The Guiding Principles for Durable Extractive Contracts mark an important achievement for the OECD Development Centre, and the development community as a whole, for three main reasons.
First, they address the difficult question of how to negotiate a fair deal for governments, investors, and communities. Unbalanced contracts are not sustainable: they create strained relationships between governments and investors and are often a source of social conflicts around extractive projects. Contracts can facilitate good development outcomes if they ensure a fair sharing of benefits between governments, investors and communities throughout the project life-cycle and across a range of outcomes and market conditions. The Guiding Principles provide guidance on how to do this.
Second, the Guiding Principles, with the endorsement by the Development Centre’s Governing Board, are an unprecedented tool, reflecting the common ground reached by its 56 members, of which 27 are OECD countries and 29 are developing and emerging economies. They show how the Development Centre, with its unique membership, provides a policy forum with equal participation from a diversity of countries not only to discuss issues of mutual interest, but to also build consensus and develop innovative approaches to development challenges.
Third, the Guiding Principles are the product of a collaborative effort by governments, industry, civil society, experts and international organisations. The multi-stakeholder process is an achievement in itself, as each actor came to the table with different and sometimes diverging perspectives. At the beginning of the process, there was a trust deficit between stakeholders. The Development Centre, acting as a facilitator, played a crucial role in bridging the divide between different positions. Through an open and transparent dialogue, participants made genuine efforts to understand the motivations and positions of each other and to work towards shared solutions.
Far from settling on the lowest common denominator, the Guiding Principles are forward-looking. They aim to facilitate a common understanding between the parties to the contract about how to approach difficult aspects of their relationship, showing how tensions can be overcome and contentious issues dealt with during the negotiations. The recommended approaches are intended to maintain an alignment of interests throughout the life-cycle of the extractive project, reflecting a balance of risks and rewards shared by governments, investors and communities.
By endorsing the Guiding Principles, the Governing Board recognised the importance, relevance and early impact of this tool, expressing its political support for their use in the negotiation of durable extractive contracts.
As Chair of the Governing Board, let me express the wish that the Guiding Principles will become a common reference for the negotiation of enduring and sustainable extractive contracts leading to improved development outcomes.
Ambassador Manuel Escudero
Chair of the Governing Board, OECD Development Centre