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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 238  November 5, 2018
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Regional cooperation to enhance FDI in the development of offshore
* <#m_3937862886776386227__edn1>
Andreas Tornaritis and Evi Neophytou** <#m_3937862886776386227__edn2>

Geopolitical aspirations and regional maritime claims could, if not
resolved or managed properly, disincentivize or even hinder FDI in the
exploration and development of offshore resources. For instance, due to
maritime disputes between Vietnam and China, BP has abandoned its plans for
exploration in Vietnam, where Repsol has stopped its operations.[1]
<#m_3937862886776386227__edn3> In the Eastern Mediterranean—even though the
countries aim to provide a stable legal environment centering on the
protection of investors (e.g., through bilateral investment
treaties)—country-specific regulatory limitations and geopolitical
challenges do not allow them to reach their full potential. Countries in
the Eastern Mediterranean have themselves acknowledged the benefits of
regional cooperation in the hydrocarbon sector, which is encouraged by
international oil companies (IOCs), the EU and the US. In this respect,
initiatives for regional collaboration have been taken, such as trilateral
energy dialogues (Cyprus-Egypt-Greece, Cyprus-Israel-Greece,
Cyprus-Greece-Jordan, Cyprus-Greece-Lebanon) and cross-boundary energy
infrastructure projects, such as the EastMed pipeline, labeled as a EU
project of common interest.[2] <#m_3937862886776386227__edn4> Thus, despite
divergent risk assessments and energy strategies, states have recognized
the need and expressed the will for cooperation to attract FDI and to
strengthen political ties between the participants in such initiatives.

In furtherance of these initiatives, we suggest the establishment of a
“Scientific Forum,” comprised of both the countries and the IOCs operating
in the region, that would encourage regional cooperation, through
multilateral dialogue on all facets of the exploration and development of
hydrocarbons and contribute to the gradual formation of a regional business
enabling environment. The inspiration for the Forum is drawn from the
Arctic Economic Council (AEC), an informal scientific policy-shaping body
that enhances circumpolar business collaboration and market connection
among eight Arctic countries, including the US and Russia, through
scientific research and encourages sustainable development in the Arctic.[3]
<#m_3937862886776386227__edn5> The establishment of the Scientific Forum
could result from a declaration and not through a treaty.[4]

The Forum would function through working groups composed of government
officials, IOCs’ executives, academics, economists, sociologists, and
experts from the region and other regions with more industry experience.
Through scientific research and economic, legal and political studies,
these working groups would advise toward enhancing cooperation among the
members. They would produce recommendations on specific issues, which could
be tested through consultations with NGOs and, in general, the civil
societies of the region’s countries, prior to them being finalized. The
working groups would inquire into the possibilities for the members to
share energy infrastructure, and they would identify sources of financing.
[5] <#m_3937862886776386227__edn7> They would also conduct research on
tailor-made best regulatory practices to enhance the countries’ regulatory
attractiveness. They would furthermore advise the governments on the
sustainable development of the resources and suggest strategies to promote
and attract investment in renewable energy sources. They would enable data
and expertise exchanges among countries and IOCs, encourage a focus on
cross-border environmental damages, and thus enhance the coordination among
countries in responding to environmental crises. The collaboration of
stakeholders with divergent interests could lead to creative solutions to
regional issues, e.g., a common set of recommendations to establish joint
development zones for straddling fields in maritime areas for which
boundaries have not yet been delimited between neighboring countries.

There is no reason why an institution similar to the AEC should not be
established elsewhere, particularly in the Eastern Mediterranean. The key
to its success rests on the fact that the region’s countries share the same
goal: they all work toward attracting the IOCs and thus lowering the risk
for investors. Even though the Forum would not enact legislation, this soft
law approach could result in countries being more inclined to agree to
recommendations that, while reflecting the lowest common denominator, would
also serve as the acceptable standard for both governments and IOCs. Those
recommendations would still have to become part of the relevant domestic
legal systems. However, governments and oppositions would have to be
mindful that the common rules acceptable to IOCs and implemented by their
neighbors would make their countries less FDI-competitive should they take
a different approach.

* <#m_3937862886776386227__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_3937862886776386227__ednref2> Andreas Tornaritis (
[log in to unmask]) is a PhD Candidate in Political Economy at the
University of Bristol and Visiting Scholar at CCSI; Evi Neophytou (
[log in to unmask]) is a lawyer working in the oil and gas industry
in Cyprus. The authors are grateful to Yair Aharoni, Antoine Basile and
John Gaffney for their helpful comments.
[1] <#m_3937862886776386227__ednref3> Tom Bergin and Aizhu Chen, “UPDATE
2-BP halts Vietnam exploration plan due China dispute,” *Reuters*, June 13,
Jose Elias Rodriguez, “Repsol says drilling suspended on Vietnam oil block
disputed by China,” *Reuters*, August 2, 2017
[2] <#m_3937862886776386227__ednref4> European Commission, “Eastern
Mediterranean natural gas pipeline – Pre-FEED Studies,” January 2016
[3] <#m_3937862886776386227__ednref5> See,; and Paula Kankaanpää and Oran R. Young,
“The effectiveness of the Artic Council,” *Polar Research*, vol. 31 (2012)
[4] <#m_3937862886776386227__ednref6> Timo Koivurova, “Increasing relevance
of treaties: the case of the Artic,” *AJIL Unbound*, vol. 108 (2014), pp.
[5] <#m_3937862886776386227__ednref7> See, e.g., Miroslav Kukobat,
“Integrated infrastructure planning,” *Regional Cooperation Council
Newsletter*, 5/2010 (2010
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Andreas Tornaritis and Evi Neophytou, ‘Regional
cooperation to enhance FDI in the development of offshore resources,’
Columbia FDI Perspectives, No. 238, November 5, 2018. Reprinted with
permission from the Columbia Center on Sustainable Investment
<>**).” A copy should kindly be sent to the
Columbia Center on Sustainable Investment at **[log in to unmask]*
<[log in to unmask]>*.*

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Marion A. Creach, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 237, Alvaro Cuervo-Cazurra, “Host country concerns and policies
   toward state-owned MNEs,” November 5, 2018
   - No. 236, Laza Kekic, “To what extent has FDI benefited the transition
   economies of Central and Eastern Europe?,” October 8, 2018
   - No. 235, Reji K. Joseph, “Investment facilitation: new dynamism at the
   WTO on investment,” September 24, 2018

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *On November 7, 2018*, CCSI and the Richard Paul Richman Center for
   Business, Law, and Public Policy, will co-host a panel discussion on “ESG
   and Public Funds: Risks and Opportunities in Investment Practices,”
with *Ronald
   J. Gilson* (Columbia Law School) and *Carol Jeppesen *(UN Principles for
   Responsible Investment). *Registration
   free but required.* *For more information, and to register, please see
   our website here
   - *On November 12, 2018*, CCSI and the Columbia Society of International
   Law will co-host a talk by *Jan Wouters*, founding Director of the
   Institute for International Law and of the Leuven Centre for Global
   Governance Studies, on “Saving the World Trade Organization: How Realistic
   are the EU’s Proposals?” *For more information, please see our website
   - *Applications are open* for our 5th annual Executive Training on
   Investment Treaties and Arbitration for Government Officials
   which will be held at Columbia University from June 17-27, 2019. Through an
   intensive course, government officials will increase their knowledge of
   crucial procedural and substantive aspects of investment law, better
   equipping them to deal with this complex and ever-evolving field with wide
   ranging implications for myriad areas of law and policy, and direct
   consequences for host-state liability. *For more information about the
   program, including application materials and pricing, please visit
   our website
   view our program brochure

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2018 Columbia Center on Sustainable Investment (CCSI), All
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*Karl P. Sauvant, PhD*

*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
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