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P OL I T I C AL

E C ON

OMY

R E

S E AR

C H

I N S T I T

UT E

Resources for Peace?Managing Revenues from Extractive

Industries in Post-Conflict Environments

Philippe Le Billon

April 2008

WORKING PAPER SERIES Number 167

Gordon Hall

418 North Pleasant Street

Amherst, MA 01002

Phone: 413.545.6355

Fax: 413.577.0261

peri@econs.umass.eduwww.peri.umass.edu

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CENTER ONINTERNATIONALCOOPERATION

POLITICAL ECONOMY RESEARCH INSTITUTE

Public Finance in Post-Confict EnvironmA Policy Paper Series February 2008

RESOURCES FOR PEACE?MANAGING REVENUES FROM EXTRACTIVE

INDUSTRIES IN POST-CONFLICTENVIRONMENTS

Philippe Le Billon

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The CenTer on InTernaTIonalCooperaTIon (CIC ) t n w Y k U iv sity w ks t ci t ti s s s t um it ic is s d g b s cu ity t tst ug i d s c ddi ct g g m t wit mu ti ti stituti s d t wid icy c mmu ity. It s i t ti

ut ti g d -s tti g w k st-c ict c bui di g, g bc ti s, d Un m.

F m i m ti , s g ttt ://www.cic. yu. du

oTher polICY paperS In ThIS SerIeS: Mic Co ti s F r v u G ti I p st C ict e vi m ts, May 2007

F c s St w t, G m B w , a d a x C b m,p m ti g G u Justic : Fisc p ici s I p st-C ict C u t i s,October 2007

p t Midd b k d G d p krig t-Fi ci g S cu ity S ct r m January 2008

T dit s w u d ik t ck w dg t su t ausaID ub ic ti t is t.

The polITICal eConoMY reSearChInSTITUTe (perI) t t U iv sity M ss c us tts, am st, g g s i

s c , icy dvisi g, g du tduc ti , d ut c . est b is d

i 1998, perI s ks t ssist tst im v ivi g st d ds dc t m just, d m c tic,

d c gic y sust i b w d.

F m i m ti , s g ttt ://www. i.um ss. du

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PREFACEPUbLIC FINANCE IN POST-CONFLICT

ENVIRONMENTS: A POLICy PAPER SERIES

I t w k vi t c ict, k y m t bui di g du b c is bui di g st t wit t bi ity t

c ct d m g ub ic s u c s. T im m tc cc ds d t vid ub ic s vic s, t

g v m t must b b t c ct v u , c ts u c s, d m g x ditu i m t t isg d d by its citiz s s ctiv d quit b .

T t sks v u m bi iz ti , budg t c ti ,d x ditu m g m t b u d t g t

by itic im tiv s s w s c mic gic. Tc ct v u s, t st t must b s s gitim ti t y s its citiz s. a d t s cu gi tim cy, t

st t must c t s u c s d m g x dituctiv y d quit b y.

T d t bui d gitim t d c b st t s i w -t s ci ti s is w wid y c g iz d.The Principles

or Good International Engagement in Fragile States ,d t d by t d v m t mi ist s m j d

c u t i s i M c 2005, d c s t t st t bui di g ist c t bj ctiv . T is s ts st iki g b k

m t v i i g wisd m i t c si g d c d s t 20t c tu y, w t st t w s wid y g d d st b m. T st t s b disc v d: it is w i v k d s t s uti . T icy t ic s c g d

m d w sizi g st t s t bui di g st t c city.

Y t itt syst m tic w k s b d w tt i t ti c mmu ity c d s u d d tst gt t c citi s st-w st t s t m bi iz ,

c t , d s d ub ic s u c s.

T is icy s i s, j i t y ub is d by tC t I t ti C ti (CIC) t n w Y k U iv sity d t p itic ec my r s c I stitut(perI) t t U iv sity M ss c us tts, am st,s ks t d ss t is g by s ti g i v tiv

icy s s t g ti g c itic issu s i stw ub ic f c .

Bui di g st t c citi s i ub ic f c is c uci tt succ ss c bui di g ts t s s:

Fi st, g v m ts must b b t su sustainable unding w d m c tici stituti s, s ci g ms t t s t si s

d d ss g i v c s, d ub ic i v stm tst m t c mic g wt d d v m t. It y st-w y s, c u t i s t c iv

g i ux xt ssist c t t t m ic m t s m t s ds. But id ty ic y dimi is s v tim , s d m stic s u c s

c ss y t sust i t s i stituti s dg ms. a k y c g is t su t t id

d s t c wd ut d m stic fsc c citi s, buti st d stimu t s t i g wt .

S c d, fsc c citi s d d t bui d legitimate state . D m c tic cti s d t, i

d t ms v s, su st t gitim cy. n it d quick im ct j cts i w ic i t ti

id g ci s s k t f u g t ds. l gitim cy c m s i g t m g v m t d iv y s vic s t t d d w t. e cti s

vid v u t citiz y t v icd m ds; s di g t t s d m ds qui st c city t m bi iz , c t , d s d ub ic

s u c s ctiv y.

T i d, i s m c s s t is d t cu t i xt -g t x ti by w ds d m d g u s s

t enhance security. I a g ist , x m ,c t b d cust ms ut sts is t y fsc issu but s s cu i ty issu . Simi y, c t

v v u s m tu - s u c xt ctisuc s ggi g i C mb di di m ds i W st

a ic , is t c uci st b is i g t st t m y t y i gitim t t x ti but si gitim t c . at t s m tim , d m stic fscc city is t y sust i b s u c f ci g

ub ic s cu ity t xt c kv wit d w .

T s i t is s i s icy s s d sigt st gt t fsc dim si st t bui di g.T ut s d w xt siv s x i ci ub ic f c m tt s i w -t s ci ti s, d

ss s m c m tiv studi s, i c udi g Peaceand the Public Purse: Economic Policies or Postwar Statebuilding (B u d : ly ri , 2007), t

utc m t f st st g t CICs st t bui di g

j ct. a t c cis c itu ti t b mt b dd ss d, t ut s c c t t si gs uti s t t c b ctic y im m t d.

W t s icy s wi f d wid udi cm gst t s w g i g wit t di fcu t

c g s st-w c st ucti , d t t ts s t y ut w d wi ssist i t twi t sks

bui di g gitim t d ctiv st t s d bui di g du b c .

JaMeS K. BoYCe Lead economist, Peacebuilding as Statebuilding Program

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RESOURCES FOR PEACE?MANAGING REVENUESFROM EXTRACTIVEINDUSTRIES IN POST-CONFLICT ENVIRONMENTS

EXECUTIVE SUMMARy

r v u s m xt ctiv s ct s y im t t i m y st-c ict vi m ts. oi d

g s, mi s, d ggi g t vid mt 30% st t fsc c i ts.W m g d

w , t s v u s c t f c stw c st ucti d t vit c - t d ds.

W mism g d, w v , s u c v u s

c u d mi b t c mic m c dt qu ity g v c , t by ig t i gt isk w d vi c . M gi g v u s

m xt ctiv i dust i s is c uci c g c bui di g. T is s s v s s

t t dd ss t is c g .

1. MANDATE PEACEBUILDING MISSIONSWITH RESPONSIBILITIES TO REGULATERESOURCE EXTRACTION.

I t transition phase , c k i g c ss u d cu t i cc ss t s u c v u s t ti c s i s. Du i g t peace-

building phase , missi st s u d s k t dd ssb d i k g s b tw s u c xt cti dc ict; w d d, t is ssist c s u di c ud d ym t c k i g c s i

s u c ducti s d t s t ti ubst c t x it ti d dd ss s u c -

t d c icts. I c s s UN trusteeship ,ctiviti s c bui di g missi s i c ud

t di ct m g m t xt ctiv s ct s,but t siti ut iti s, w t c i t ti , s u d t g t g-t m c t ctsi xt ctiv s ct s.

2. RECOVER STOLEN RESOURCE REVENUES,REAPPRAISE CONTRACTS, ANDNEGOTIATE NEW CONTRACTS.

M j ss s ub ic v u t sm w tim ti g d m t c t ctuvisi s t d i t by vi us g v m ts.

Ex post acto ici s d d t c v stu ds, t y t ugm t fsc v u s but s

t sig t d im u ity d disc u g t sm suc b vi . I t w k vi t c ict,

syst m tic vi w xt ctiv s ct ctiviti s dc t cts s u d b u d t k , wit t c c t

di us c t cts b i g i d t c c sc t cts w t is is w t d. T x is

ctiviti s c duct d du i g t w s u d bc sid d, d ti s vi d c m i s tk wi g y t d d i c ict s u c s. D ss u d c u g suc is by vidit c ic ssist c , by su ti g civi s ci ty

g iz ti s t t y m it i g , d b

i g budg t y su t t m k u t tiv u ss s du i g vi w i ds.

3. MAXIMIZE DOMESTIC BENEFITSFROM RESOURCE EXTRACTION.

r t t us i g t i v v ig c m ii s u c xt cti , d m stic t u s is u d b d v d t t u st xt t sibS m s u c s c yi d g t d m stic b fi xt ct d t ug b -i t siv m t ds

D m stic w s i c b ub ic, iv t , mix t tw . e ctiv gu t y m c ismsi m y w ys m c t t t issu

w s i . M su s d d t gu d g i st c yc it ism, ss t st i i g, d c it ig t i c udt s cy i c t cts d v u s, d t

st b is m t f w s b tw gu t s t gu t d.

4. DISBURSE RESOURCE REVENUESDIRECTLY TO THE POPULATION.

r v u -s i g g m ts b tw g v m tsi divid d st t , b tw u i g ti s i c iti g v m t, v c d i t m

isk w d c ict. as t tiv , div u c ti t t u ti s u d b

c sid d, ticu y w v ty t s ig d s u c v u s subst ti ug

t m k di c t . Giv t

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st t v u s, ti is yb id sc m w by t t v u is dist ibut d t t

u ti di ct y, d t t t is t i dby t g v m t ub ic i v stm t ds ci x ditu . a t ti is t t s

s u c v u t t u ti d tt x t c i ts cc di g t t i c m v s t ci i ts. T is w u d bui d t x dmi ist tivc city d t t s m tim t c s tt x ti - s t ti g t t icts m y

s u c -d d t gim s, c u gi g citiz st d m d t t t st t justi y its t x ti d b

cc u t b t its .

5. ESTABLISH RESOURCE-SPECIFICREVENUE INSTRUMENTS.

T m j ty s fsc i st um ts c bc t d by d m stic v u m g m t ws.Fi st, v u v ti ity-sm t i g i st um tss u d b m t d, wit t su t d s

d xt ctiv c m i s, t duc s v i ti s i t v v u s su ti g mu - d-d w s i s u c v u s d ivi g m

j ct cyc s d s u c ic s. S c d, s vi gsu ds c b st b is d t s t d ti

- w b s u c s, but i ig t imm di tstw ds t s usu y s u d b imit d t

sm m u t v u w s m g m t c bui d i stituti c city g -t mf ci i g. T i d, v u m g m t

ws c st b is c ti m c isms, suc su u d wit d w c i i gs d sc ib d

ti s v u c ti c ss s ds ct s.

6. SET UP A RESOURCE COMPACT VIA ANEXTRACTIVE SECTOR FORUM AND ESTABLISHAN INDEPENDENT MONITORING BODY.

T im s u c c m ct is t st c st uctiv g g m t m g st k d s

d im v d gu t y c citi s i t ms gis ti , im m t ti , d m it i g. Suc

c m ct c b g d by xt ctiv s ct um t t b i gs t g t citiz s, itici s,

d c m i s i ub ic d b t s. T ums u d i m t g u ti b ut t

s u c s ct s; id ti y t tu , bj ctiv s,d ti i ci s guidi g t xt ctiv

s ct ; d vid ub ic t m xt ctivs ct st k d s, t by i g t f t

st-c ict gu t y d fcit. a i d d txt ctiv s ct m it i g b dy s u d bst b is d by t c m ct, t c m m t st t

m it i g g cy.

7. NEGOTIATE AN INTERNATIONALEXTRACTIVE SECTOR AGREEMENTAND ESTABLISH AN INTERNATIONALREVENUE MANAGEMENT AGENCY.

Fi y, i t ti xt ctiv s ctg m t c u d duc t c mic d

itic isks c d by u ti s i duci g

c u t i s. T g m t, d wi g v txisti g i t ti w d c d s c duct,

s u d d f c ict s u c s, s t c msd ti g c du s g di g v u

g t d i c ict- ct d c u t i s, did ti y u itiv m su s c m i s u d tb i vi ti t g m t. T g ms u d s t c t ctu b c m ks d ci it t

cc ss t i st um ts t t duc v u v ti ity d b tt dist ibut isk b twc m i s d g v m ts. a i t ti

v u m g m t g cy w u d tsu t t t v u i i m c m it g v m ts d u ti s is tig t, s t t

v u s c t u ti .

p st-c ict vi m ts s t xc tic g s d tu iti s im vi g. T

s s dv c d i t is t quic b t st-c ict c s s. T s cifcs

t s tti g i c udi g t s ct s i v v d, tc citi s i stituti s, d t b d itic

d c mic dy mics t st-c ictc v y wi s d cisi s i iti s

t m u icy ti s. T s ti s cd muc t ss xt ctiv s u c s t t

qui m ts c bui di g. T i u suit wiqui c m i s d i t i c tiv s.

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RESOURCES FOR PEACE?

MANAGING REVENUESFROM EXTRACTIVE

INDUSTRIES IN POST-CONFLICT ENVIRONMENTS

Philippe Le Billon 1

r v u s m xt ctiv s ct s y im t t i m y st-c ict vi m ts, w

t um, mi s, timb qu t y vidm t 30 c t st t fsc c i ts (sFigu 1).2 W m g d w , s u c v u sc t f c c st ucti d t c -

t d ds. W mism g d, w v , s u cv u s c u d mi c mic m cd t qu ity g v c , t by isi g t

isk w d c ict d i i g t s u ti s.3 r s u c v u s d t b k t ut

t c c s i s d di ct d t w dsst t bui di g d c mic c v y. a d i divid dst t s, suc s Sud , dis ut s v s u c v uc t v t b s v d. M gi g v u s m

xt ctiv i dust i s is t us c uci i c is t bsust i d.

FIGURE 1 SHARE OF EXTRACTIVE SECTORS IN GOVERNMENT

REVENUE AND GDP4

1 p i i l Bi is ass ci t p ss t t liu I stitut G b Issu s dt D tm t G g y t U iv sity B itis C umbi . h is t ut

Fuelling War: Natural Resources and Armed Con ict (IISS & r ut dg , 2005).

2 o t i d st-c ict c u t i s si c 1989 d fsc d d c xt ctiv s ct s b v 30 c t ( xc udi g ig g ts d s) i

t y s wi g c ict t mi ti . (I m ti cu d m IMF c u t y ts d p c r s c I stitut i os c ict d t s t).

3 F discussi , s Mic r ss, W t d w k w b ut tu s u c sd civi w s? Journal o Peace Res earch 41(3), 2004:337-356; d p i i l

Bi , Fuelling War: Natural Resources and Armed Con i cts, ad i p 373, (l d : r ut dg d IISS, 2005).

4 D t m IMF c u t y ts d t p c r s c I stitut i os (prIo).

T is x mi s xt ctiv s ct c gi st-c ict c t xts d s s v

s s s u c v u s t c s id t siti t c . T f st s t s s

t t xt cti m g m t, i c udi g

c bui di g missi m d t s, t c v y t d w t , st-c ict c t ct isd t m ti d m stic t u s id m ym t. T s c d s t s t us s s u c v u s, i c udi g di ct disbu s m t

t t u ti d t c ti s ciu ds. T f s t c c s s u c g v c

i c udi g s tti g u s u c s ct s c m ctt t b i gs t g t g v m t, c m i s dcivi s ci ty, d i t ti g m ts

xt ctiv i dust i s.

CHALLENGES IN POST-CONFLICT EXTRACTIVESECTOR MANAGEMENT

T st-c ict c t xt is t u v b ctiv xt ctiv s ct v u m g m

s v s s. Fi st, g v m ts t sum ck k w dg b ut t s u c

v i b x it ti d c t d v mi t s ct du , x m , t s s isu v ys, u d cum t d w tim s u c

x it ti , d t ig t qu if d s

d utd t d t i i g. as su t, g v m ts it m ximiz v u c cti , s ci y wg ti ti g wit b tt i m d c m i s.5

M w i , t u ti m y v u s bx ct ti s v u s wi g ut txt ctiv s ct s, d u su isi g y tt ibut w

fci v u s t ig g v m t c u ti . a m j c g is t us t id y cqui ds d k w dg b ut t ti s u c

v u s, d t i m b t icy d cisi s dub ic i i s. as g i ci , s u c

su v ys, v u w ys s, t x st uctu s, di m ti diss mi ti s u d b su t d by i t ti g iz ti s ssisti g i t st-c ict d c st ucti c ss.

S c d, b ki g t vici us cyc b tw ig isks d w fsc tu s s ts m j

5 F x m , c t g ss i m t s si g ( .g. s t it im g y) b tt dvic t x v id c m c isms c g t dv t g t c m i s.

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c g . T isk w d c ict, d g d di st uctu s, d u c t i ti s i t gu t y

vi m t m y dis dv t g t g v m ti its g ti ti s wit i v st s.6 G v m ts

t m j t x i c tiv s t tt ct g -sc i v stm ts. p st-c ict c diti s s

t tt ct t m st isk-t ki g c m i st t m y b m i c i d t us b ib y, d y

iv t m d t cti , d t k s tcuts it ms c t s ci s sibi ity. Fi cii stituti s d d g v m ts g t

st-t ck ig di ct i v stm t (FDI) m y tu b i d y t t b ckg u ds d c ds

t s c m i s.7 as g i ci ,t siti ut iti s s u d t b g t d t

ig t t w d g-t m c t cts xt ctivj cts. I t ti ssist c s u d vid

budg t y d s cu ity su t b t t w isks d t m ximiz fsc tu s.

T i d, du t imit d g -sc i v stm t,s u c s t f st x it d t ug sm -

sc v tu s t t iv i d tu iti s c u ti s but t v di fcu t t g v m t t t x. T is is t t

c s , x m , wit ggi g d t mi i g uvi mi s. a m j c g i suc

6 h sti iti s d ig isk m y b c sid d dv t g s mc m i s. F x m , t st ck m k t s d d g tiv y t t d

sti iti s i a g , b b y c sid i g t t di m ds c m i s w u d cig c m titi d st g g v m t b g i i g w , s M ssim

Guid i d e i l F , Di m ds v , w s t. Is c ict b d iv t f ms?, American Eco nomic Revi ew , 2008.

7 risk i su c t s u c j cts m y d cc u t bi ity d fsc y

u t citiz s i b t x ti g d im ti g c u t i s. M y f cii stituti s d c dit g ci s v s ug t t v t suc utc m s t ug

i ci s c duct d s cti c it i . S , x m , t W d B k G u s ext ctiv I dust i s r vi w, d t v u t y equ t p i ci s t b ki g s ct ( tt ://www. qu t - i ci s.c m/) t t bui d tI t ti Fi ci C ti guid i s but m i v u t y d d

t dd ss m j i c tiv s suc s b k st b us s i k d wit v dj ct f ci g. F discussi , s a d s Missb c , T equ t p i ci s:

D wi g t i s ci y s sib b ks? a i t im vi w m nGos ctiv , Development 47(3), 2004:78-84. F c itiqu t x t

c dit g ci s, s F i ds t e t d p cifc e vi m t, ExtractiveSector Projects Financed by Export Credit Agencies: The Need or Foreign

Investment Cont ract and Revenue Re orm , 2005.

c s s is t b c c iv i d tu itid fsc v u m ximiz ti . as gi ci , c m siv ss ssm t ti s

c s ct d x it ti s uc i y bj ctiv s, ut i ssib sc i s,

m ximiz b d d v m t b fts. ass ssm ts d ici s d t b b s d t

tici ti c t u s d w k(i c udi g m g t st), s w s

i , d i m d c s t by c c mmu iti s.

Fi y, budg t y c ti i st-c icvi m ts t s ts s ci di fcu ti s

I c tiv s c u ti t ig t dby t m c ct itic bu uc tic i tm ts i t sitig v m ts. p itic ct s qu t y i t v

t b y t ug g m ts v u s ib tw m b ig t ti s. C u tim y b t t d by b t itici s d d s

t s k itic st bi ity. D su s ci s vic s c w k ssu t

g v m t t c t v u s t t s igi ity s. S m d s m y ti t i mi

u c diti ssist c t ivi g d cc ss ts u c s ct s, suc s t g ti g s u c

j cts t m c m i s tit tm t i s u c su y cc ss.8 a m j

c g is t us t su t t t t v uc ti c s id t s b t c mic c v yd g d g v c . as g i civ u c ti m c isms s u d st

s s tit m t v v u s m gst tu ti , bui di g i c tiv s d m c isms

t t ct v u s m bus s by g v m tsd xt ctiv i dust i s.9

PART 1: MANAGING EXTRACTION

T st-c ict t siti is t c ct iz dby us t xt ct tu s u c s: c

u ti s d j bs, g v m ts d v u ,d c m i s w t t cc ss t m st tt ctivs u c - xt cti s cts. U du st is

s ci y c ct istic w it s d iv b

8 S , x m , luk a. p t y, St t u s: i c m i s d m d c icti Sud , Third World Qua rterly 28(5), 2007:997-1016.

9 F discussi , s M c t hum ys, J y D. S c s d J s e. Stig itz, Escaping the Resource Curse , (n w Y k: C umbi U iv sity p ss, 2007).

T siti ut iti s s u dt w d g-t m c t cts xt ctiv j cts, s ci y i t s i c ud t x i c tiv s.

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Un c bui di g missi s v ccumu t dmuc x i c s t siti ut iti s d iim m ti g s cti gim s: x i c t tc u d b c ct d d yz d t im v utumissi s. I t transition phase, c k i g

c s s u d cus cu t i i g cc ss t s u cv u s t ti c s i s. T is c

b d by id ti yi g y s i t xt ctivi dust i s, d mi it izi g s u c ducti

s, d c si g d w ctiviti s b fti gs i s by t g ti g k y t di g i t m di i s

d t s t ti b tt cks suc s b idg sd ts. p c k i g c s c s i t v

t v t t sc ti s u c - t dc icts, s i t c s s b tw c y ut s

d d m bi iz d b s di s du i g t 2001di m d us i K idu, Si l s di m d

c it .

Du i g t peacebuilding phase , missi st s u d s k t dd ss b d i k g s b tw

s u c v u s d c icts, by ssisti g cut iti s d i t ti g ci s i c g

t s u c s ct s. M it i g ctiviti s,gistic su t, d t g d fc s t

Un S c t y G s S ci r s t tiv c c t ibut i t is g d. I t D m c tic

r ub ic C g , x m , t Un missi

(MonUC) s s i m ti c ct d i gggi g wit s v Un g ci s, nGos, dg v m t ut iti s.

I t c s UN trusteeship , ctiviti s i c udt m g m t xt ctiv s ct s. T siti

ut iti s, w t c i t ti , s u dt b g t d t ig t t w d g-t m

c t cts i xt ctiv s ct s.13 But v u sm s u c s ct s s u d b ut u d

i t ti t ust s i , t st su visi .14

ev s t ust s i is x d s d m stic st-c ict i stituti s c s id t t ms v s, it is

13 T is i ci is c g iz d i tic 55 t 1907 h gu r gu ti( ccu yi g st t s dmi ist t s d usu uctu y), d w s u d by 1976 US D tm t Justic M m dum, i t c s i x it ti by Is i t Si i ( i t d 16 IlM 753, 1977). T is i ci c b i d td m stic t siti g v m ts t ug c gis ti , c g m t, Un S cu ity C u ci s uti .

14 S x m , p i i l Bi , G tti g it d , i I B d p uC i , ds., Natural Resou rces and Armed Con i cts: Actions and Options ,(W s i gt , DC: W d B k, 2005), . 215-286.

d si b t m i t i xt su visi c city t i t v i v u m g m t,

ssib y s g s d c d . Giv s sitiviti sv s v ig ty, suc ts isk isi g qu sti sb ut t m tiv s i t v i g ti s u ss

st ict i d d c d bs c v st di t sts c b d m st t d. Wit g d t t

i g i f ds, t aust i i t v ti ie st Tim d t am ic i t v ti i I q

c uti y x m s.

Recovering looted assets and tackling odiouscontracts

M j ss s ub ic v u c su t w tim ti g d c t ctu visi si it d m vi us g v m ts. I t ti

id c m sk t s ss s, but t y b c m mt w d tigu s ts i d c u t i s

m st i d sust i d v u s.

PROPOSAL 2: RECOVER STOLEN RESOURCEREVENUES, REAPPRAISE CONTRACTS, ANDNEGOTIATE NEW CONTRACTS.

Ex post acto ici s d d t c v t d s u c w t d t isd g ti ti c t cts. W t c v

s ks t id ti y d t i t t c dsg t d by i g s u c x it ti , d f d by d m stic gis ti i t tis cti gim s. T is c i c ud t ss ts

b g u s d m mb s u c stitutig v m ts, d t c ds c m i st t tici t d i i g c mm ci ctivitiT bj ctiv is t y t c v m y t

dd t fsc v u s, but s t sig t d im u ity d disc u g xt ctiv c m i sd b ki g i stituti s m tici ti g i w -

tim s u c ti g.15

F c t ctu is , f st st is udisc su c t cts, c t st uctu d

w s i . C fd ti c mm ci c us s t t b c sid d g y v id, giv t t tvi w is g y m d t d c t cts i

c u t y. T x v si d busiv ctic s i c udi g15 F s t ti c g s d ti s, s t j i t o fc D ugs

d C im (UnoDC) d W d B k St ass ts r c v y (Star) i iti tiv ,tt ://sit s u c s.w db k. g/neWS/r s u c s/St - - u . d .

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t x id ys, t s ici g, bi s d c mm dity-ici g m c isms, d i bi ity s t i g d

t b v k d. T is qui s syst m tic vi w xt ctiv s ct ctiviti s d c t cts, i c udi g

t s i v vi g st t c m i s, wit c c t di us c t cts b i g i d t c c

xisti g c t cts i c ss y.16 T x is c m y ctiviti s c duct d du i g t w

s u d b c sid d, d ti s im s d c m i s t t k wi g y t d d i c icts u c s (s b w).

D s s u d su t suc is t ug t c ic ssist c d su t civi s ci ty

g iz ti s d m di g d m it i g c g s.T g i t su t d m stic ut iti s,d s s u d c sid vidi g budg t y su t t m k u t ti ss s i v udu i g vi w i ds. I d t is c ss tb m i g u , vi ws must b , wit t i

f di gs d c t ctu visi s m d ub ic. I c ss y, disci i y m su s g i st uct tc m i s d g v m ts s u d b c sid d,i c udi g t ug t t g t d ctiv ti U it d n ti s S cu ity C u ci s cti s.

T cki g d w ss ts qui s xt siv x tis , judici su t, d c b ti m f cii stituti s. 17 T cus i suc c s s s u db m j i v st s, t d s, d x t s.M su s i c udi g judici du c ss d tdisb dm t itic mi iti s s u d b i c

16 T c c t di us c t ct is s i d t di us d bt c t ct dby st g v m ts g i st t i t sts t , wit ut t i c s t,

d wit t u w ss t c dit . F discussi , s as q K , J Ki g, d B y T m s, Advancing the Od ious Debt Doctrine , (M t :C t I t ti Sust i b D v m t l w, 2003); d p t ici a v z-p t d Ti m B ck, p stw D bts: Tim n w a c , i J m s K.B yc d M d oD , ds., Peace and the Publi c Purse: Economic

Policies or Postwar St atebuildi ng , (B u d : ly ri . 2007).

17 S J t M. Wi d T if J. r u , F w t m y: T f c i icit s u c xt cti , i I B d p u C i , ds., Natural

Resource s and Armed Con icts : Actions a nd Options , (W s i gt , DC: W dB k, 2003), . 161-214. am g t c s s g s cuti , i 2006 Dutc timb m c t, Gus v K uw v , w s s t c d t ig t y s im is m t b ki g t Un ms mb g lib i .

t v t itici s x s d m cticm s i i g t c . Suc ici s m y d t

utu i v stm ts i c t ctu c it i c . ad ti i t ti xt ctiv s ct

g m t (s b w) w u d vid guid i s suc c t ctu is .

D s it t s c st i ts, t v b s msucc ss s i c t ctu m dm ts. I tD m c tic r ub ic C g , n ti ass mb y c mmissi d by C ist lutu du id tif dd z s i g dubi us c t cts sig db tw 1996 d 2003. Its D c mb 2005 t

c mm d d t g ti ti c c ti 16 c t cts, judici i v stig ti 28 C g s

i t ti c m i s, d s cuti ud 17 s s. T C g s p i m t

t d y d y d fci c sid ti tt, wit s m s i itici s im ic t d

i t s d s i g t bu y it.18 Y t wi gt d c s by civi s ci ty d siti

itici s c t ctu vi ws, tg v m t c mmissi c c ud d i t 2007t t ut 61 mi i g c t cts vi w d m y

t m sig d du i g t t siti i d 38c t cts d t b g ti t d d 23 c c db c us i gu iti s.19

I lib i , st y c c ssi s w c c dd sid t e Si -J s w s b

g ti t i mi i g c t ct b twMitt St d t vi us t siti g v mt t, m g t busiv c us s, d w d tc m y t d t mi t ic i dt by its w t x ti t . pub ic x su

i quiti s i t c t ct by G b Wit ss, i t ti nGo wit st g t ck- c d t tm bi iz d xt t c ic x tis , s w Si -J s s w b ckg u d i b ki g d i t ti f s a ic s f st ct d m

sid t, c t ibut d t subst ti y im vi gt w c t ctu t ms (s T b 1).20

18 The Curse o Gold (W s i gt DC: hum rig ts W tc , 2005); lutu duC mmissi r t, D c mb 2005 v i b t tt ://www. w bs.c m/ c g -ki s s ..

19 J. C yt , Mi i g g u s c C g s k -u t vi w, T Tim s,n v mb 8, 2007.

20 G b Wit ss, Heavy Mittal ? A State within a State. The inequi table Mineral Develop ment Agreement between the Government o L iberia and Mittal St eel Holdi ngs NV , 2006.

abusiv ctic s d t b v k d.T is qui s syst m tic vi w

xt ctiv s ct ctiviti s dc t cts, wit c c t di us

c t cts b i g i d t c cxisti g c t cts i c ss y.

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Table 1 - Fiscal aspecTs oF MiTTal conTracT

renegoTiaTion in liberia 21

Initial Contract Renegotiated Contract

Mitt s ts i ic , d t usctiv y ty t d t x t

I ic s t by i t ti m k t ic

Fiv y t x id y, wit u imit d xt si n t x id y

ob ig ti s gu t dy by c c ssi i

(Mitt s subsidi y)

ob ig ti s gu t dby t c m y

T s t Mitt m i tii w y i d d -s t

n t s , xc usiv ig t

ext d d d b ckd t dquit b t tm t c us

equit b t tm t c usimit d t i s ct

d b ckd ti g

C c ssi i ig ts t mi s i t c c ssi

rig ts t i y

C t ct g v d by U it d Ki gd m w

C t ct g v dby lib i w

Mi im s ci b ig ti s n ti s i m g s d t c b ig ti s

Revisiting liberalization policies

ext ctiv s ct s v b ib iz d si c tt 1980s, ticu y i st-c ict c u t i s.

lib iz ti ici s t i c s d igi v stm t d c mic ut ut, usi g duc dt x ti t s s c i c tiv . T v fscim ct s v i d m g c u t i s, but bs v s

v i t d t g-t m isks ss ci t d wit w fsc tu s - w b s u c s.22

Fisc gim s v ivi g d i c m t x dducti s i g g m ts (pSas) t t

g t t g v m t s t s u ci gs, t t y ti s ub ic y w d

c m i s.23 o b m is t t t t ms t

21 G b Wit ss,Update on the Renegotiation o the Mineral Development Agreement between Mittal Steel1 and the Government o Liberia . august 2007.

22 J m s M. ott , G b c g s i mi i g ws, g m ts d t xsyst ms, Resource s Policy 24(2), 1998: 79-86; G vi B idg , M i g tb z : g g i s mi i g i v stm t i ib m,The

Pro essional Geographer 56(3), 2004: 406-421.

23 I az b ij , x m , i d g s f ds wit w k utu s ctsc ti u d t b t d by t st t i c m y (SoCar), w s w f ds d v d d m g d u d t d s i i t ti t s

d t i i c m is s d b tw g v m t d c m i s cc di g t -d t mi d ducti s i g g m ts, s IMF, az b ij r ub ic

su ti g g m ts ct t imit d b g i iw st-c ict st t s. a s c d b m

is t t itici s t t k d cisi s wit g-t m im cts b s d s t-t m c sid ti s.T y m y b m g , x m , t i vit

ig c m y t t is b t jum -st t j ctd g sig tu b us t t d v

d m stic i dust y, ig i g t d w sid s cki g t s u c s ct i t ig c td x c b ti g its c v c ct .

PROPOSAL 3: MAXIMIZE DOMESTIC BENEFITSFROM RESOURCE EXTRACTION, INCLUDING NOTONLY REVENUE BUT ALSO LOCAL EMPLOYMENTDOMESTIC ENTREPRENEURSHIP, AND NETNATIONAL PRODUCT.

att cti g ig c m i s t t xt ctivs u c s ct is qu t y t m j i it t g v m t d id d s ik . Y t

d m stic b fts m y b b tt s cu d utsid st-t ck d FDI j cts. S m s u c s, suc

s timb d su c d sits ig g d c b x it d t ug b -i t siv m t ds

qui i g mi im t c gic d c iti uts. T s m d s x it ti ( tis sm -sc ) m y v w t x t ti , but t

t v ig t ti v u dd d t

c it i t siv j cts (s T b 2). D m sticw s i vid s m xibi ity v t s t x ti s ct s u d d m stic w s it t s im s d by t g b m igi v stm t.

D m stic w s i c b ub ic iv t , mix b t . p iv t w s i c t d

t st t cc u t b , but t st t must s dt iv t s ct cc u t b . e ctiv gu tm c isms , i im t t w ys, m c tt t issu ub ic v sus iv t w s i .24 I ctic , g v m ts v qu t y s ug t tb i ut iv t c m i s x m , t ug

S ct d Issu s d St tistic a dix. IMF Countr y Report No. 03/130, 2004 .Suc m d w s s m t d u d c t v si d t i w I q. Fc itiqu , s G g Muttit,Crude Designs - The Rip-o o Iraqs Oil Wealth , (l d :p t m, 2005)

24 e ik W i t d p u i J s lu g, C mb ti g t s u c cu s : t tiv s uti t m gi g mi w t , Perspectives on Polit ics 4(1),

2006: 35-53.

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t x x m ti - w c d wit t s ct g -sc u m ym t w k y itic

su t s t isk. M su s d d, i y c s , t v t c y c it ism, ss t st i i g,

d c it ig t. am g t s t s cy i c t cts d v u s, d f w s b tw

gu t s d gu t d.

T b 2 c m s FDI-i dust i d d m stic-tis ( sm -sc ) s u c xt cti .

I dust i x it ti g y vid s ig s u c c v y t t tis m t ds.

Y t ig im t d i uts, x t i t w g s,d ci ti , d ft t i ti duc t t

ti duct (nnp) i dust i ductib w t t d m stic tis xt cti . T

t ti dv t g i dust i x it ti isig t x v u , but y ssumi g s u d t x

ici s. att ti s u d s b giv t i di ctc mic cts b t m d s ducti .

D m stic sm -sc ti s c g tc uci f ci c it u c mi s dm c c mic d v m t.

Table 2 Foreign-indusTrial versus doMesTic-arTisanal

resource exTracTion 25

FDI-industrial Domestic-artisanal

V u s u c d sit 100 100r s u c c v y (g ss ut ut) 95 70

M t i i uts Imported Locally produced

207

31

G ss D m stic p duct 68 66

W g s d ym ts Expatriates

o which repatriated Nationals

7 3.514

0-

50

T x ym ts 20 4

D ci ti 9 1

r t i t d fts 18 11

G ss n ti p duct 46.5 55

n t n ti p duct 37.5 54

25 T is t b bui ds t c s mi i g i Si l ; s T y Ki ick, Tb fts F ig Di ct I v stm t d its t tiv s: a m i ic x ti ,

Journal o Development Studies 9(3), 1973: 301-316. S m d m stic- tisfts t i t d by x t s wit t s ti ti s ( .g. di s s

d m stic it s wit mi y m mb s b d). S s D. F. St w t, l g -sc sm sc mi i g: M ti g t ds d v i g c u t i s, Natural Resource

Forum 13(1), 1989: 44-52. r t i t d fts i d m stic tis c s d t

c it ig t, t b y m di s d du - ti ity x t s (suc s Sil l b s ).

PART 2: CHANNELING REVENUES

T us s v u s m xt ctiv s ct s is m j itic d c mic issu . p itic

v u s c u d mi t siti t d m c cy d x c b t id tity itics. ec mic y,

v u s c t d c mic div sifc ti d j diz sust i b c mic c v y. B ts ts isk ticu y cut i w-i c mdivid d st t s ci g ig v s iz ti qu iti s b tw s ci g u s wit disti ctid titi s.26 Tw k y c g s i st-c ict

v u m g m t t (1) w tdd ss s u c - t d id tity itics, d

(2) w t su t t v u s c t ibut t sust i b d div sif d c my.

Resources and identity politics a disti cti c b m d b tw s u c s d

s u c v u s. T t it y w s u c c t d m y b i divisib , w s s u c

v u s c b si y divid d. T di c w s bui t i t t c g m t i S ut Sud , c m mis i w ic t w s i

i s v s w s t utsid t sc tg m t, u ti dum t k s c , w i

cusi g i st d i v u s i g dt um s ct m g m t. T b m is t

c t v u s i g g m t t t is s cu s t it i divisi w u d b .27

Wit s ct t s u c s, u ti s i duci ggi s v c ims t d t y t w s i

but s t t s ci - vi m t im ctsss ci t d wit s u c xt cti . T is w subst ti b dy x i c i dd ssi g

t s im cts.28 But x i c s i st-c ictc u t i s m i tiv y w d b twI Si l s di m d s ct , sc m w s

st b is d t c t s m t di m d x

26 S F c s St w t, G m B w d a x C b m, Promoting Gro up Justice: Fiscal Policies in Post-Con ict Countries , (n w Y k: C t I t ti C ti , d am st, Ma: p itic ec my r s c I stitut ,p icy p pub ic Fi c i p st-C ict e vi m ts, 2002).

27 S J st i F. T s, T u x ct d d : W y t G v m t Sudd t SplM/a c d g m t i issu s t ug t IGaD c

t ks 2002-04, U ub is d , (C t t Study Civi W , os : prIo,2005)

28 B t ic l b , T mi i g i dust y d t c mmu ity: J i i g c s sust i b s ci d v m t, Natural Resou rce Forum 23(4), 1999:

315-322.

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t x v u t c c mmu iti s. T is m t dt m iz ti tis mi i g v tu s,

i g t is t x s w i tu i g s m tv u t c c mmu iti s. T sc m su d

m s v s tc mi gs, w v : it w s tim m t d g i dust i v tu s, d s itt ct t t t s t d t g st s ci -

vi m t t i t; d m y cust m y c i s w c iv d muc t v u s w

t cc u t b t c mmu iti s.29

ex i c s v t st tw d c d s sugg st t tv u s i g g m ts b tw g v m ts

i divid d st t , b tw u i g ti si c iti g v m t, v c di t ms isk w d c ict.30 W t s i g m y ci it t t sitiv c c usi

c g ti ti , but t is d s t gu t sitiv utc m v t m dium t m. I d d,

suc g m ts c v s v g tivc s qu c s:

First, revenue shar ing negotiated under false

t c s c b b ig ts t m. ISud , x m , i f ds w d v du d t t ms t 1997 K t um p c

ag m t, w ic g t d s v S utm d cti s s i v u s i

xc g c ss ti sti iti s. T isg m t v tu y c s d d c ict

i t gi ig it d, t is tim wit muc w t i Sud s g v m t.

Second, resource revenue allocation may be

c iv d s w di g t b ig t ty,vidi g i c tiv s t g u s t w suit i c yc t ct. T Sud lib ti

29 G b Wit ss, p c bui di g omissi ?, oct b 2007. av i bt tt ://www.g b wit ss. g/d t /f s/ g s/g b _wit ss_ bc_

submissi _101007. d .

30 p i i l Bi d e ic nic s, e di g r s u c W s: r v uS i g, ec mic S cti , Mi it y I t v ti ?,International

Peacekeeping 14(5), 2007: 616-635; g i g s c t prIo by h g M miBi i gsb d Si i a s rust d.

a my i D u , x m , is c iv d m tiv t d i t by t x m t i -

v u s i g d g ti t d wit tg v m t by t Sud p s lib ti

a my i s ut Sud .31

Third, sectarian divisions of resource revenuesisk gg v ti g t si s m g c mmu iti s.

I nig i , st t -b s d v u c tiyi g id tity itics u d mi d s cu

m d g v c t ug t s i g i c m tib c mmu ity id titi s.32 I

I q, s cu i g i v u c ti b s d u ti t t t it i b sis

ccu ti Su i a b itic tib s d i s wit itt v i s v

d t gi ut my m t d by i - icS iit d Ku dis itic ti s m t smist ust. 33

S m c t g v m ts v s ug t tdd ss t g istic id tity itics t ug

fsc d c t iz ti , wit mix d su ts.34 T c ss t ug w ic d c t iz ti is

c i v d s ms t m tt s muc s its c micutc m s. T b st su ts, s i S ut a ic d

M z mbiqu , v b c ct iz d by b du tici ti (i c udi g by mi ity

g u s), b g i i g b tw g v m t d sub-ti g u s, st t ut c i m t s

t ust-bui di g m g g u s tici ti g i cg v c i stituti s, d v u dist ibuti

c ss gi s. Bui di g t s x i c s,di ct disbu s m t v u s t t u ti

31 J Y u g, Sud : a w d c c ss di g t w d c , Review o A rican Poli tical Eco nomy 32(103), 2005: 99-113.

32 Mic J. W tts, a ti mi s c mmu ity: S m t ug ts g g y,s u c s d m i ,Transactions o the Institute o British Geographers ,

29, 2004: 195-216. Y s G i, D c t iz ti d t acc mm d ti et icDiv sity, i C. Y u g ( d). Ethnic Di versity and P ublic Policy. A Comparative

Inquiry , (B si gst k : p g v , 1998).

33 T c us t 2005 I qi c stituti gu t i g dist ibuti id g s v u s i i m i ti t t u ti dist ibuti i

ts t c u t y y i s t cu t y d v d f ds. r v u s u d v d f ds w t u d t c t gi ut iti s.

34 a i d Sc u d M it h ug, D c t is ti i C ict d p st-C ictSitu ti s, W ki g p 2005:139, (B i d : n w gi I stitut U b

d r gi r s c , 2005); J s Si g d p t ick oM y, ass ssi gt m its d c t iz ti s c ict mitig ti st t gy, D v m t

a t tiv s I c., 2007 v i b t tt ://www.d i.c m/ d /D c t iz ti _s_ _C ict_Mitig ti _St t gy. d .

r v u s i g g m ts b twg v m ts i divid d st t ,

b tw u i g ti s i c itig v m t, v c d.

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c b s d s w y t m ti stituti d c mic ti s i s m g

s u c s, g v m ts, d t .

PROPOSAL 4: DISBURSE RESOURCE REVENUES

DIRECTLY TO THE POPULATION as t tiv t c i g s u c v u st ug gi d c g v m ts d t

ti s t t c t t m, di ct disbu s m tt t u ti s s v dv t g s.35 Di ct v u c ti vid s t gib

vid c c divid d t u ti .r c t studi s s w t t di ct c s ym tsc t ibut sitiv y t v ty vi ti ddis st c v y, i c udi g i c ict- ct d

vi m ts.36 Di ct disbu s m t t t

u ti s s ds sig t t s u c s w d by t , t by t g v m t t ti s t t c t it. T is c i c s

ssu c m i s d g v m ts tm ximiz ub ic v u s. I t c ic is m dt dist ibut t v u qu y c ss t ti

u ti , t is c c t ibut t s s ti id tity d c mm d sti y. l st but t

st, di ct disbu s m t is ss subj ct t tg v m t budg t t itic m i u ti d

ss ci t d g i v c s.

a di ct v u t s s u istic giv w st t c city, ck i m ti citiz s,

d udim t y f ci d fsc syst ms im y st-c ict c u t i s? Di ct ym ts

i v u s v b sugg st d i t c s I q, y t b quick y dismiss d du t

35 T a sk p m t Fu d Divid d st b is d i 1976 is m g td st sc m s cifc y im d t di ct disbu s m t (s tt ://www. c.g/; Sc tt G dsmit , T a sk p m t Fu d Divid d: a ex im t i

W t Dist ibuti , p s t d t t ni t C g ss B sic I c meu n tw k, G v , Switz d, S t mb 12-14, 2002 v i b t

tt ://www.is .u . sk . du/pub ic ti s/BIen--p m t%20Fu d%20Divid d%20p .d c. S s X vi S -i-M ti d a vi d Sub m i ,add ssi g t n tu r s u c Cu s : a I ust ti m nig i , NBERWorking Paper 9804 (C mb idg , Ma, 2003).

36 p u h v y, Cash-based Responses in Emergencies , HPG Report 2 4 (l d : ov s s D v m t I stitut , F b u y 2007).

c ti u d i s cu ity d w k bu uc cy.37 Butt situ ti i I q is t st-c ict. l gisticc g s m i i m y st-c ict c sbut t y c b v c m . M v , t ck i g t mc vid b fts b y d utti g m y i t

ds i dividu citiz s. F x m , t t sks c bui di g missi s t i c ud v tgist ti . T is itic tit m t c s

c u d b m tc d wit c mic tit m tc ss, w by syst m citiz id tifc ti

is s t u . T b sis i c m t x c cti cs b st gt d, by vidi g i c tiv tt i t m f ci ti wit t st

Di ct disbu s m t c s t bui d bui d t f ci s ct .

a t m im m t ti di fcu ti s, di ctv u t s s m y s t b m

T t s cti c sts m y m k t is tiu c mic w c it v u s w. I

v u s s t - ductiv im t dg ds, t is c b d t im t t t t db c d u d mi c ducti . p iticm i u ti c sti ccu , t b y i t timi g

v u disbu s m t.38 a d di ct disbu s m td s t its s v t ticu istic c ims

u ti s i ducti gi s.

I t bs c d qu t t tiv s u c s v u , di ct disbu s m t m y s duc t

st t s bi ity t ub ic g ds d s vic s. I di ctdisbu s m t v u s w us d t justi y d

gitim t iv tiz ti ms ub ic s vict is c u d v g ssiv im ct t st.Giv t d st t v u , ti is

yb id sc m , w by t t v u isdist ibut d t t u ti di ct y d t t

t g s t t g v m t ub ic i v stm td s ci x ditu .

a t tiv w y t dd ss t d st tv u is t t y t s v u s t t

u ti , but s t t x t m cc di g t t

37 T m s p y, oi d t c s I q,Challenge 47(3), 2004: 94-112.

38 F x m , di ct disbu s m t w s m d i t 1950s by t g v m t a b t , C d , just i t cti . S r b t B c d Si v T d ,

ex i c s wit oi Fu ds: I stituti d Fi ci as cts, (W s i gtDC: e gy S ct M g m t assist c p g m, W d B k, 2006).

Di ct disbu s m t t t u tis ds sig t t s u c s w dby t , t by t g v m t

t ti s t t c t it.

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i c m v s t ci i ts.39 T is w u d v g ssiv i c m ct, vi g m v u

i t ds t st. at t s m tim , it w u d i m citiz s b ut b t t v u sg t d by t xt ctiv s ct d t u di g

qui m ts t st t . T is syst m c u d c s t t x ti - s t ti g t t ictsm y s u c -d d t gim s, di g citiz st d m d t t t st t justi y its t x ti d b

cc u t b t t .

D su t suc sc m c u d t dv c t c mic bj ctiv v ty

ducti d t itic bj ctiv st t -bui di g. D s c u d st i t c m s t

st t v u ss s d t by vid i c tiv t g v m t t su t t is

sc m . T is budg t su t c u d b s d-i t s d t t bs tiv c city tg v m t, d s d- ut t i c tiviz tst t t d v its fsc ut my d st

c mic div sifc ti .

Contributing to a sustainable and diversifed economy

ec mic c v y is i ity d mb ig ti i st-c ict c t xts, giv

y s vi t dis ss ssi , g ct dcu t i d tu iti s. M v , c c bc s id t d by t gib c divid ds, duc du m ym t, d c i g ts i tbusi ss t t divisiv i tics. It w u d b

v , w v , t t i k t t c mic c v y ist itic , t t it is i vit b y c duciv t

bui di g du b c . r t , tt ti dst b id t t w ys d m s t ug w ic

c v y is c i v d.

T c i g s u c v u s id y s u d

st div sif d d sust i b c my t t i su s g i st utu g wt c s d

39 S M ti S dbu, n tu W t acc u ts : a s vi ti g ttu s u c cu s ,World Development 34(7), 2006: 11531170. I c mv s m y b di fcu t t d t mi d c . a ssib ti is t v

i dividu s s -id ti y s , midd , ic , wit t i t x t v yi gcc di g y. S -id tifc ti c u d b st d ub ic tic b d t

t st fc ( w v divid d ym ts disbu s d), tti g s cissu /st tus c c s ct s c m t m c ism t ut u s -

id tifc ti (J m s B yc , s. c m, oct b 2007).

t by duc s t isk w d utb k sti iti s. But xt ctiv s ct s s t s v

c g s t sust i bi ity d div sifc ti :

First, extractive sectors often rely on non-w b s u c s. I v stm ts i

s cti g d m fci t t c gi sc ugm t t st tus s v s, but t s

u tim t y f it . Divid d s vi gs u ds,s i t c s n w ys, m y b t t

s uti t s u c d ti . But i st-c ict c u t i s, c st ucti d s ci

ds mi it t g i st s tti g sid subst ticti s u c v u s (s b w).

Second, extractive resources tend to create a s u c t st t , cki g c u t ii t d d c d x si g t m t utu

v u i st bi ity.40 r v u wi d s su ti gm b mi g ic s -tim b us s m y

g t u sust i b x ditu s d icymy i , d y ms, d c t u ist

x ct ti s wit i t u ti . r v uc s s, t t d, m y i ducg v m ts t b w b y d t i m s.

Third, resource revenues face a high risk c tu by u i g it s u ss bust

i stituti s i c t v t t is. T isg d vid c t t xt ctiv -s ct v u s

s ci y vu b t mb zz md t t s u c w t is c t d wit

ig v s c iv d c u ti i wi c m c u t i s.41 T is s s m vid c

40 S ric d M. auty, Resource Abundance and Economic Development, (ox d: ox d U iv sity p ss, 2001). I i ci , i v sti g v u s i t

t s ct s c u d ssist div sifc ti , but i ctic , m y c u t i s i tfci t y m g t is c ss du t misdi ct d s u c v u c ti

( .g. t ug s -c d w it ts j cts, t cti u c m titivi t-i dust y, c u ti ), c st i ts b ski s, d t d b i s.T s i c tiv s t t div si y t c my i d t cu t i t isk

itic c m titi c mi g m i d d t s ct s. Div sifc ti is sd w t t muc t m u ctu i g s ct s dy b c tu d

by t f st d s c d g ti s n w y I dust i iz d C u t i s, m stc t y by C i . F discussi t tt c st i t, s r K i sky,

D t McC mick d Mik M is,The Impact o China on Sub-Saharan A rica. C i o fc , DFID, 2006; I C x d, a n w r s u c Cu s ? Im cts

C i s B m C m tiv adv t g d r s u c D d c iS ut st asi ,World Development 35(7), 2007: 1099-1119; d M u iciM squit M i , F C i : Is T Futu M u ctu i g i l ti

am ic ?World Development 35(3), 2007: 355-376.

41 C s l it d J s W idm , D s M t n tu C u t - n tur s u c s, C u ti , d ec mic G wt , IMF W ki g p s 99/85, 1999.

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t t v s c u ti i c s i st-c ict situ ti s, ssib y du t i c s d

tu iti s c u d wit c m titiv iticsd c mic ib iz ti .42

PROPOSAL 5: IMPLEMENT RESOURCE-SPECIFICREVENUE INSTRUMENTS, INCLUDING REVENUE

VOLATILITY-SMOOTHING, SAVINGS FUND,TARGETED ALLOCATION, AND MEASURES FORTRANSPARENCY AND ACCOUNTABILITY.

r c t i t ti ts t dd ss t sc g s v b d v t d m st y tt s cy issu s. ex m s i c ud text ctiv I dust i s T s cy I iti tiv(eITI), t pub is W t Y u p y c m ig ,

d t IMFs Guid r s u c r v u

T s cy (GrrT).43 I t ti su t v u st bi iz ti m c isms, i c t st, s

t d i t st tw d c d s.44 M w i , wit t xc ti opeC, m st c mm dity

duc g iz ti s v giv u t i icst bi iz ti ctiviti s.

D m stic v u m g m t ws g y d f t i ci s d bj ctiv s s u c

v u m g m t. T s cy, cc u t bi ity,s t ti d quity m j issu s t s

ws must dd ss i d t v id v uc tu by w i t st g u s d t ducisks ( w d) m d c ict. T y c s

c t t m j ty s fsc i st um ts.Fi st, v u v ti ity-sm t i g i st um tss k t duc s v i ti s i t v

v u s su ti g m u s- d-d w s is u c ducti s u c ic s. T is c

b c i v d t ug st bi iz ti u ds s tti gsid v u s w t s xc d c sts t

g v m ts bs ti c city, d by si gs v u ds w v u s d c s . S vi gs

u ds s v simi u cti , but wit g

42 p i i l Bi C u ti d t ib c : p c bui di g dst-c ict tt s c u ti , Internatio nal Peacekeeping , 15(2),

orthcoming 2008.

43 F i m ti , s tt ://www. ub is w ty u y. g/ g is /; dtt ://www. it s cy. g/.

44 Mu ti t sc m s t ss c mm dity ic s cks, suc s t IMFsC m s t y d C ti g cy Fi ci g F ci ity d t eUs F x m c isms,

imit d i sc d d t cc ss.

t m iz , s ki g t t bu v i ti s butt bui d utu s u c i c m , i ticu wt s u c wi b x ust d. I ic y, t s

v g y b i t duc d w t y st d d; t t is, w s u d fsc ici s

dy bs v d d s u c v u s sy sm t fsc i ws.45 St bi iz ti

u ds s u d b c u g d i st-c ictc t xts giv t m j v ti iti s i s u c s

v u s, vid d t t t s w i t g ti t budg t y m g m t d s cu d m

mb zz m t. S vi gs u ds, i c t st, t i ity giv st-c ict c mic c v y d

s ci ds. est b is i g s vi gs u d c bt, w v , g m i stituti bui di g

But c ti g sig ifc t m u ts m y t iti t y s t t siti m y b m

s u c t si t c t ibuti t st tc s id ti .

Fi y, v u m g m t ws c st b isc ti m c isms, suc s u

u d wit d w c i i g d ti s v uc ti t s (suc s vi c s) d s ct s

(suc s t d duc ti ). I t duci g c s id ti g suc gis ti d t

dmi ist tiv d v sig t b di s d d tim m t it s u d b i ity st-c ict

st t -bui di g. o ti is t ut t s dg m w k t dum. n t y w ut is g t st g gitim cy but it w u d s

m bi iz d i v v c mmu iti s i d b ti gt d t. T bs c xibi ity i budg t y

c ti , w v , c b s u c t si , d m st t d i t c s C ds c isis v i

v u s c ti .46

45 F discussi , s ric d M. auty d r ym d F. Mik s ,Sustainable Development in Mineral Economies , (ox d: C d p ss, 1998); Ug F s ,r vi w t x i c wit i st bi iz ti d s vi gs u ds i s ct dc u t i s,IMF Working Paper WP/00/112, (W s i gt D.C.: I t tiM t y Fu d, 2002); hum ys t ., Escaping the Resource Curse , cit.

46 W i t C d C m p j ct w s i d s w m d id v m t i c u t i s d b ft d m u c d t d tt ti

d ts, t j ct i d t su t t st g i stituti s w i cb i v u s st t wi g d t g v m t c d b k u tcy i t

c m d siti . S I G y d nikki r isc ,Chads Oil: Miracle or Mirage? Following the Mo ney in A ricas Newest Petro-State , C t ic r i S vic s d B k I m ti C t , 2005.

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PART 3: STRENGTHENING RESOURCE

GOVERNANCE

r bust i stituti s c dd ss s m td t i us c mic d itic im cts

s u c d d c d t by t

c s id t c . M y t s i stituti sdi ct y t t d m stic st t bui di g. Tst t , w v , d s t t i v cuum. Ti t ti i stituti vi m t d tb vi mu ti ti xt ctiv c m i s

c t t st-c ict c v y. Tws s st gt i g s u c g v c

s t d b w, b t w ic qui tsu t i t ti s w s d m stic ct s:

ti xt ctiv -s ct c m ct s u cg v c ; d i t ti g m t

xt ctiv s ct s, i c udi g i t tiv u m g m t g cy.

PROPOSAL 6: SET UP A RESOURCE COMPACT VIA AN EXTRACTIVE SECTOR FORUM THATINCLUDES ALL STAKEHOLDERS, AND ESTABLISHAN INDEPENDENT MONITORING BODY.

I c tiv s m j d iv icy utc m s.B c us s u c s ct s d st-c ict c t xts

ig y s cifc, f di g t ig t b c i c tiv s is ss m tt yi g b u i tt v c mi g ticu istic i t sts

s d t t ub ic i t st. T ub ic its ds t c m t , i m d d su t d by

civi s ci ty g iz ti s, mist itici s dbu uc ts, id d s, d g ssiv xt ctivc m i s. o st iki g tu st-c ict

s u c ms is t qu t y c t tig g m t civi s ci ty g iz ti s wit

c m i s d ut iti s, d t c imi iz ti xt ctiv ctiviti s c u ti s.47 I

t b st c s s, t is ds t c g s i t ig t

di cti , but m y cc si s t utc mis g t s c cy d ssi . a t

47 Cumb s m gu t y m su s d c ckd w s s -c d i gggi g mi i g c mm c i st-c ict c u t i s, d c s t

b i t c iv i ds c v y d bi s v i g v u c c t tiby g c ti s. S n i C , picki g ut t pi c s t libp c s: r s t ti s C ict ec mi s d t Im ic ti s p icy,Security Dialogue 36(4), 2005: 463-478; h ik nitzsc k d K ysi Studd d,T g ci s w c mi s: c g s d ti s c m ki g d

c bui di g, Internatio nal Peacekeeping 12(2), 2005: 222-239.

c mm tu is utd t d, i ctiv , c u t gu t y vi m t. T s u cc m ct s u d t us w b t c st uctiv

g g m t m g st k d s d im v dgu t y c citi s i t ms gis ti

im m t ti , d m it i g.

T t t c m ct is xt ctiv s ct um t t s u d b i g t g t citiz s,itici s, d c m i s i t ub ic d b t s

t t t d by t m di d c sid dby v t i stituti s suc s i m t yc mmissi s, v t mi ist i s, d g ci s,

d xt ctiv c m i s.48 a m i i ity t um is t id ti y d s ut t tu

bj ctiv s, d ti i ci s guidi gt xt ctiv s ct .49 T um s u d y

ctiv i i mi g t g u tib ut t s u c s ct s, i c udi g t

t ti v u s v s, c st d vst ms, t ssib m d s x it ti d

t i s ci - vi m t im cts, i d tst cc u t bi ity m c isms. T t is d,t um s u d v s c t i t c b

cqui i g, yzi g, d di usi g i m ti a s c d i ity t um is t vid

ub ic t m xt ctiv s ct st k dt b y m gi iz d s. Suc t

c ci it t s t ti d g ti ti s is i g s ct icy d gis tiv i s, c t ibut t f i g t gu t y v cuum st-c ict t siti .

48 S , x m , Busi ss p i ci s Sud du i g t I t im p i d(www. c s i . g). I t is c s , t um w s c s tium eucivi s ci ty g iz ti s t t s d ut t i ci s, ctiviti s, m tiv

m w k, d b c m ks i c m i s t y sitiv i Sud .

49 F x m t imits d ssib bi s s tici t y iticsd st k d c su t ti c ss s v i v u c ti , s M.

hum ys, W.M. M st s, d M.e. S dbu, T d s i d m c ticd ib ti s. r su ts m f d x im t i S T m d p ci ,World

Politics , 58(4), 2006: 583-622.

T st t d s t t i v cuum: t i t ti i stituti

vi m t d t b vi mu ti ti xt ctiv c m i s

c t t st-c ict c v y.

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T s u c c m ct s u d st b is i d d t xt ctiv s ct m it i g b dy.

a ms gt ti s k y t c dib m it i g,d s u d b st gt d t ug f ci g

by d t ust u d d div sity i m it i gt m m mb s i . T m it i g b dy s u d

j y d m cc ss t i m ti d f dsit s (i c udi g t c m y sit s), d its f di gsi tu s u d b t d t t ub ic. Su ts u d s b vid d t c m m t y st t m it i g g cy s t t t st t s c city t m its gu t y is c s id t d.

PROPOSAL 7: NEGOTIATE AN INTERNATIONALEXTRACTIVE SECTOR AGREEMENT ANDESTABLISH AN INTERNATIONAL REVENUEMANAGEMENT AGENCY.

C ict situ ti s v cus d t tt ti t i t ti c mmu ity s u c

g v c , i g itic s c i t ti g m t xt ctiv i dust i s.50

a i t ti t sk c i c udi g tig v m ts, v t i t ti g iz ti s,i dust y ss ci ti s d civi s ci ty g iz ti sis d d t g ti t suc g m t, d wi g

v t xisti g i t ti w d c d s c duct. 51 n ti tifc ti t g m t

c u d b b ck d by i c tiv s, s w s by d c sum ssu . T is g m t w u dv t t ti t c i v t st tus

wid s d m d t y m.

am g its k y m ts, t g m t s u dd f c ict s u c s d s t c t ic

ms d ti g c du s g di gv u s g t d i c ict- ct d c u t i s

i d t d t ctiviti s t t isk gi g ig iti g vi t c icts. o us u d f iti is

s d by G b Wit ss: c ict s u c s

50 S , x m , t s i t ti c t xt ctivi dust i s p u C i ,The Bottom Billion. Why the Poorest Countries are

Failing and What Can Be Done About I t , (ox d: ox d U iv sity p ss,2007). C i s s w u d st b is v u t y ms, i c t st t i t ti g m t t t w u d cqui m d t y st tus i i t ti

w.

51 T j i t t sk c c u d d w u t x i c t Kimb y c ss, t W d B k xt ctiv i dust i s vi w, t C di G v m t

u dt b xt ctiv i dust i s, d t Mi i g, Mi s d Sust i bD v m t j ct.

tu s u c s w s syst m tic x it tid t d i c t xt c ict c t ibut

t , b ft m, su t i t c mmissi s i us vi ti s um ig ts, vi ti s

i t ti um it i w vi tim u ti g t c im s u d i t ti w.52

r s u c s sus ct d m ti g suc c it is u d b subj ct t i d d t i v stig ti s,suc s t s Un x t s, d t ctiviti s

d ss ts c m i s i v v d i t s s ct sm d i b t i t ti s cti s, f s, dc imi c du s.

S c d, t g m t s u d s t c t ctub c m ks, t b y i t ms st d ds

ub ic biddi g c du s, t x ss ssm t (id t v id t s ici g d t t x

v id c m c isms), d t s cy d cc u t bi ity i v u c cti d

c ti . T g m t s ds t dds u c v u isk, t b y by ci it ti

cc ss t v u sm t i g i st um ts dby b tt s i g isk b tw c m i s dg v m ts.

T i d, I t ti r v u M g m t ag cy s u d b c t d s t t

g m t. T m d t t is g cy w u d bt su t t t v u i i b twc m i s, g v m ts, d u ti s istig t, d t t v u s w t i t m

di ct disbu s m t, ub ic s vic s, b t c t u ti . I ct, t g cy w u dvid i t ti i su c m c isms,

i m g us t t t t xc dit d c iv b s m g m t g ci s w

y i duci g i v stm t d v u isks xt ctiv c m i s. T is c sid b

x tis v i b c m i s t c v v u s wi g cu cy itic c is s,

52 G b Wit ss,The Sinews o War: Eliminating the Trade in Con ict Resources , 2007, v i b t tt ://www.g b wit ss. g/ g s/ /d f iti _

_c ict_ s u c s. tm . S s , l Bi , G tti g it d , cit.

T w-i c mduci g c u t i s s u d t

b m isks t g dig y ft b c m i s.

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itt t t x tis s b d y d b t i t sts c u ti s i duci g

c u t i s. T w-i c m duci gc u t i s s u d t b m isks t g

d ig y ft b c m i s.

T g cy c u d t ct u ti s mv u v ti ity i k d t u s v ts,

cu cy d v u ti , d s u c ic v i ti s, usi g v u st bi iz ti i st um ts

d di ct budg t y ssist c , t su t dc m m t t xisti g i stituti s ( .g.,

duc s ss ci ti s d i t ti f cii stituti s). T g cy c u d s s d t t x

v si d c u ti , dd ssi g c m i tsby citiz s d civi s ci ty wit g d t fscm g m t. It c u d c duct budg t y udits t

ss ss t s di g sid v u m g m td t ck d w i gu iti s, w ic c u d t

b ub ic y t d d dd ss d t ug c i t ti i stituti s. I xc ti c s s,

g v m t v u s c u d b di ct d t w ds t ust d by t g cy. Fi ci g tg cy c u d b s cu d t ug c s tium

d s, c m i s, d duci g g v m ts.I c tiv s ti s w u d i c ud g t st bi ity d g t gitim cy t s u cs ct ctiviti s.

CONCLUSIONS

p st-c ict vi m ts s t misi gbut c gi g c t xt m gi g xt ctivs ct v u s. a c t qu sti is w t

v u s s u d b s d m g g v m tsi divid d st t d m g ti s i c itig v m t. T c d w t s i g

g m ts i t st tw d c d s s b. W t s i g m y b t sitiv

c c usi c g ti ti , but it d s tgu t c ict s tt m t v t m diumt m. e ts t m i st m t m g m t

xt ctiv s ct s i t c ict s uti dc bui di g i iti tiv s s u d t y cus

d ti g g m ts s sitiv t xt ctivs ct issu s, but s vidi g t gu t st t xt d m ig ts v tu s u c s t

cc u t bi ity m c isms i v u c ti .

Wit ut suc gu t s, w t s i g isi su fci t, d i t w g itic c t xt itc v v c u t ductiv . I dditi ,t ig ts t siti g v m ts t c

g-t m s u c x it ti c t cts s ub cu t i d, d t s u c v u s g tu d t siti g v m ts s u d b u d

xt su visi .

a s c d qu sti is w t xt ctiv s ct ss u d b id y d v d, v i t t

x s d m stic t u s i d/fsc v u s. ext ctiv i dust i s c s u

c mic c v y d c t ibut t iticst bi ity, but f st qui m t t s sitivim cts is v t i stituti s t b su fci t y st g b x it ti ccu s. r t t

us i g t i v v ig c m i s, d m stict u s i s u d s b d v d t

t u st. C m siv ti s ss ssm tss u d b syst m tic y c duct d, d s u c

x it ti s u d b t subj ct i d i m d c s t by c c mmu iti s. T t s

ds, i t ti g m t xt ctivs ct s d t is vi us xt ctiv

s u c c t cts s d.

a f issu is t t v u c ti

m c isms, i c udi g s s s t t i st bi ity d x ustibi ity s u c v u s. r v u

st bi iz ti u ds s u d b m t d wit tsu t d s d xt ctiv c m i s.S vi gs u ds, i c t st, t i ity i c u t i s, d i i t duc d t y s u d b imit dt sm m u t v u w s m g m tc bui d i stituti c city g-t mf ci i g. Di ct ym ts s u c

v u s t t u ti s u d s b givs i us c sid ti , ticu y w v

t s ig d s u c v u s su fcit m k di c t . a i t ti

g m t, i c udi g i t ti v um g m t g cy, s u d s k t duc t

c mic d itic isks c d by u ti si duci g c u t i s.

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Public Finance in Post-Confict Environments

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T bj ctiv s d b vi i t tig ci s y im t t i mi gxt ctiv s u c s ct s. I t g v m t

g iz ti s d d g ci s s u d vidssist c t m ximiz v u c cti d t

su t s t, i , d cc u t b c ti .r v u d s ci - c mic c sti g s u db vid d d t su ts wid y b dc st ds s t bui d istic x ct ti s i tg v m t d m g t u ti . D ss u d t syst m tic y m t FDI- t d

xt ctiv ici s d j cts t s t c t g t i x t d c dit g ci s

v d m stic t u s i . r t , d ss u d su t st ut iti s i c ti g

s u c s v s cc di g t b d s ci dvi m t c it i , i c udi g t t cti

d st gt i g c iv i ds. Giv t tg t s u c v u s v tu y duc d f ci v g , s t tiv im t c

id dimi is s, xt ctiv c m i s s u d t i t g m t wit d g ci s t sut du bi ity ms. a i c tiv t d sc u d b vid d by m ki g suc g m t c diti cc ss t t s vic s x t c dit

g ci s. a i t ti xt ctiv i dust i sg m t w u d t cu t i c m titiv

b vi m g d s g t m t t i

s u c i t sts, d vid g vi m tguidi g t b vi xt ctiv c m i s dg v m ts.

T ti s d s s dv c d i t is t qu y ic b t c s s st-

c ict xt ctiv s u c m g m t. Ts cifcs t s tti g t s ct s i v v d, tc city i stituti s, d b d itic d

c mic s cts st-c ict c v y wiy m j t i d cidi g w ic t u su .

Just s im t t y, t u suit t s ti s wi qui c m i s d t i t s t i c tiv s.

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