Resource Curse or Sustainable Development?

Not long ago I discussed (see comments under this post), among other issues, the question of whether (and how) developing countries with rich endowments of natural resources can use this to promote development. Today Lyuba Zarski, a TripleCrisis blogger, published an interesting entry on this issue.

He quotes antithetic views on mining as a contributor to the process of sustainable development: while World Bank and the International Council on Metals and Mining claim that it is a major contributor, many other commentators see mining as a striking problem that does not really promote economic sustainability or development:

While specific grievances differ, the overall contours of the conflicts are alarmingly similar. Poor and/or indigenous communities living close to large open pit and underground mines are often not consulted or even informed  before ground for the mine is broken—despite internationally recognized rights of indigenous peoples to “free, prior and informed consent”. There are also deep environmental and health concerns, including long-term impacts of heavy metals contamination of land and water that could destroy or undermine agricultural livelihoods.  Fears for the environment are fuelled by lack of local regulation and monitoring and little, if any, provision for contingent liabilities relating to mine legacy.  Finally, there is an abiding sentiment that economic benefits are few and unequally distributed: the fight for mine jobs splits communities; company financial contributions to local schools, hospitals etc are meager; infrastructure investment from royalties is all but non-existent.

According to Zarski, there surely is a problem factor that international mining companies exploit the inability of local governments to provide a framework that would ensure that the problems listed above would be minimized. But he otherwise emphasizes the importance of exactly these governments’ ability not to leave the opportunity for misuse:

But there is a deeper problem: weak and often corrupt host states. No matter how “responsible” the company, it cannot take on crucial governance roles of the state. Only a host partner—a state with both institutional capacity and political accountability—can negotiate and impose royalty and tax rates; invest mining revenues in local development projects;  and create and enforce a legal regulatory regime to protect the environment and ensure that human rights are articulated and protected.  Without such a state, the sustainable development efforts of foreign mining companies—no matter how well-intentioned– will be marginal and primarily serve their own interests.

Because we cannot fully abandon mining (despite the many environmental, social and other problems it causes), it is an issue worth considering. Maybe it would do good if the Bretton Woods institutions (especially the World Bank) would begin supporting the governments involved instead of relying on “corporate responsibility”, and thus recognizing that the latter exists mostly on paper only.

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