What is the true art of the deal? Is it about who can be more forceful? The most manipulative? Bruno Verdini believes a successful negotiation is when everybody leaves the table satisfied. Executive director of the MIT-Harvard Mexico Negotiation Program and author of the new book, “Winning Together: The Natural Resource Negotiation Playbook,” Verdini studied negotiations between the United States and Mexico over hydrocarbon drilling rights. What he learned was how conflicts can be resolved through proactive collaboration.
Verdini explored age-old disputes between the two countries regarding the hydrocarbon reservoirs in the Gulf of Mexico and environmental and water resources from the Colorado River. In 2012, following a decades-long stalemate, the countries developed joint agreements that have been implemented, enhanced, and renewed. What changed?
The U.S. had historically enforced the “rule of capture,” specifying that if a company drills into a reservoir on the U.S. side, regardless of whether the reservoir crosses the border, it is entitled to all extracted oil. Mexico protested what it considered a unilateral ruling that put it at a disadvantage, but it was also laboring under its own restrictive policies. Constitutional rulings forbid joint drilling between Petróleos Mexicanos (PEMEX), its national oil company, and energy companies outside of Mexico.
Negotiators for the two countries, finding themselves at an impasse in 2000, agreed to place a ten-year moratorium on drilling in the contested area. In 2010, they extended the moratorium for another four years, but this time, they set about resolving the core issue. Eighteen months later, the United States and Mexico signed a landmark agreement to overhaul all prior practices and incentivize their energy companies to develop shared hydrocarbon reservoirs.
Leaping the impasse
Verdini talked with negotiators from both countries. He wasn’t so much interested in the specifics of the agreement but in how the day-to-day communications unfolded. The lead negotiator for the United States, who had deep oil-industry experience, suggested that before the start of negotiations, the two groups participate in a series of collaborative workshops to develop a deeper understanding of each country’s goals and constraints. Working side by side in these monthly workshops, the participants came to understand one another’s points of view. The environment was friendly, positive, and productive, and in the end, the two negotiating teams built a solid rapport and sincerely wanted to come to a win-win conclusion.
“There’s evidence that one of the best ways to satisfy one’s own interests is to find an effective way to meet the core interests of the other side,” Verdini notes in an article published in the MIT Energy Initiative’s magazine Energy Futures. “Embracing a mutual-gains approach to negotiation implies switching away from the traditional, widespread, zero-sum, win-lose mindset in order to structure the negotiation process instead as an opportunity for stakeholders to learn about and respond to each other’s core needs. The result tends to be a more robust agreement that both sides experience and view as beneficial.”
Verdini’s research received Harvard Law School’s award for best research of the year in negotiation, mediation, and conflict resolution, the first time the honor has been awarded to faculty member based at MIT. He is now heading the development of a Mexico-based bi-national negotiation center devoted to training stakeholders and organizations.
Read more about Verdini’s research in Energy Futures, the magazine of the MIT Energy Initiative.
