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The United Nations Interagency Framework Team for Preventive Action




EXTRACTIVE INDUSTRIES
    AND CONFLICT
                                    GUIDANCE NOTE FOR PRACTITIONERS




         with funding and support from the European Union
Executive Summary                                                  Steps can be taken to: prevent such conflicts from
                                                                   occurring; mitigate their short and long-term effects when
                                                                   they do occur; and, harness the enormous potential of
Natural resources and conflict                                      natural resources to rebuild societies in the aftermath of
Conflict arises when two or more groups believe their              conflict. The effective management of a society’s natural
interests are incompatible. It is not in itself a negative         resources is therefore a priority for all those committed to
phenomenon. Non-violent conflict can be an essential               the goal of conflict prevention and sustainable development.
component of social change and development, and is a               Consequently, it is important that immediate and longer
necessary component of human interaction. Non-violent              term steps are taken by United Nations (UN) and European
resolution of conflict is possible when individuals and            Union (EU) development practitioners to prevent the
groups have trust in their governing structures, society           Extractive Industries from being a source of conflict, and
and institutions to manage incompatible interests.                 to address conflict in this domain in an effective manner
                                                                   when it does arise. This Guidance Note aims to address
Conflict becomes problematic when societal mechanisms              this challenge.
and institutions for managing and resolving conflict break
down, giving way to violence. Societies with weak                  Extractive Industries
institutions, fragile political systems and divisive social
                                                                   The Extractive Industry is a term that is often used to
relations can be drawn into cycles of conflict and violence.
                                                                   describe non-renewable resources, such as oil, gas and
Preventing this negative spiral and ensuring the peaceful
                                                                   minerals. This Guidance Note begins by explaining the
resolution of disputes is a core interest of the international
                                                                   main reasons why the Extractive Industries can cause
community. The challenge for UN, EU and other
                                                                   tensions at a local or national level, and how these tensions
international actors is to promote positive social
                                                                   can lead to conflict. It then offers guidance on strategies
transformation, while mitigating the risks and potential
                                                                   for mitigating the impacts of conflicts associate with the
impacts of violent and damaging conflict.
                                                                   Extractive Industry.
Environmental factors are rarely, if ever, the sole cause
                                                                   The following six principles are identified as the main drivers
of violent conflict. However, the exploitation of natural
                                                                   of Extractive Industry-related conflicts:
resources and related environmental stresses can be
implicated in all phases of the conflict cycle, from                   Poor engagement of communities and stakeholders:
contributing to the outbreak and perpetuation of violence              Where communities and stakeholders are poorly
to undermining prospects for peace. This Guidance Note                 engaged, marginalised or excluded from the dialogue in
accordingly focuses on the role of natural resources in                the Extractive Industry development process, they are
triggering, escalating or sustaining violent conflict. Its aim         almost certain to begin to oppose the development. As
is to provide practical guidance on the role that the UN and           the conflict escalates, the use of strategies of violence
EU can play in early warning and assessment, structural                as a coercive measure against the company, and a
conflict prevention (long-term measures) and direct conflict           means for addressing old grievances and mounting
prevention (short-term measures). It is meant to provide a             opposition against the government, are likely.
combination of strategic advice and operational guidance,              Inadequate benefit-sharing: If benefits are distributed
as well as to unite existing tools and guidance under a                in a manner that appears unfair as compared to the
single framework.                                                      distribution of the costs, risks and responsibilities, then
                                                                       those who are disenfranchised or bearing risks and
Extractive Industries and conflict                                      responsibilities without fair compensation are likely to
                                                                       oppose the development, and possibly rebel.
The Extractive Industries present particular challenges
for both fragile states and developing nations; the                    Excessive impact on the economy, society and the
exploitation of non-renewable natural resources, including             environment: Notwithstanding the promise of
oil, gas, minerals and timber has often been cited as a key            prosperity often associated with Extractive Industry, the
factor in triggering, escalating or sustaining violent conflicts       impacts on the local economy and the macroeconomic
around the globe. Violent conflict is most likely to occur             conditions of the nation as a whole can be quite
where local communities have been systematically excluded              negative; in circumstances where governing institutions
from decision-making processes, when the economic                      are weak or underdeveloped, the consequences of the
benefits are concentrated in the hands of a few, when the              “resource curse” are often magnified. Furthermore,
burdens associated with Extractive Industries clash with               while social and environmental assessment and
local social, cultural, religious and environmental norms,             management procedures in the Extractive Industry
or align with pre-existing tensions. The price paid by                 sector are well developed, impacts on communities
societies threatened by, undergoing or emerging from                   and the environment continue to be a powerful
natural resource-related violence is evident in the lives              conflict driver.
lost or touched by conflict, and amplified by fractured                Mismanagement of funds and financing war:
relationships, weakened institutions and destroyed                     Corruption and diversion of funds to satisfy individual
infrastructure.                                                        gains at the expense of national and community
EXTRACTIVE INDUSTRIES
             AND CONFLICT
    interests can easily contribute to conflict. Too often the       with enough information and training to be able to
    vast revenues from Extractive Industries have been               engage in the process of dialogue in a meaningful way.
    diverted away from the public interest to satisfy                Equitable benefit-sharing: Under the right conditions,
    personal gains and, in some cases, to finance armies             the Extractive Industries can provide significant benefits
    and violent conflict.                                            to communities and regions in the form of infrastructure,
    Inadequate institutional and legal framework: The                employment, contracting opportunities, and general
    mismanagement of funds is symptomatic of the                     economic development. If these benefits are consistent
    broader institutional and legal capacities to manage             with community interests, and are perceived to be
    the development of Extractive Industry for the benefit           delivered fairly, they can help prevent conflict and
    of the country as a whole.                                       compensate for the environmental and social impacts
    Unwillingness to address the natural resources                   of the development.
    question in peace agreements: If unaddressed in a                Mitigating the negative economic, social,
    peace process, natural resources become a potential              environmental and gender issues: Economic,
    source of the conflict in the future. Issues of                  social and environmental impact assessments and
    ownership, wealth-sharing and distribution are                   management procedures have evolved substantially
    important and will have significant effects on the               in recent years; there are now substantial international
    capacity to achieve post-conflict stability.                     standards that provide direction in resolving these
                                                                     issues proactively. The rights of indigenous people
Intervention framework                                               and the gender implications of the Extractive Industry
                                                                     sector need close attention and recognition to mitigate
Before designing specific interventions, it is essential
                                                                     any violent conflict. Part of the long-term strategy for
to construct an intervention framework that takes into
                                                                     conflict prevention in this sector is to ensure it becomes
account the following key issues: an assessment of
                                                                     a foundation for employment generation and economic
conflict dynamics; the alignment of key actors for positive
                                                                     development for local people.
outcomes; and, the design of interventions that respond
to the prevailing conflict causes, in a way that reflects the        Transparent and effective management of revenues:
particular stage in the broader conflict cycle. The paper            Extractive Industries normally lead to vast increases
proposes a framework for designing intervention                      in government revenues and, if improperly managed,
strategies; the framework consists of:                               these increases can stimulate corruption and undermine
                                                                     stability. A culture of transparency needs to be
    Natural resource assessment considerations that can
                                                                     encouraged and the Extractive Industries Transparency
    be integrated into assessments are already underway,
                                                                     Initiative (EITI) provides the platform to institutionalize
    including Post Conflict Needs Assessments (PCNA);
                                                                     the effective management of revenues.
    and, activities in support of Development Assistance
    Frameworks.                                                      Strengthening the institutional and legal framework:
                                                                     Establishing a robust institutional and legal framework
    Aligning and coordinating with other actors able to
                                                                     that governs the development and management of the
    make a constructive contribution to conflict prevention
                                                                     Extractive Industries is essential to ensure that there is
    and dispute resolution as they relate to natural
                                                                     a legal basis to administer the rights and demands of
    resources. These include national and local
                                                                     stakeholders.
    governments, non-government organizations (local,
    national and international), and the private sector              Incorporating high-value natural resources into
    (both companies and associations).                               peace processes: Addressing extractive resources
                                                                     in the context of a peace process is an essential part
    Designing an intervention strategy that is responsive
                                                                     of the peace agreement, and essential for creating
    to the specific circumstances and nuances of the
                                                                     sustainable peace. The peace process often offers the
    conflict dynamics.
                                                                     opportunity to create a new constitutional arrangement
                                                                     that can address these structural issues in a way that
Conflict prevention strategies                                        may also help address the causes of the conflict.
Experience shows that tackling these issues requires a
concerted and multifaceted approach that encompasses             Additional Resources
governance, macro- and micro-economic stability,
                                                                 The study of the Extractive Industry-conflict nexus and the
capacity enhancement, and creative approaches that
                                                                 design of possible intervention strategies to respond to it is
increase opportunities for dialogue and contribute to the
                                                                 gaining scholarly attention. There exist many organizations
peaceful resolution of conflict. The paper identifies six key
                                                                 and initiatives which address these issues and a wide
opportunities for preventing conflicts related to Extractive
                                                                 variety of resources available to practitioners. A list of
Industries, they are as follows:
                                                                 these organizations and resources can be found in the
    Effective engagement of communities and                      Guidance Note.
    stakeholders: Conflict can be prevented by
    establishing channels of communities between
    stakeholders, and by ensuring all parties are provided
UN-EU Partnership
Strengthening Capacity for the Consensual and Sustainable
Management of Land and Natural Resources
The management of land and natural resources is one of the most critical challenges facing
developing countries today. The exploitation of high-value natural resources, including oil,
gas, minerals and timber has often been cited as a key factor in triggering, escalating or
sustaining violent con icts around the globe. Furthermore, increasing competition and
con ict for diminishing renewable resources, such as land and water, is on the rise. This is
being further aggravated by environmental degradation, population growth and climate
change. The mismanagement of land and natural resources is contributing to new con icts
and obstructing the peaceful resolution of existing ones.

To improve capacity for land and natural resource management and con ict prevention, the
European Union partnered with the Expert Reference Group of the UN Framework Team (FT)
in late 2008. The aim of this partnership was to develop and implement a strategic
multi-agency project focused on building the capacity of national stakeholders, the United
Nations system, and the European Union to prevent land and natural resources from
contributing to violent con ict. Six UN agencies, programme or departments have been
involved, including UNDP, DPA, UNEP, PBSO, UN-HABITAT and DESA. The partnership is
also designed to enhance policy development and programme coordination between key
actors at the eld level.

The rst outcome of this project is an inventory of existing tools and capacity within the UN
system and a set of four Guidance Notes on addressing natural resource management and
con ict prevention. These Guidance Notes cover: (i) Land and con ict, (ii) Extractive
industries and con ict, (iii) Environmental scarcity and con ict, (iv) Capacity development for
managing land and natural resources.

Based on the Guidance Notes, the second outcome of the project is to deliver a series of
training modules for UN and EU eld staff, as well as local partners, to enhance the
knowledge and skills needed to understand, anticipate, prevent, and mitigate potential
con icts over land and natural resources. Participants will acquire the skills to formulate and
operationalize preventive measures in relation to natural resource management (NRM) and
con ict.

In countries where speci c NRM and con ict challenges are identi ed, the project will aim
to provide focused technical assistance in the development of con ict prevention strategies.
This could include the deployment of staff and other experts to assist the UN Country Team
(UNCT), including the Resident Coordinator (RC) or Peace and Development Advisor, in
analysing options and designing programmes. Where needed, dedicated follow-up
measures will also be undertaken on an inter-agency basis, in partnership with the EU.

For more information, please contact Mr. Mohamed Yahya at the Framework Team
Secretariat on: +1-212-906-6622 or mohamed.yahya@undp.org or Stephen Jackson of DPA
at jackson3@un.org




                                               UN Interagency Framework Team for Preventive Action
                                               Hosted by: UNDP, Bureau for Crisis Prevention and Recovery
                                               One United Nations Plaza, Rm. 2084, New York, NY 10017, U.S.A.
                                               Tel.: +1-212-906-5422 E-mail: framework.team@undp.org

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UN - Extractive Industries Conflict

  • 1. The United Nations Interagency Framework Team for Preventive Action EXTRACTIVE INDUSTRIES AND CONFLICT GUIDANCE NOTE FOR PRACTITIONERS with funding and support from the European Union
  • 2. Executive Summary Steps can be taken to: prevent such conflicts from occurring; mitigate their short and long-term effects when they do occur; and, harness the enormous potential of Natural resources and conflict natural resources to rebuild societies in the aftermath of Conflict arises when two or more groups believe their conflict. The effective management of a society’s natural interests are incompatible. It is not in itself a negative resources is therefore a priority for all those committed to phenomenon. Non-violent conflict can be an essential the goal of conflict prevention and sustainable development. component of social change and development, and is a Consequently, it is important that immediate and longer necessary component of human interaction. Non-violent term steps are taken by United Nations (UN) and European resolution of conflict is possible when individuals and Union (EU) development practitioners to prevent the groups have trust in their governing structures, society Extractive Industries from being a source of conflict, and and institutions to manage incompatible interests. to address conflict in this domain in an effective manner when it does arise. This Guidance Note aims to address Conflict becomes problematic when societal mechanisms this challenge. and institutions for managing and resolving conflict break down, giving way to violence. Societies with weak Extractive Industries institutions, fragile political systems and divisive social The Extractive Industry is a term that is often used to relations can be drawn into cycles of conflict and violence. describe non-renewable resources, such as oil, gas and Preventing this negative spiral and ensuring the peaceful minerals. This Guidance Note begins by explaining the resolution of disputes is a core interest of the international main reasons why the Extractive Industries can cause community. The challenge for UN, EU and other tensions at a local or national level, and how these tensions international actors is to promote positive social can lead to conflict. It then offers guidance on strategies transformation, while mitigating the risks and potential for mitigating the impacts of conflicts associate with the impacts of violent and damaging conflict. Extractive Industry. Environmental factors are rarely, if ever, the sole cause The following six principles are identified as the main drivers of violent conflict. However, the exploitation of natural of Extractive Industry-related conflicts: resources and related environmental stresses can be implicated in all phases of the conflict cycle, from Poor engagement of communities and stakeholders: contributing to the outbreak and perpetuation of violence Where communities and stakeholders are poorly to undermining prospects for peace. This Guidance Note engaged, marginalised or excluded from the dialogue in accordingly focuses on the role of natural resources in the Extractive Industry development process, they are triggering, escalating or sustaining violent conflict. Its aim almost certain to begin to oppose the development. As is to provide practical guidance on the role that the UN and the conflict escalates, the use of strategies of violence EU can play in early warning and assessment, structural as a coercive measure against the company, and a conflict prevention (long-term measures) and direct conflict means for addressing old grievances and mounting prevention (short-term measures). It is meant to provide a opposition against the government, are likely. combination of strategic advice and operational guidance, Inadequate benefit-sharing: If benefits are distributed as well as to unite existing tools and guidance under a in a manner that appears unfair as compared to the single framework. distribution of the costs, risks and responsibilities, then those who are disenfranchised or bearing risks and Extractive Industries and conflict responsibilities without fair compensation are likely to oppose the development, and possibly rebel. The Extractive Industries present particular challenges for both fragile states and developing nations; the Excessive impact on the economy, society and the exploitation of non-renewable natural resources, including environment: Notwithstanding the promise of oil, gas, minerals and timber has often been cited as a key prosperity often associated with Extractive Industry, the factor in triggering, escalating or sustaining violent conflicts impacts on the local economy and the macroeconomic around the globe. Violent conflict is most likely to occur conditions of the nation as a whole can be quite where local communities have been systematically excluded negative; in circumstances where governing institutions from decision-making processes, when the economic are weak or underdeveloped, the consequences of the benefits are concentrated in the hands of a few, when the “resource curse” are often magnified. Furthermore, burdens associated with Extractive Industries clash with while social and environmental assessment and local social, cultural, religious and environmental norms, management procedures in the Extractive Industry or align with pre-existing tensions. The price paid by sector are well developed, impacts on communities societies threatened by, undergoing or emerging from and the environment continue to be a powerful natural resource-related violence is evident in the lives conflict driver. lost or touched by conflict, and amplified by fractured Mismanagement of funds and financing war: relationships, weakened institutions and destroyed Corruption and diversion of funds to satisfy individual infrastructure. gains at the expense of national and community
  • 3. EXTRACTIVE INDUSTRIES AND CONFLICT interests can easily contribute to conflict. Too often the with enough information and training to be able to vast revenues from Extractive Industries have been engage in the process of dialogue in a meaningful way. diverted away from the public interest to satisfy Equitable benefit-sharing: Under the right conditions, personal gains and, in some cases, to finance armies the Extractive Industries can provide significant benefits and violent conflict. to communities and regions in the form of infrastructure, Inadequate institutional and legal framework: The employment, contracting opportunities, and general mismanagement of funds is symptomatic of the economic development. If these benefits are consistent broader institutional and legal capacities to manage with community interests, and are perceived to be the development of Extractive Industry for the benefit delivered fairly, they can help prevent conflict and of the country as a whole. compensate for the environmental and social impacts Unwillingness to address the natural resources of the development. question in peace agreements: If unaddressed in a Mitigating the negative economic, social, peace process, natural resources become a potential environmental and gender issues: Economic, source of the conflict in the future. Issues of social and environmental impact assessments and ownership, wealth-sharing and distribution are management procedures have evolved substantially important and will have significant effects on the in recent years; there are now substantial international capacity to achieve post-conflict stability. standards that provide direction in resolving these issues proactively. The rights of indigenous people Intervention framework and the gender implications of the Extractive Industry sector need close attention and recognition to mitigate Before designing specific interventions, it is essential any violent conflict. Part of the long-term strategy for to construct an intervention framework that takes into conflict prevention in this sector is to ensure it becomes account the following key issues: an assessment of a foundation for employment generation and economic conflict dynamics; the alignment of key actors for positive development for local people. outcomes; and, the design of interventions that respond to the prevailing conflict causes, in a way that reflects the Transparent and effective management of revenues: particular stage in the broader conflict cycle. The paper Extractive Industries normally lead to vast increases proposes a framework for designing intervention in government revenues and, if improperly managed, strategies; the framework consists of: these increases can stimulate corruption and undermine stability. A culture of transparency needs to be Natural resource assessment considerations that can encouraged and the Extractive Industries Transparency be integrated into assessments are already underway, Initiative (EITI) provides the platform to institutionalize including Post Conflict Needs Assessments (PCNA); the effective management of revenues. and, activities in support of Development Assistance Frameworks. Strengthening the institutional and legal framework: Establishing a robust institutional and legal framework Aligning and coordinating with other actors able to that governs the development and management of the make a constructive contribution to conflict prevention Extractive Industries is essential to ensure that there is and dispute resolution as they relate to natural a legal basis to administer the rights and demands of resources. These include national and local stakeholders. governments, non-government organizations (local, national and international), and the private sector Incorporating high-value natural resources into (both companies and associations). peace processes: Addressing extractive resources in the context of a peace process is an essential part Designing an intervention strategy that is responsive of the peace agreement, and essential for creating to the specific circumstances and nuances of the sustainable peace. The peace process often offers the conflict dynamics. opportunity to create a new constitutional arrangement that can address these structural issues in a way that Conflict prevention strategies may also help address the causes of the conflict. Experience shows that tackling these issues requires a concerted and multifaceted approach that encompasses Additional Resources governance, macro- and micro-economic stability, The study of the Extractive Industry-conflict nexus and the capacity enhancement, and creative approaches that design of possible intervention strategies to respond to it is increase opportunities for dialogue and contribute to the gaining scholarly attention. There exist many organizations peaceful resolution of conflict. The paper identifies six key and initiatives which address these issues and a wide opportunities for preventing conflicts related to Extractive variety of resources available to practitioners. A list of Industries, they are as follows: these organizations and resources can be found in the Effective engagement of communities and Guidance Note. stakeholders: Conflict can be prevented by establishing channels of communities between stakeholders, and by ensuring all parties are provided
  • 4. UN-EU Partnership Strengthening Capacity for the Consensual and Sustainable Management of Land and Natural Resources The management of land and natural resources is one of the most critical challenges facing developing countries today. The exploitation of high-value natural resources, including oil, gas, minerals and timber has often been cited as a key factor in triggering, escalating or sustaining violent con icts around the globe. Furthermore, increasing competition and con ict for diminishing renewable resources, such as land and water, is on the rise. This is being further aggravated by environmental degradation, population growth and climate change. The mismanagement of land and natural resources is contributing to new con icts and obstructing the peaceful resolution of existing ones. To improve capacity for land and natural resource management and con ict prevention, the European Union partnered with the Expert Reference Group of the UN Framework Team (FT) in late 2008. The aim of this partnership was to develop and implement a strategic multi-agency project focused on building the capacity of national stakeholders, the United Nations system, and the European Union to prevent land and natural resources from contributing to violent con ict. Six UN agencies, programme or departments have been involved, including UNDP, DPA, UNEP, PBSO, UN-HABITAT and DESA. The partnership is also designed to enhance policy development and programme coordination between key actors at the eld level. The rst outcome of this project is an inventory of existing tools and capacity within the UN system and a set of four Guidance Notes on addressing natural resource management and con ict prevention. These Guidance Notes cover: (i) Land and con ict, (ii) Extractive industries and con ict, (iii) Environmental scarcity and con ict, (iv) Capacity development for managing land and natural resources. Based on the Guidance Notes, the second outcome of the project is to deliver a series of training modules for UN and EU eld staff, as well as local partners, to enhance the knowledge and skills needed to understand, anticipate, prevent, and mitigate potential con icts over land and natural resources. Participants will acquire the skills to formulate and operationalize preventive measures in relation to natural resource management (NRM) and con ict. In countries where speci c NRM and con ict challenges are identi ed, the project will aim to provide focused technical assistance in the development of con ict prevention strategies. This could include the deployment of staff and other experts to assist the UN Country Team (UNCT), including the Resident Coordinator (RC) or Peace and Development Advisor, in analysing options and designing programmes. Where needed, dedicated follow-up measures will also be undertaken on an inter-agency basis, in partnership with the EU. For more information, please contact Mr. Mohamed Yahya at the Framework Team Secretariat on: +1-212-906-6622 or mohamed.yahya@undp.org or Stephen Jackson of DPA at jackson3@un.org UN Interagency Framework Team for Preventive Action Hosted by: UNDP, Bureau for Crisis Prevention and Recovery One United Nations Plaza, Rm. 2084, New York, NY 10017, U.S.A. Tel.: +1-212-906-5422 E-mail: framework.team@undp.org