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Wellington, New Zealand, 2009/02/04 - Acclaimed author and economist, Paul Collier and Nobel laureate, Michael Spence and others launched a draft of a new international Charter on natural resources (like oil). This could change the way business is done in oil-rich poor countries - NaturalReso.
The draft of a new Resource Charter was launched today for consultation at a conference of the Global Development Network in Kuwait.
It creates a step-by-step guide for governments of resource-rich developing countries to help them make core decisions – beginning with the decision to extract natural resources like oil, gas or minerals, and ending with decisions about using the revenues they generate.
The draft is launched for public consultation by economist and critically acclaimed author of The Bottom Billion Paul Collier, Nobel Prize winner Michael Spence, economist Anthony Venables, an NGO called Revenue Watch Institute, and a group of independent lawyers and political scientists.
It could help some of the world’s poorest countries to lift living standards at a time when the global financial crisis puts pressure on aid budgets.
“A billion people still live in extreme poverty. Around a third of them live in countries rich in natural resources like oil. So why are these resources a source of growth in some countries but a source of stagnation in others? We set out to answer this question and create a new ‘tool’ for governments and societies to set about reversing that trend,” says Paul Collier.
The Charter will also put pressure on others who can make a difference, such as the governments' of developed countries and transnational extraction companies. It will encourage them to compete for contracts to extract resources in an open and fair way.
This has been the focus of the United Kingdom’s Extractive Transparency Initiative, introduced in 2002.
“It was the right place to start. Citizens need to know what money is coming in so they can scrutinize how it is being used. We hope a Resource Charter will take this further,” says Paul Collier.
By highlighting the key decisions that determine whether natural resources are successfully harnessed for development, the Charter uses guidance and peer pressure to bring about change.
“History shows that guidance and peer pressure can be very effective. The countries of Eastern Europe for example, changed their laws and rules to meet the standards of market democracies - not because they had to, but because they wanted to join the European Union club,” says Gobind Nankani, President of the Global Development Network.
More than 430 researchers and policy-makers gathered in Kuwait today at the annual conference of the Global Development Network to discuss natural resources and poverty reduction.
The Charter also outlines ways in which the risk of price changes in commodities like oil could be shared between the governments of poor countries and the extraction companies.
“Governments that are beset by problems and are heavily constrained by their limited capacity, cannot alone carry the risk of boom and bust in international commodity cycles. A re-balancing of risk need not imply a transfer of wealth (or a subsidy) if it results in a better overall growth path,” says Paul Collier.
“Countries with natural resource wealth face special opportunities and special challenges. If used well, these resources can create greater prosperity for current and future generations; if used poorly, they can cause lasting damage. This is the moment to look closely at the other tools apart from aid that are available to us. So we at Global Development Network have been very pleased to be part of this launch today,” says Gobind Nankani.
About the Global Development Network
The Global Development Network (gdnet.org) is a global association of research and policy institutes. Its annual conferences are held in a different region each year.
Participants at the annual conference in Kuwait include:
The Deputy Prime Minister of Kuwait, Mohammad Al-Sabah;
Former President of Mexico and GDN Chair, Ernesto Zedillo;
Chief Economist and Senior Vice President at the World Bank, Justin Lin
The GDN conference is hosted by the Arab Fund for Economic and Social Development based in Kuwait.