Dear friends and colleagues,
Far from business as usual, this year has seen swift and critical changes in the movement for accountable and open natural resource governance. Political developments have brought the fight for transparency and accountability out into the open, drawing attention from the international media and impartial observers.
Last month a major setback for transparency and anticorruption took place in the U.S., and we are realistic about major governance challenges ahead in a number of developed countries. Yet public and private sector leaders, companies and citizens in many countries remain committed to good governance and transparency in general—and in extractives in particular.
Political setback in Washington
With our partners in the Publish What You Pay coalition, we launched a major public effort to protect a flagship U.S. transparency and anticorruption rule which had come under political attack. This bipartisan provision, which had mandated detailed project-level disclosure of U.S.-listed extractives companies’ payments to governments, was challenged by Big Oil and many politicians in America’s new Congress. The rule and its subsequent disapproval received significant attention from the media, which, thanks to concerted advocacy, also focused on the false claims leveled against the rule. It was nonetheless nullified.
‘Bogotá moment’ for transparency
In the wake of the regressive move in Washington, the Extractive Industries Transparency Initiative (EITI) board convened earlier this month in Bogotá for a scheduled meeting. Mindful of the importance of protecting transparency and anticorruption gains elsewhere, the board took a leap forward on a long-overdue project-level reporting requirement. The U.S. faction of Big Oil had opposed this progress in EITI for years, yet other companies, as well as many governments and civil society players, supported reform.
Implementation of a project-level reporting requirement will provide critical and relevant information to communities where extraction takes place, as well as to governments and investors. It will also allow companies to better explain the economic impacts of their activities. Project-level reporting can aid efforts to enforce contracts and to monitor tax payments—so this is a significant victory. This detailed disclosure of payments is critical for our collective work.
And such detailed payment disclosure is part of a “transparency troika” in extractives—namely disclosure of the “who” (beneficial owners), “what” (contract terms) and “how much” (payments). Under EITI, pioneering progress is taking place on beneficial ownership disclosure. Also encouraging are the findings of a new NRGI study we launched in Bogotá, revealing that 29 countries—well over half of EITI members—now disclose extractives contracts and licenses.
As we are increasingly able to triangulate using these three types of information, we can begin to unleash the exponential power of data in exposing conflict of interests, corruption and the extent to which citizens in resource-rich countries are deprived of the benefits from extraction of resources that are rightfully theirs.
‘Bogotá moment’ for accountability
Beyond transparency, in Bogotá there was a major development on the accountability front as well, focused on oil-rich, illiberal Azerbaijan. The country had met EITI’s technical disclosure standards for some time. But not only had the government consistently failed to provide an enabling space for civil society—one of the pillars of the EITI initiative—but over the years civic space became increasingly embattled. Azerbaijani citizens, including NRGI advisory council member Ilgar Mammadov, have been subject to arrest, conviction and incarceration on false charges; other activists face harassment and detention. Furthermore, organizations which are truly non-governmental face enormous operational obstacles.
As a result, the EITI board, which had previously demoted Azerbaijan from compliant back to candidate status, temporarily suspended the country. Unfortunately the government of Azerbaijan opted to immediately withdraw from EITI altogether, rather than engage in a process to re-open its civic space. These adverse developments for Azerbaijan have called into question the wisdom of foreign private and multilateral investments in the country’s extractive sector.
The United States’ role in EITI
Contrary to some accounts, the U.S. has not left EITI, and thus the current number of member countries stands at 51. Nonetheless, we cannot ignore the recent lack of initiative on these matters from the superpower. The U.S. must reassert its commitment to EITI, facilitating a well-functioning multi-stakeholder group, as scores of other countries around the globe already do. And U.S. companies should conform to international norms of transparency, including on tax reporting, as thousands of companies already do in other EITI implementing countries.
Countries and citizens engaging in change
My recent trip to Guinea, where I met with the country’s leadership as well as with civil society and industry actors, was a potent reminder of the paramount importance of the aspiration by many stakeholders for progress in resource management. Citizens in Guinea—as in many other resource-rich yet still poor countries—have yet to benefit from their natural resource wealth. In the next stage of our collaboration, we look forward to supporting the implementation of Guinea’s mining law, moves toward meaningful transparency, and the country’s fuller embrace of EITI.
And earlier this year in Mexico City and Washington, following a concerted technical assistance collaboration, we explored how Mexico’s National Hydrocarbons Commission has the opportunity to help advance the government’s transparency commitments, set a new global benchmark for disclosures and empower experts and citizens at large to access relevant, timely, and understandable information. Key leaders and officials are taking the initiative and are poised to execute significant reforms in the interest of transparency.
Forging ahead
We have recently been reminded of the powerful interests who oppose transparency and accountability in some settings. Not only will we resist by continuing to innovate, analyze and advocate based on real facts, but we are also investing in creative new windows for change, together with you, our friends, donors and partners. Stay tuned for upcoming news on the governance and anticorruption fronts, and also regarding exciting tools that leverage the power of data.
With thanks and best wishes,
Daniel Kaufmann
President and CEO