Clean trade in natural resources: putting political accountability in the picture [en]

31 luglio -

oil

 

With very few exceptions, international traders do not care for the political situation of a particular country when dealing with their business. Whether they are selling to Canada or to Sudan, their most prominent interest is profit making. It is indeed true that in a state-centric view of international political economy, where nation states assume the role of traders, protectionist policies and embargoes are widespread, yet seldom do they take moral considerations into account. Even the recent European economic sanctions against Russia are politically founded rather than appealing to issues of ethics. A question thus arises: are there reasons to believe morally founded appeals in international trade should be justified?

Professor Leif Wenar, Chair of Ethics at King’s College, London, believes so. His argument runs as follows: Article 1 of the International Covenant on Civil and Political Rights (ICCPR) and of the International Covenant on Economic, Social, and Cultural Rights (ICESCR) states that “[a]ll peoples may, for their own ends, freely dispose of their natural wealth and resources”. This means that the resources, as well as the wealth of a country belong not to the country itself, but to its people. As such, any trade in wealth or resources in countries where political accountability is absent is to be considered theft and, as a consequence, is to be morally reprimanded.

 

The “resource curse” strikes not only the resource-exporting countries, by favouring the rise of authoritarianism (“might makes right”, one would say), but also the resource-importing countries, since they would be more or less directly financing those very same countries that they consider to be “evil”. Think of George W. Bush’s Axis of evil. Closely related to the Axis is one country such as Libya, rich in petroleum. According to Wenar, if we bought oil from Libya, then we would be indirectly financing the very same kinds of regime we are trying to fight. This, too, is morally wrong, if not borderline irresponsible.

 

The solution, writes Wenar, is to reinstate political accountability in those countries where might has made right. This way, not only would the resources belong to the people, instead of the state (as per the ICCPR and the ICESCR), but it would also turn the morally wrong into a morally not-as-wrong-as-before-but-there-is-still-a-ways-to-go. Wenar is aware that political accountability by itself will not solve all the country’s problems, but it would certainly put it on the right track. One important thing to note is that Wenar does not aim to make the resource curse-stricken countries democratic: he merely aims to substitute the Westphalian remnants of the rule of the stronger with political accountability, which, in his own words, “does not require a specific form of government”, democracy included. Political accountability means transparency, and it means that the importing countries should identify who is a “legitimate vendor” and who is not. Yet transparency alone is not sufficient.

 

What Wenar proposes is a clean trade policy framework for importing states, set up in a two-step process: a Clean Trade Act and a Clean Hands Trust. The aforementioned legitimate vendors can be qualified by whether “citizens have minimal civil liberties and political rights”. Wenar argues that such a trade framework “will disengage […] consumer demand from the most extreme authoritarian regimes and failed states” and instead encourage those states implementing these policies to, so to say, join the group of legitimate vendors.

 

A Clean Trade Act (CTA) is meant to set out legal penalties for those states, citizens or corporations importing from a disqualified country into the enacting jurisdiction. There, it will create a level playing field for all corporations since all resource curse-stricken countries will be forbidden from doing any business within said jurisdiction. At the same time, though, the CTA by itself will create a disadvantage for those firms that are within the jurisdiction of the implementing state, relative to those that are not. Horizontal pressure for other countries to join will be of paramount importance so as to isolate unaccountable actors.

 

This pressure, Wenar believes, can be gathered from a Clean Hands Trust (CHT), which would aim to “protect the citizens of the implementing state from paying for stolen resources indirectly”. In order to explain how it would work, Wenar makes the following example: suppose the US blocks any deal with Equatorial Guinea to buy its petroleum because of its authoritarian regime; suppose, also, that China continues to trade with Equatorial Guinea and buys an amount of petroleum for $3 billion. What the CHT is meant to do is for the US to impose duties on China so as to accrue to the “missing” $3 billion. This money will be put in a trust that will then be held for the citizens of Equatorial Guinea until a minimum accountable government is in place. In other words, the trust’s aim is two-fold: it will serve the purpose of beating the resource curse in Equatorial Guinea, by overthrowing the oppressive regime; and it will also create incentives for other countries (such as China, in this case), not to buy from disqualified countries, since for every dollar spent on “dirty oil”, the Chinese government would pay an additional dollar to be put in the CHT. Therefore, buying resources from unaccountable trade partners will become economically disadvantageous. In today’s world a clean trade framework can be pushed on the agenda by the more powerful countries and corporations. Intel’s commitment to a conflict-free supply chain for minerals can be one such example, other than a step in the right direction.

 

What Weinar fails to explain is how the unaccountable regime would exactly become accountable. His argument is that “no commercially isolated regime can survive for long”. Isolating Equatorial Guinea, he insists, will pave the way for new, different, and accountability-prone kinds of power taking the reins of the country. “[E]ven the threat of commercial isolation may be sufficient to bring transformational pressures”: since change cannot happen from within, it will have to come from without. Of course, change might happen, but the key word here is not “change”, it is “might”. Professor Wenar’s wish that all countries form a uniform commercial bloc abiding by an international system of property law is certainly something we should all share. But it is nothing more than that: a wish.

 

What is far more likely to happen is that, by applying such a policy framework, the trading world will be fractured into commercial blocs, one abiding by the new standards, and one refusing to do so. Hence, what Wenar calls “commercially isolated countries” will still have some support. A huge deal of trade will have to be diverted, and profits might not be maximised – but let us take a moment to ask ourselves: are they ever? What is important here is not that profits will not be as high as before, but that no country will have to become self-sustaining. If thousands of years have failed in combating the likes of shadow regionalism and the failed states phenomenon, there is very little reason to believe that a new ethical approach would. After all, in a framework where profit is paramount, what room is left for morals?