PANEL DISCUSSION ON CORPORATE RESPONSIBILITY “Business Legitimacy and Reconstruction in Zones of Conflict” Dr. Malaika Culverwell Senior Research Fellow -Corporate Responsibility/ Royal Institute of International Affairs (Chatham House) United Nations - Department of Economic and Social Affairs 10 October 2003

2 Private Sector in Conflict Zones PRIVATE SECTOR CAN: exacerbate tensions & contribute to downward spiral of insecurity. contribute to peace-building and reconstruction KEY: Transparency Inclusivity Accountability In routine business activities at micro and macro level For extractive, but more importantly infrastructure, power, transportation & financial sectors

3 Policy Approaches for Engaging Business 1. NORMATIVE ‘Naming & shaming’; advocacy campaigns e.g. “Conflict Diamonds” Can work - but for recognisable brands 2. COERCIVE Regulatory regimes that sanction prohibited behaviour Difficult - different levels of regulation, incentives for evasion, depends upon state co-operation 3. INSTRUMENTAL Positive inducements that reward constructive industry practices At company level - doesn’t go far enough? Multistakeholder level - is too context specific to be generic eg. “Chad/Cameroon Pipeline Agreement”. ”

4 Profiteering & Opportunism by Both Business & Government? Insecurity Lack of reconstruction Strongest perception of illegitimacy, profiteering and corruption rests within the administration Fear that subcontracting and hiring practices by business will exacerbate pre-existing tensions. IN IRAQ: GOV’T BUSINESS ENVIRONMENT

5 A Role for Responsible Business National & Int’l Level Community Level Bidding process Awarding contracts Hiring & sub-contracting Transparent Inclusive Accountable BUSINESS Confer legitimacy Earn legitimacy

6 Inclusivity Requires: an integration of local ethnicities, tribes, religions & business networks. Recommended: a simple formal dialogue with firm’s Iraqi employees and their families. A neutral third party facilitator to manage the process Requires: independent scrutiny of civil society Recommended: civil society capacity building Accountability

7 Transparency Requires: companies to be cautious with respect to working with elites from previous state institutions. Companies to insist on free and open competition with respect to tendering process for reconstruction contracts & sub-contracts Recommended: Companies, with civil society help build the credibility of political institutions of the nascent new Iraqi state Companies seek inter-sectoral collective action to influence free and open competition with respect to reconstruction contracts & subcontracts

8 Conclusion Responsible companies need courage, stamina and a long- term view to attend to issues of “inclusivity”, “accountability” and “transparency”. Companies can initiate efforts but will need the support of neutral third party mediators, NGOs, IOs and legitimate political institutions In all the complexity of post-conflict Iraq, business should not loose sight of the fact that the greatest risk management tool at its disposal is its contribution to the winning of the peace.