Azerbaijan: Transparency of Oil Revenues and Public Finance Program


Issue: Research

Country: Azerbaijan


Revenue Watch's founding partner in Azerbaijan is the Open Society Institute-Assistance Foundation's Transparency of Oil Revenues and Public Finance (TORPF) program. Established in 2003, TORPF aims to generate and publicize research, information, and advocacy on the investment and disbursement of revenues, and the responses by government and extractive companies to civic demands for accountability. The TORPF program, which collaborates closely with a variety of local NGOs, also seeks to build the monitoring capacity of local groups through training in budget monitoring and reporting on the extractive sector, as well as providing seed grants to budget watchdogs.

Working with RWI, the TORPF program has three areas of focus for its technical and financial support in the resource transparency movement: revenues (i.e. EITI outreach and implementation), expenditures (i.e. budget monitoring and analysis), and impact (i.e. civil society monitoring and capacity building).

EITI Implementation: Revenues
Azerbaijan's coalition "For Increasing Transparency in the Extractive Industries" plays a lead role in the monitoring and implementation of the Extractive Industry Transparency Initiative (EITI). The coalition's first priority is increasing civil society’s leverage to impact state policy. Projects include capacity building for coalition members, public awareness campaigns, media outreach, public debates, analysis of local audits and strategic participation in the international EITI campaign.

Following Azerbaijan's endorsement of EITI in 2004,  TORPF successfully mobilized leading civil society actors to establish a coalition to take part in the EITI process and prevent the government from creating a puppet coalition to pioneer the initiative. Since then, RWI and TORPF's support has provided for growth in the coalition’s membership and capacity, increased public awareness about the importance of revenue transparency, and the inclusion of civil society in the national development process. Some of the main outcomes of their RWI-supported work included the preparation of independent reviews on the government's audited EITI reports, recommendations for improvement in investment policy, capacity building for regional partners, and the execution of a variety of public awareness and sensitization projects in producing regions, universities, and the media. With the help of the local coalition Azerbaijan became the first country to meet EITI validation. For more information on EITI in Azerbaijan, see www.eiti-az.org.

National Budget Group: Expenditures
The National Budget Group (NBG) is an alliance of leading economists and practitioners in Azerbaijan that promotes public participation and education in the budgetary process. The group recommends budget policy reforms and advocates for effective execution in budget processes. The NBG functions as an incubator for effective transparency strategies for public finance, providing expert analysis to government officials and training for parliamentarians and civil society in participatory budgeting and expenditure monitoring.

In recent years, the NBG has taken great strides in institutionalizing its objectives (particularly in certain media outlets) and deepening its capacity to effectively engage the government. Although their ability to affect changes in national budget process have not been easy due to the political environment, measurable impacts of their work can be found in the quality of research and analysis being produced and the slow but steady adoption of their recommendations by parliamentarians. TORPF's future activities will build on these achievements with public hearings with parliamentarians to citizens' priorities; training modules on contemporary economic issues; and collaboration with international experts to improve the group’s own budget advocacy activities and develop new strategies for engaging the government in the current country context. For more information on budget transparency in Azerbaijan, see www.nbg.az.

Civic Response Network: Impact
Azerbaijan's Civic Response Network (CRN) assists in the resolution of citizen grievances through monitoring, research and audits of corporate and government decisions that affect producing communities. The Network presents progressive ideas and recommendations to promote community goals. It works in five regions of Azerbaijan—Ganja, Salyan, Hajiqbul, Balakhani and Siyazan—where local groups develop pilot projects to monitor the range of problems caused by resource extraction. The CRN is based loosely on the Alaskan model of Regional Citizen's Advisory Councils (RCACs), which were formed after the Exxon Valdez oil spill of 1989 in response to the lack of informed public participation or oversight of local extractive industry activities.

The objective of the CRN is to empower citizens in an oversight capacity to ensure that industry and government act in the public interest. But because of government repression of the media and limited cooperation between civil society and government, it is increasingly difficult to publicize information and conduct advocacy that generates domestic pressure for reform. Such an operating environment will continue to limit the impact of civil society's efforts unless continued support for monitoring activities can be leveraged. With the support of TORPF the CRN is able to overcome some of these challenges by assisting in the resolution of citizen’s grievances through presenting progressive policies and recommendations to promote community goals. RWI and TORPF continues to support the CRN to expand its regional scope and deepen its monitoring initiatives to highlight the unique problems faced by producing communities, particularly by building the capacity of investigative journalists and highlighting the necessity of sound public finance management.