ROLE OF BUSINESS IN ARMED CONFLICT CAN BE CRUCIAL – ‘FOR GOOD AND FOR ILL’, SECRETARY-GENERAL TELLS SECURITY COUNCIL OPEN DEBATE ON ISSUE

role of business in armed conflict can be crucial – ‘for good and for ill’,

Secretary-General tells Security Council open debate on issue

Following are Secretary-General Kofi Annan’s remarks at an open debate of the Security Council on the role of business in conflict prevention, peacekeeping and post-conflict peace-building in New York, 15 April:

I would like to thank the German Government for taking the initiative on this very important issue.

The economic dimensions of armed conflict are often overlooked, but they should never be underestimated.  The role of business, in particular, can be crucial, for good and for ill.

Private companies operate in many conflict zones or conflict-prone countries.  Their decisions -– on investment and employment, on relations with local communities, on protection for local environments, on their own security arrangements -- can help a country turn its back on conflict, or exacerbate the tensions that fuelled conflict in the first place.

Private companies also manufacture and sell the main hardware of conflict -– from tanks to small arms, anti-personnel mines or even machetes.

And private enterprises and individuals are 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 rebel groups alike have financed and sustained military campaigns in this way.  In many situations, the chaos of conflict has enabled resources to be exploited illegally or with little regard for equity or 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.

These are complex challenges.  They touch on fundamental questions of sovereignty, democratic governance, corporate accountability and individual integrity.  Moreover, many of the transactions involved occur in the shadows, or within the context of failed States that do not have the capacity to regulate activities that are driven by profit but which fuel conflict.  Enforcement and monitoring measures aimed at cracking down on such activities often lack teeth, if they exist at all.  Supply chains are often so multi-layered as to defy efforts at greater transparency.  Even legal activities can have unfortunate or unintended consequences.

Business itself has an enormous stake in the search for solutions.  After all, companies require a stable environment in order to conduct their operations and minimize their risks.  Their reputations –- not just with the public but with their own employees and shareholders –- depend not just on what product or service is provided, but how it is provided.  And their bottom lines can no longer be separated from some of the key goals of the United Nations:  peace, development and equity.  All these are compelling reasons why business should play an active role in tackling these issues, without waiting to be asked.

The Security Council, for its part, has already addressed many of them.  You have imposed targeted sanctions.   You have supported the Kimberley Process which, though a voluntary initiative, has reduced the trade in so-called conflict diamonds.  You have set up expert panels to assess the role of political economy in triggering or prolonging conflict.  You have authorized some peacekeeping missions to assist in the monitoring of economic sanctions and arms embargos, and to support efforts to re-establish national authority over natural resources.

This meeting occurs against a backdrop of several important initiatives.

The Organization for Economic Cooperation and Development has adopted Guidelines for Multinational Enterprises, with the hope of ensuring corporate adherence to Security Council decisions and international conventions.

An initiative led by the United Kingdom aims to increase transparency in the extractive industry.

Some member States have issued voluntary principles on security and human rights, aimed at ensuring that, when security and protection is sub-contracted to private companies, this is done in ways that protect against violations of human rights.

And my own Global Compact has sought to improve global corporate citizenship.  One product of the dialogue on this subject is the “Business Guide to Conflict Impact Assessment and Risk Management”.  Members of the Compact are also discussing adding a tenth principle, on corruption, to the existing nine on human rights, labour standards and the environment.  And they are exploring what they can do to help implement the new UN Convention against Corruption.  All of us -– governments, businesses, non-governmental organizations, and intergovernmental organizations -– need to learn to operate more openly, in the sunshine of transparency.  This is essential if we are to break the cycle of corruption and build greater confidence in our various institutions and enterprises.

In the specific context of the United Nations, you probably know that I am establishing an independent inquiry into allegations of fraud, corruption and mismanagement relating to the oil-for-food programme that we were running in Iraq.  Transparency is the only way to deal with such allegations, and by far the best way to prevent corruption from happening in the first place.  That, I believe, will be one of the main lessons we have to learn from this affair, whatever the outcome of the inquiry.

In any case, all of these efforts and initiatives have only begun to tackle the issue.  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 us the tools with which to better understand, and more actively influence, the economic incentives and disincentives that drive the dynamics of armed conflict.  And it would ensure that those factors are reflected in efforts to prevent conflict, in peace agreements and in the mandates given to peace operations.

With these aims in mind, I have established an inter-agency group, chaired by the Department of Political Affairs, which is looking carefully at the political economy of armed conflict and will provide recommendations on how to improve the response of the UN system and of Member States.  I urge this Council, and MemberStates in general, to focus greater attention on this issue, and engage more dynamically with the private sector.  The Secretariat will help in any way it can.

This is a subject on which passions run high, as we know.  We need to find the proper balance between inducement and enforcement.  There are times when outrage is the only proper reaction.  There are times when appeals to the common good will fall on deaf ears.  But with so much at stake, we cannot afford a situation in which the actors involved are polarized, demonizing each other and unable to engage in dialogue.  We must create a space where all can come together and find solutions.  I hope that this meeting will contribute to that goal.

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