Too often in such situations, negotiators focus on strategies they believe will maximize their own party’s advantage at the expense of the other. Often deals are unduly shaped (or misshaped) to satisfy financing institutions. Instead, both investors and host governments would be better served by learning about the genuine needs of their future partners, before and during negotiations.
An investor will often face resistance when selling a deal to its board of directors, investment committee, banks, and domestic advocacy organizations. Host governments must persuade political supporters and opponents, labor unions, local businesses wanting protection from competition, single issue NGO’s, and many others of the benefits of the project and the good reputation of the foreign investor. Carefully working through these issues together, not glossing over them to close the deal, will give the new business practical sustainability.
Identification and frank discussion of these problems will facilitate both deal negotiations and sustainability of the intended project. This effort should go along with the more straightforward, conventional work of defining project economics, realistic estimates of local employment, tax and royalty requirements, and impact on communities where the project will be located.
