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Improving The Resource Trade

"Where accountability is weak, profit will inevitably trump principle."

In many developing countries, extractive industries such as mining, timber, and oil, are crucial to their economies. If used for the common good, such resources can lift countries out of poverty by providing jobs, accelerating economic growth and creating communal wealth that can be used to provide the citizenry with quality education, health care and a whole array of much needed government services.

Or they can be a source of untold misery.

"In cases where governance is absent or ineffective, corruption frequently fills the void," said Under Secretary for Economic, Energy and Agricultural Affairs Robert Hormats. "Where accountability is weak, profit will inevitably trump principle. And where oppression smothers the seeds of opportunity, no investment in development can bear fruit."

In such places, armed militias may force villagers to extract the minerals. The profits are then used to purchase weapons and fund insurgencies against legitimate governments.

Illegal or unregulated extraction of natural resources touches upon many issues: human rights, economic stability, good governance, development, trade, state authority, and national security.

The response must be equally extensive, said Under Secretary Hormats. "We must promote transparency, accountability, and the rule of law within state authority. We must build the capacity of civil society to demand a future without corruption, one that cements the gains of a meaningful democracy. And we must strengthen the infrastructure for legitimate trade, investment, and economic growth."

The United States plays a leading role in a number of multilateral initiatives that address these issues globally, including: the Extractive Industries Transparency Initiative (transparency in government revenues), Voluntary Principles on Security and Human Rights (human rights), and the Kimberley Process (conflict diamond trade). The Obama Administration is also active in a number of arenas to address the conflict minerals trade in the eastern Democratic Republic of the Congo.

In addition to reinforcing Congolese leadership and oversight at all levels of government, the State Department is engaging at home and abroad--with private industry, NGOs, international partners, economists, lawyers, academics, and development activists to encourage responsible natural resources trade. We are building the capacity of local civil society groups, enhancing diplomatic efforts with foreign governments, and supporting the United Nations Mission to the DRC (MONUC). Every sector of society has a role to play.

"This is an issue that calls for moral leadership, extensive public and private sector cooperation, and concerted effort to do more to address this complicated set of problems," said Under Secretary Hormats. "We all share a responsibility to come to the table to help find solutions."