16 April 2004
Security Council Discusses Role of Business in Conflict Prevention, Peacekeeping, Post-Conflict Peace-Building
Economic Dimensions of Armed Conflict Are Often Overlooked, But They Should Never Be Underestimated, Secretary-General Says
NEW YORK, 15 April (UN Headquarters) -- The bottom lines of private corporations could no longer be separated from such key goals of the United Nations as peace, development and equity, Secretary-General Kofi Annan told the Security Council this morning.
As the Council considered the role of business in conflict prevention, peacekeeping and post-conflict peace-building, he said, Business itself has an enormous stake in the search for solutions, adding that companies required a stable environment in order to conduct their operations and minimize their risks.
He noted that todays meeting took place against the backdrop of several important initiatives, including the recent adoption by the Organisation for Economic Cooperation and Development (OECD) of Guidelines for Multinational Enterprises, a United Kingdom-led initiative aimed at increasing transparency in the extractive industry. Also, some Member States had issued voluntary principles on security and human rights. His own Global Compact had sought to improve global corporate citizenship.
Noting that the economic dimensions of armed conflict were often overlooked, he said they should never be underestimated. The decisions of private companies operating in conflict zones could help a country turn its back on conflict or exacerbate the tensions that had fuelled the conflict in the first place. Private companies also manufactured and sold the main hardware of conflict - from tanks to small arms, and anti-personnel mines to machetes. Private enterprises and individuals alike were also involved in exploiting and trading in lucrative natural resources.
Council President Gunter Pleuger (Germany), speaking in his national capacity, noted that while the Council had generally not dealt with the issue of corporate citizenship in conflict zones, it had given attention to private sector involvement in particular countries and regions experiencing violent conflict. For example, it had imposed sanctions in an attempt to end hostilities by reducing opportunities for combatant self-financing through trade in conflict commodities, including diamonds and timber.
Ideally, he said, corporate participation in the post-conflict phase of reconstruction would provide twin benefits: investment, with resulting jobs and business opportunities, as well as managerial know-how and expertise. In the end, however, it was not for governments or international organizations to decide what was in the best interests of the private sector. Companies would make their own decisions, weighing opportunities against the risks of engagement in conflict zones.
He emphasized that private sector engagement in all phases of a conflict could only succeed if it was embedded in a broader concerted effort, accompanied by strong partnerships among governments, international organizations, business and civil society. For that reason, the relevant United Nations bodies, the Bretton Woods institutions and civil society should cooperate closely with the private sector to support the climate of peace in conflict-prone regions, help mitigate crisis situations, and contribute to reconciliation processes.
Marjatta Rasi (Finland), President of the Economic and Social Council, noted that, while it was widely accepted today that the private sector had a primary responsibility for building economic and social well-being, the sector itself must assume a responsibility to help prevent and mitigate conflict. The key challenge of peace-building was to rebuild economies in such a way that the benefits of recovery were spread as widely as possible across society. However, private business could not be forced to invest in post-conflict areas. Corporations required an environment that would attract them to contribute to stabilizing social situations.
Dumisani Kumalo (South Africa), Chairman of the Economic and Social Councils Ad Hoc Advisory Group for African countries emerging from conflicts, said The challenge has always been in trying to define a role for the private sector in these processes. In both Burundi and Guinea-Bissau, the eruption of violence had driven international private businesses away, and local business had been forced to curtail operations. The partnership between local and international businesses was a critical confidence-building step for post-conflict nations, and contributed to the success of reconstruction and development efforts.
Siemens President and Chief Executive Officer Heinrich von Pierer, describing the companys efforts in two current conflict situations, said that, in Afghanistan, it had analysed the countrys most pressing infrastructure needs, chiefly rebuilding water systems and restoring power supplies, while helping with efforts to send people back to school. In Iraq, Siemens had already initiated the establishment of a mobile telephone network, and the reconstruction of a local power plant. While all countries and situations were different, some basic factors were critically important to private sector engagement in post-conflict situations: security, infrastructure, financing, post-conflict planning and visible progress.
World Bank President James Wolfensohn said the institution had found that, in all conflict situations, the first thing to look at following the restoration of peace and the examination of various fundamental social issues was the question of establishing a framework for restoring business. It was important to have a growing economy in which people could share. Poor people, just like the rich, wished to live in peace. Far from wanting charity, they wanted opportunity and hope for their children. The aims of the private sector in conflict prevention and resolution accorded with the entirely human targets of the Millennium Development Goals - providing people with the chance to live.
Also making statements today were the representatives of Algeria, China, Romania, Chile, France, United States, Angola, Benin, Pakistan, Russian Federation, Spain, United Kingdom, Philippines and Brazil.
The Security Council met this morning to consider the role of business in conflict prevention, peacekeeping and post-conflict peace-building.
GUNTER PLEUGER (Germany), Council President, noted at the outset that there was a need to pay particular attention to the role of the private sector in the prevention of conflict, as well as in peacekeeping and post-conflict peace-building. As a consequence of globalization, the international private sector was more involved in global economic stability.
Recalling the Security Council mission to Afghanistan a year ago, he said he had discovered that combatants were more likely to lay down their weapons when provided with the opportunity to earn their livelihoods. It was appropriate for the Security Council, as a forum for the maintenance of international peace and security, to consider the role of the private sector in conflict prevention.
KOFI ANNAN, Secretary-General of the United Nations, said the economic dimensions of armed conflict were often overlooked, but should never be under estimated. The role of business, in particular, can be crucial, for good and for ill, he said. Private companies operated in many conflict zones or conflict-prone countries. Their decisions - on investment and employment, on relations with communities, on protection for local environments, on their own security arrangements - could help a country turn its back on conflict, or exacerbate the tensions that had fuelled the conflict in the first place.
Private companies also manufactured and sold the main hardware of conflict - from tanks to small arms, and anti-personnel mines to machetes, he continued. Private enterprises and individuals were also involved in the exploitation of and trade in lucrative natural resources such as oil, diamonds, narcotics, timber and coltan, a crucial ingredient in many high-tech electronics. Governments and rebels alike had financed military campaigns in that way. In many situations, the chaos of conflict had enabled resources to be exploited illegally or with little regard for equity of the environment.
When local populations are excluded from discussions on access and control of natural resources - and see little benefit from them in their communities - this, in turn, can be a cause of more conflict, Mr. Annan said, adding that these were all complex challenges. They touched on fundamental questions of sovereignty, democratic governance, corporate accountability and individual integrity. Moreover, many of the transactions involved occurred in the shadows, or within the context of failed States that did not have the capacity to regulate activities that were driven by profit, but which fuelled conflict. Even legal activities could have unfortunate or unintended consequences, he added.
Business itself has an enormous stake in the search for solutions, he said, adding that after all, companies required a stable environment in order to conduct their operations and minimize their risks. Their bottom lines could no longer be separated from some of the key goals of the United Nations: peace, development and equity. All those were compelling reasons why business should play an active part in tracking those issues, without waiting to be asked.
He said that, for its part, the Security Council had already addressed many of those issues. It had imposed targeted sanctions; it had supported the Kimberley process, which had reduced the trade in conflict diamonds; it had set up expert panels to assess the role of political economy triggering or prolonging conflict; and it had authorized some peacekeeping missions to assist in the monitoring of economic sanctions and arms embargoes, and to re-establish national authority over natural resources.
He said that todays Council meting took place against the backdrop of several important initiatives, including the recent adoption by the Organisation for Economic Cooperation and Development (OECD) of Guidelines for Multinational Enterprises, an initiative led by the United Kingdom aiming to increase transparency in the extractive industry. Also, some Member States had issued voluntary principles on security and human rights. His own Global Compact had sought to improve global corporate citizenship.
Everyone -- governments, businesses, non-governmental organizations and intergovernmental organizations -- needed to learn to operate more openly, in the sunshine of transparency. That was essential in order to break the cycle of corruption and build greater confidence in institutions and enterprises. In the specific context of the United Nations, he drew attention to the establishment of an independent inquiry into allegations of fraud, corruption and mismanagement relating to the oil-forfood programme. Transparency was the only way to deal with such allegations, and was by far the best way to prevent corruption from occurring in the first place, he added.
In any case, all of these efforts and initiatives have only begun to tackle the issue, he said, stressing that the time has come to translate ad hoc efforts into a more systematic approach. At the United Nations, such an approach would promote greater cooperation and interaction between the security and development arms of the Organization. It would give the Organization the tools with which to better understand, and more effectively influence, the economic incentives and disincentives that drove the dynamics of armed conflict.
With those aims in mind, he announced that he had established an inter-agency group, chaired by the Department of Political Affairs, which was looking carefully at the political economy of armed conflict and would provide recommendations on how to improve the response of the United Nations system and Member States. He urged the Council, and the Organizations wider membership, to focus greater attention on this issue, and engage more dynamically with the private sector.
Finally he said that passions ran high on matters related to todays subject, so it was important to find the proper balance between inducement and enforcement. There were times when outrage was the only proper reaction. There were times when appeals for the common good would fall on deaf ears. But with so much at stake, no one could afford a situation in which the actors involved were polarized, demonizing each other and unable to engage in dialogue. We must create a space where all can come together to find solutions, and I hope this meeting contributes to that goal, he concluded.
JAMES WOLFENSOHN, President of the World Bank, said that the issues of conflict prevention and resolution and post-conflict rebuilding could best be seen as methodologies of peace. If one had hope, one would be less likely to go out and shoot somebody. In all conflict situations, the World Bank had found that the first thing to look at after the restoration of peace and the examination of various fundamental social issues was the question of establishing a framework for restoring business.
The first thing to do was to have a growing economy in which people could share, he said. Poor people, just like the rich, wished to live in peace. Far from wanting charity, they only wished for an opportunity, as well as hope, for their children. The crucial challenge was how to find an opportunity for the youth to work so that they would not be subject to frustration. The World Bank was devoting much time to finding how to give them that opportunity.
Pointing out that the world spent $900 billion on defence annually while spending only $50 billion on development, he said that, if the reverse were true, the Security Council could be turned into an economic and social council. The aims of the private sector in conflict prevention and resolution were in accordance with the targets of the Millennium Development Goals, which were entirely human - providing people with the chance to live.
Dr. HEINRICH VON PIERER, President and Chief Executive Officer of Siemens, said that over its 157 years of doing business around the globe, his corporation had gained extensive experience working in diverse crisis situations. He first touched on the situations in two conflict areas that were the focus of intense public attention right now: Afghanistan and Iraq.
Less than two weeks ago, he had met with Afghan President Karzai while he had been in Berlin for the International Conference on Afghanistan. Their talks had, of course, concentrated on Afghanistans reconstruction. He said that Siemens had taken some specific steps to restart its activities and help rebuild the country. It had found the right man to run its operations there - one fluent in Pashto, Farsi, German and English - when its office had reopened in February 2003.
Parallel to setting up operations, the company had critically analysed the most pressing infrastructure needs in the country, chiefly rebuilding water systems and restoring power supplies. On the social side - always important for a successful engagement - Siemens began helping to educate the people. It was supporting the United Nations Children's Fund (UNICEF) Back to School initiative as an investment in Afghanistans future, with an emphasis on girls to ensure that they had access to basic education. All those efforts were just a beginning, but they were visible, and that was important, he said.
In Iraq, Siemens would like to pursue that same basic strategy, helping to restore, for example, that countrys power grids and communications networks. Siemens also hoped to open local facilities, but as everyone knew, the situation in Iraq was extremely difficult right now. Still, despite the security risks, two concrete projects were already under way: the setting up of a mobile telephone network in northern Iraq, and rebuilding a local power plant. We all share the hope that the reconstruction of Iraq can be accelerated as soon as possible, he said.
While all countries and situations were different, he believed that there were some basic factors that were critically important to business engagement and participation in post-conflict situations. Those included security, infrastructure, financing, post-conflict planning and visible progress. On security, he said that after the 11 September 2001 terrorist attacks on the United States, it had become clear that there were no more safe havens in the world - violence could strike anywhere or at any time. But what was also clear was that for business to operate here must be a reasonable level of security and enough government control to provide basic law and order.
He went on to say that business must also work with international actors and agencies to ensure that people in post-conflict or conflict-prone regions had a future. Here, he said people must personally see that progress was being made and that their own lives were improving. He stressed, in this regard, education and building schools, transferring technology and know how, and ensuring access to basic health care as critical. Alone, business could not change the world. But together with public partners, business could make decisive contributions in the struggle against violence, against anarchy and against terrorism -- and for civilization, freedom and for prosperity, he said.
MARJATTA RASI (Finland), President of the Economic and Social Council, noted that the causes and prevention of poverty overlapped substantially with the causes and prevention of open violence and complex humanitarian emergencies. Long-term prevention efforts included undertaking structural and institutional changes, building capacity and spurring economic and political development. Short-term measures were often political and military, but also developmental and humanitarian to ameliorate potential conflict.
Today, it was widely accepted that the private sector had a primary responsibility for building economic and social well-being, she said. In the spirit of corporate citizenship and civic-mindedness, the private sector itself must assume a responsibility to help prevent and mitigate conflict. The actions of private companies during conflicts - and the corporate ethics behind those actions - and sensitivity to human rights were important in that regard.
Noting that conflict was too often caused by the struggle to exploit natural resources, she said the private sector contributed to instability and conflict if it provided finance to armed groups in exchange for natural wealth like diamonds, gold and timber. In that regard, Security Council resolution 1306 (2000) banning uncertified rough diamond imports from Sierra Leone was a major step in recognizing the private sectors role in conflicts.
Peace-building required a huge economic investment and the involvement of investors, she said. The key challenge was to rebuild economies in such a way that the benefits of recovery were spread as widely as possible across society. Such an enabling environment of broad-based recovery required considerable institution-building. However, private business could not be forced to invest in post-conflict areas, and an environment should be created to attract private business into that area and to contribute to stabilizing social situations.
DUMISANI S. KUMALO (South Africa), Chairman of the Ad Hoc Advisory Group for African Countries Emerging from Conflicts, said todays debate was long overdue. South Africa was celebrating 10 years of freedom this month, and both local and national businesses had played a significant role in ensuring its success by practising corporate and social responsibility. Some had begun hiring whites and blacks to work together, performing the same functions, acting as bridge-builders across racial, social, ethnic, political, economic and regional divides.
He said it was now generally accepted that there was an inescapable link between peace and development, particularly economic development. There was further agreement that the role of the private sector was critical to economic development. However, in conflict situations or during post-conflict reconstruction phases, the private sector was reduced to being a minor player, while the international community and donors had the main responsibility of preventing conflict and promoting peace-building. Only when there was peace could the private sector come in and make its contribution towards creating economic growth and prosperity.
The challenge has always been in trying to define a role for the private sector in these processes, he continued. Defining that role was complicated by the continued presence of business which conducted trade in illicit goods or exploited natural resources. Drawing on his experiences in Burundi and Guinea-Bissau as a member of the Economic and Social Councils Advisory Committee for African Countries Emerging from Conflict, he stressed that in both countries, the eruption of conflict had driven international private businesses away, and local businesses were forced to curtail operations or find ways to operate under difficult conditions. Eventually, many were forced to close, while others barely survived. Meanwhile, governments continued to demand contracts for the supply of products and services that those weakened local businesses could in no way meet.
So it was clear that settling outstanding government debts to local business would provide much-needed injection of money back into recovering economies. Furthermore, a healthy local private sector was a major attraction and prerequisite for the involvement of the international private sector in any country emerging from conflict. To put in more bluntly, foreign businesses are reluctant to move into countries were local business is not investing money in its own country, he said. The partnership between local and international businesses was a critical confidence-building step for post-conflict nations, and contributed to the success of reconstruction and development efforts.
He stressed that the international community was the most important player in creating the political environment in which the private sector could do business. As business was driven by the profit margin, it needed peace and stability in which to operate.
MOURAD BENMEHIDI (Algeria) said that the Kimberley Process was an important contribution to the maintenance of international peace and security. It was the embodiment of the Global Compact that the Secretary-General had proposed to the international business community.
He said it was widely recognized that the practices of global corporations had a considerable impact on respect for human rights in conflict zones, as well as on the disruption of peace through corporations relations with governments or social groups involved in conflict. It was clear from observing countries emerging from conflict that it was at the end of conflicts that the international community was confronted with the absence of significant investment that would guarantee sustainable growth leading to lasting peace. The private sector could not remain on the sidelines and must participate on the basis of social responsibility. There was a need for business to be involved earlier, rather than adopting a wait-and-see attitude.
WANG GUANGYA (China) said that with the steady development of economic globalization, businesses and business interests had now spread to all parts of the globe, even areas in which conflict was under way or which were prone to conflict. It was now necessary to ask how to ensure that businesses operated appropriately and did not make matters worse. Such enterprises should scrupulously abide by Security Council resolutions and international business norms, rules and regulations. By example, he noted that illegal trade in diamonds, timber and other natural resources, particularly in Africa, often exacerbated conflict. Such exploitation and illegal activities should not be allowed, and the Council should work assiduously to ensure compliance with its resolutions.
For their part, businesses should actively participate in disarmament, demobilization and reintegration activities in post-conflict situations, he said. They should also assist international actors with economic rehabilitations and physical reconstruction as a way to provide jobs and provide opportunities for war-weary civilians to actively and constructively participate in their societies and communities. That would be a great help to the countries involved, as well as the wider international community, in broad efforts to maintain peace and security.
Businesses must also promote transfer of technology and knowledge, he said. Prevention and settlement of conflicts required the joint efforts of the entire international community, and businesses and the private sector should be encouraged, especially transnational corporations, to work actively to play a constructive role in those efforts. He suggested that the General Assembly and the Economic and Social Council further explore the issue being discussed today.
MIHNEA MOTOC (Romania) said his countrys own experience showed that sustainable investment and trade were essential factors for successful transition to the rule of law and a functional market economy. Business needed a stable political and legislative environment. For example, Africas challenge was to create an enabling business climate to provide facilities that would draw in investors. Also, foreign companies should themselves generate stability through all their activities. Good corporate citizenship or corporate social responsibility was key for the role business could play in countries affected by conflicts. In addition, help was needed for the local private sector, which had either been eroded or distorted following its involvement in the war economy, or completely shattered by it.
Business, he continued, be it local or foreign, was called to join other components of society in upholding respect for human rights within its own sphere of activity, thus making a direct contribution to preventing and overcoming conflicts. It was essential for businesses to ensure they did not participate in human rights abuses and that they abstained from any improper involvement in local politics. Furthermore, the United Nations system should show understanding and provide adequate support for the responsibility foreign business was asked to shoulder when it entered or re-entered a country/market in the phase of peace building and post-conflict reconstruction.
HERALDO MUÑOZ (Chile), noting that the private sector should also be understood to mean civil society and non-governmental organizations, said that the private sector had historically influenced, for better or worse, the development of countries. It had pushed the Powers of the seventeenth, eighteenth and twentieth centuries to dominate distant societies albeit in the interest of the metropolitan rather than the local economy. With the passage of time, the situation had evolved from colonialism to the dominance of large corporations.
He said that, since the private sector was involved in the sale of small arms and light weapons, it bore a considerable responsibility to avoid their proliferation. While corporations were neither philanthropic nor peacekeeping organizations and were in business for profit, the steady growth of liberalization had resulted in the transfer of massive resources to large corporations, which entailed huge profits, as well as high levels of poverty and significant corruption.
In the context of conflict prevention, they could serve as a source of early warning and mitigation strategies, he said. Business could allocate resources through social investment in communities and in activities that promoted tolerance and civic education. Many companies were already working in that direction though they could do much more. Companies could also offer financial support for projects to provide jobs to ex-combatants, the lack of which often caused the recurrence of conflicts.
JEAN-MARC DE LA SABLIÈRE (France) said it was a good idea for the international community to analyse its procedures and actions regarding the role of businesses and private enterprise in post-conflict situations. He drew attention to work under way to monitor international business activity - illegal and legal - within the United Nations system, particularly noting the various sanctions and embargoes imposed by the Council on diamonds, timber and arms, among other things.
Nevertheless, the United Nations efforts in this area appeared, for the most part, to be scattered - carried out in reaction to specific circumstances or situations. So, perhaps, it was time to ask how the Organization could better systematize those efforts. It was important that the ultimate aim be to assist States in their efforts to achieve economic stability and sustainable development.
Regarding conflict-prevention, he shared the sentiments of the World Banks President that giving hope to people was the best way to avoid conflict. He went on to stress that in post-conflict situations, it was up to the States, in accordance with Council resolutions, to take appropriate measures to ensure compliance with embargoes and sanctions. In several instances, embargoes were being flouted, and States must take proactive steps in ensuring such acts did not continue. He said it was also important for States to ensure conditions favourable to development of business and the local private sector. Here, the United Nations system must make its contribution to economic recovery and strengthening State institutions.
Finally, he said that it might be time for the Council to look beyond monitoring sanctions and embargoes. It may be more useful to establish an independent, expert mechanism to more closely examine the role illegal exploitation of resources and traffic in illicit goods played in fuelling conflicts. The Council should, on a daily basis, be more conscious of peacekeeping mandates and be conscious of links between illicit trafficking, organized crime and bad governance.
SICHAN SIV (United States) emphasized that business did not have the same responsibilities as governments in conflict-prevention, peacekeeping and post-conflict peace-building. Companies could provide leadership by setting examples of good corporate citizenship. They had chosen to do that in many different ways, such as adopting corporate codes of conduct or choosing to participate in voluntary international codes regarding corporate behaviour. American companies were providing outstanding global leadership as good corporate citizens.
He said the United Nations Global Compact had built a multi-stakeholder process based solely on nine social justice principles that promoted human rights, labour rights and environmental responsibility. The United States supported the Compacts voluntary approach, which joined together companies, United Nations agencies, labour and civil society in efforts to promote human dignity in a context of freedom and prosperity. The Compact did not burden companies with regulatory requirements, but rather operated through dialogue and voluntary cooperation.
The United States also supported policy mechanisms that specifically focused on businesses in conflict situations, he said. The United States-United Kingdom partnership on voluntary principles on security and human rights urged business to conduct comprehensive risk assessments and to try to ensure that public and private security forces did not have a record of past human rights abuses.
ISMAEL ABRÃAO GASPAR MARTINS (Angola) said there was general agreement on the need to generate new partnerships and initiatives, and new ways of thinking about how to secure the necessary resources for all nations to achieve the Millennium Development Goals, as well the objectives of the other major international conferences of the past decade. For most developing countries, and Africa in particular, it was clear that those goals could not be met within domestic resources alone or official development assistance (ODA). Without outside resources, the long term-effects of conflict and endemic poverty could not be ameliorated, and the Millennium Goals would remain a mirage.
Conflict-prevention was a joint effort, including active participation by States, the business sector and non-governmental organizations. Indeed, the role of business and private enterprise should be underlined because of the opportunities such enterprises provided in rehabilitating war-torn areas, providing jobs and hope. Businesses should not only see their participation in terms of profit-making, but in terms of contributing to the sound development of the countries in which they were operating. Sadly, more often than not, lessons learned were ignored, and big business could often be found working in collusion with the forces of division and conflict. Still, initiatives such as the Kimberley Process proved that successful cooperative initiatives could be sustained.
He reiterated that rebuilding nations, implementing disarmament, demobilization and reintegration (DDR) initiatives and alleviating poverty, all while simultaneously struggling to achieve international development goals, were simply not possible without the help of the international community, in which the private sector played an important role. He drew attention to the recently held conference on rebuilding Afghanistan, at which some $8.2 billion had been pledged.
That meeting had been a model of how the international community could effectively help countries emerging from conflict. Equal opportunity should be seized for other post-conflict countries, he added.
His own country had emerged from conflict and had embarked decisively on a path of economic reform and aggressively improving management systems and accountability. Angola was in a better position today to pursue dialogue with big business. Greater private sector participation in Angolas recovery would be a concrete contribution to consolidating peace and ensuring reconstruction in a recent post-conflict situation.
JOEL ADECHI (Benin) noted that, while it was generally assumed that investment was flowing to African countries, the reality was that investors were reluctant to put their money there owing to the persistence of conflict and non-respect for the law. There was a correlation between the persistence of conflict and the proliferation of small arms and light weapons. Furthermore, in the globalized economy, the private sector became an active participant in governance, both locally and internationally and was a party to the weakening and even breakdown of institutions.
Noting the weakness of the private sectors presence in countries emerging from conflict, he said it was, therefore, difficult to establish and strengthen partnerships between corporations and host governments. The situation was worse in the least developed countries, which were the most vulnerable. What must be done to have the private sector associate itself with the multidisciplinary process of peace-building? While its involvement was desirable in the short term, it would not be cohesive in the long term, given the need to balance corporate needs with sustainable development.
MUNIR AKRAM (Pakistan) said that, although the maintenance of peace and security fell to States, businesses had a stake in ensuring peace, as well as an important role to play in post-conflict reconstruction. Indeed, world businesses held a greater share of the worlds capital, technologies and jobs. Transnational corporations greatly influenced the economic, social and political destinies of many States. So private enterprise had considerable potential for good, as well as bad, particularly for developing countries.
The majority of developing countries that had shown significant growth or recovery in recent years had benefited from large inflows of foreign direct investment, rather than ODA, which had been modest. But such inflows had been limited to only a few dynamic developing countries, he added. Unfortunately, profit-making -- the primary but understandable motivating factor from most corporations -- was not always compatible with the economic, social and political aims of the countries concerned.
He noted that the control of natural resources by business cartels had significantly intensified domestic and national tensions, which had erupted into conflicts in many parts of the world. He cited a recent World Bank report, which had noted the irony that countries that were rich in natural resources were much more prone to conflict than those that were resource poor. There were also certain direct actions taken by unscrupulous private enterprises which contributed to conflict, including not only exploitation of resources, but producing weapons and supporting warlords and rebel groups to protect their interests. Such actions were real weapons of mass destruction, he added.
Offering some suggestions for business behaviour in post-conflict situations, he said enterprises should, among other things, adopt corporate social responsibility, help spur economic development, build a sense of community, and engage in diplomacy and dialogue. He added that, though valuable, voluntary codes adopted by businesses were often not strong enough to offset the financial incentives for non-compliance with such codes. Pakistan believed it might be better to establish a framework to implement and monitor such codes, based on the United Nations Charter.
The best contributions international businesses could make to ensuring broad peace and security included promoting balanced efforts to ensue sustainable development, taking a supportive stance on debt relief for the poorest countries, and adjusting their business practices regarding the use of raw materials. He added that the profits generated by the worlds leading corporations and financial institutions amounted to hundreds of billions of dollars. Was it possible for those institutions to consider donating 1 per cent of their net profits to development assistance for the worlds poorest countries? If that were to happen, it would have a direct effect on worldwide peace and security and an indirect but equally important effect on post-conflict reconstruction by creating the jobs and hope for so many of the worlds people.
YURIY ISAKOV (Russian Federation) said that the private sector must support and supplement the efforts of the Security Council and not the other way around. Good use could be made of the upcoming summit meeting of Global Compact leaders.
He said that undertaking voluntary measures in matters of corporate governance was not enough. It was important that the private sector be guided by already existing international principles and norms that had proved their effectiveness. It was fundamentally important to draw up regulations based on political impartiality and equality.
ANA MARIA MENENDEZ (Spain) said the best way to avoid conflict was to build democratic societies where good governance and the rule of law were the norm. Economic stability was essential, and the business sector must participate responsibly in post-conflict reconstruction. It must also refrain from contributing to economies that could support a return to conflict. All Member States must ensure that all persons and entities under their jurisdiction adhered to United Nations embargoes.
EMYR JONES PARRY (United Kingdom) said that the private sector should, at a minimum, not make conflict worse. However, business did create prosperity and hope, and individual business leaders could have a role in transforming societies. They had to respect the human rights of their employees, as well as those who would be affected by their activities. They should also insist on transparency and signal clearly when they suspected that conflict might be emerging.
Companies should not do business with those supplying arms to people involved in conflict and those smuggling natural resources, he said. Africa had historically suffered from conflicts that were directly linked to control of their natural resources, and the region desperately needed investment. However, it was not the role of business to take the lead in conflict prevention, though it could make a valuable contribution by taking into account the damage that it could cause if it did not play a responsible role in conflict zones.
LAURO L. BAJA (Philippines) said the private sector was a global partner in conflict-prevention and post-conflict reconstruction. In times of peace, business was an engine of economic growth, and in times of post-conflict reconstruction, business became an instrument for sustainable peace and development. Multinational corporations had a role in creating wealth and promoting socio-economic development.
Depending on the situation, the role of business could be positive, negative or a combination of both, he said. If the benefits of economic growth were unevenly distributed, they could increase rather than decrease the potential or existence of conflict. While business played a crucial role in conflict-prevention and post-conflict situations, the more crucial question was how to harness such a role in safeguarding global peace and security.
Appropriate support systems should be established, he said. An enabling environment should be created so that private sector could conduct its business. There was also a need to forge partnerships between the public and private sectors. Economic development should be accompanied by strengthening of the social capital and civil institutions that were essential in most post-conflict situations. Business could take a proactive stance in post-conflict period, including by participating in truth and reconciliation commissions and amnesty and demobilization programmes.
He added that corporations could also be agents of change by forging ties with small entrepreneurs in developing countries, by offering them advice and technical assistance and helping them grow their business. They could also engage in economic development infrastructure and economic multipliers which provided momentum for future development, including distribution networks, financing mechanisms, access to markets and training and human resource development.
RONALDO MOTA SARDENBERG (Brazil) said the primary and most evident role of business activity in promoting peace and stability was the generation of wealth. Business activity created opportunities for generating desperately needed income in war-torn countries. Indeed, when businesses were on the rise, so was employment, investment and the availability of essential goods. He added that infrastructure rehabilitation and technological development also benefited from increased economic activity.
Companies also contributed to peace by empowering communities, he continued, stressing that their comparative advantage could be used in such areas as human resource development, management skills training, and promoting equitable hiring and labour practices. Private businesses could assist in conflict management either by acting within the framework of a coherent national development policy and eschewing attitudes and actions that would worsen the conflict or destabilize a post-conflict situation. He added that business could also help with the implementation of governmental programmes, including in the fields of foreign aid and humanitarian assistance, in partnership with local authorities and the wider international community.
We must remain aware, though, that business alone or acting out of enlightened self-interest will not create the ideal environment for peace, he said. Business activity, important as it was, was not a substitute for the essential role played by public authorities, which had the primary responsibility for providing incentives for economic activity and investment, encouraging partnerships and instituting sound public policies in areas such as trade, agriculture and industry. He added that decisive action by public authorities must be supported by intergovernmental organizations and peacekeeping agencies.
He stressed that it was also important to prevent the negative involvement of business actors in conflict. To that end, their activities must be transparent and, at all times, open to public scrutiny. At the same time, good practices must be rewarded. He applauded the role the Secretary-Generals Global Compact Initiative had been playing in bringing together businesses, United Nations agencies and civil society groups, all helping to promote good corporate citizenship and increase corporate support for responsible practices.
Mr. PLEUGER (Germany) identified entrepreneurial responsibility and the huge potential for private sector activities in any development or reconstruction strategy as the two elements that were important to his delegation. The issue of corporate citizenship in zones of conflict had, in general, not been dealt with by the Security Council, yet the Council had given attention to the involvement of the private sector in countries and regions experiencing violent conflict through various resolutions pertaining to individual cases. For example, it had imposed sanctions in an attempt to end hostilities by reducing the opportunities for combatant self-financing through trade-in conflict commodities, including diamonds and timber. The Secretary-General had prominently addressed the issue of corporate citizenship through his Global Compact Initiative.
Private sector activities in the post-conflict phase of reconstruction were essential to the sustainable resolution of conflicts, projecting political stability and helping to prevent possible resurgence of conflicts, he continued. Multinational corporations, working in partnerships with governments, international organizations, non-governmental organizations and civil society, could use their business skills and financial leverage to promote regional stability. In countries where peace efforts were foundering, a tangible promise of employment, trade, direct investment and promotion of local enterprise could have a major effect. Ideally, corporate participation would provide twin benefits: investment with resulting jobs and business opportunities, as well as provision of managerial know-how and expertise. Other actors in the field, including the United Nations, international financial institutions and civil society, would profit in their own efforts to overcome conflict situations.
In the end, however, it was not for governments or international organizations to decide what was in the best interests of the private sector, he said. Companies would make their own decisions, weighing opportunities against risks of engagement in zones of conflict. In that regard, the United Nations, international institutions and national governments were called upon to create the necessary framework for private sector engagement. What could be done to adequately address the risks the private sector ran was crucial in that context. Equally important was a clear perspective for creation of a stable legal framework, the rule of law, adequate administrative structures and the establishment of a viable private sector. A stabilized region was a precondition for successful development at a country level. A lucid example for that was the Stability Pact for South-Eastern Europe, which incorporated a coherent political, economic and security approach, close cooperation of all relevant stakeholders and the regional dimension of conflict resolution.
Private sector engagement in all phases of a conflict could only be successful if it was embedded in a broader concerted effort, accompanied by strong partnerships among governments, international organizations, business and civil society. For that reason, he wanted to encourage relevant United Nations bodies and agencies, including the Bretton Woods institutions, as well as civil society, to cooperate closely with the private sector, to support the climate of peace in conflict-prone regions, help mitigate crisis situations, and to contribute to reconciliation processes. He also welcomed the Secretary-Generals suggestion that the Council should focus greater attention on the issue in the future.
Mr. WOLFENSOHN, President of the World Bank, said it was clear that there was a significant community of interests between the Councils work and that of the World Bank with regard to conflict prevention, peacekeeping and post-conflict peace-building.
Mr. VON PIERER, Chief Executive Officer of Siemens, noting that it was possible to find a balance between all the various interests, reiterated the need to combat poverty and the lack of hope. The United Nations and the private sector could unite in providing broad and systematic education as an effective way of preventing conflict and in post-conflict peace-building.
Ms. RASI, President of the Economic and Social Council, said sustainable economic growth was key to conflict prevention, an area in which broad cooperation was needed between the United Nations, the private sector and non-governmental organizations. A way must be found to include all the other stakeholders.
Mr. PLEUGER (Germany), Security Council President, said that, while there was no guarantee that corporations could resolve conflicts, their resolution would be virtually impossible without the private sectors involvement.
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