Iraq and the EITI: An Encouraging Step for Development

As Iraq struggles to move beyond the deadlocked debate over oil legislation, a positive sign came last week when the nation formally expressed its interest in the Extractive Industries Transparency Initiative.

This is an encouraging step, as our colleague Yahia Said pointed out during his testimony to the Senate Foreign Relations Committee. With its February 21 letter to the EITI secretariat, Iraq's government officially declared its commitment to greater transparency in the management its vast oil revenues. Iraq holds the planet's second largest reserve of oil, now estimated at 300 billion barrels.

Iraq's EITI process in its very early stages - even without the challenges of the current political and security climate, it will need substantial support and technical assistance from the EITI, as well as the World Bank and groups like Revenue Watch to fulfill this aspiration.

The upside of EITI success will be manifold. Iraq is in the midst of negotiating power-sharing and revenue-sharing arrangements between the central government, regional leaders and political factions that are increasingly hostile and mistrustful. Progress on transparency in the oil sector could help foster trust among opposing parties and communities, and usher in the possibility of compromise on other issues.

Iraq is also determined to expand investment in its oil industry, and an established mechanism to ensure transparent revenues will create an attractive environment for investors, in particular the more serious companies who are themselves interested in transparency and accountability in the development of oil.

To begin in earnest, Iraq must now appoint a senior official within the government to manage the EITI process. Working with local civil society groups and the business community, Iraqi officials will then need to craft a plan for the collection, publication and verification of revenue data from the nation's enormous and still-fractured oil sector.

Though the road to success is unlikely to be smooth, Iraq's leaders deserve both congratulations and support from every side for this move toward a more open and stable development climate.

Read more Revenue Watch analysis and commentary on oil, transparency and reconstruction in Iraq ...