are of local impact. In addition, while some companies are responsible for accidents, they are often registered and pay taxes in other regions. For instance, whereas Surgutneftegaz is registered in the region’s capital, oil companies operating in the Komi Republic are predominantly incorporated in Moscow and, hence, profit taxes stay there. Moreover, many non-local workers are reported to be employed in oil projects, and much of the income tax is collected in workers’ home regions. Thus, regional budgets only benefit from income tax, along with some minor land taxes (Cdu.ru, 2017). These findings demonstrate the Komi economy’s lesser capacity to benefit from the petroleum industry.
of companies cannot compensate for the damage they cause to the environment and indigenous culture. According to the respondent form Sakha republic, there is a second wave of industrialization taking place in the region referring to an on-going shift from traditional for the region diamond mining to extraction of oil and gas which is perceived by Sakha residents as a
“curse for the region.” Indigenous peoples claim that they do not have the opportunity to discuss and negotiate terms of their agreements with companies, instead they are presented “with a model and an inflexible contract, preprinted and ready to be signed” (Garipov, 2014, p. 71).
Often, since indigenous groups have usufruct rights, the negotiation process with enterprises starts after the decision to extraction project has been made. Whether or not to start extraction project is not up for discussion usually (Stammler and Ivanova, 2015). In this case, payments from companies decrease potential objections from indigenous communities to industrial activities, i.e. companies exchange goods for loyalty to the company’s operations (Tysiachniouk and Olimpieva, 2019). As a result, instead of receiving the possibility to express and promote their interests, indigenous groups become the recipients of corporate “pay-offs”
(Tysiachniouk et al., 2018). Arrangements for questionable payments “negotiated” between the enterprise and regional executives are, in a sense, instruments in enforcing acceptance among local residents for the operations of extractive companies. As a result, the dialogue with indigenous population has become a mere formality. Under this system of paternalism, CSR and companies do not support local decision-making. Aspects of infrastructure and welfare are presented as gifts and charity or limited to “ribbon-cutting projects,” while a desired support targeted at long-term sustainable development for the community is not even on the table.
To put it differently, the major shortcoming is a fundamental power imbalance between actors in the negotiation proceedings, due to variation in access to funds, political connections and legal representation. As a rule, in negotiations over agreement, actor’s capacities are determined by the knowledge, organization and resources. Needless to say, non-indigenous stakeholders
hold considerable advantages over indigenous groups who rarely possess either formal and informal ties with influential actors and the knowledge about the market rules and formalities of negotiation process. Additionally, companies’ strategic alliances with government aggravates already disadvantaged position of indigenous groups. In other words, indigenous communities are engaged in an uphill battle with extractive companies whose capacity and expertise in negotiation process is far more extensive. Failure to organize collective representation, in turn, may result in a complete disregard for their preferences. Surely, for the indigenous community, it appears to be more beneficial to negotiate than to stay silent.
However, under conditions of underdeveloped institutions and weak civil society, finding strong indigenous representative on issues related to resource extraction can be particularly difficult. Aa a result, “mismatch” between the capacities of actors involved will likely lead to dysfunctional relationships between companies and communities (Tysiachniouk et al., 2018).
Under these conditions, negotiations often result in (a weaker actor) communities “signing away their rights and foregoing long-term benefits” (The International Bank for Reconstruction and Development / The World Bank, 2019).
Another factor that influences economic arrangements is the role of government and company involvement. From a global industry perspective, companies generally hold on to domestic indigenous policy on the status of indigenous peoples and their rights to land and resources.
Legally the business enterprises abide to the law of the individual countries they operate in and, hence, do not necessarily follow the same standards in every country. Many companies rely heavily on formal and informal relationship with federal authorities for the support of corporate operations, including financial support and services (Fjellheim and Henriksen, 2006).
Particularly in Russian case, where the federal state takes side with the company, or, more often, dictates the rules of the game, benefit-sharing arrangements are often subject to the state capture. Some scholars argue that original idea behind benefit-sharing is empowering
indigenous actor to the level when the state participation in negotiations is optional. However, in the Russian Federation, where many large extractive companies are state-owned, the state plays a decisive role rendering the possibility to limit government’s ability to influence the process virtually impossible. In Russia, land claims and terns of agreements are defined by the state or company (Corntassel, 2008). Whereas when acting in a good faith, the government can facilitate implementation of effective arrangements and play a positive role in fostering dialogue and negotiation, in Russian case the role of authorities is far less constructive. In a virtue of irreconcilable differences in priorities, authorities often take the side of the business which, in turn, hinders effective negotiating process between participants.
In a visa versa situation, some enterprises are becoming the sole source of basic services (water, electricity, communication, or road-building services) and a surrogate provider of government services (that are typically the responsibility of government) (The International Bank for Reconstruction and Development / The World Bank, 2019). To demonstrate, companies in Russia often take responsibilities of the state and regional authorities. Do business entities have the right to substitute for the government in addressing socio-economic challenges? That support (medicine, infrastructure, transportation) is certainly useful. But as a rule, they are within the competence of the state and spread upon the whole population. And on condition of this twisted situation, indigenous peoples have to fight for something that is their inherent right (Funk, 2015).
Surely, in negotiating terms of agreements, all actors maintain their own interests and decision to support indigenous communities is not coming from corporate generosity. To extractive company, it is of major importance that the resource is extracted in the shortest time at the least possible cost; since companies are in the domain of extraction, not indigenous peoples’
development, they are, therefore, interested primarily in profit. While in Russia more and more companies declare their commitment to CSR policies, pursuing a responsible corporate policy