Interpreting the Politics of Natural Resource Extraction
Abstract and Keywords
This chapter synthesizes findings from Bolivia, Ghana, Peru, and Zambia. It concludes that political settlements influence the relationships between resource-dependent economies and patterns of social inclusion. However, neither authoritarian, dominant leader forms of politics, nor competitive democratic politics has fostered significant economic diversification or reduced levels of resource dependence. The extractive economy does, however, influence the dynamics of national political settlements. The rents that resource extraction makes possible, and the high cost of engaging in extractive industries, induce asymmetries and create incentives for political exclusion. Colonial and post-colonial histories of resource extraction give political valence to ideas that have helped mobilize actors who have challenged relations of power and institutional arrangements. The materiality of subsoil resources has direct implications for subnational forms of holding power that can influence resource access and control. Mineral and hydrocarbon economies bring both transnational and local political actors into the constitution of national political settlements.
As we were in the final stages of preparing this manuscript, Global Witness released its report ‘Defenders of the Earth: Global Killings of Land and Environmental Defenders’ (Global Witness, 2017). The report records 200 documented killings in 2016, a new record, up from 185 murders in 2015, which had also been a record. In the view of the non-governmental organization (NGO): ‘This tide of violence is driven by an intensifying fight for land and natural resources, as mining, logging, hydro-electric and agricultural companies trample on people and the environment in their pursuit of profit.’ If one needed a reminder that the drivers of natural resource governance are deeply political, this is an especially poignant one.
Appalling realities such as those described in the Global Witness report demand that discussions of natural resource governance have a substantial political component. This does not mean that resource governance has to be analysed in political terms alone, but it cannot be analysed apolitically. In Chapter 1, we noted that some of the calls for ‘better’ institutions in extractive industry governance elide discussion of the political processes through which existing institutions have become dominant, or through which they would need to be contested if new arrangements were to emerge. We also noted, though, that there is a significant body of literature that does read extractive industries through a political lens. One of the tasks of this book has been to show what, if anything, a political settlements approach might add to this work.
This existing literature on the politics of extractive industry has followed different lines. Terry Karl’s work (1987, 1997), for instance, explored the relationships between extractive industries and the possibilities of democracy. Karl analysed how political pact making related to oil development created incentives to keep democratic institutions weak, with pacts in one period (p.198) constraining political options in subsequent moments. This interest in the implications of extractives for democracy has also characterized the methodologically varied interventions of authors such as Michael Ross (2012) and James Robinson et al. (2006). At their core, these approaches have explored how subsoil natural resources affect the incentives encountered by political elites and their subsequent behaviour. Much of this work has been focused at a national level, though a number of authors have addressed the same concerns in analyses of the implications of resource extraction for subnational political dynamics and the responses of subnational governments (Arellano-Yanguas, 2011; Asante, 2016).
Research on social mobilization and resistance to extractive industry investment constitutes a distinct approach to the politics of resource governance. Here the emphasis has been on understanding why, and how, affected populations and activists respond to the presence or expectation of extractive industry. The bulk of this research has been at a quite local scale, examining particular community-level conflicts (Bebbington and Bury, 2013; Gilberthorpe and Hilson, 2014; Kirsch, 2014). What this research has done less well is understand the operations of national political and economic elites, both within the state (Kirsch, 2012) and within corporations (Kemp, 2014).
Work such as Karl’s and Ross’s operate primarily at a national scale, while work on forms of popular agency and resistance tends to have a territorial and local focus. Just as these approaches to resource politics prioritize differing scales of analysis, they also focus on different types of actor. While some authors are primarily concerned with political and economic elites, others are more interested in the actions and motivations of indigenous, non-governmental, community-based, and civic actors who mobilize precisely because they feel excluded from the national and strategic decision making fora that the elites dominate. Another difference among these approaches is that some implicitly take a notion of development for granted, while others question dominant models of development. For some analysts, what is primarily at stake is a politics of interests, while others are more concerned with the contentious politics of ideas that inform natural resource governance.
In some sense, the Global Witness document occupies the space at which the concerns of these different analytical traditions could articulate. The tragic material on which it reports demands an understanding of how the incentives to those who stand to gain from resource extraction drive decisions that ripple out through political and social networks, ultimately leading people to kill those who resist. At the same time, targeted killings and civil conflict are not the only outcome when elite politics and pact making collide with grassroots interpretations of resource extraction. These diverse outcomes demand an explanation of why this articulation sometimes produces violence (p.199) and at other times produces compromise and institutional innovation. Put in the language of ‘good’ natural resource governance, the question is, how can the conditions under which more ‘effective’ and ‘inclusive’ institutions emerge be understood, anticipated, and facilitated? Political settlements approaches are no panacea in the face of this analytical and political question. However, they may go some way towards helping bridge these different ways of framing natural resource politics, and in bringing elite politics, different forms of political agency, and grassroots contention within the same analytical frame.
Our discussions of Bolivia, Ghana, Peru, and Zambia have offered accounts of the long historical sweep of the politics surrounding extractive industry governance. They have tried to account for the shifting pacts among elites as well as their interactions with grassroots responses to extractive industry investment, and to explain resource governance institutions in terms of these pacts and interactions. At the same time, they have sought pattern in these interactions. The goal has been to show that while there is always negotiation and agency, the politics of resource governance is not one of perpetual change. Instead, this governance is characterized by periods of stability (settlement) punctuated by transitions of instability and contingency. Discussing each country’s resource governance history through a shared and integrative conceptual lens helps, we hope, to identify both similarities and differences in ways that push forward conceptual discussions. In this chapter, we focus on those comparisons and contrasts, and use them to revisit a discussion of political settlements and the broader politics of resource governance.
1 Restating the Endeavour
The work underlying this book was predicated on two main claims. First, political settlements theory can help explain how mineral and hydrocarbon resources are governed over time in ways that complement other approaches to the politics of extractive industries governance. Second, a focus on natural resources can bring to the fore important ways in which materiality, scale, and ideas affect relationships among the elites and other social actors in natural resource governance and play a causal role in the constitution of political settlements. In this final chapter, we summarize what the Peruvian, Bolivian, Zambian, and Ghanaian analyses have contributed to these claims. We do this by developing answers to the following three themes that have run through the book: (1) How have transnational factors affected the politics of extractive industry governance and the relationships between the mineral economy and political settlements? (2) How have the circulation of ideas and the materiality of the resources in question affected natural resource politics and the (p.200) relationships between political settlements and natural resource governance? (3) How has the nature of political settlements affected the governance of the extractive industries sector and relationships between the sector and patterns of social inclusion; and how have the dynamics surrounding resource extraction in turn influenced features of these political settlements? We close with a summary discussion of the ways in which a focus on natural resources can bring new insights to political settlements thinking.
2 Transnational Factors in the Politics of Natural Resource Extraction
In the course of discussing our conclusions with colleagues, we were cautioned against seeing too much convergence across our cases. While this is a fair warning, there is no doubt that a series of transnational processes and shared global histories link resource extraction in the four countries analysed (cf. Cooper et al., 1993). Some of these global histories are more general, some more specific, but each of them cautions against prioritizing the country level in the analysis of political settlements. Key elements of these transnational couplings hinge around: colonialism and post-colonialism; global commodity prices and domestic political and economic dynamics; state capitalism and neoliberalism; and corporate strategy and new investors.
2.1 Colonialism and Post-Colonialism
While there are obvious differences among the four countries as regards the specific colonial powers associated with resource extraction and the periods in which those powers exercised direct rule, the association of mining with both colonial rule and truncated post-colonial transitions remains an important element of the contemporary politics of resource governance. In all four countries, resource extraction is still associated with the exercise of colonial power, and some actors relate the inability to become fully ‘post-colonial’ to the ways in which subsoil resources continue to be governed. This narrative circulates in popular and journalistic1 texts (Galeano, 1971), academic analysis (Ferguson, 2006), and UN reports (Mbeki Panel, 2015). As a consequence, discussions around extractive industry are simultaneously discussions around sovereignty and dependence, meaning that moves to deregulate and re-regulate resource extraction are interpreted through such languages, as well as in technical terms. As noted in Chapter 5 on Ghana, President John Mahama invoked precisely this sense of continuing dependency when he lamented at the annual World Economic Forum meeting in Davos in 2014, that: ‘[The mining companies] threatened to lay off workers (p.201) if we implemented the windfall tax and because we needed the jobs and you don’t want workers laid off you are coerced to go along.’
Such histories of truncated transitions in the post-colonial era continue to influence ideas about resource governance in Zambia and Bolivia also. Furthermore, and as the experience of Peru shows, perceived national elite control of mineral resources can be viewed by subnational actors as a continuing form of ‘internal colonialism’, itself a legacy of racialized, colonial power and the centralization of political authority.
2.2 Global Commodity Prices and Domestic Political and Economic Dynamics
Global commodity markets bind these countries’ resource sectors together in important ways. Most importantly, all countries are price takers in these markets. While at one level this dependence on global prices is the case everywhere, the implications are more significant when internal demand is limited and economies poorly diversified. The effect is that the policy space open to national elites varies as global prices move. The options open to all four countries to address poverty over the first fifteen years of this century were a direct function of the commodity boom, and in particular of significant increases in gold, copper, gas, oil, and silver prices. By the same token, by the mid-2010s each country was reappraising poverty reduction financing in light of the end of the commodity super-cycle. Other income stream options, absent from government, range from cutbacks in social policy expenditure through to policies favouring the expansion of extraction in an effort to offset declining prices with increasing production, as in Bolivia’s approach to expanding its natural gas frontier.2
Global commodity markets have also been implicated in the constitution and unravelling of national political actors in each country, as well as in their relative levels of holding power and inclusion in prevailing settlements. This is particularly clear for the cases of organized labour and small-scale miners. In Zambia and Bolivia, unionized mine workers became a critical part of the political landscape up to the late and mid-1980s, respectively, their initial emergence as political actors having been made possible by the combination of nationalized industry and reasonable prices for copper and tin. Their emergence as powerful forces meant that they were very much included within their respective national settlements and able to channel significant benefits in the form of social services and wages towards mining areas and union members. This in turn led to geographically and sectorally concentrated impacts on poverty and inclusion. As noted in the Zambia chapter, during these periods of union strength, ‘[t]he Copperbelt, in many ways, resembled a mini-developmental state’. The cohesion of these actors and the associated (p.202) mechanisms of inclusion unravelled quickly when prices collapsed, labour was dismissed, and industry was privatized.
Conversely, as commodity prices began to rise again during the 2000s, a new set of political actors emerged related to artisanal and small-scale mining (ASM). This phenomenon is especially dramatic in Ghana and Bolivia, though it is also significant in Peru. In each case, ASM has become a far more important source of employment than large-scale mining (see, for instance, Cano, 2015a, for Peru, and Hilson, 2009, and Hilson and Garforth, 2013, for Ghana). In addition, ASM organizations and networks have become vehicles for political inclusion expressed through street protest and violence (Bolivia), subnational electoral success (Peru), lobbying (all three countries), and direct representation in debates on national mining policy (Bolivia). While national factors may have helped trigger the initial emergence of ASM through conscious policy to promote it, as in Bolivia in the 1980s and Peru in the 1970s,3 it is only because of transnational processes of price formation that these sectors have emerged as significant modes of economic inclusion in the mineral economy. These processes also contributed to ASM operators becoming nationally important political actors able to exercise direct influence on legislation and force themselves into the national political settlement, above all in Bolivia.
2.3 State Capitalism and Neoliberalism
Another shared experience in all four countries has been the transition to and fro between state-owned and privatized industry. The extent of this oscillation varies among countries, though it has been clearest in the case of hydrocarbons governance in Bolivia, which has been nationalized three times over the last century. The oscillation between different forms of ownership is partly explained by changes in national settlements, while also influencing subsequent settlements because of the effects that nationalization and privatization have on the relative power of different actors. However, there is also a shared transnational dimension to what has happened across Bolivia, Ghana, Peru, and Zambia. Changes in ownership have reflected global shifts in prices, changes in global thinking regarding the merits of state-led investment, the inability of state companies to access leading technology and information (thus reducing their competitiveness), and the influence of international financial institutions, especially the World Bank. It is clearly no coincidence that from the mid-1980s to the late 1990s, each of the four countries moved from state-owned industry to one dominated by the private sector—above all in mining. Thus, the Bolivian Mining Corporation (Corporación Minera de Bolivia, COMIBOL), the state-owned mining company, was to all intents and purposes wound down in 1986, Ghana’s State Gold Mining Corporation (p.203) (SGMC) in the mid-1980s, Peru’s various state-owned mining assets in the first half of the 1990s, and Zambia’s Consolidated Copper Mines (ZCCM) in 2000. Since these periods, the mining sector in each country has been dominated by private investment,4 almost entirely international in character.5 This private investment has been explicitly encouraged by broadly neoliberal policies promoted by international financial institutions and many domestic elites.
The relative coincidence in ‘global time’ of these transitions attests to the importance of globally circulating ideas regarding state-led management of the economy, such as those emanating from the United Nation’s influential Economic Commission for Latin America and the Caribbean (ECLAC) in the mid-twentieth century (Finnemore, 1997) and, later, state withdrawal from the economy based on ideas emanating from Chicago School economists and subsequently distributed globally via iconic cases in the 1970s and 1980s, such as Chile, New Zealand, and the United Kingdom (Maxwell and Stone, 2004; Stone, 2004). However, the nature of the national polity is also important. In each country, resource nationalism has only been institutionalized in the form of state ownership or elevated taxation under dominant party/dominant leader settlements. This suggests (as Soifer, 2015, argues for nineteenth-century Latin America) that state-centric, developmentalist ideas tend to take root when there are high levels of political elite cohesion, and that these elites look to the state as the instrument for implementing their vision of development. Conversely, under conditions of competing elites, there is a preference for a weaker state, lest it be captured by one or another group (Soifer, 2015; vom Hau and Hickey, 2016).
2.4 Corporate Strategy and New Investors
As the mineral and hydrocarbon sectors of each country have become dominated by transnational capital investment, they are also affected by global dynamics within that corporate community. Thus, investment and portfolio decisions by corporations in any given country are not independent of the decisions they make in other countries. In addition, even though companies clearly adapt elements of their practices and demands to a particular country, the disciplining effect of global commodity and capital markets together with the club effects of corporate information sharing and self-organizing—for instance, in the form of the International Council of Mining and Metals (ICMM)—mean that ideas and practices circulate transnationally. The rise of corporate social responsibility (CSR) is a case in point. Though the ways in which CSR rolls out in each country are affected by levels of conflict, fiscal policy, and forms of government decentralization, core sets of practices travel the globe, affecting localized forms of patrimonialism and elite capture, as well as local development (Frederiksen, 2017).
(p.204) A second pattern across all four countries has been the changing composition of investment in extractive industry. Chinese capital has become increasingly important, especially in the mining sector in Peru and Zambia, but also in hydrocarbons in Bolivia (see also Sanborn and Torres, 2009; Mohan et al., 2012; Brautigam and Gallagher, 2014; Gallagher, 2016). However, unlike in the case of resource nationalism, the engagement with Chinese and other ‘non-traditional’ sources of investment seems to occur across quite different political settlements. While not all Chinese companies have similar practices, the implications for development may be significant and, at the very least, their generalized presence does imply the insertion of the Chinese Embassy, Chinese foreign policy, and new corporate actors into discussions of extractive industry policy in ways that challenge national elites (corporate, public, and civic) who have a relative lack of experience in negotiating with Chinese capital. Commenting on the mining sector in Peru, Sanborn and Chonn (2015) note that by 2015, Chinese state-owned enterprises had come to hold more than a third of the country’s projected investment portfolio, and, in the authors’ view, appeared less willing than their western and Peruvian counterparts to communicate with diverse actors or engage in local power struggles. This increased presence of new forms of capital in each country is also affected by domestic elites’ efforts to seek sources of investment that establish less political conditionalities.
From the colonial era to the present, therefore, transnational factors ranging from global prices to the practices of international corporations have affected the nature of political settlements and the governance of natural resources. National dynamics thus cannot be considered in isolation from the broader context in which they are situated. These transnational factors are, in turn, the result of the global circulation of ideas, a topic we turn to in the following section.
3 Materiality, Ideas, and the Politics of Extractive Industry Governance
The histories of natural resource politics in Bolivia, Ghana, Peru, and Zambia have suggested that these politics are best understood not just in terms of the interests of different parties negotiating resource use and control, but also in terms of the very nature of the resource itself and of ideas about that resource. While those ideas might be mobilized in pursuit of particular interests, they exist separate from those interests, often emanate from other locations and scales, and have had effects that cannot be explained solely in terms of interest-based politics. The nature of the resource in question—its location, its quality, its ease of extraction and so on—has also had political effects. (p.205) In this sense, both ideas about, and the materiality of, resources have affected resource governance and the formation of political settlements.
Mineral and hydrocarbon resources have patchy geographies that overlap with geographies of political authority, race and ethnicity, land and territorial claims, and other natural resources. In each of the countries studied, relatively long-standing, historically stable geographies of resource extraction have been disrupted in recent decades in ways that influence the politics of extractive industry governance. In Zambia, the notion that mining is primarily a feature of the Copperbelt has now been upset as copper mining moves into North-Western Province. In Ghana, the association of resource extraction with Ashanti and Western regions has now been overturned by the spread of mineral concessions into other areas, as well as by offshore oil (Cuba et al., 2014). In Bolivia, the notion that the eastern lowland department of Santa Cruz was the centre of the hydrocarbon economy was rapidly upended by the post-1990s discoveries of remarkable gas reserves in Tarija (Humphreys Bebbington, 2010). And in Peru, the opening of new mining frontiers in the north of the country has challenged the traditional association of hard-rock mining with the Central Andes and Southern Coast.
These new frontiers are not just geographical phenomena driven by a mix of global changes in prices and demand and national policy incentives (Bridge, 2004)—they also produce political change. The expansion of mining into northern Peru has created political actors with considerable power. These actors include the owners of new and extremely profitable mines, as well as the regional political and civic actors contesting the forms taken by this mining.6 The growth of the gas economy in Tarija and the capture of revenue from it helped produce regional political elites with the capacity to make themselves essential ideological allies of the national elites with whom they converged, or powerful opponents of other elites with whom they disagreed. Gas also provided new sources of political leverage for traditionally marginalized Guaraní communities under whose land the newly found deposits lay (Ospina et al., 2015). In other instances, this expanding frontier has led ASM miners to gain political influence. This has tended to occur in areas where minerals are accessible with relatively low-tech practices, as in the case of alluvial gold in Madre de Dios, Peru; near-surface gold in parts of Ghana; or abandoned subsurface mines in highland Bolivia.
While the expansion of copper into Zambia’s North-Western Province has not yet created regionally based political actors with the capacity to break into the national settlement, it may well do so in the future, and it has at least increased the leverage of local chiefs who have influence over land and access (p.206) to the subsoil. The expansion of mining and oil into non-traditional regions of Ghana has brought into being subnational political actors (chiefs and otherwise) with capacity to engage the central government directly (see also Asante, 2016). At the same time as they strengthen new actors, these processes weaken the relative power of actors in traditional areas of extraction—as in the case of political authorities and labour in the Zambian Copperbelt. This intersection of the materiality of subsoil resources with frontier expansion due to global demand and prices thus becomes part of an explanation of how actors once excluded from national settlements gain holding power that can enable them to influence national debates on resource governance. These processes also help explain how factions that were at one time vertically included in the political settlement—perhaps especially organized labour in areas of traditional production—slowly lose leverage within the dominant coalition.
Furthermore, these processes and shifts in the balance of power are part of an explanation for the emergence of and struggles over new rules governing the distribution and spending of resource rents. Across all four countries, though perhaps in ways that are more pronounced in Peru and Bolivia, the expansion of the extractive frontier into areas without a tradition of mining or hydrocarbon production has been characterized by conflict and resistance. This has generated a broad literature suggesting that such conflict has sometimes reflected efforts to protect or claim rights (to territory, water, self-governance, etc.) and at other times has been used as a tool to gain access to employment, rents, subcontracts, and other benefits or compensations (Arellano-Yanguas, 2011; Bebbington, 2012). Regardless of these different drivers of protest (some of which are interest-based, others of which are idea-based), a common response across all four countries has been for the national elites to share resource rents with subnational and local authorities in the hope that this will dissipate conflict, buy off resistance, and create conditions allowing access to subsoil resources.
One such mechanism in each of the countries has been the use of CSR as a way of co-opting local elites (Frederiksen, 2017). In three of the countries (Peru, Bolivia, and Ghana), a second, and financially much more important, mechanism has been to institute systems for the transfer of taxes and royalties to the regions in which resource extraction occurs. The most generous of these transfers has been the so-called canon minero in Peru, which returns 50 per cent of all taxes on mining companies to authorities in the regions of extraction. The least generous is that in Ghana, which sends just 10 per cent of royalties back to a mix of district assemblies, traditional authorities, and stools.7 Bolivia sits in between, with more substantial transfers of hydrocarbon taxes back to gas- and oil-producing areas, and much smaller transfers of mining taxes to mining regions. Peru appears to have been particularly generous because of the level of local conflict surrounding resource extraction. Government (p.207) and corporate elites believed, incorrectly as it turned out, that transferring resources to these regions would reduce conflict (Arellano-Yanguas, 2011; Ponce and McClintock, 2014). In both Peru and Bolivia, when central authorities have subsequently sought to reduce such transfers, they have been largely unable to do so because of the level of local resistance. Such resistance, driven by actors who have become accustomed to the receipt of these transfers, reflects a further sense in which the geography of resource extraction contributes to the emergence of subnational constituencies with holding power.
It is not just the physical location of resources that can have such political effects. The quality of the resource helps determine whether it becomes viable or not, how it will be mined, how much water will be used in the extraction process and so forth. Just as one example, the concentration of deposits determines whether they will be mined using open-pit or underground mining techniques. Open-pit techniques involve far more movement of earth, affect more surface property rights, and demand more water use. Such techniques have typically been much more conflictive than underground mining. The high levels of conflict in northern Peru which have had significant consequences for regional and national politics, owe much to the fact that deposits have demanded open-pit mining.
3.2 Ideas: Resource Nationalism, the Nation, and Technopols
Different ideas related to resource extraction have influenced the constitution of national political settlements and governance arrangements. Ideas surrounding territory, rights, environmental impacts, and ethnic–racial identity have been important in the emergence of subnational actors that contest resource extraction and the distribution of rents generated from minerals and hydrocarbons. While the experiences in Bolivia, Ghana, Peru, and Zambia suggest many ways in which ideas are important, here we focus specifically on the influence of ideas of resource populism, national unity and the nation, and the idea that technocrats are objective and above special interests, and so are able to govern more effectively than politicians.
Resource nationalism is the notion that natural resources should be managed above all for the needs of ‘the nation’, and therefore should be controlled by the state for ‘the people’. This idea is closely related to historical experiences of colonialism, dependent development, and the capture of resource rents by foreign capital. It also has a constitutional basis in many countries, insofar as national constitutions define the state as the owner of subsoil mineral resources. This observation is important because the global industry typically talks of resource nationalism in negative terms, as an unauthorized and inefficient exercise of state power that puts a break on market functioning. This framing understates the constitutional obligation of many states to (p.208) administer their countries’ subsoil resource wealth, as well as the resonance that this idea has with broad parts of national populations.
Such national-populist renderings of resource governance have been important in all four countries. They have emerged at different historical moments and have typically been associated with dominant party/dominant leader settlements. In Zambia, such ideas informed the nationalizations effected by the United National Independence Party (UNIP) of Kenneth Kaunda, the first president after independence, during the late 1960s and early 1970s. They were also present in the approach to natural resource governance of Kwame Nkrumah, the first president and prime minister of Ghana following independence in 1957. In Peru, they were especially strong during the period of the nationalist Revolutionary Government of the Armed Forces (Gobierno Revolucionario de las Fuerzas Armadas, GRFA) from 1969 to 1974. In Bolivia, they were at the core of the agenda of the post-1952 government of the National Revolutionary Movement (Movimiento Nacionalista Revolucionario, MNR) and then again, more recently, since the 2006 election of the indigenist–socialist government of Evo Morales’ Movement to Socialism (Movimiento al Socialismo, MAS).
In each of these cases, ideas of resource nationalism grounded in organized labour in the mining and oil sectors, party intellectuals, and other factions provided ideological support for notions of state ownership of extractive industry. While in more recent periods such ideas have been most forcefully mobilized in Bolivia, they have also been apparent in mineral taxation debates in the three other countries, in each instance informing (usually short-lived) efforts to introduce tax increases during periods of commodity boom.8 Interestingly, there is some indication that the Bolivian example has served as a point of reference for some African countries pursuing such options. One prominent example has been the concept that anti-poverty policy instruments could be directly funded by taxes on the mineral and hydrocarbon sectors (Mosley, 2017). What is important here is to recognize that these sets of ideas only come into being because of the long-standing couplings of resource extraction with colonial and post-colonial exploitation. How history is remembered and interpreted thus matters. The ideological significance of natural resources in these histories creates ideational space for ideas of resource nationalism.
Ideas of the nation, national unity, and sovereignty influence the governance of extractive industries in additional ways. To the extent that the localized nature of resource extraction can elicit subnational movements demanding either greater autonomy in the governance of natural resources, or greater claims over the revenue streams made possible by royalties and the taxation of extractive industry, there is always a sense in which the political dynamics surrounding extraction can challenge national integration. Indeed, (p.209) while transferring revenue to mineral- and hydrocarbon-producing regions, Ghanaian and Bolivian national authorities have also mobilized ideas of national unity (Ghana) and national equity/harmony (Bolivia) as rationales for increasing the proportion of resource rents that are centrally controlled, with a view to spending them in line with national policies and in a way that does not concentrate fiscal transfers in the regions in which extraction occurs. In Ghana, there has been a recurring commitment to distribute rents without regard for regions of extraction. Even resources from the Mineral Development Fund, which are theoretically meant to mitigate the environmental and social costs in the communities where mining occurs, are distributed to benefit non-mining communities in the name of ‘unity’. In Bolivia, the MAS government has deployed ideas of the nation as a justification for changes to fiscal policy that seek to reduce the proportion of rents going to departments in the eastern lowlands that have been critical of the MAS government. Though these moves have also been part of conscious efforts to reduce the power of subnational factions that had been empowered by previously more generous fiscal transfers, they have been crafted in terms of ‘the nation’ and ‘the people’.
Peru offers further insight into the importance of ideas. This is a case in which the idea of technocracy as legitimate government has been important in influencing the governance of extractives and development. The relative stability of macroeconomic policy, and the suite of incentives to encourage extractive industry investment across the country, even in the face of relatively unstable governments and sustained social conflict over resource extraction, is taken by some scholars to reflect the relative power of technocrats within key ministries in defining national policy (Dargent, 2015). These technocrats have, over the last twenty years, been committed to ideas that place value on free markets, are suspicious of planning, and deeply doubt the capacity of the state to be an efficient and effective economic actor. This relationship between ideas and pockets of bureaucratic and technocratic competence has also been visible in other parts of the Peruvian state, where over the last two decades, a strong, rights-oriented legal technocracy has been consolidated in the Human Rights Ombudsman’s office and, with somewhat less autonomy (and more recently), in the Ministry of Environment and Vice-Ministry for Intercultural Affairs.9 Together, these different concentrations of technocratic strength have played important roles in determining how resource governance institutions are designed to manage the trade-offs between the promotion of investment and the protection of citizenship rights in relation to natural resource governance.
Quoting from Chapter 2, the argument here is that in a ‘context of “fractured politics” (Crabtree, 2011), technocrats have remained fundamental to operating the central state in Peru, and this has contributed to a higher degree (p.210) of stability and responsibility in macroeconomic policymaking than in past eras (Dargent, 2015)’. Of course, this is also possible because of a certain alignment between the thinking of technocrats and that of national business elites, but it also appears that the very idea of being technical rather than political is mobilized in ways that protect space for such so-called ‘techno-pols’.
The ideas embodied in technocracy or resource nationalism as forms of governing, as well as ideas that have motivated mobilization and protest, have interacted with the material qualities of subsoil resources in ways that have had clear implications for resource politics and national politics more generally. Though these ideas and materialities cannot be explained away as mere artefacts of a politics of interests and incentives, the effects that they have derive from the particular ways in which they interact with such interests. We now turn to a closing discussion of these interests and their implications for mineral governance.
4 Political Settlements, Extractive Industry, and Inclusive Development
Terry Karl once commented that ‘the “resource curse” is primarily a political and not an economic phenomenon’, and that the institutional distortions that prevent economic diversification and inclusive development ‘cannot be undone without a huge coordinated effort by all stakeholders involved’ (Karl, 2007: 256, 258). Introducing this chapter, we noted that scholarly and activist work alike have highlighted the importance of politics and power in resource extraction. The question, however, is how to talk about such power in a formal, analytical way that combines both elite and grassroots politics. Our argument has been that political settlements approaches offer a fruitful response to this task.
Political settlement frameworks focus attention on relationships of vertical power between elites and bases within a dominant coalition, and horizontal power between elites of a dominant coalition and excluded factions who are not party to the benefits bestowed by the coalition (Khan, 2010). Levy and Walton (2013) and Levy (2014) complement this framework by arguing that how elites within a dominant coalition manage these relationships and approach development depends on whether the broader political system is characterized by competition among leaders and parties or the dominance of a particular leader or party. Political competition would lead elites to recruit clients into the coalition as a means of holding on to power (a form of political settlement they refer to as ‘competitive clientelism’) and would tend therefore to operate with shorter-term time horizons oriented (p.211) towards recruitment of clients ahead of electoral cycles. Conversely, dominant leaders and parties are able to worry less about client recruitment and to use resources for longer-term political projects based on particular ideas of development or personal gain, a form of settlement referred to as a dominant leader/dominant party settlement. Such forms of dominant party/dominant leader settlement can range from the authoritarian modernization project of a developmental state through to a personalized kleptocratic project, and can involve leadership that is autocratic or elected, but in either instance, dominant.
How far do these frameworks help explain how extractive industries have been governed across Bolivia, Ghana, Peru, and Zambia? In turn, how far does the prominence of extractive industries in these economies help explain these vertical and horizontal relationships and the extent to which political arrangements are characterized by competition or authoritarianism? Several themes emerge in the country analyses, which we address in this section. The first two themes relate to the relationships between the nature of the broader political system, extractive industry governance, and modes of inclusion. The second two themes have to do with the relationships between horizontal and vertical distribution of power among elites, excluded factions and ‘lower-level groups’, and institutional change. The final issue relates to the particular insights to be gained from a long-term view of these relationships.
4.1 Competitive Clientelism, Economic Transformation, and Modes of Inclusion
It has been argued in some of the political settlements literature that competitive clientelist systems tend to be associated with weaker commitment to investment of resources in structural transformation of the economy because leaders’ primary concern is to use resources to recruit electoral support in order to remain in power (Hickey et al., 2015; Whitfield et al., 2015). As noted in Chapter 1, the notion of clientelism in this concept is not one of the traditional patron–client relationship of dominance and dependence, but rather of the elites who, in competing for political power, need to recruit and sustain supporters both to assume, and then retain, governing power. The ‘clients’ in ‘competitive clientelism’ thus have significant power themselves, which they can use to trade their support for governing elites in return for benefits of different types. This creates incentives for elites to channel resources to different constituencies rather than to invest those resources in one or other development strategy. This claim that competitive political systems can lead to dissipation of resources has led to arguments for the developmental state, and the notion that a combination of authoritarian rule with bureaucratic competence can allow states to introduce coordinated programmes of economic and institutional modernization without having to dilute reforms to (p.212) accommodate the electoral and political claims made by those who lose out in such processes (O’Donnell, 1973, 1988; Evans, 1995; Golooba-Mutebi, 2013).
At one read, the case for the limited developmental efficacy of competitive clientelism seems to be borne out by the four country histories. The argument is made most forcefully through the discussion of mining governance in Ghana in Chapter 5, which argues that a competitive clientelist system has created incentives for the political party in power to use rents from extractives primarily as a means of cultivating clients with a view to securing allegiance ahead of the next electoral campaign. It is worth repeating the text of that chapter:
It is this form of political calculus that shapes the manner in which mining resources are distributed, and the way in which this in turn shapes the impact of mining on national and local development. Notably, allocation of rents to traditional authorities and chiefs does not seem to be driven by socio-economic development concerns but is more of a co-optation strategy driven by: (1) the logic of maintaining social orders, due to the significant leverage of traditional authorities over mineral-rich lands; (2) the desire of ruling elites to win and maintain political power through the political support of chiefs, who wield substantial leverage over rural voters. Traditional authorities receive a significant share of mineral rents, mainly because ruling political elites want to avoid provoking resistance from a group in society that brokers land and votes in the rural areas.
We make a similar argument in Chapter 3 on Bolivia, though in that instance, the emphasis is less on using resource rents to cultivate clients, and more on building political alliances:
[T]he incentive for elites has consistently been to control revenue streams from resources in order to spend on managing political alliances, rather than to invest in economic and social development.
However, a closer look at the extractives sector suggests that while competitive clientelist systems might underinvest in forceful state-directed approaches to economic diversification and transformation, they have nonetheless been associated with transformational policy in the extractives sector and the economy as a whole. The introduction of thoroughgoing neoliberal reforms to break up state-owned extractive industry enterprises and encourage foreign direct investment has occurred during periods of democracy characterized by competitive clientelist practices. This is particularly clear for the periods from the latter 1980s to mid-1990s in Bolivia and Zambia, and to some degree also in Peru.10
Across the four countries, periods of competitive clientelist rule have not succeeded in using resource rents to foster any substantial diversification of the economy. In Peru, the commitment of 50 per cent of taxes paid by mining (p.213) companies to the canon minero, the return of all royalties to the producing regions, and the use of part of those rents that do accrue to central government for the financing of national social programmes, has the knock-on effect of reducing resource availability for investment in structural transformation of the economy, even when policymakers have identified this to be a critical need (Ghezzi and Gallardo, 2013). In the Andean region, the argument is made that, for obvious political reasons, governments systematically underinvest in research and development relative to what they spend on transfers, and this lack of spending on innovation holds back economic change. Chapter 5, on Ghana, argues that the emphasis on channelling rents to clients has meant that they are not available for investment in alternative forms of economic development and has contributed to the creation of a more broadly based national capitalist class. It is also possible that the combination of Dutch disease effects, global competition, and free trade agreements that hinder preferential treatment of domestic industry together made such diversification unlikely, with or without targeted investment.
One consequence of this is that under these regimes, large-scale extractive industry has fostered social inclusion at least as much through contributing taxes and royalties that have then been spent on targeted social protection and other transfer programmes, as it has through the labour market. This pattern varies across the countries, with the more significant successes in poverty reduction in Peru and Bolivia arguably reflecting the combination of transfer programmes and the trickle-down effect of rapid economic growth fuelled by the mining and hydrocarbon sectors (Mosley, 2017). It remains an open question as to how durable such poverty reduction will be if commodity prices continue to fall, or if investors choose not to proceed with new projects, which would result in a reduction in the tax and royalty payments that form the fiscal base of social protection programmes.
Finally, the fact that both Peru and Bolivia have had significant success in poverty reduction over the last decade presents a challenge to arguments about the relations between political settlements and inclusive development. While both contexts are characterized by a broadly competitive clientelist political logic, Bolivia’s MAS government has been in power for a decade and is beginning to display features that are more characteristic of dominant party contexts. It also espouses an ideological commitment to socialism. Peru looks very different. The same period has seen regular turnover of governing parties, with swings from the right to centre-right and a more or less sustained ideological commitment to the market as the most effective allocator of resources and investments. Moreover, these two quite distinct cases share similar patterns of inclusion in terms of both poverty reduction and the forms taken for consultation over resource extraction, with evidence in each country of significant limits on community-level voice regarding the (p.214) viability, design, and governance of mining and hydrocarbons (Humphreys Bebbington and Bebbington, 2012; Gustafsson, 2017; Schilling-Vacaflor, 2017). The implication is that the relations between inclusive development and natural resource extraction can be similar under differently structured settlements. This may suggest equifinality, in which the workings of different types of political settlements end up achieving similar outcomes by different means, or it may suggest different settlements following ultimately similar strategies: the promotion of rapid growth of extractive investment, coupled with concerted efforts to redistribute the benefits of this growth.
4.2 Dominance and Modes of Inclusion
Over the longue durée considered in the four country studies, there have been several periods of more or less authoritarian and personalized dominant leader/dominant party rule. The most obvious of these are the military government of Peru from 1968 to 1980 and the period of Kenneth Kaunda’s rule in Zambia from 1964 to 1991.11 As just noted, Evo Morales’ MAS government in Bolivia may also be easing into a dominant leader/party mode of rule. These periods have been associated with state ownership of extractive industries (the MAS government has re-floated/re-strengthened state mining and oil companies)12 and a unionized workforce, with benefits channelled primarily to unions and to human settlements around mine sites.
The Kaunda and Peruvian military regimes did seek state-led modes of economic transformation, but ultimately with little success—neither in economic diversification nor in sustained poverty reduction. Efforts to foster inclusion through employment or unions (but not political participation) also unravelled. Thus, while a case could be made that these authoritarian/dominant party systems did encourage development policy that looked beyond the short-term need to recruit clients for electoral success (MAS being an exception, as it is still subject to electoral disciplining), they were not successful in converting these visions into sustainable forms of social inclusion. This is so because of limited governing and technical capacity and (in Zambia’s case) because of falling commodity prices. So, while the Levy and Walton (2013) framework might go some way in explaining how and why certain ideas about development and inclusion emerged under these authoritarian systems, it remains the case that these ideas failed on their own terms.
4.3 Horizontal and Vertical Power Relations and Piecemeal Institutional Reform
In each of the four countries, a significant part of the post-1995 expansion of large-scale extractive industry has occurred in non-traditional areas for mining (p.215) and hydrocarbons.13 In most instances, these have also been areas occupied by resource-poor and politically excluded populations. Examples include: the ethnically diverse communities of North-Western Province in Zambia long excluded from the Copperbelt–Lusaka axis of power; the resource-poor municipalities and historically marginalized Guaraní and Weenhayek peoples of the sparsely populated dry Chaco of Bolivia; chronically poor peasant and indigenous communities of the Peruvian Andes; and resource-poor communities in Ghana. In Khan’s (2010) terms, expansion has largely occurred in areas occupied by lower-level factions, some of them ostensibly within the dominant coalition, others not—but in all cases, these have been groups in positions of relative exclusion from centres of power.
However, as noted in Subsection 3.1, this self-same expansion has increased the potential political leverage of these excluded groups insofar as they can complicate company access to the subsoil. This leverage has increased further as transnational and national urban actors concerned with rights, environmental impacts, and justice have reached out to these factions. Often the response of the elites within the dominant coalition has been to try and co-opt these newly empowered actors, and this has sometimes been successful. However, at the same time, the mobilization (or threat of mobilization) on the part of these factions has also induced a series of institutional reforms. This has perhaps been most evident in Peru, where, in the face of conflict, governments have introduced new laws and regulations on environmental impact, prior consultation, revenue sharing and local land-use planning, among others. These regulations have, however, been introduced in response to horizontal pressures, rather than because of fundamental changes in development thinking among the elites and within the dominant coalition. As a result, these reforms have also been introduced in a piecemeal fashion and are fragile and subject to reversal. This use of institutional change in response to specific claims and perceived urgencies has tended to produce governance arrangements that lack strategic coherence.
4.4 ASM as a Constraining Form of Horizontal Power
In Bolivia, Ghana, and Peru, though to a lesser extent in Zambia, the last three decades have been associated with the continuing and substantial growth of an artisanal, small- and medium-scale mining sector. This sector, which is composed largely of poor un- or under-employed parts of the rural and urban population, has emerged from factions long excluded from the formal economy, as in the case of communities affected by the expansion of the extractive frontier, noted above. There are two significant exceptions to this trend. First, the sector also incorporates relatively significant owners of capital. These are the entrepreneurs who provide the larger-scale machinery to miners, organize (p.216) work gangs, control marketing, and, in some instances, participate in laundering illegally sourced investment capital and/or the illegally extracted gold. Second, in the specific case of Bolivia, a number of these miners were previously members of the miners’ union of the pre-1985 period. When union workers were laid off as part of structural adjustment programmes, some were given mining licences as compensation. These rights have become part of the basis for the growing informal sector. Importantly, such resource rights are also a key asset with which these miners have sought to negotiate with larger-scale companies interested in mining the areas to which the formerly laid-off miners now hold mineral rights.
For these different reasons, the ASM sector has emerged as a particularly powerful faction. Its influence resides in the fact that it not only controls access to the same subsoil often sought by expanding large-scale mining operations, but, in Ghana, Peru, and Bolivia, is also responsible for a substantial percentage of all gold leaving the country. In addition, the low-tech, labour-intensive nature of ASM means that the sector generates many more jobs than does large-scale mining. This combination of factors has meant that these sectors have had the potential to influence dominant coalitions in more significant ways than do dispersed communities, municipalities, environmentalists, and others with their more specific claims. In Bolivia, the mobilizing power of the cooperatives has meant that they were able to exercise significant influence over new mining legislation in 2014. In Peru and Bolivia, there is evidence to suggest that the sector (or at least important actors within the sector) has been able to use its resources to influence the election of subnational and national representatives. In Ghana, the ASM sector provides livelihoods to over 1 million people and produces around one-third of gold exports. This sheer scale, coupled with the sector’s links to local chiefs and business elites, gives it power. As we note in Chapter 5 on Ghana, ‘[s]upporting small-scale mining is…one simple way for politicians to appear sympathetic to the rural, unemployed youth and the families they financially support, (Teschner, 2012); and ‘[i]n a country where…presidential elections are sometimes won by less than 50,000 votes, it is easy to understand the political relevance of galamsey operators to ruling political elites and in shaping the political settlement around mining sector governance more broadly’.
4.5 Cautionary Insights From the Longue Durée
The longue durée perspective taken in our country studies has been sobering. Notwithstanding the many specific regulatory changes documented, and the many shifts to and fro in dominant political coalitions, the impression is that underlying productive structures have been relatively immutable. At the beginning of the periods under analysis, these four economies were (p.217) dependent on resource extraction (at least for foreign direct investment (FDI), fiscal revenue, and export earnings), and by 2015 they were still dependent on resource extraction, albeit sometimes of different natural resources. Notwithstanding the emergence of more complex urban service and informal economies over time, or of a moderately diversified export agriculture and agro-industry, these four countries have not moved far beyond economies that are dependent on the primary sector. They have seen no real success in developing and diversifying a secondary sector and continue to have public budgets that are dependent on the rise and fall of commodity prices. Put another way, they have not been terribly successful in developing stable, durable, and diverse channels of inclusion through either the labour market or public expenditure.
This presents the slightly perplexing dilemma of how to relate a picture of political settlements that change, but a productive structure that changes very little. Even if taking a longer historical view allowed us to see beyond the short-term political volatility that occupies the minds of many commentators, we did still identify a number of changes between political settlements over the last century in each of the countries studied. If, put very crudely, our independent variable was changing but our dependent variable was stable, does this mean that there is no relationship between the two?
Our resolution of this dilemma has been to talk of ‘meta-settlements’. This idea initially emerged from our analysis of Zambia, in an effort to tie together five distinct political settlements running from the colonial era to the present. Ultimately, we identified two key phenomena that have persisted across different settlements: authoritarianism and a narrow (vulnerable) elite. To quote from Chapter 4, the first is manifest in a ‘concentration of power in the hands of the executive branch and a weakening of institutions of accountability, including parliament and the judiciary’. This authoritarianism persists even after the emergence of multiparty elections. With regard to the second, Zambian leadership has tended to pass between relatively few hands, even if this change of power occurs often, as in recent years. This notion of ‘meta-settlement’ became useful for seeing enduring trends in political relationships across all four countries. Examples of such durable phenomena include: the long historical tug-of-war over control of natural resources between chiefs and central government in Ghana; the recurring struggle over political control among Bolivia’s regional elites, funded by the most lucrative subsoil resource of the moment; or the persistent centralized control of resource rents in Peru, until the last decade.
This observation raises a follow-on question: if certain features have been so resilient to change, why is this so? The experiences of Bolivia, Ghana, Peru, and Zambia suggest that part of the answer to this question may have to do with natural resource dependence itself. First, through creating the reality, or (p.218) the prospect, of significant rents, the very imaginary of subsoil wealth creates incentives that encourage political and economic elites to focus on capturing these rents, rather than seeking economic and political innovations that might create new value. Second, by producing highly uneven geographies of accumulation and dispossession, and creating incentives to particular regions to increase their capture of rents, the natural resource economy creates serious obstacles to the building of broad-based coalitions that share a national development imaginary (Watts, 2004a, 2004b). Natural resource-dependent economies may tend to foster political splintering more than alliance.
Having said this, it is important not to overstate the idea of underlying continuity and limited change. The emergence of powerful actors, along with changes in foundational ideas, have modified elements of the political settlements in each of the four countries in ways that have enhanced inclusion: colonial subjects have become citizens with rights and voting power in all four countries; access to rule has become somewhat less determined by race or family; and degrees of competition among economic elites have increased. In general, competitive clientelist settlements have been associated with a sustained widening of citizenship rights more than dominant party/dominant leader settlements. Competitive clientelist settlements, while certainly not free of corruption, have been characterized by relatively greater degrees of political accountability in the use of resource rents. The nature of settlements has, therefore, had important implications for the relationships between resource-dependent economies and the nature and degree of social inclusion. Where the nature of settlements appears to have had less effect has been in the successful fostering of economic diversification and reduction of the weight of resource rents within the national economy.
5 A Long-Term Natural Resource Governance Lens on Political Settlements
Mineral and hydrocarbon resources are intensely local. Even when it can seem that the extractive frontier is everywhere (especially when represented through maps of exploration licences), it remains the case that commercial quantities of these resources are located in relatively few places, and many of the environmental and social consequences of their extraction are relatively concentrated in space.14 At the same time, mineral resources have been part of international value chains that have become increasingly globalized and integrated, at least since the Iberian pillage of Latin America. Over the last century, these commodity markets have been further internationalized, with prices set globally, and an increasingly wide range of transnational actors interested in securing access to the resources. In between these two scales, (p.219) subsoil resources are also deeply national. Their commodification has often been one of the principal pillars (if not the pillar) of national economies, serving as an important source of fiscal revenue and foreign exchange, and a driver of national investment and elite formation through the capture of rents. Subsoil resources have also often become national icons. Histories of Andean identities cannot be told without reference to gold and silver, the centrality of mining and now natural gas to Bolivian nationalism is clear, and Zambian ‘expectations of modernity’ (Ferguson, 1999) continue to pass through copper. And beyond the countries in which we worked, oil is part of national and subnational identities in Nigeria (Watts, 2004a), while in the UK, the miners’ strike of 1984–85 was profound not just because coal was a valuable commodity that created jobs, but also because it was part of national and class identities.
These qualities of subsoil resources have implications for themes within any discussion of the politics of extractive industry governance and of political settlements in natural resource-dependent economies. We summarize the key arguments we have made in this chapter and throughout our country chapters with six themes of special significance: (1) the distinction between national settlements and policy domain settlements; (2) scalar relations within political settlements; (3) the implications of natural resource rents for settlements; (4) the scale of investment required to develop mineral and hydrocarbon deposits; (5) the symbolic power of subsoil resources; (6) the longue durée of resource extraction. In the following paragraphs, we elaborate on each of these.
While some approaches (Hickey and Sen, 2016; Levy and Kelsall, 2016) distinguish between the overall national political settlement and more specific settlements in particular policy domains (such as education, health, or social protection), this distinction may not always be relevant for natural resource extraction. In those instances in which the mining, oil, and gas sectors are central to the national political economy, identity formation, and the constitution of national political actors, it may be unhelpful to imply a sharp distinction between the overall political settlement and the natural resource policy domain. Instead, these two ‘spaces’ may be mutually constitutive. The historical experiences of Bolivia, Ghana, Peru, and Zambia show just how central mining and hydrocarbons have been to national political debates. Over extended periods in each country, the mining and hydrocarbons ‘policy domain’ has been the key national political domain.
Second, the local, national, and global dimensions of resource extraction also imply that an analysis of the politics of extractive industry governance and of the constitution of political settlements must work across scales. The transnational enters in the form of global investment capital and practices, multinational companies, regulation of global commodity markets, global (p.220) price trends, international financial institutions, transnational civil society, and global environmental and human rights frameworks. By the same token, the localized nature of minerals and hydrocarbons means that their extraction consistently brings subnational actors into national and international dynamics. Because local actors have significant influence over the ability of companies and states to secure access to these natural resources, national and international elites often have to negotiate with them and at times have to enrol them into broader political settlements in order to be able to extract minerals and hydrocarbons. In this sense, the geographically specific location of resources can frequently produce new subnational elites with substantial power to influence the course of extractive industry development.
A third special feature of subsoil resources derives from their ability to produce significant rents, especially during periods of commodity boom. The combination of relatively easy-to-capture ‘super-rents’ and the potential power of local actors to restrict access to the subsoil means that the politics surrounding resource extraction can be particularly prone to violence and corruption. In addition, the potential to capture such rents can make these resources singularly attractive to actors seeking to realize and finance a broad range of other political projects. We see diverse projects financed by these resources across Chapters 2 to 5. In Bolivia, MAS increased central government capture of hydrocarbon rents to finance broad-based social redistribution. Chiefs in Ghana sought the means to consolidate territorial and political authority through natural resource rents. Copper revenues were central to the nationalist post-colonial project in Zambia, while in Peru the development of the mining sector was crucial to the effort of different post-internal conflict governments to establish political order in the highlands. The politics of extractive industry governance are thus also the politics of core financing mechanisms for the explicitly political and ideological strategies of elites of diverse types. Political settlements analysis, with its focus on elite strategy in relation to ‘excluded factions’, is particularly useful for drawing attention to these types of relationship.
Fourth, and related to the prior point, large-scale natural resource extraction projects typically require substantial up-front investments, which then become immobile capital. The same would apply for many infrastructural projects that often accompany resource extraction, such as dams, ports, trunk roads, and rail lines. Such investments require significant ‘credible commitment’ from government (Sen, 2013) to provide investors with the financial, legal, and physical security they demand in order to proceed with these projects. In order to commit to investments on such a scale, companies seek sizeable tax holidays or reductions, as well as legal and contract security. Because the fixity of investments makes them more vulnerable to expropriation (p.221) and the demands of localized protest and social conflict, investors also seek physical and juridical security from the state, which can translate into assurances that public force will be used against protest and demands for legal exceptions and guarantees. In the case of hydrocarbons, the scale of necessary investment also makes this a sector dominated by large-scale capital ownership. Consequently, the sector is characterized by asymmetries of power, knowledge, and expertise which often can only be offset (albeit partially) by social conflict, public debate, or relatively autonomous countervailing regulatory bodies within the state. The exception to this pattern is the case of ASM—an activity whose geography is itself related to the nature of mineral deposits, only some of which are accessible to ASM. In these different ways, the materialities of the mine, well, pipeline or resource deposit have implications for resource politics and lead economic and political elites to establish agreements that can be resilient in the face of popular protest. Insofar as it situates civic movements’ holding power in relation to these other players in the settlement and in relation to the ruling coalition, political settlements analysis is useful in qualifying some of the more hopeful and populist sentiments that can inform studies that focus only on grassroots resistance.
Fifth the symbolic significance of subsoil resources means that ‘ideas’ take on potentially causal power. The implication is that the nature of the political settlement has to be understood not just in terms of interests, but also of the politics of ideas, some of which have considerable political valence and a capacity to mobilize resistance (Hall, 2010; Hickey, 2012; Hickey et al., 2015). Across all four countries, ‘resource populism’ and ‘justice’ have been and continue to be important ideas that have affected natural resource governance and social mobilization. In the specific cases of Peru and Bolivia, ideas surrounding indigenous peoples’ rights of consultation have also influenced negotiations around mining and hydrocarbon investments. The cultural significance and historical resonance of these ideas—and the extent to which they are mobilized by actors who draw no obvious gain from them—suggests that this is clearly an instance in which ideas cannot be collapsed into interests, and that they have a causal effect on the constitution of settlements and the governance arrangements pursued under those settlements. The politics of extractive industry governance is a clear illustration of Hall’s claim that ‘the politics of ideas is intrinsic, rather than epiphenomenal, to the processes of coalition formation that underpin institutional change’ (2010: 212).
Finally, the longue durée view taken in this project complicates some of the categorical frameworks used in political settlements thinking. In particular, the distinction between competitive clientelist/dominant leader-party forms of settlement loses some of its cogency (cf. Khan, 2010; Levy and Walton, 2013). Competitive clientelism refers to systems in which the elites need to compete (p.222) with supporters in order to gain or maintain power, in contrast to a dominant leader/party system, in which the elites are able to wield power relatively uncontested (Levy and Walton, 2013; Levy, 2014). At the very least, our analysis makes the distinction between these two types of settlements appear descriptive, rather than explanatory, insofar as it begs the question of why more dominant or competitive modes of rule emerge in the first place. While some argue that the purpose of political settlements theory is precisely to understand how particular forms of ‘settled’ relationships affect development processes and outcomes, looking at politics over the longue durée demands explanation of how and why settlements change, and how far these changes are related to the dynamics of development.
In the country analyses in Chapters 2 to 5, a view of the longue durée also allowed us to map more explicitly the rise and demise of different political actors as a means of explaining how certain periods of rule emerged. In this regard, the long-term historical approach of this research has made more use of Khan’s (2010) emphasis on understanding how boundaries of horizontal and vertical exclusion are negotiated, and the implications of these boundaries for the ways in which dominant coalitions form and unravel and how resources are governed. The country analyses have also made clear the importance of understanding the causal processes that explain how certain actors acquire or lose holding power15 in ways that influence their position within a political settlement. In particular the materiality of the resource, transnational linkages, and certain ideas were each often central to these relationships of relative power as were the patterns of accumulation and dispossession unleashed by prior political settlements.
Taking a longer-term view has helped guard against associating settlements with regimes. Put another way, settlements for the most part last much longer than governments. In the case of Peru, for instance, just three periods of settlement are identified between 1895 and 2016, even though, as we noted in the introduction to Chapter 2, ‘the country has had twelve constitutions and over 100 governments [since independence in 1821], while its economic system has run the gamut from extreme liberalism to statism and back again’. These settlements are associated, chronologically, with periods of: oligarchic rule and foreign capital domination; statism and accelerated social change; and neoliberalism characterized by both competitive authoritarianism and multiparty democracy. These longer-term readings of settlements make clear that certain elite pacts associated with key organizing ideas (e.g. foreign capital dominance; neoliberalism; curtailment of citizenship rights) endure well beyond specific governments. Thus, while things may appear to change from government to government, this should not divert attention from the persistence of ‘meta-settlements’ that are much more stable over time and involve similar elites and foundational ideas.
Political settlements and natural resource extraction exist in a relationship of mutual constitution from which there is no escape. The nature of the political settlement has significant influence on how extractive industries are governed, and how their role in national and local development is understood. The settlement defines those elites whose interests will have most influence on resource extraction, but also the relationships of incorporation and clientelism that elites must finance through the use of resource rents if they are to sustain the settlement. Conversely, the existence of significant subsoil resources that are capable of generating large rents defines the terrain on which settlements are constituted, negotiated, and contested. In some sense, these resource rents become one of the main stories in town, a narrative axis around which political actors revolve in their attempts to capture those rents, whether for personal gain or to finance particular visions of society. This does not mean that natural resources or resource rents define the actual nature of the settlement—there is much room for creativity and change; it does mean, however, that whatever the political innovations that might emerge in such processes of change, these innovations will never escape the incentives and ideas brought into being by natural resource wealth.
Ideas and materiality are critically important in bringing new political actors into being. In natural resource politics, much mobilization and aggregation of interests and motivations hinges upon shared ideas that articulate movements, and also upon the shared opportunities and losses, both real and perceived, which derive from the material nature and geographical location of the resource in question. Ideas are also critical because they frame debates and bound the limits of the thinkable: they can therefore restrict political action and imagination while also becoming the targets of actions that aim to challenge and reframe these dominant ideas.
And finally, for the four countries in which we have worked, transnational factors have been central to the politics of natural resource governance since colonial times. Global valuation of gold, copper, tin, silver, and hydrocarbons (the main resources that we have discussed) has been the primary factor bringing the subsoils of these four countries into global circuits of finance. With these valuations have come transnational demands, explorers, and interests, as much in colonial times as in the present. It is impossible to understand the nature of national resource politics absent an attention to these global actors and factors.
Regardless of whether one finds the language of political settlements useful, the long histories of Bolivia, Ghana, Peru, and Zambia make palpably clear that pact making, contestation, negotiation, and violence have been part and parcel of the governance of natural resource extraction. There has never been, (p.224) nor will there ever be, a national collective meeting of minds on what constitutes ‘good’ natural resource governance: there is only ever some degree of balance (‘settlement’) among consent, dissent, and imposition. By the same token, there is rarely, if ever, a fully collective agreement on the sort of ‘inclusive development’ towards which this ‘good’ resource governance should be oriented. Some voices, some interests, and some ideas are always more excluded and less powerful than others. Analytically, what matters is to understand how certain voices, interests, and ideas become ascendant in resource governance and how they are able to stabilize this ascendancy. Politically, what matters is to use such an analysis to pursue the balance of power, interests, and ideas that the actor in question is seeking. At least in the countries studied here, resource governance was never just a question of getting the institutions right. It has only ever been part of a political strategy that in turn has its own political effects.
(1.) This term is not used in a pejorative sense, but rather to refer to the style and the wider circulation and recognition of the text.
(2.) Another example of this route is the Temer government of Brazil, which is seeking aggressively to increase mining and other forms of resource extraction in order to help fill budget gaps produced by crises in other sectors and in the macroeconomy.
(3.) The absence or failure of policies to offset the stagnation of small-scale farming was another factor in the movement of younger, mostly male, adults into ASM.
(4.) After 2006, Bolivia diverges from this pattern somewhat. That said, though the MAS government has relaunched COMIBOL as part of its resource populist endeavours, investment in large-scale mining is still dominated by international companies. Note that investment in small-scale mining, which responds to very different economic and social dynamics and is less formalized, is dominated by the domestic licit and illicit private sector.
(5.) Peru is a partial exception in that, while dominated by international investors, there is also a national mining capitalist class invested mostly in medium-scale mines.
(6.) Two of these actors were, for instance, important figures in the 2016 national presidential and congressional elections.
(7.) Stools are a form of local authority in Ghana. Note also that a tenth of this 10 per cent can be retained by the Office of Administration of Stool Lands for administrative costs.
(8.) In Ghana in 2009; Peru in 2011; and Zambia in 2008.
(9.) Though these offices have, since late 2016, become somewhat more fragile.
(10.) The precise timing varies slightly among the three countries. Peru is a partial exception, because the authoritarian Fujimori regime (1990–2000) introduced many such reforms. However, early shock and neoliberalizing reforms (albeit not related to the mining sector) were introduced under the preceding competitive (p.225) regimes from 1981–85 and 1985–90. Also, after 2000, elected governments have maintained the Fujimori reforms.
(11.) In particular, during his period of one-party rule from 1973 onwards.
(12.) In Peru, one US mining company survived nationalization.
(13.) There has also been expanded investment in traditional areas.
(14.) Many other consequences reach much further of course: the downstream effects of oil spills or tailing dam failures; the climate effects of hydrocarbon burning; the national governance effects of severe subnational conflict over resources; etc.
(15.) Khan’s notion of ‘holding power’ refers to the power of actors to hold their position and push back on the ability of other actors to impose their interests.