Negotiation Support for Developing Host Countries

The VCC, together with the HUMBOLDT-VIADRINA School of Governance, has initiated a process to see whether and, if so, how the availability of expert support to developing host country governments for complex projects could usefully be expanded globally.

For many developing countries, large scale projects carried out by foreign investors, for example, in extractive industries or infrastructure, are the most important means of generating funds to drive economic growth, development and prosperity. While these deals are of critical importance, many developing host country governments do not have in place strong regulatory frameworks, a strategic vision or the necessary resources to negotiate the deals, meaning that they are losing the opportunity to maximize the benefits of these major projects for their country. Poorly conceived and negotiated deals for such projects, which often last for decades and sometimes sit outside the legislative framework the country puts in place, not only prevent a country from enjoying the full long term benefits of its resources, but help to entrench poverty, corruption and even conflicts, particularly when governance systems are inadequate. Similarly, from the company’s perspective, bad deals can lead to adverse business outcomes, such as reduced security of titles or concessions, increased prospects for disrupted operations from civil protests and greater risks of revisions of tax and other conditions.

An initial workshop was convened in Berlin in October 2011 to begin to explore this question. At that workshop, there was a clear consensus among the participants about the need for an expansion of support.

A second workshop was held at Columbia University in July 2012 to undertake a gap analysis between the existing sources of support for developing countries in relation to complex contracts and the countries’ needs for such support. This workshop explored, at a preliminary level, whether and if so which potential mechanisms, tools and innovative solutions could usefully be provided to make comprehensive support available to developing country governments. A background paper prepared for this workshop outlined, for the purpose of guiding discussions, the nature and scope of developing countries’ needs for support, the existing sources of support, the missing elements and challenges to address to fully meet these needs, and some possible options for delivering additional support.

Both workshops have included participants involved in or with knowledge of developing country negotiations, including host country government officials, investors, lawyers, representatives of existing initiatives, members of civil society, donors, multilateral organizations and academics.

The VCC and Humboldt-Viadrina School of Governance are now working with a number of partners and stakeholders to advance the outcomes of these two workshops. In that context, additional tools and materials will be prepared both to provide additional information to developing host governments and to enhance the existing support initiatives, and proposals will be formulated to take forward the discussions on mechanisms to fill any gaps.