Natural Resource Charter (NRC)

The Natural Resource Charter, as part of the resource transparency movement, is a set of principles to guide governments' and societies' use of natural resources so that these economic opportunities result in maximum and sustained returns for a country's citizens. It outlines tools and policy options designed to avoid the mismanagement of diminishing natural riches, and ensure their ongoing benefits.

=Foundation=

The charter was conceived by economist Paul Collier, as he worked on his book the Plundered Planet. Recognising the precedent set by the EITI, the charter is an attempt to extend the principles of good governance across every area of natural resource management. A draft of the charter was announced in February 2009. As well as Collier, the charter was sponsored by a number of academics and the Revenue Watch Institute.

Collier's idea is that natural resources are key to the development of many countries, particularly in Africa. But the reason so many countries have suffered from the Resource Curse is a series of breaks in a crucial chain of decisions required to ensure effective exploitation of resources: the lack of sufficient investment in the discovery process, failure to impose adequate taxation, shortage of domestic investment of revenue, and the need to ‘invest in investments’ by building civil service capacity to manage investment portfolios.

=Precepts= The charter is made up of a number of precepts, or basic principles. These are thought to be universally applicable to all natural resource producing countries, in the same way as the Universal Declaration of Human Rights. Each of the principles has a detailed explanation and an accompanying document on ways to achieve it on the charter's website.

Overarching Issues

 * Precept 1: The development of natural resources should be designed to secure maximum benefit for the citizens of the host country.
 * Precept 2: Extractive resources are public assets and decisions around their exploitation should be transparent and subject to informed public oversight.

Upstream Issues

 * Precept 3: Competition is a critical mechanism to secure value and integrity.
 * Precept 4: Fiscal terms must be robust to changing circumstances and ensure the country gets the full value from its resources.
 * Precept 5: National resource companies should be competitive and commercial operations. They should avoid conducting regulatory functions or other activities.
 * Precept 6: Resource projects may have serious environmental and social effects which must be accounted for and mitigated at all stages of the project cycle.
 * Precept 7: Resource revenues should be used primarily to promote sustained economic growth through enabling and maintaining high levels of domestic investment.

Downstream Issues

 * Precept 8: Effective utilization of resource revenues requires that domestic expenditure be built up and gradually smoothed to take account of revenue volatility.
 * Precept 9: Government should use resource wealth as an opportunity to secure effective public expenditure and to increase the efficiency of public spending.
 * Precept 10: Government policy should facilitate private sector investments in response to new opportunities and structural changes associated with resource wealth.

Global Responsibility

 * Precept 11: The home governments of extractive companies and international capital centers should require and enforce best practice.
 * Precept 12: All extraction companies should follow best practice in contracting, operations and payments.

=Institution= The charter is at present a draft put together by a group of leading international scholars. In March 2010, the charter announced that it had an advisory board which includes former president of Mexico Ernest Zedillo, and African businessman Mo Ibrahim.

=References=