New WTO „World Trade Report 2010: Trade in natural resources“

Peace and Trade in natural resources?

P. 95: Consider that there are two ethnic groups, group j that controls the government and group i that is dominated. Groups i and j have to agree on any of four potential outcomes, two peaceful ones (peace or accepted secession) and two conflictual ones (secessionist or centrist conflict).62 Preferences over these possible outcomes are essentially determined by the surplus-sharing agreement – that is, the share of total surplus of natural resources production accruing to the disadvantaged group i.

If there were only one form of conflict (centrist conflict), bargaining and transfer could always assure peace, as the destruction of war creates some peace dividend to be distributed. In the presence of multiple forms of conflict, however, it is not always possible to find an agreement that assures peace, because there might be a war dividend that makes bargaining fail despite the availability of credible transfers. Bargaining failure is most likely under two conditions. The first of these is when the amount of natural resources extracted in the region more densely populated with the dominated group i (denoted r1) is large. The second condition is when the winning probability of group i in secessionist conflict, relative to the winning probability of group i in centrist conflict (pS/pC), is large. Intuitively, for low r1 or pS/pC, secessionist conflict becomes less attractive, and the situation would be similar to when there is only one form of salient threat (i.e. centrist conflict).
The empirical evidence regarding natural resources and civil conflict is mixed, and sometimes contradictory. On the one hand, Collier and Hoeffler (2004) find that countries relying heavily on exports of primary commodities face higher risk of civil war than resource- poor countries, and that this is true for primary commodities of all types – including oil, minerals, and agricultural goods. On the other hand, subsequent studies have challenged the claim that natural resources invite civil conflict. Brunnschweiler and Bulte (2008) find that civil war creates dependence on primary sector exports, but the reverse is not true, and that resource abundance is associated with a reduced probability of war onset. Others have noticed that the relation between natural resource abundance and war onset depends on the type of natural resources involved.
De Soysa (2002) and Fearon and Laitin (2003) suggest that resource abundance being associated with a greater likelihood of war only applies to oil. In contrast, Humphreys (2005) points out that it is dependence on agricultural production that matters. Using newspaper reports of violent skirmishes in 950 Colombian municipalities between 1988 and 2005, Dube and Vargas (2006) find that violence was negatively correlated with coffee prices in locations where a large fraction of land area was under coffee cultivation. In other words, more violence occurred when coffee prices were low. The opposite was true for oil: it was higher prices that intensified conflict in areas with productive oil wells or pipelines.63

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In contrast to the Arctic region, a treaty regime was set up for Antarctica in 1959. The Antarctic Treaty, however, expressly states that it does not affect the territorial claims made by some states (and denied by others), nor provides a basis for the assertion of territorial sovereignty. The purpose of the Antarctic Treaty is to ensure “in the interest of all mankind that Antarctica shall continue forever to be used exclusively for peaceful purposes”. It establishes “freedom of scientific investigation in Antarctica” and provides a framework for cooperation. The Protocol for Environmental Protection, which entered into force in 1998, prohibits all activities relating to mineral resources other than scientific research. A Convention on the Regulation of Antarctic Mineral Resource Activities was negotiated in 1988. It set out rules on prospecting, exploration and the development of mineral resources activities. The Convention never entered into force because not all of the states with territorial claims over Antarctica became parties to it (U.S. Department of State, 2002).

WTO
„World Trade Report 2010: Trade in natural resources“
The report examines the characteristics of trade in natural resources, the policy choices available to governments and the role of international cooperation in the proper management of trade in this sector.

Full text (256 pages):
http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report10_e.pdf

Doyle, M. W. and Sambanis, N. (2000), “International peacebuilding: A theoretical and quantitative analysis”, The American Political Science Review 94(4): 779-801.

Galtung, J. (1971), “A Structural Theory of Imperialism”, Journal of Peace Research 13(2).

de Soysa, I. (2002), “Paradise is a bazaar? Greed, creed, and governance in civil war, 1989-99”, Journal of Peace Research 39(4): 395-416.