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Globalizing Extraction and Indigenous Rights in the Russian Arctic: The Enduring Role of the State in Natural Resource Governance

The governance of extractive industries has become increasingly globalized. International conventions and multi-stakeholder institutions set out rules and standards on a range of issues, such as environmental protection, human rights, and Indigenous
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    Resources   2019  ,  8  , 179; doi:10.3390/resources8040179  Article Globalizing Extraction and Indigenous Rights in the Russian Arctic: The Enduring Role of the State in Natural Resource Governance Svetlana A. Tulaeva 1 , Maria S. Tysiachniouk 2,3,4, *, Laura A. Henry 5  and Leah S. Horowitz 6,7 1  Faculty of International Relations and Politics, North-West Institute of Management, Russian Presidential Academy of National Economy and Public Administration, 194044 St. Petersburg, Russia; 2  National Research University Higher School of Economics (HSE), Laboratory for Studies in Economic Sociology, 101000 Moscow, Russia 3 Environmental Policy Group, Wageningen University, 6700 HB Wageningen, The Netherlands 4  Centre for Independent Social Research, Ligovsky 87, 197022 St. Petersburg, Russia 5 Government and Legal Studies, Bowdoin College, Brunswick, ME 04011, USA; 6 Nelson Institute for Environmental Studies, University of Wisconsin-Madison, 550 N. Park Street, Madison, WI 53706, USA; 7 School of Human Ecology, University of Wisconsin-Madison, Madison, WI 53706, USA *  Correspondence: Received: 20 October 2019; Accepted: 25 November 2019; Published: 28 November 2019 Abstract: The governance of extractive industries has become increasingly globalized. International conventions and multi-stakeholder institutions set out rules and standards on a range of issues, such as environmental protection, human rights, and Indigenous rights. Companies’ compliance with these global rules may minimize risks for investors and shareholders, while offering people at sites of extraction more leverage. Although the Russian state retains a significant stake in the oil and gas industries, Russian oil and gas companies have globalized as well, receiving foreign investment, participating in global supply chains, and signing on to global agreements. We investigate how this global engagement has affected Nenets Indigenous communities in Yamal, an oil- and gas-rich region in the Russian Arctic, by analyzing Indigenous protests and benefit-sharing arrangements. Contrary to expectations, we find that Nenets Indigenous communities have not been empowered  by international governance measures, and also struggle to use domestic laws to resolve problems. In Russia, the state continues to play a significant role in determining outcomes for Indigenous communities, in part by working with Indigenous associations that are state allies. We conclude that governance generating networks in the region are under-developed. Keywords:  benefit sharing; oil and gas; resources; governance; Russia; resistance; governance generating networks; paternalism; partnership; corporate social responsibility 1. Introduction The governance of extractive industries has become increasingly globalized, with authority shifting from the state to both the international and local scales, through processes of “glocalization” [1,2]. Although the 1962 UN General Assembly resolution on “Permanent Sovereignty over Natural Resources” enshrines every state’s sovereign rights on its territory “freely to dispose of its natural wealth and resources in accordance with its national interests”, and “respect for the economic independence of States, in practice different systems of property rights and licensing, and global supply chains create a variety of opportunities for citizens to influence extraction and revenues from natural resources. At the international scale, the tools for governing the extractive sector have become  Resources   2019  ,  8  , 179 2 of 20 increasingly complex, as states sign international conventions and multi-stakeholder institutions set out rules and standards on a range of issues, such as environmental protection and human and Indigenous rights [3]. Companies’ compliance with multiple global rules may minimize risks for investors and shareholders [4,5], while offering people at sites of extraction more leverage. Pressure and resources at the international scale allow civil society largely to bypass the nation-state, addressing their concerns to intergovernmental or nongovernmental actors, whom they can now more easily contact via the Internet, which has also facilitated networking among social movement organizations and activists [6–8]. Meanwhile, this rapid transfer of information has allowed the environmental and social performance of oil and gas companies to come under increased scrutiny for their negative environmental impacts, as well as for seizures of land from Indigenous peoples and violations of their rights [9,10]. A particularly salient example of the intertwining of environmental and human rights issues is the Russian Arctic. As the fragile environment of the Arctic is affected by extraction, the rights of local residents, especially traditional reindeer herders, are under threat. However, identifying paths for resolving these issues through the governance of the oil and gas industry is particularly challenging in the Russian context. In Russia, land is owned by the state, and may be leased to companies and other users. Indigenous people often do not have property rights to their traditional territories, although many oil and gas companies voluntarily adopt international conventions related to the rights of Indigenous people. In the Russian Arctic, the growth of extractive industries also has set off conflicts over industrial development and revenue-sharing from the oil and gas sector. Oil exploration, extraction, and transport have severe impacts on the environment and livelihoods of Indigenous peoples, including degradation of land and water from oil spills, the loss of pasture land, and the fragmentation of territory used for reindeer herding and hunting [11–14]. In some cases, Indigenous communities and associations, as well as other non-governmental organizations (NGOs), have resisted industrial development, occasionally using tactics that extend to the global level and place pressure on financial lending institutions, such as during the “Green Wave” campaign against the expansion of oil development in Sakhalin in the Russian Far East [15]. To avoid these problems and the negative publicity they entail, international financial institutions and investors have developed a host of guidelines and standards to ensure the protection of Indigenous peoples’ rights to traditional natural resource use and to require benefit sharing by companies in the extractive sector in the form of social investment, development plans for Indigenous communities, or, at a minimum, compensation for damage to traditional livelihoods [16–18]. These requirements are one element of the globalization of corporate governance. However, due to significant levels of state ownership and investment by the Russian government, as well as the dependence of many countries on Russian oil exports, Russian companies are less sensitive to the opinions of transnational stakeholders, and therefore, less vulnerable to reputational risks outside the country and to pressure from transnational organizations and social movements [19–21]. However, continued globalization may be changing the status quo in Russia’s oil and gas sector [22]. To examine this issue in detail, we focus on the Yamal peninsula, a site of rapidly expanding oil and gas development in the midst of a significant Indigenous population. 2. Materials and Methods Data for this study were collected using qualitative methodologies [23]. The collection and analysis of materials were carried out in 2017–2019. The primary research strategy was the case study method based upon a detailed and comprehensive study of Yamalo-Nenets Autonomous Okrug (YaNAO), or Yamal (Figure 1) Yamal is a strategically important region for the development of the Russian oil industry, and a number of major Russian oil and gas corporations operate in Yamal. At the same time, Yamal is home to a large number of Indigenous people, many leading a traditional way of life. Intensive industrial development of the region has led to negative consequences for Indigenous people, whose well-being depends on the quality of the environment [24,25]. This case study allows us to consider the interactions among the state, oil and gas corporations, and Indigenous peoples in the context of the globalizing extractives sector. Processes of globalization are penetrating  Resources   2019  ,  8  , 179 3 of 20 YaNAO; markers of globalization include the spread of global environmental and social standards that shape industrial activities and relations with foreign investors. However, the state remains committed to its role in controlling oil extraction and civic activity in the region. Thus, this case study allows us to analyze the key characteristics of interactions between global trends and state control in the field of natural resource management. The main research methods included semi-structured interviews (Appendix A: Table A1), document analysis, and participant observation. Interviews were conducted with representatives of local and regional authorities, experts based in scientific institutes and NGOs, and local residents, including members of reindeer herding communities and employees of reindeer herding enterprises. In total, 23 interviews were conducted. Interview questions focused on the following issues: The impacts of the oil and gas industry on the lives of local residents, mechanisms of interaction with the government and companies, government programs to support Indigenous people, and companies’ engagements with Indigenous people. The interviews were transcribed and analyzed by the method of axial coding. In addition to interviews, observations were made in Indigenous settlements located in regions of oil and gas development. Document analysis also informs this study. The following documents were analyzed: Global standards related to the interaction of oil and gas companies and Indigenous peoples; state legislation defining the rules of interaction between companies and Indigenous people; and corporate reports describing the forms of interaction. The data obtained from different sources were compared, allowing for triangulation of the collected materials. The collected data helped to identify the features of interaction between oil and gas companies, Indigenous people, and state authorities. Figure 1.  Map of Yamal-Nenets Autonomous Okrug with research sites. 3. The Globalization of Governance in the Oil and Gas Sector: The Theoretical Approach As the rules and standards that govern the oil and gas sector have shifted from state-based government to global governance, including private efforts, such as the Extractive Industries Transparency Initiative (EITI) and the requirements of international financial institutions, there is an expectation that the state would be just one of many actors shaping company behavior. Governance may occur at many scales and involve many different actors; rules and standards are developing in a variety of institutional venues. Although they are not easily enforceable, global rules and standards often surpass state-based legal requirements for environmental protection and community consultation. For example, Indigenous rights may be more clearly codified at the international level  Resources   2019  ,  8  , 179 4 of 20 than in domestic law. One would expect that global governance would then offer Indigenous communities greater leverage to address rights violations than domestic legal systems. The globalization of governance in the extractive sector is manifested in several trends: The increasing dependence of extractive companies on international financial institutions; the development of global environmental and social standards; the involvement of non-state actors (corporations and NGOs) in shaping governance; and the institutionalization of global standards at the local level [26–29]. As the governance of natural resources has globalized, it has grown to encompass a range of regulatory and standard development institutions, such as the United Nations, notably through the International Labor Organization (ILO) convention, the Arctic Council, Organization for Economic Cooperation and Development (OECD) Guidelines, and the Responsible Care Initiative, among others. Multi-stakeholder initiatives like the Global Reporting Initiative, the Voluntary Principles on Security and Human Rights, Extractive Industries Transparency Initiative (EITI), and others foster transparency by encouraging companies to monitor and report social and environmental impacts [29–31]. In addition, companies may participate in voluntary environmental management certification schemes, such as International Organization for Standardization-14000 (ISO 14000), Occupational health and safety management systems-18000 (OHSAS-18000), the European Union Eco-Management and Audit Scheme (EMAS), and so forth. Some global standards specifically focus on the protection of Indigenous people’s rights, such as ILO Convention No.169 and World Bank Operational Directive 4.20 on Indigenous people. This article uses the concept of governance generating networks (GGN) to understand how extractive industries may be governed by multiple actors operating across different scales [32–36]. The GGN in this study is the oil production network, including companies, investment banks, equity partners, international and local offices, as well as state agencies at different levels and civil society actors (NGOs and Indigenous peoples’ associations). Interactions among actors from the state, the private sector, and civil society in these networks link the transnational level and the local level. The main components of the GGN are (i) the transnational nodes of global governance design, (ii) the forums of negotiation, and (iii) sites of implementation. In the transnational nodes of global governance design  (see Figure 2), global institutions like the United Nations (UN), the Arctic Council (AC), the International Monetary Fund (IMF), the International Financial Corporation (IFC), the World Bank (WB), and the Extractive Industry Transparency Initiative (EITI), and other environmental management certification schemes develop new regulatory global standards, such as guidelines for oil companies to ensure the sustainability of oil production and the protection of Indigenous people’s rights. Governance decisions are not only made in the nodes of design, but also in “forums of negotiation”  and “sites of implementation” [33]. Forums of negotiations can involve both global and local actors, can take the form of global conferences and meetings (for example, in the Arctic Council or its Sustainable Development working group, involving Indigenous people as permanent participants), and can occur at the national, regional or local level. The local forums can take place at public hearings, or extend from bottom-up resistance movements by local actors who appeal to global institutions. Sites of implementation are geographic territories where governance arrangements are implemented and adapted to local circumstances. In the context of oil production, key sites of implementation are the places of oil exploration, extraction, and transportation. In these sites, local stakeholders, and especially Indigenous people, experience the impact of oil development. These sites of implementation are connected to the transnational level by networks of state, market and civil society actors, interacting and negotiating over the development of global policies and standards, and the implementation of these standards in the management of oil companies.  Resources   2019  ,  8  , 179 5 of 20 Figure 2. Governance of oil production network. GGNs link transnational spaces with the “space of places”, a term coined by Manuel Castells [6]. These connections can be established in different ways. In well-developed GGNs, the network includes civil society actors operating in the local space of places participating in the network from the bottom up. They may participate in NGO-led market campaigns to change corporate practices by highlighting grievances about the local activities of transnational corporations. A GGN also involves actors operating in transnational spaces with the aim of fostering, from the top down, institutional changes in specific localities by imposing sets of new rules and standards to be implemented locally. These actors may collaborate on new rules issued by transnational actors and institutions, such as the investors and equity partners who fund extraction. Oil companies may voluntarily adopt certain global standards to increase their competitiveness in the market, attract financial support, and comply with the requirements of financial institutions that provide loans or investment. Ideally, GGNs facilitate constant interaction and information exchange among local and transnational actors, with the ultimate goal of encouraging sustainable development in the specific localities. This type of robust GGN has been observed in the forest sector [33]. New modes of global governance and decision-making are crafted and recrafted to adapt to the globalization of oil production. In this way, companies in the extractive sector may go beyond the requirements of national legislation by adopting and implementing global standards. Oil and gas companies adopt global standards to avoid reputational risks, satisfy their shareholders, limit pressure from NGOs and Indigenous organizations, and most importantly, to ensure future investment. For instance, private Russian oil companies seek loans from international lending institutions, such as the IMF, World Bank, or the European Bank of Reconstruction and Development (EBRD) and also need to maintain good relations with equity partners. These banks and partners have crafted lending requirements that are based on the global conventions and rules described above. This results in the institutionalization of global rules in concrete practices in places of oil exploration, extraction and transportation. The companies also respond to the interests and demands of shareholders by developing their own corporate codes of conduct and corporate social responsibility policies. Scholars have argued that the role of the state in governing the oil and gas industry is changing, due to globalization and oil production supply chains that stretch across borders [37]. In a well-developed GGN, companies go beyond a given state’s legal requirements for operation, instead of maintaining the often stricter or more expansive standards from the global nodes of design. Cumulatively, these rules and standards encourage companies to pursue what has been referred to as a “social license to operate” (SLO) in order to further avoid risks and minimize conflicts [38,39]. SLO assumes that in addition to meeting legal requirements by obtaining licenses and permits, companies have to receive social acceptance and approval from society [40,41]. SLO helps companies
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