Turbo-Charging Investor Sovereignty
Investment Agreements and Corporate Colonialism
by Nicholas Hildyard and Greg Muttit
first published 11 February 2006
Multilateral negotiations are stalling. Unable to get what they want, corporations are now relying on bilateral and regional treaties to push their investment interests. They are using Bilateral Investment Treaties (BITs) to challenge national and local laws, taxes and other government actions, or to push through new obligations such as more intellectual property rights.
Some companies are using existing or specially-negotiated BITs to get more out of concession agreements. Under the umbrella of BITs, companies are imposing Host Government Agreements (HGAs) that dictate the legal framework under which a company's proposed project, such a dam or an oil pipeline, will operate. The Agreements give effective control to a company over national legislation and regulations that apply to their activities -- and require the country to compensate the corporation if it enacts any new law that affects corporate profits.
In addition, oil, gas and other extractive industry companies are using and evolving other legal instruments, Production Sharing Agreements (PSAs), and imposing new or tightened conditions on their concessions. Combined together, some corporations have gained almost complete control over the very development of a country's natural resources.
This article describes and illustrates how corporations are imposing a new era of resource colonialism by means of these agreements with examples from the former Soviet Union, West Africa and Iraq.
It was written as a chapter in a new publication, Destroy and Profit: Wars, Disasters and Corporations, published by Focus on the Global South. The book address some of the key issues and challenges that accompany the reconstruction and rehabilitation programmes implemented after wars, conflicts or natural disasters. Such programmes have often been opportunities for national and foreign governments, and multilateral agencies to establish new rules and policies for the provision of goods and services, infrastructure development and investment. They have also been used to reshape geographical, economic and political contours of societies. Analysis of the economic and political restructuring of Iraq is a major theme of the volume, but it also documents the links between war and disaster profiteering after Hurricane Katrina, the Asian Tsunami, and the conflicts in Afghanistan and Haiti.