Oil companies should not be expected to try to influence the way oil revenues are spent in war-torn areas where they operate, a leading expert in the field has said.
Geir Westgaard, vice president for social responsibility at the Norwegian oil company Statoil, told a conference on corporate citizenship in Warwick, England, that it was dangerous to argue that oil companies should be intervening in the internal affairs of countries to prevent conflict.
‘There are real limits as to how far beyond the factory gate a corporation can move without jeopardizing its licence to operate,’ he said. ‘Even though the role of the corporate sector has increased significantly with globalization, business has to be careful about demands that fall outside the scope of legitimate action by a commercial entity.’
Westgaard, a former foreign policy advisor to the Norwegian prime minister, said it was highly questionable whether international oil companies should be telling host governments how to spend their oil revenues – and warned that such moves could easily transform corporate social responsibility into political interference.
He argued that the way national revenues from oil and other natural resources was spent ‘is first and foremost a government responsibility and should remain so’.
Although Statoil does not operate in oil-rich areas of conflict such as Nigeria, Sudan and Chad, he said the company would be reluctant to make threats to governments if difficulties arose.
‘We would be reluctant to play the conditionality card as suggested by some of our stakeholders,’ he said. ‘If and when we do, however, it will be as part of a broader effort that involves the international community. The conditionality should then be imposed by legitimate international bodies such as the United Nations, the World Bank or the International Monetary Fund, with the oil companies cast more in a supporting role.
‘Oil exports by themselves do not cause civil war,’ said Westgaard. ‘The underlying factor causing conflict in some oil-producing states is weak institutions and less than good governance, not oil in itself.’