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Editorial comment

Whilst resource nationalism is nothing new, its present guise is particularly opportunistic and mirrors the wider nationalist and authoritarian movements that have gripped developed and developing states alike since 2015.

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In my work as an investment treaty arbitration lawyer specialising in mining disputes, I have watched with astonishment as states across the globe have thumbed their noses at their obligations under both treaties and contracts with foreign investors, in exchange for short term gains and, ultimately, long term losses.

I date much of this wave of resource nationalism to Tanzania in 2016. There, shortly after coming to power, the late President John Magufuli pushed through a spate of resource nationalist measures, in the midst of what he declared to be an “economic war” with foreign mining companies. Of course, this rhetoric was not limited to East Africa, as nationalist movements rose to prominence in countries like Poland and the US as well. But the ramifications for Africa have had a sustained temporal effect. Seeing the electoral popularity of President Magufuli’s measures in Tanzania, other African states followed suit, and soon countries all over the continent were hastily amending their mining codes. Whilst many of these amendments sought to understandably attain a better economic balance between miner and state, other measures were nothing more than rent seeking.

From approximately 2021 until recently, I mistakenly thought that this tide of resource nationalism had receded, but the recent coups across francophone Africa have proven me wrong. The military rulers in those states appear to have studied the late President Magufuli’s actions in detail, though sadly they have not studied the impact of Tanzania’s measures, which are now resulting in sizeable liabilities. Consequently, new mining codes are being promulgated in francophone Africa with startling rapidity and a lack of foresight.

Even if the tide had receded in Africa – which clearly it has not – it has moved onto other continents. Poland’s PiS party, for instance, has made clear that its coking coal resources are not to be mined by foreign companies, no matter what innovation they would have brought to that sector. Mexico, sensing the opportunities that the EV revolution poses, has sought to nationalise all lithium mining, which continues a long-running cycle of nationalisation and privatisation. Chile, long a haven of mining regulation stability in Latin America, has also sought to nationalise lithium reserves. Resource nationalism is global, again.

What’s past is prologue – investment treaty arbitration arose as an alternative to the gunboat diplomacy utilised by states to protect their companies operating abroad from expropriation without compensation. But while the gunboats will remain docked, investors will continue to seek recompense for the ongoing wave of electorally popular, albeit economically short-sighted, round of nationalisations, and the resulting bills will be considerable.