect.

While regional and municipal benefit sharing provide some funds for indigenous communities, they do not address many environmental concerns, nor do they acknowledge Komi-Izhemtsi claims to indigenous status. As a result of these grievances, some Komi have engaged in environmental activism since the 1990s, when members of Izvatas and the save Pechora committee (SPC), an environmental initiative group formed in the late 1980s, began to address environmental issues. The SPC has organized street protests in several Izhma and Usinsk district villages, and mobilized citizens, including members of the indigenous community, at Lukoil-Komi’s public hearings.

From 2000 to 2007, Lukoil received five loans from the European Bank of Reconstruction and Development (EBRD), in which it committed to “pollution cleanup, pipeline replacement, gas flaring reduction, health and safety measures, [and] social infrastructure” (CEE bankwatch network Citation2014; Appendix 3). Yet, Lukoil initially resisted NGO demands that referenced these commitments and even attempted to fund a more favorable local NGO, a branch of the All-Russia Society of Nature Protection, to demonstrate social support for its activities. Lukoil also used its close ties to national-level parliamentary deputies to endorse the company’s activities in the Komi Republic and elsewhere.

Representatives of Izvatas and SPC argue that they have been excluded from decision-making processes related to the construction of new oil-drilling stations, even when the infrastructure is located close to villagesFootnote18 and that Lukoil has concealed evidence of environmental damage from oil spills.Footnote19 Komi NGOs have had to adapt to changing political conditions to continue their activism. For example, in 2012, the SPC strategically decided to drop its legal registration as an NGO and operate informally in an attempt to minimize state scrutiny. The group also relies primarily on volunteer retirees who may have less to lose from social mobilization (Pierk and Tysiachniouk Citation2016). In 2014, Izvatas and the SPC worked with the Silver Taiga Foundation and Greenpeace-Russia to create a list of “10 demands” for Lukoil-Komi, emphasizing environmental safety issues and the need to replace outdated oil pipelines.Footnote20

In drawing up the list, the NGOs referenced norms of CSR. Lukoil is formally committed to CSR through its participation in the UN Global Compact and use of the GRI to communicate CSR performance to shareholders. In response to environmental and indigenous activism, in February 2015, Lukoil-Komi negotiated a direct socioeconomic agreement with Izvatas. The agreement focuses mainly on social concerns, such as scholarships for students, but addresses environmental issues as well. For example, Lukoil-Komi agreed to inform citizens about all oil spills. Since the agreement, Lukoil-Komi has become more transparent about oil spills in the Izhma district, where the Izvatas office is located. However, interviewees accuse Lukoil-Komi of continuing to conceal oil spills in the Usinsk district.Footnote21 The agreement expanded Lukoil-Komi’s plan to renovate pipelines, but has not satisfied environmentalists who still insist that the company meet all 10 demands. As one activist stated, they do not want to “sell the environment,” but protect it.Footnote22 After a large oil spill in the Usinsk district in April 2016, the SPC organized protests that intensified until Lukoil allocated 20 billion rubles for replacing its pipelines.Footnote23

In sum, the Komi-Izhemtsi were unable to use domestic laws to gain indigenous status from the state or extract direct benefits from oil development in Russia’s illiberal environment, but activists successfully mobilized to target Lukoil due to its perceived violations of indigenous rights and environmental protection, ultimately achieving a socioeconomic agreement.

Differences in Oil Company Relations across Indigenous Communities

Lukoil-Komi’s benefit-sharing arrangements with indigenous communities in the NAO and Komi Republic, respectively, exhibit differences in the level of conflict and the timing of benefits. In the Komi Republic, the Komi-Izhemtsi had to engage in a longer, more confrontational struggle to achieve an agreement with Lukoil than did the Nenets people in the NAO. These experiences suggest two distinct paths to indigenous benefit sharing in the illiberal context of Russia: (1) if the indigenous group has domestic legal status and controls at least a portion of its traditional lands, it may be able to rely on Russian federal and regional laws related to compensation for damages—even these laws do not offer a route to political participation and indigenous empowerment; and (2) if the indigenous group is not recognized domestically, it may mobilize in cooperation with domestic and international NGOs and pressure companies using transnational norms, such as indigenous rights and CSR.

The following sections examine more closely three key aspects of indigenous–oil company relations in Russia: the relationship between domestic laws and the international arena, the role of NGOs in social mobilization, and oil company responses to domestic and global pressure.

Domestic Laws and the International Arena: Who is Indigenous? Who Deserves Benefits?

Both NAO and Komi residents receive financial support from socioeconomic agreements with Lukoil-Komi. However, the different legal statuses of the Nenets and Komi-Izhemtsi influence whether they have direct socioeconomic agreements or receive compensation for damages from Lukoil. Different legal entitlements to reindeer grazing land in the NAO and the Komi Republic contribute to their different access to benefits and compensation.

Based on Russian law, the oil industry has a special responsibility to indigenous reindeer herders whose livelihoods are disrupted by oil development and whose land use rights are infringed. The law “On Territories of Traditional Nature Use of Indigenous Numerically Small Peoples of the North, Siberia and the Far East of the Russian Federation” requires companies operating on traditional indigenous lands to acquire consent from indigenous peoples and provide compensation for damages from the companies operating on these lands. This law has worked for indigenous people in Khanti-Mansiiski Autonomous Okrug (Tulaeva and Tysiachniouk Citation2017). However, in the Komi Republic, there are no indigenous groups recognized by the state; therefore, regulations to enable the federal law on territories of traditional nature (TTNs) have not been developed. In the NAO, indigenous reindeer herders have agricultural land in lease, so there was no need to designate TTNs.

The federal “law on the guarantee of rights of the indigenous and small-numbered peoples” (Article 1.6) provides indigenous peoples the right to participate in assessments as a means of evaluating “sociocultural effects on the indigenous communities” (Article 6.8).Footnote24 These assessments have been performed in Sakha Yakutia, but not in the NAO nor in the Komi Republic (Dahlman, Peskov, and Myrashko 2011). However, indigenous groups in the NAO are advantaged by a regional law that requires industrial projects to complete an environmental impact assessment and to seek approval from lease-holders of the land. Nenets reindeer cooperatives, and several Komi-Izhemtsi cooperatives actively herding in the NAO, have leases to state agricultural land. Oil companies need the cooperatives to sign off on drilling in these territories. At first, negotiations over consent were informal and often resulted in in-kind support for the cooperative. In recent years, a formal methodology for calculating compensation has been used, allowing indigenous groups in the NAO to receive more funding than in the past.Footnote25 In the Komi Republic, the Komi-Izhemtsi do not have any land in lease and therefore cannot use this methodology.

Global activism has not yet influenced the Russian government’s perception of the Komi-Izhemtsi as indigenous; the latter thus have been unable to take advantage of domestic legal pathways to benefits, limited as they are. Izvatas participates in the Russian indigenous peoples’ association RAIPON and, through RAIPON, in the Arctic Council. As noted, the Komi-Izhemtsi also have worked with IWGIA and INFOE to publish reports citing violations of UN standards on indigenous rights by the Russian state (Pierk and Tysiachniouk Citation2016; Appendix 1–2). As a member of the UN, the Russian government has responded to these reports, but has not changed the official status of the Komi-Izhemtsi to recognize them as indigenous.

Negotiation or Social Mobilization: The Role of NGOs

Russia’s illiberal political system makes it challenging for NGOs and social movements to demand benefits and environmental protection. Ultimately, three important factors allowed the Komi-Izhemtsi to mobilize successfully for benefit sharing. First, Russia’s federal system allows for some variation at the regional level, including more favorable legal context in the NAO and a long-standing tolerance for village activism in Komi, and that these minor differences can significantly shape indigenous politics. Second, Komi-Izhemtsi mobilization mostly occurred prior to the implementation of Russia’s 2012 foreign agent law. Third, Komi-Izhemtsi activists have taken measures to insulate themselves from the effects of the law through alliances with other NGOs, the use of global norms, and, in the case of SPC, by not registering as a formal organization.

Opportunities for activism in Russia often are greater at the local, rather than federal level, in part because local mobilization is less threatening to the central regime. Although unauthorized protesters often are prosecuted in Russia’s urban areas, in local villages, protests generally are tolerated, and activists are more likely to openly express grievances. Izvatas works closely with the SPC and the Silver Taiga Foundation—the latter of which was designated a foreign agent in 2017 (Silver Taiga Foundation Citation2017), on issues of environmental protection and indigenous rights. While activists recognize the need for oil and gas development to ensure Russia’s economic growth, their protests focus on the lack of transparency in how oil revenue is used, violations of indigenous rights, and damage from oil spills and construction projects. In contrast, Yasavey, the primary Nenets NGO, is a moderate organization. Its representatives argue that cooperating with the government and negotiating with oil companies helps the Nenets people more effectively than protesting against oil development.Footnote26

The different strategies of indigenous NGOs in the NAO and the Komi Republic are influenced by their different status. In the NAO, the indigenous association Yasavey has made use of laws that benefit Nenets reindeer herders. Although an affiliated organization, Yasavey Mansara has been declared a foreign agent and has closed; the Yasavey association still plays a facilitating role in negotiations with the regional government. Since indigenous groups in the NAO have successfully pursued compensation for damages, in recent years, they have neither engaged in environmental mobilization nor cooperated with environmental groups such as Greenpeace-Russia that are viewed with suspicion by regional officials.

In the Komi Republic, indigenous and environmental issues have been intertwined since the late 1980s. Izvatas, active in both NAO and Komi, exhibits different behaviors in each. In the NAO, Izvatas generally does not intervene in relations between oil companies and communities; in the Komi Republic, Izvatas, along with the SPC, is an active part of the movement against environmental damage by oil companies.

The Komi social movement uses several strategies to achieve better environmental and social outcomes for the Komi-Izhemtsi. Environmentalists in Komi have taken advantage of ties to transnational NGOs, including connections to Greenpeace Russia, to better invoke global norms related to indigenous rights and CSR. Greenpeace Russia has a unique status in Komi due to personal ties between Greenpeace representatives and regional officials as well as the regional government’s concern about oil spills. Greenpeace has sponsored Izvatas representatives’ travel to international meetings, such as the Arctic Council meeting in Iqaluit, Canada, in 2015, to publicize environmental threats and lack of recognition of the Komi-Izhemtsi people.Footnote27 Greenpeace also helped Komi activists organize roundtables with state representatives on how to prevent and clean up oil spills in Usinsk and a press conference in St. Petersburg in 2015.Footnote28 In April 2016, SPC and Greenpeace jointly organized a roundtable on how to respond to a large oil spill in Usinsk.Footnote29 More recently, in 2015–2017, Komi and Nenets indigenous associations began to work together. For example, the SPC is helping the local branch of Izvatas in the NAO to identify issues related to oil development and attract media attention.

Thus far, the Komi-Izhemtsi have been involved in transnational networks to a greater degree than the Nenets, who have been able to achieve a moderately favorable outcome operating domestically. A shift to global venues and norms allows the Komi-Izhemtsi to try to escape the unfavorable domestic context for unrecognized indigenous groups in Russia.

Lukoil’s Response: Domestic and Global Audiences

Lukoil-Komi’s approach to benefit sharing is first and foremost rooted in national legislation, and secondarily in informal practices related to welfare provision from the Soviet period, but in recent years, it has been increasingly shaped by reputational concerns—how the company is perceived by investors, lenders, and shareholders. Lukoil follows the letter of Russian law on benefits and compensation. If a group is recognized as indigenous and is an official leaser of the land, they are compensated accordingly; if they lack the status, but engage in reindeer husbandry and lease land in the NAO, as some Komi-Izhemtsi do, they can be compensated as well. Members of the Komi-Izhemtsi who are not recognized formally as indigenous and not engaged in reindeer herding are limited to the same rights as any other Russian citizen. The Nenets thus have two assets: formal recognition as indigenous by the Russian state, and a lease to state agricultural land. In the Komi Republic, the Komi-Izhemtsi lack both of these favorable conditions.

Under Russian law, the company is not obliged to pay the Komi-Izhemtsi compensation, but Lukoil did eventually respond to bottom-up pressure from activists and potential harm to its reputation when it negotiated an agreement with Izvatas in 2015, following the movement’s articulation of demands. By participating in transnational activist networks, Komi NGOs were able to activate global norms to support their demands, including Lukoil’s previous commitments to indigenous rights and CSR. Although Lukoil does not receive EBRD financing for its projects in the Komi Republic (and indeed the EBRD is not financing oil and gas projects in Russia currently due to sanctions), Lukoil’s policies toward indigenous communities have been influenced by the companies’ past loans from the EBRD, the need to comply with the GRI, and desire to avoid negative publicity and to secure future investment. Lukoil is an increasingly globalized company and is listed on several Western stock exchanges. The company’s past EBRD loans have required it to “both anticipate and avoid adverse impacts of projects on the lives and livelihoods of Indigenous Peoples’ communities, or when avoidance is not feasible, to minimize, mitigate or compensate for such impacts” (EBRD Citation2014, 43).

Lukoil’s 2013–14 Sustainability Report, submitted to the GRI, addresses environmental protection and social programs in Northwest Russia, including in the NAO and Komi. The report confirms that according to its Indigenous Minority Relations Policy, Lukoil “has been building its relations with the local residents on the assumption that their cultural heritage and traditional lifestyles must be preserved” (Lukoil Citation2015, 60). It continues by affirming benefit sharing in both regions, noting that “In NAO and the Komi Republic the indigenous minority support is provided as part of the multi-tier social partnership system” (Lukoil Citation2015, 60). Lukoil again referred to its CSR policy in its press release about the 2015 agreement with Izvatas (Center for Assistance to Indigenous Peoples of the North Citation2015).

However, Lukoil’s general global commitments are not sufficient for the Komi-Izhemtsi to overcome differences in domestic status and international financing. For example, Lukoil implements higher standards toward indigenous in the Khanti-Mansi region where Khanti indigenous people are recognized by the state, TTN use have been designated, and Lukoil’s extractive project is funded in part by international institutions including the EBRD. In Khanti Mansi, for example, Lukoil consults and negotiates with reindeer herders beyond what is required for compliance with Russian law. Thus, invoking Lukoil’s commitments to global indigenous and environmental standards assisted the Komi-Izhemtsi, but was not as influential as in other regions given domestic constraints.

Conclusion

For indigenous peoples living in the Russian Arctic, domestic laws and access to global networks and norms can profoundly shape their experience engaging with oil companies, including the type and level of benefits they receive and how they pursue compensation for environmental damage. This study has focused on socioeconomic partnerships and compensation for disturbances to the traditional practice of reindeer herding within benefit-sharing arrangements between Lukoil and the Nenets and Komi Izhemtsi indigenous peoples. The cases show that although the two groups are affected similarly, they have been treated differently in Lukoil’s benefit-sharing arrangements.

In the NAO, benefit-sharing arrangements are shaped by Russian laws, the involvement of a moderate NGO with close ties to the regional government, and leases to grazing land—all of which resulted in earlier and more substantial benefits for Nenets reindeer herders. Although the Nenets have global ties, they did not need to activate them to engage in benefit sharing. In the Komi Republic, lacking a domestic legal basis for their claims, environmental and Komi-Izhemtsi NGOs pursued an alternative strategy, including a more confrontational approach toward Lukoil. To achieve even modest benefits as an indigenous group, the Komi-Izhemtsi sought to substitute the more liberal architecture of global governance for the illiberal governance of natural resources at home, invoking Lukoil’s stated commitment to norms of indigeneity and CSR to a broader audience. As a result, Lukoil negotiated a socioeconomic agreement with Izvatas in 2015. This agreement provides new benefits to the Komi-Izhemtsi, but does not formally recognize them as indigenous. SPC continues to fight for environmental protection in Komi; after a large oil spill in Usinsk in April 2016, they have intensified their protest efforts.

Benefit-sharing arrangements between oil companies and indigenous communities are designed to improve the economic position of communities to empower stakeholders and to raise environmental standards. Yet benefit-sharing arrangements are modified and adapted to accommodate local conditions, highlighting the importance of regional variation even in an illiberal state. Benefits to indigenous communities in the NAO and the Komi Republic depend on domestic legal status and control of land. Without these advantages, global norms and practices of CSR provide an alternate path to benefit sharing, but in Russia’s illiberal political system, they do not necessarily lead to greater opportunities for political participation or the assertion of indigenous rights. In addition, the contraction of space for civil society due to Russia’s 2012 foreign agent law and its effect on indigenous associations have made benefit sharing even more challenging than in the past.

The comparison of the Nenets and Komi-Izhemtsi experiences in engaging with Lukoil offers several insights for broader scholarship on illiberal regimes and natural resources benefit sharing. First, illiberal systems are not monolithic. Factors such as federalism, domestic social status, and the path-dependent nature of some political interactions can shape how illiberalism manifests in each locality. In addition, companies such as Lukoil that operate globally may operate with few constraints in their home states, yet be forced to acknowledge more liberal norms and practices and implement these standards domestically to appease international audiences. One emerging international norm relates to the rights of indigenous peoples to share the benefits of resource extraction. These two Russian cases demonstrate that, in conjunction with local mobilization, this norm may be used to increase the quantity of benefits provided to indigenous peoples experiencing social and environmental losses related to that extraction. At the same time, the two cases provide evidence that illiberal regimes allow few opportunities for indigenous communities to participate in decisions related to industrial development on their territories or to ensure that shared benefits lead to sustainable economic development in the longer term.

Additional information

Funding

This research was supported by the NWO, the Netherlands Organization for Scientific Research, Arctic Program (“Developing benefit sharing standards in the Arctic”, No. 866.15.203), and the Finnish Academy Arctic Program (“Oil Production Networks in the Russian Arctic”, No. 286791), we would like to thank Giulia Landonio for creating the map for this paper.

Notes

Convention on Biological Diversity, the Nagoya Protocol on Access and Benefit Sharing, https://www.cbd.int/abs/ (assessed 21 February 2015).

An “autonomous okrug” is a territorial unit within Russia’s federal system designed to recognize some areas as indigenous homelands. An “oblast” is the most common territorial unit within Russia’s federal system and can be viewed as synonymous to “region” or “province.”

Ob utverzhdenii perechnia korennykh malochislennykh narodov Severa, Sibiri, I Dal’nego Vostoka Rossiiskoi Federatsii (On the approval of the list of indigenous small-numbered peoples of the North, Siberia and the Far East of the Russian Federation) (56-P), Federal law, 17 April 2006.

Interviews with villagers in May–June 2011.

Approximately US $1.7 million.

Interview, Lukoil, April 2015.

For the period 1999–2017, total revenues from Zarubezhneft to the budget of the Russian Federation through the PSA exceeded $US 3.4 billion dollars (Zarubezhneft Citation2017).

Interview, Lukoil, April 2015.

Interview, RusVietpetro, March 2015.

Interview, Administration of the Polar Region, June 2011.

Lukoil Company website, http://www.lukoil.com/press_6_5div__id_21_1id_24526_.html (assessed 29 November 2016).

Interview, Izhma, February 2015; 15 million rubles is approximately US $2.5 million.

Interview, Lukoil, February 2015.

Interview, Save Pechora Committee (SPC), February 2015.

Russian Association of Indigenous Peoples of the North.

Interview, Izvatas, February 2015; interview with SPC, February 2015.

BNK, Eksperty OON obnaruzhili v Komi rasovuiu diskriminatsiiu izhemtsev, 25 August 2007, http://full.bnkomi.ru/data/news/530/, http://www.pechora-portal.ru/biblio/stat2007/ex.html?/biblio/stat2007/pechorskoevremya2007_09_12d.htm (accessed 8 May 2016).

Informal conversations and interviews, Krasnobor, February 2015.

Interview, Krasnabor, February 2015.

Interview, SPC, February 2015; interview, Izvatas, February 2015.

Interview, SPC, January 2016.

Interview, SPC, February 2015.

Novaya gazeta, 24.07.2016, available on-line, accessed 25.07.2016.

O garantiyakh prav korennykh malochislennykh narodov Rossiyskoy Federatscii” (No. 82-FZ) [On Guarantees of Rights of Small Indigenous Peoples of the Russian Federation. (No. 82-FZ)]. Federal Law, 30 April 1999.

Order of the Ministry of Regional Development of Russian federation, 9 December 2009, http://ohranatruda.ru/ot_biblio/normativ/data_normativ/57/57780/ (accessed 20 January 2016).

Interview, Yasavey, April 2013.

Interview, Izvatas, February 2015.

Interview, SPC, January 2016.

Greenpeace-Russia, Kto razlil neft v Ukhtu, 5 June 2016, http://www.greenpeace.org/russia/ru/news/2016/04-06-2016_Ukhta_lukoil/ (accessed 09 August 2016).

References

Appendix 1

Interviews and participant observation in NAO

Interviews and participant observation in the Komi Republic and Moscow

Participant observation

Appendix 2. Abbreviations

NAO, Nenets autonomous okrug

NGO, nongovernmental organizations

CSR, corporate social responsibility

GRI, global reporting initiative

TNK-BP, transnational corporation British petroleum

EBRD, European Bank of Reconstruction and Development

CBD, convention on biodiversity

GDP, gross domestic product

SPC, save Pechora committee

IWGIA, the international work group for indigenous affairs

INFOE, German NGO for ecology and ethnology

CERD, the committee on economic, social, and cultural rights

UN, United Nations

Appendix 3. Internet Resources Analyzed

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International Covenant on Civil and Political Rights. 2014. Seventh periodic reports of the Russia Federation, CCPR/C/RUS/7. Parallel Information: Civil and political rights of indigenous small-numbered peoples of the North, Siberia and the Far East of the Russian Federation. http://tbinternet.ohchr.org/_layouts/TreatyBodyExternal/Countries.aspx?CountryCode=RUS&Lang=EN (accessed 12 February 2016).

International Finance Corporation. 2012. Performance Standard 7: Indigenous Peoples. http://www.ifc.org/wps/wcm/connect/1ee7038049a79139b845faa8c6a8312a/PS7_English_2012.pdf?MOD=AJPERES (accessed 01 December 2016).

International Finance Corporation. 1991. The World Bank Operational Manual. http://www.ifc.org/wps/wcm/connect/835cc50048855270ab94fb6a6515bb18/OD420_IndigenousPeoples.pdf?MOD=AJPERES (accessed 30 November 2016).

International Work Group for Indigenous Affairs. 2012. Indigenous Peoples in the Russian Federation. http://www.iwgia.org/iwgia_files_publications_files/0590_Indigenous_Peoples_in_the_Russian_Federation_IGIA_Briefing_note_March_2012.pdf (accessed 20 July 2016).

Lukoil. 2015. General Information. Lukoil Oil Company. http://www.lukoil.com/static_6_5id_29_html (accessed 13 March 2015).

Lukoil. 2008. Sustainability Report. Lukoil Oil Company. http://www.lukoil.com/static_6_5id_2113_html (accessed 15 October 2015).

RAIPON, 2014. Reports on activities, second international decade, indigenous small populations of the North, Siberia and Far East: current situation and perspective (Otcheti o deyatelnosti, vtoroe mezdunarodnoe desiatiletie, korennie malochislennie narodi several, sibiri i dalnego vostoka rossiiskoi federatsii: sostoianie i perspektivi.] http://www.raipon.info/documents/otchety-o-dejatelnosti.php?sphrase_id=414473 (accessed 12 July 2016)

Sukhanovski, A.F. 2013 NAO-2012: numbers, facts, achievements. Naryanmar: Pomoskaya Stоlitsa.

Trade and Environmental Database, 1997. TED Case Studies: The Russian Arctic Oil Spill. http://www1.american.edu/ted/KOMI.HTM (accessed 21 May 2016).

Usinsk Municipality. 2014. Usinsk, General Information. http://city.usinsk.ru/?page_id=7504 (accessed 05 July 2016).