What is the Natural Resource Charter?
The Natural Resource Charter is a set of principles to guide governments and societies’ use of natural resources so these economic opportunities result in maximum and sustained returns for a country’s citizens. The charter provides the tools and knowledge necessary to avoid the mismanagement of these natural diminishing riches and ensure their ongoing benefits now and for the future.
Why design a charter? What is its intent?
The charter is designed to help governments and citizens harness natural resource wealth, making decisions that will provide the maximum, sustained economic benefit. The charter is not intended as a binding document but as a standard to which countries rich or poor can aspire, and a resource for technical and practical guidance.
Who is the charter for?
The charter provides guidelines for governments of all resource-rich countries from the United Kingdom to the Ivory Coast. These governments have both the sovereign right and moral responsibility to use their natural wealth for the maximum economic benefit of their people. For civil society in these countries, the charter principles can be a rallying point and advocacy tool to promote natural resource extraction that is conducted ethically and to the benefit of the community. Government and civil society in resource rich countries are not the only important decision-makers in how benefits are maximized. International companies, intergovernmental organizations, civil society groups, and governments of wealthy states that import a significant amount of resources also have roles. The charter includes recommendations for these actors.
Who is behind the charter? How was it founded?
The charter has no political heritage or sponsorship.
The drafters of the charter are an independent group of the world’s foremost experts in economically sustainable resource extraction, assembled by Paul Collier, director of the Centre for the Study of African Economies at Oxford University. The drafters comprise the charter’s Technical Group, which will continue to incorporate views, feedback, and input into the charter on an annual basis.
The charter is governed by an Oversight Board chaired by Ernesto Zedillo, former President of Mexico.
How does the charter fit with similar efforts?
The charter is not intended to substitute or supplant existing initiatives or guides on best practices. The charter draws on such internationally accepted guidelines as the EITI, the International Monetary Fund Guide on Resource Revenue Transparency, the Equator Principles, ICMM Principles for Sustainable Mining, and UN conventions on human rights and corruption. It is intended to complement this body of knowledge. The charter is not a binding agreement or protocol. It is a rallying point for existing efforts and good practices in natural resource management. We hope countries and companies choose to use the charter as a blueprint and strive to meet its recommendations.
The Precepts
The charter is organized around twelve core Precepts that offer guidance on key decisions governments face, beginning with whether to extract resources in the first place, and ending with decisions that determine how generated revenue can produce maximum good for a country’s citizens.
The Precepts are:
Overarching Issues
1) The development of natural resources should be designed to secure maximum benefit for the citizens of the host country.
2) Extractive resources are public assets and decisions around their exploitation should be transparent and subject to informed public oversight.
Upstream Issues
3) Competition is a critical mechanism to secure value and integrity.
4) Fiscal terms must be robust, to anticipate changing circumstances and ensure the country continues to get the full value from its resources.
5) National resource companies should be competitive, commercial operations. They should avoid conducting regulatory functions or other such activities.
6) Resource projects may have serious environmental and social effects, which must be addressed and mitigated at all stages of the project cycle.
Downstream Issues
7) Resource revenues should be used primarily to promote sustained economic growth, by enabling and maintaining high levels of domestic investment.
8) Effective utilization of resource revenues requires that domestic expenditure be built up gradually to take account of revenue volatility.
9) Government should use resource wealth as an opportunity to secure effective public expenditure and to increase the efficiency of public spending.
10) Government policy should facilitate private sector investment in response to new opportunities and structural changes associated with resource wealth.
Global Responsibility
11) The home governments of extractive companies and international capital centers should require and enforce best practice.
12) All extractive companies should follow best practice in contracting, operations and payments.
Each Precept is explained in three sections: Level 1) a brief outline; Level 2) a more complete explanation of the issues governments must confront and recommended solutions; and Level 3) a more technical discussion of underlying issues.
Why these Precepts?
The precepts were chosen to cover the process from discovery and decision to extract or not, to decisions about the use of revenues generated.
These Precepts were developed as guidelines for countries to maximize the benefit of diminishing resources. Issues such as environmental sustainability, cultural preservation or the local impacts of resource extraction, as linked to this goal, are addressed in the charter.
Some precepts are clear recommendations based on strong evidence and historical experience. They apply to almost every resource-rich country’s situation. For example, public, competitive auctions are preferable to back-room deals – whether it’s off shore oil in the United States or a copper deposit in Papua New Guinea.
Some precepts cover situations where recommendations are not clear, where correct action must be determined by local circumstances. Here the charter offers guiding principles and supporting recommendations. In these cases, the best choices largely depend on the politics, economy, or culture in the country. For example, recommendations and decisions around the use of sovereign wealth funds will differ between Norway and Ghana.
What is the future of the charter?
The charter is a living document that will continue to be refined in consultation with civil society organizations, policy makers, experts and other stakeholders involved in meeting the challenges associated with harnessing natural resource wealth.
This process, which involves soliciting input in global and regional meetings as well as on the web, will inform the recommendations in the charter. The consultations are also an opportunity to build support, advocacy and grassroots activity around the charter.
The charter could eventually be the basis for a more formal agreement among governments and, possibly, companies. Such an agreement would represent a new kind of international compact –one that is not dictated from above, but is instead built upon a critical mass of informed opinion from citizens and civil society groups in resource-rich countries who have demonstrated success by adopting the charter principles.
We need your input.
We need your expertise and feedback to help inform the contents of the charter.
· Based on the description of the Precepts above, do you know of real examples to bring these ideas to life?
· The Technical Advisory board administers the charter, incorporates feedback and will collaborate closely with individuals and organizations who can inform the consultation process. Who should join the group to address this need?
We also need your advice about charter implementation.
· What questions will societies in your home country have about the charter?
· How do your constituents communicate about policy decisions? On the Internet? Meeting directly with politicians? At churches, temples or mosques?
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