Research Director, Energy, Environment and Resources
Associate Fellow, International Law
Research Associate, Energy, Environment and Resources
Oli Brown, Former Associate Fellow, Energy, Environment and Resources, Chatham House (2012-14)

While the extractive sector has the potential to make a positive impact in fragile states, explicit corporate engagement in peacemaking or peacebuilding activities remains a high-risk proposition in all but the most exceptional circumstances.

 

Photo: Marcel Mochet / Getty Images.Photo: Marcel Mochet / Getty Images.

Key findings
 

Resource investment in fragile and conflict-affected settings is unlikely to be ‘conflict-neutral’. Large-scale resource development in fragile or conflict-affected situations will have an impact one way or another. This places special responsibilities on the actors that support extractives-led development in fragile and conflict-affected situations (not least companies and investors) to understand the direct and indirect consequences of their presence and activities on peace and conflict dynamics.

‘Peace-positive’ resource development is likely to be a ‘fair weather’ proposition. Where resource development appears to have contributed to peace, there is often already a constructive political and/or social dynamic under way, which the benefits of resource development can reinforce. This is arguably more likely in ‘frozen’ disputes and post-conflict situations.

Extractive companies have limited influence over peace and conflict dynamics. The extractive sector has the potential to make a positive impact in fragile states, but is not equipped to be the main peacebuilding actor. Companies may control their core operations and may have influence at the policy level, but they have minimal control over wider conflict dynamics or peace processes. Explicit corporate engagement in peacemaking or peacebuilding activities remains a high-risk proposition in all but the most exceptional circumstances.

Even a ‘do no harm’ approach can be harmful. Current tools and guidelines focus on the direct impacts and risks associated with resource development, with the objective of doing no harm. In the most adverse contexts, however, even a ‘do no harm’ approach in line with conflict-sensitive guidelines may inadvertently fuel conflict. In most cases firms must judge for themselves what the most responsible course of action is – this raises the question of how best they can do so. 

New approaches are needed. At present there is little in the way of an evidence base or decision-making framework to enable stakeholders to assess conflict risk against peace-positive potential. This makes it difficult to reach informed and inclusive decisions on how to proceed in a given context. A transparent, multi-stakeholder process to develop such a framework would, at a minimum, deepen understanding of the links between resource development, conflict and peace – and what constitutes responsibility beyond ‘do no harm’.

Strong institutions are critical, but take time to emerge. Even with the best technical advice and donor support, in the most fragile and conflict-affected states – where governance and institutional capacity are especially weak or absent – effective institutions will take a long time to emerge. In such circumstances, governments should explore the political and economic viability of policies to slow resource development, while working with development partners to build institutional capacity.

Promotion of extractive-led development as a means to peace in conflict-affected situations carries inherent risk. Even with significant financial and technical assistance and concerted multi-stakeholder efforts, there is no guarantee that resource development will contribute to peace. Despite this, the logic may still be that resource development is the ‘best bet’ in fragile contexts where few, if any, other prospects for economic transformation exist.