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Rules of Engagement: How Business can be a force for peace
Conference, 13 November 2002
Netherlands Congress Centre, The Hague
Remarks of Bennett Freeman
Managing Risk and Building Trust:
The Challenge of Implementing the Voluntary Principles on Security and Human Rights
I want to thank Pax Christi Netherlands, the Dutch Section of Amnesty International, and the Netherlands Institute for Southern Africa for inviting me to address this important and timely conference. It is a tribute to the sharp focus and hard work of the global NGO community that the whole subject of business and conflict is now on the agenda of so many industries and companies, as well as international institutions and a growing number of national governments. It is also appropriate that this subject is commanding attention in the Netherlands, in light of both the global reach of corporations based here, and the great contributions that your civil society and government have made to promote human rights and provide humanitarian relief around the world.
No doubt the Government of the Netherlands, together with Dutch NGOs and Royal/Dutch Shell, will contribute creatively to the Voluntary Principles on Security and Human Rights— one of the three initiatives highlighted by the conference this morning. The Voluntary Principles offer "rules of engagement" for extractive sector company relationships with security forces, one of the central sets of issues to have emerged in the debate over the roles and responsibilities of business in zones of conflict. I will argue that while recent events are testing the value of the Voluntary Principles, there are concrete steps that companies, NGOs and the convening governments can take to make these "rules of engagement" more useful and credible- and help business become a force for peace.
Since the U.S. and UK governments announced the Voluntary Principles on Security and Human Rights in December 2000, the clash between large-scale extractive operations and remote, impoverished communities in zones of conflict has become more acute than ever. Although the Voluntary Principles offer a global standard the combination of past incidents and current tensions make them most relevant in three countries above all: Nigeria, Indonesia, and Colombia.
In the summer of 2002, the salience of the Voluntary Principles was highlighted in all three:
- In early July, hundreds of unarmed women from surrounding communities occupied ChevronTexaco's oil terminal at Escravos in the Niger Delta, while others took over several nearby flowstations. Shell faced similar protests the next month.
- At the end of August, two American citizens and an Indonesian were killed near Freeport McMoRan's giant Grassberg mine in the highlands of Papua, Indonesia. While the Indonesian military blamed the separatist OPM for the killings, speculation has intensified that elements connected to Kopassus, the special forces arm of the army, were responsible. The incident may have been intended as a signal to Freeport to maintain funding levels for its security arrangements with the military, and curtail its contacts with pro-independence elements in Papua.
- Late in the summer, U.S. military advisers arrived in Saravena in east-central Colombia to begin training two Colombian army brigades to protect the 500-mile Cano Limon-Covenas pipeline operated by Occidental Petroleum that has been a frequent target of guerilla attacks. Some 100 special forces personnel will reinforce the effort in January.
These developments pose challenges for the companies, and for their host and home country governments alike. Their response will test the Voluntary Principles as a framework for balancing security and human rights. At stake is not only the companies' "social license to operate" in zones of conflict and in close proximity to indigenous communities, but also the companies' ability and willingness to continue operating in difficult circumstances— even with such large investments on the ground. If the Voluntary Principles are to remain a useful framework, the convening governments and participating companies and NGOs must together sharpen the focus of the process around the twin objectives of managing risk and building trust. It is essential to continue the dialogue in the conference rooms of the State Department and the Foreign Office, but even more important to extend the dialogue and take actions on the ground in the countries where the threats loom largest.
The year-long dialogue convened by the State Department and the Foreign Office in March 2000 did not attempt to address all the issues which have put extractive sector companies under the harsh spotlight of international NGOs and the local communities where they operate. Avoided were the perhaps tougher issues of whether a particular company should even operate in certain countries, such as Burma or Sudan. Instead, the dialogue focused exclusively on the clash between security and human rights: how to balance the companies' legitimate need to meet real security threats in certain countries with NGOs' and local communities' insistence that company security arrangements respect human rights.
The Voluntary Principles are framed around three concrete sets of issues: the criteria that companies should consider as they assess the risk of complicity in human rights abuses in their security arrangements, including their relations with local communities and diverse stakeholders; company relationships with state security forces, both military and police; and their relations with private security forces. The principles provide practical guidance to companies, particularly to country and security managers, on how to incorporate international human rights standards and emerging best practices into policies and decisions that sometimes have life and death consequences.
For example, the Risk Assessment section of the Voluntary Principles offers a roadmap of key human rights "factors" to be taken into account as companies plan or update their security arrangements. These include identifying conventional security risks as most companies do as a matter of course as well as broader conflict impact assessments, which are less common; the human rights records of public and private security forces operating or available in the region; the strength of the rule of law and judicial processes; and equipment transfers. Most significantly, companies are called upon to "consider the available human rights records" of potential security providers, both public and private, so that "awareness of past abuses and allegations can help companies to avoid recurrence as well as to promote accountability."
The Public Security section urges that "the type and number" of forces should be "competent, appropriate and proportionate to the threat." The most far-reaching provision in this section calls on companies to "record and report any credible allegations of human rights abuses by public security in their areas of operation to appropriate host government authorities" and "where appropriate… urge investigation and that action be taken to prevent any recurrence." This provision breaks new ground by effectively encouraging companies to not only report potential abuses but to urge accountability for them, an important step in countries where impunity has been the norm.
If observed, these kinds of guidelines can alter the dynamics among companies, security forces and local communities by lowering risks to human rights and identifying companies with the rule of law-- while maintaining necessary security. Yet they also raise difficult operational issues on the ground with military commanders and, ultimately, political and diplomatic issues with the host country governments that cannot necessarily be resolved by the companies themselves.
Seven U.S. and UK-based companies (Chevron and Texaco separately prior to their merger, Conoco, BP, Shell, Rio Tinto and Freeport McMoran) and nine major NGOs (including Human Rights Watch, Amnesty International, International Alert, the Lawyers Committee for Human Rights and the Fund for Peace, along with the Prince of Wales International Business Leaders Forum and Business for Social Responsibility) were able to "support the process and welcome the principles" because they saw an opportunity to serve their own core interests. The companies wanted the benefit of such rules of the road developed jointly with the NGOs, several of which had published detailed reports alleging company complicity in human rights abuses in the Nineties. The NGOs may have preferred principles that would be both legally binding and subject to independent monitoring. But they decided that engaging was better than missing a chance to develop a standard, though voluntary, which nonetheless the companies would be expected to implement and in turn could be used as the basis for further scrutiny.
The motivations of the U.S. and UK governments in convening and driving the process were just as clear. They shared a concern over the implications of such serious allegations made against a number of their flag companies. They shared a commitment to work together with companies and NGOs to promote corporate social responsibility, partly in response to the growing backlash against globalization. At least as important, they also shared an economic and strategic interest in ensuring that their companies could continue to operate in Columbia amidst that country's armed insurgency. They shared the same interest in Nigeria and Indonesia, two key countries facing fragile political transitions to democracy against a backdrop of low-intensity but violent regional conflicts threatening their unity and stability. For example, Texaco was forced to halt operations in the Niger Delta in August 1999 due to large scale community protests, while in Indonesia ExxonMobil was forced to shut production for several months in early 2001 at its Arun LNG facility after its operations came under direct attack from Acehnese separatists.
The process probably never would have been convened nor the Voluntary Principles negotiated, agreed and announced without the key convening and drafting role of the U.S. and UK governments. Both the companies and NGOs looked to the governments to bring them together and then to announce the Voluntary Principles while shielding them, respectively, from perceptions that companies were foisting the Principles on sensitive host country governments; or that the NGOs were implying that their concerns were now resolved. And both the companies and NGOs looked to the governments to either lead or support the process of implementation at the country level by briefing the host country governments in Abuja, Bogota, Jakarta and elsewhere.
The Bush Administration has carried the initiative forward together with the British government. Steps were taken in 2001 and early 2002 to brief the governments of Colombia, Nigeria and Indonesia, and to join implementation discussions with the companies (including several not part of the original meetings in London and Washington.)
Further progress was made in a London plenary session in May 2002 when an additional U.S.-based company, Newmont Mining, joined the process and was followed the next month by Occidental Petroleum and ExxonMobil. These developments brought the number of participating companies to nine. As significantly, the governments of The Netherlands and Norway joined at that time: The Netherlands with its joint home country relationship with Shell (along with the UK); Norway with a commitment to bring Statoil and possibly others into the process. The engagement of these new participants reflects and reinforces the emergence of the Voluntary Principles as the global standard on security and human rights issues for extractive companies.
The government of Canada and several Canadian companies have also indicated an interest, along with other UK-based companies which have been following developments closely. When the process can be further expanded without diluting progress made so far, it would be useful to add the governments of Australia, South Africa and Chile together with the international mining companies based in those countries, along with the governments of Mexico and Brazil together with their state-owned oil companies which also operate abroad.
But more important right now than further expansion is consolidation and implementation on the ground. Two years after their launch, the credibility of the Voluntary Principles is on trial; the ability of the process to demonstrate concrete progress is being tested. The NGOs inside the process and others outside of it cannot be expected to accept such progress on trust alone. Progress must be demonstrated in concrete contexts and specific countries, and trust must be developed through further dialogue and new patterns of cooperation.
Tangible steps can be taken on three interlocking levels to give the Voluntary Principles more operational texture: one set of steps by the companies on their own; a second by the companies and NGOs working together; and a third by the convening home country governments, working directly with host country governments and security forces.
First and foremost, companies can intensify the integration of the Voluntary Principles into their statements of company policy, training, and community engagement programs on a global basis. They can:
- Revise operating guidelines and procedures for their facilities and personnel in relevant countries to reflect provisions of the Voluntary Principles. Many managers in the field have little experience on these issues, and can benefit from materials which can help them meld company policy with the Voluntary Principles in specific situations.
- Integrate the content of the Voluntary Principles into their training programs . Personnel, from senior site and operations managers to company security guards, could benefit from basic introductions to human rights issues and detailed discussions on the use of force. Case studies and role-playing scenarios can be useful, especially if tailored to particular country conditions.
- Add clauses to security contracts with public and private security forces detailing expectations on key issues such as use of force and company equipment, and prior human rights records of individual units and commanders. Since much of the content of the Voluntary Principles calls on companies to reach certain understandings with security forces, it can be helpful to codify such understandings to the extent possible even if they are not made public.
- Integrate some provisions of the Voluntary Principles into community engagement programs so that security and community relations staffs more fully coordinate their activities. These programs require a willingness to expand communication and consultation on security issues with the local communities near their operations. Community-based security can be strengthened by hiring and training local community residents as security guards where conditions warrant. This approach depends not only on informing local communities about their rights but also their responsibilities for ensuring security. It also depends on developing trust and cooperation with local government authorities and security forces.
- Build understanding of the Voluntary Principles through direct dialogues with host country governments and militaries at the national and regional levels. It is especially important to engage with national oil companies such as the NNPC in Nigeria, ECOPETROL in Colombia, and Pertamina in Indonesia, which have a stake in working with their foreign partners to address security issues in ways which minimize risks to reputation as well as to production.
BP Indonesia is trying to develop such a community-based approach for its planned Tangguh LNG project in Papua. Moreover, it has taken the unprecedented step of annexing the full text of the Voluntary Principles to its contract with Pertamina, and has also developed a set of security guidelines for private security contractors based explicitly on them. Other companies may want to consider similar steps as they plan new projects, or revise their policies and procedures in connection with existing ones.
Second, far more interaction should take place between the companies and NGOs outside the annual plenary sessions convened by the governments. In addition to companies communicating the progress they have made and the problems they have encountered in their implementation of the Voluntary Principles, companies could work together with NGOS in four areas:
- Consult on risk and conflict assessment criteria and planning with respect to global policy and specific countries. The companies and NGOs might strengthen mutual understanding and trust by sharing information, methods and analysis, especially as new issues emerge or incidents occur.
- Develop human rights content of training programs undertaken with both public and private security forces.
Such direct consultation and cooperation must be handled sensitively to remain consistent with the core interests and appropriate roles of the companies and NGOs alike. NGOs would have to be willing to engage on this basis without diminishing their ability to scrutinize and criticize company security policies and practices. Companies no doubt would have to find and test the appropriate limits of information they would be willing to share.
Third, the convening governments should be prepared to take a more active role in working with host country governments to institutionalize the Voluntary Principles with military and police forces. The home country governments of companies operating in Nigeria, Indonesia and Columbia, among others, can use the Voluntary Principles as a framework for helping their companies navigate some of the toughest threats to their investments, while remaining on the ground in such important countries. The Voluntary Principles can also be used as a framework for working with host governments and militaries to strengthen respect for human rights and accountability for abuses— sensitive issues which ultimately reflect on all parties and shape the climate of bilateral relations and cooperation on other interests.
The U.S., UK and Dutch governments can contribute to the implementation process in Nigeria in light of the incidents in the Niger Delta last summer. Further unrest is possible as the revenue allocation process channeling funds back to the states and local communities remains incomplete and expectations for tangible improvements remain unmet.
The U.S. Government in particular has raised the bar for testing the credibility of the Voluntary Principles in Colombia through its direct support for pipeline security. It will have a high political price to pay if such protection, however inadvertently, becomes connected to new allegations of human rights abuses by U.S.-funded and trained forces operating around an American company's operations. With the U.S. military increasingly called on to extend security protection to large-scale foreign-owned oil, gas and pipeline facilities in Colombia and elsewhere (such as Georgia), the line between the national interest of those countries and the corporate interests of the companies involved also becomes blurred. This development not only opens up new opportunities for expanded human rights training, but also exposes companies to new and different risks. In the event that U.S.-trained forces exceed their mandates and are found complicit in human rights abuses, companies are exposed to potentially significant new liabilities as well as risks to their operations and ultimately to their reputations.
For these reasons, the U.S. forces hitting the ground to train and equip the Colombian army brigades to protect the Cano Limon-Covenas pipeline should also come prepared to reinforce human rights training for their Colombian counterparts. They should also work with Occidental Petroleum to draw on the content of the Voluntary Principles where appropriate.
The U.S. and UK governments, together with those of Australia, The Netherlands and other countries, face the most sensitive situation alongside the companies in Indonesia. In the wake of the Bali bombing in October 2002 and threats to oil company facilities in Aceh and elsewhere in Sumatra, American pressure on the Indonesian government to crackdown on terrorism has become the overriding priority of U.S.-Indonesian bilateral relations. Stronger security cooperation is surely in the interests of both the Indonesian and U.S. governments, as well as of the foreign extractive companies operating across the archipelago. Yet as military and intelligence cooperation are strengthened to counter further terrorist attacks, the NGO and media spotlight will remain trained on the Indonesian government and military's record on human rights. The U.S. Government has pushed hard for accountability for past abuses by the military, in East Timor in particular. No doubt it recognizes that while the bilateral relationship and foreign investment environment both depend on a full Indonesian commitment to counter terrorism, congressional and public support for the relationship could be undermined by further abuses. It has already been put on notice by Senator Leahy, who has urged that U.S. training assistance to the Indonesian military be halted if the military is found to have planned the killings near the Freeport mine in Papua.
Those killings also threaten the long-term security and even viability of extractive company operations in Papua if accountability is not achieved. The Voluntary Principles will not provide security, the most critical priority. But they can contribute to accountability, on the part of both the companies and the security forces. Long-term security will not take hold in Indonesia without greater accountability, together with renewed efforts to achieve reconciliation in regions of unrest. While the companies will continue to share the main responsibility for implementing the Voluntary Principles, the U.S. Government should help engage the government and military in the process constructively. Such a signal from the U.S. can also help overcome any doubts to its commitment to the Voluntary Principles in Indonesia stemming from its August 2002 intervention in the lawsuit against ExxonMobil, when it asked a federal court to drop the case due to the complications it could cause in U.S.-Indonesian bilateral relations. (That suit alleged company complicity in human rights abuses in Aceh, including the charge that it provided land moving equipment used by the Indonesian military to dig mass graves).
While most attention has focused on the risks facing extractive operations in Nigeria, Colombia and Indonesia, the Voluntary Principles may be useful in a number of other countries as well— even those without current armed conflict or unrest but with records of human rights abuses or tensions with local communities. These range from Peru and Ecuador in South America to Papua New Guinea in the South Pacific where oil and mining companies have had tense relations with indigenous peoples, to several countries in Africa. In Africa, these countries include Chad and Cameroon, where the major pipeline project supported by the World Bank passes through regions previously torn by strife; and Equatorial Guinea, where major oil companies have established a presence in a country long governed repressively. The Caspian is another region where the Voluntary Principles may be relevant, especially as a security corridor is established alongside the Baku-Ceyhan pipeline from Azerbaijan through Georgia to Turkey.
Finally, much attention has been paid recently to the activities of private security companies, especially those based in the U.S. which are playing a growing role in advising and training military and police forces around the world. Whether or not these firms are unofficial extensions of U.S. foreign policy, the U.S. Government has an opportunity through its official licensing process to encourage them to integrate human rights training into their activities. Such training could include issues addressed by the Voluntary Principles, such as use of force and community engagement, while coordinating with similar training undertaken by the companies themselves.
Implementing the Voluntary Principles on Security and Human Rights is challenging enough since they already address the most pervasive human rights risks facing the operations and reputations of extractive companies around the world. Yet their implementation is further complicated by the fact that they connect not only to the collision of extractive companies and remote communities on the frontlines of globalization, but to sensitive diplomatic relationships and even geopolitical challenges at the same time. They raise difficult questions about the blurred, overlapping roles and responsibilities of companies, NGOs and governments. They address directly, even if only in certain countries, the turbulent but necessary balance that must be struck between security and human rights in an era of local conflicts and global terrorism. The imperative of finding that balance will only increase in what has also become an era of accountability as well.
