Publications

In today's world, the private sector is the dominant engine of growth - the principal creator of value and managerial resources. If the private sector does not deliver economic growth and economic opportunity, equitable and sustainable around the world, then peace will remain fragile and social justice a distant dream (Koffi Anan)One of the realities of doing oil and gas business in the global marketplace is that many managers in this type of multinational corporations find themselves operating extractive industries in areas of armed conflict, indigenous cultural disputes, epidemic disease and other kinds of social upheaval which destabilizes business operations. This new challenge requires business managers to engage in conflict resolution and peace-building strategies in situations where promoting peace is an essential element of successful business operations and stable working environment.The involvement of oil and gas private sectors in peace-building is essential. Oil and gas industries usually have assets that make particular locations hard to leave, for instance, when a high technology industry has been constructed with the availability of highly trained personnel and links to other companies and local governments. This long standing and extensive relationships, obviously forces the company to remain in the location and continue the operation. The other reason is that the state with internal conflict is often economically weak. The government is more likely to be unable to cope entirely with the emerging demands of recovery of conflict torn regions. Consequently, business communities who are financially, logistically, and administratively prepared should intervene to mitigate violence.There are three types of corporate engagement, core business activities, social investment and philanthropy, and policy dialogue. To allow the business role in conflict mitigation become more effective and sustainable, it requires other entities to work with. Building partnerships with the government, NGOs and CBOs is of paramount importance, in addition to strengthening partnership with private sectors.Private sector can also play as a dialogue partner and donor in the promotion of peace in their operational area. The role of the 'collective group of seven of business associations' in Northern Ireland and an individual capacity of a chief executive of a multinational company in changing the face of politics in Mozambique are two examples of the role of private sectors in peace-building.The emergence of extractive industries around the world operated by giant multi- national companies in rural populations has greatly contributed to the economic growth of the host country. On the other hand, their operations have also created social problems for local populations, such as discriminatory access to employment, economic benefits, education, health services, environmental degradation, and human rights abuse by corporate security personnel, and the loss and damage to ancestral lands.The UN Office for the Coordination of Humanitarian Affairs (OCHA), (2000) states that corporations have been accused of complicity with human rights abuses and corporate royalties have continued to fuel wars. It has a become common knowledge that by selling diamonds and other valuable minerals, belligerents have been able to supply themselves with small arms and light weapons, thereby prolonging and intensifying the fighting and the suffering of civilian population. For example, rebel groups receive some amount of money from businessmen and private enterprises operating in the area of conflict. Such activities obviously endanger not only the local population, but also destabilize host country politics and threaten the safety of business operation, its employees and infrastructure, especially when payment is halted. Therefore, businesses should now have stopped this practice and adopt a new social role. Their investment should benefit the local population, feed national economic growth and use their influence and financial capacity to get involved in conflict resolution, prevention, and management in their operational area.Private sectors generally have good reasons to support efforts of conflict resolution. When conflicts occur, shortages of basic necessities like food and medicine can lead to a general breakdown of a society, with serious implications for civic order. This can make it difficult for business to function effectively. In addition, their presence in the host country often has a significant stake in local communities. They have recruited local workforce, built partnerships with various local businesses and developed relationships with the host country leader and politicians. For these reasons, they have direct incentives in supporting the elimination of conflict. By supporting conflict resolution process, business affirms its long-term commitment to host communities. This support can help companies build relationships and strengthen their reputations, leading to improved business opportunities. This benefit according to the World Bank, is part of the rationale behind corporate social Responsibility.In situations where protracted conflict is ongoing, the Business Humanitarian Forum (BHF, 1999: 10) finds that business can work with humanitarian organizations to provide practical assistance and support for their efforts to deal with urgent problems and needs. For example:1. Business can contribute funds to humanitarian organizations to finance their operation in wartorn, disaster hit, and social upheaval areas.2. The use of corporate assets or facilities such as mobile housing, communications, and means of transport, therefore humanitarian organizations can make relief operations much more effective.3. Business can assist by providing technical needs, such as communication devices, drug and medicine, and even share company human resources, such as employees' skills (doctors and engineers, geologists) to assist in providing assistance to conflict or disaster affected population.4. The growing power of multi-national companies in the global economy creates an opportunity to use their influence to assist humanitarian activities. They can also encourage host governments to respond more quickly and peacefully to end conflict and violence - to influence politicians and senior authorities and military officials to deal with conflict through peaceful solution. The ongoing conflict and repressive government could cause a threat to business operations, leading to wider economic and social problems within the country.Carnegie Commission on Preventing Deadly Conflict and Butler (in Haufler, 2000: 5) stated that private sectors rely on three general factors that might persuade managers to consider direct participation in conflict prevention and conflict management.1. The level of political and economic risk.2. How much they need access to resources and markets located in unstable areas.3. How important reputation is a corporate asset.In some ways it is most likely that corporate executives are interested in conflict management, especially in situations that disrupt the normal conduct of business. Business operating in conflict regions has a potential to face political risks. For example, violence from war, civil war, riots, and rebellion are dramatic set that can disrupt business operation. Such situations can lead to destruction to company's property, the shutting down of corporate operations, and direct harms to corporate personnel. In this regard, the companies might have two choices, cease the operation and leave the country, or stay and continue the operation with more efforts to support resolving the ongoing conflict. But extractive industries, particularly those with more related with downstream industries, may be tied to a specific location, and the cost of withdrawing could be too high.Moreover, oil and gas industries usually have assets that make particular locations hard to leave, for instance, when a high technology industry has been constructed with the availability of highly trained personnel and links to other companies and local governments. This long standing and extensive relationships, obviously forces the company to remain in the location and continue the operation. However, in order to reduce risks, the company needs to engage in finding out ways to resolve conflict and build peace in their operational area.The private sectors rich oil and gas industry can contribute the prevention and resolution of violent conflicts by supporting efforts to end hostilities, promoting respect for human rights, generating employment and income, assisting economic recovery and development to promote peaceful environment. They can also use their influence to persuade the host government and politicians to find a peaceful solution to conflict rather than by expressive measures.The other important factor why private enterprise should be involved in conflict resolution is that the state with internal conflict is often economically weak. The government is more likely to be unable to cope entirely with the emerging demands of recovery of conflict torn regions. Consequently, business communities who are financially, logistically, and administratively prepared should intervene to mitigate violence. However, business sectors should work in partnership with the host government, NGOs, and CBOs in order to reach maximum achievement of the programs.Profitable management of its core activities is the most effective contribution that business can make to prevent hostilities. Micro financing -small loans to small individual businesses -is one worthwhile strategy. It contributes to reducing the risks of another cycle of violence. 'Successful business practice attacks the root causes of potential conflicts. It generates wealth and promotes diversity of employment' (Berenbeim, 2002: 2).