Fair Contracts for Poor Countries
Poor countries and multinational companies can avoid the costs of renegotiating contracts that future governments perceive as unfair if companies pay countries to hire world-class negotiating teams. After all, companies want not only the best possible deal for themselves, but also the certainty of durable contracts.
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A number of countries in Latin America, Africa, Eastern Europe, and elsewhere are abrogating or renegotiating contracts with multinational enterprises (MNEs), and others are likely to follow suit. The costs can be high. Governments may get better terms, but they may also become embroiled in international investment disputes and discourage other investors. For companies, renegotiations mean uncertainty and possible interruptions of production and revenue.