EITI Builds Momentum at Global Conference

Half a dozen Revenue Watch delegates joined over 500 participants at the fourth EITI Global Conference from February 16 to 18, in Doha, Qatar.  

Representatives from over 80 countries gathered to celebrate the achievements of the initiative thus far, to share experiences of support and implementation, and discuss ways of moving forward. The Republic of Azerbaijan was accepted as EITI Compliant, becoming the first implementing country to pass the EITI Validation process that determines whether an implementing country has met EITI requirements. Tanzania was also admitted as the 26th EITI Candidate country while Norway became the first OECD country to implement EITI shortly before the conference. Revenue Watch offered its warm congratulations to both. Shortly after the Doha event, Afghanistan formally declared its intent to implement EITI.

In many ways this conference marked a consolidation of Extractive Industries Transparency Initiative as a global standard. The governance structure of the initiative was formalized, with the establishment of the EITI Members' Association under Norwegian Law, and a new EITI Board was elected, including Revenue Watch's own board chair Anthony Richter, who will serve on the EITI board through 2011.

In a special side meeting hosted by Revenue Watch, officials from national oil companies in Azerbaijan, Kazakhstan, Norway and Qatar met with international finance experts and business leaders including EITI Chairman Peter Eigen and George Soros of the Open Society Institute.

Companies voiced anxiety about losing revenue in the global downturn and setting aside regulatory reforms that could lead to long-term fiscal and national growth. "State-owned oil companies are a pivot-point in this crisis," said RWI director Karin Lissakers, director of Revenue Watch Institute. "They are realizing that transparency in revenue management and reporting has become an economic necessity." Read more … | Español

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• UN General Assembly Adopts Transparency Resolution
  

AZERBAIJAN: The Path to EITI Validation

When Azerbaijan chose to be the first country to undergo the EITI validation process, it seized the opportunity to lead in global EITI implementation, but it also entered uncharted territory among its EITI peers.

In a three-day workshop organized by Revenue Watch in Baku in December, civil society groups and all members of Azerbaijan's EITI working group met to gain a more thorough understanding of the entire validation process, its purpose, the detailed set of indicators used, and the roles of all parties in EITI implementation more broadly. This meeting on validation took place against a backdrop of severe time constraints due to Azerbaijan's ambitious schedule to become the first candidate to face formal validation at the upcoming EITI Board meeting in February 2009. 

RWI worked with a coalition of civil society groups worked to coordinate expert input on the validation process and to bring multiple voices to the assessment of Azerbaijan’s EITI progress.  A range of self-assessment exercises allowed participants to understand the validation process in practical terms, to gauge where Azerbaijan needed to improve its performance in order to qualify as a compliant country, and to clarify key EITI fundamentals such as a Multi-Stakeholder Working Group and a formal EITI workplan.

Indeed one key area of  concern for civil society in Azerbaijan has been the need to establish a permanent multi-stakeholder working group with a balance of oversight from all sectors, government, civil society and the private sector.

This validation meeting allowed civil society to share a unified message of concern with other stakeholders prior to the formal process before the EITI Board. As a result of this and other civil society efforts, the government of Azerbaijan ultimately agreed to establish a permanent multi-stakeholder working group and create an EITI workplan, an agreement made just prior to its official EITI validation.

Now that Azerbaijan is the world's first resource rich nation to receive EITI "Compliant" status, Revenue Watch is hopeful that the establishment of the permanent multi-stakeholder working group will ensure continued engagement and progress on EITI in the country.

LEARN MORE

• Azerbaijan EITI Validation Progresses, as EITI Plans for Country Awards
• AZERBAIJAN: Overview

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From Indonesia to Peru: RWI Partners Meet to Confront Sub-National Resource Revenue Challenges

The struggles and opportunities for sound extractive revenue management vary among the producing regions of resource-rich countries. To build information-sharing and collaboration, and capture the early lessons from our innovative sub-national pilot projects, Revenue Watch and OSI’s Local Government Initiative convened a one-week meeting with our partners in Ghana, Peru, Nigeria, and Indonesia working on effective policy-making, revenue management and transparency at the local and regional levels. The effort is supported with funding from the Bill and Melinda Gates Foundation and the Open Society Institute. 

The gathering in Piura, Peru was co-hosted by our Peruvian grantee REMURPE.  Our Indonesian and Peruvian participants joined in a week of face-to-face discussions. Because of logistical challenges, our colleagues in Ghana and Nigeria participated virtually.

A key theme of the meeting was the intersection between resource sector volatility and the planning and budgeting cycles of local governments. As the global fiscal crisis wreaks havoc on commodity prices, regional and sub-national officials face even greater revenue management challenges, working under budget cycles which are already unbalanced from one season to the next. Read more … | Español

LEARN MORE

• Sechura, Peru: Seeing Transparency in Action
• Helping Local Leaders and Communities Manage Resource Revenues

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Oil-Rich Bayelsa State Reaches Milestone in Sub-National Revenue Oversight

On March 5, oil industry leaders, regional government officials and citizen groups met to launch a landmark effort at shared oversight of oil revenues and expenditures. The Bayelsa Expenditure and Income Transparency Initiative puts the Niger Delta state at the forefront of the transparency and disclosure movement among resource-producing countries. Bayelsa State Governor Chief Timipre Sylva said, "The business of governance is too important to be left to politicians and government officials alone."

"Regional and sub-national governments face severe challenges managing oil wealth even in times of plenty," said Julie McCarthy, deputy director of the Revenue Watch Institute, which supported the Bayelsa government in the creation of the BEITI, "but with the global financial crisis wreaking havoc on commodity prices, Bayelsa's example of transparency and public dialogue is all the more needed to show regional governments how to keep development on course during troubled times." Read more ... | Français 

New RWI Reports on Liberian Concessions, EITI for Legislators

A range of new Revenue Watch reports are now available in print and digital format, covering issues including concession renegotiation and best practices and expansion of the EITI process.

Getting a Better Deal from the Extractive Sector: Concessions Negotiation in Liberia: The Government of Liberia won significant gains in taxes, social programs and corporate governance rules after renegotiating its contracts with the Firestone rubber company and the ArcelorMittal steel company. In a comprehensive report on Liberia's negotiations, Revenue Watch demonstrates the pivotal role that the contract process can play in post-conflict economic recovery and development. RWI senior economist Antoine Heuty and Raja Kaul, a lawyer who was closely involved with Liberia Firestone and ArcelorMittal negotiations, prepared the report for the Office of the President of Liberia. Read more, download the full report and listen to audio from RWI's February 26 panel with Liberian Minister Natty B. Davis, Raja Kaul and other experts ...

For more about Liberia's extractive industries, also see Revenue Watch's assessment of the new 25-year iron mining agreement between China Union and the Liberian government. Covering exploration and mining in the Bong Range of Liberia, the deal is the largest ever foreign investment in Liberia. Created jointly with Columbia University to help inform the current legislative contract review process, the assessment focuses on the deal's fiscal framework and highlights issues that warrant closer scrutiny by Liberia's legislature. Read more and download the full report ...

EITI Guide for Legislators: This new manual on how to support and strengthen resource transparency is jointly produced by Revenue Watch, the National Democratic Institute, the EITI Secretariat, and USAID. It provides a roadmap for parliamentarians to resource revenue oversight.  With EITI expertise, legislators can help their countries improve development and enhance trust in democratic institutions, and in the process to establish themselves as leaders on good governance and transparency issues. The guide is an important tool for strengthening budget monitoring and oversight, reinforcing anti-corruption initiatives, and improving the national investment climate. Read more and download the full text of the Guide ...

EITI—Beyond the Basics: This Revenue Watch report, authored by EITI expert Sefton Darby, showcases the differing and instructive approaches that some EITI implementing countries have taken. The survey can help each nation to shape its own process according to its needs, and encourages countries to see EITI's minimum criteria not as an end, but a starting point for improving extractive sector governance. Read more and download the full report ...

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Revenue Watch Offers Five Recommendations for Resource-Rich Nations in Times of Crisis

For most of this decade, the governments, extractive companies and civil society groups working to strengthen the governance of natural resource revenues have lived in "times of plenty," with real commodity prices increasing by 75-150 percent from 2000 to 2008. This boom time has meant growing budget surpluses in virtually all developing countries that exported oil or drew income from mining activities. Until recently, the policy debate has focused on the best ways to manage revenue windfalls and decrease volatility risks, with issues like smoothing expenditures, diversifying long-term sources of growth and reviewing extractive contracts at the top of the agenda.

With the dramatic changes in the global economy, developing countries now face new and potentially grave challenges for resource revenue management. Revenue Watch's new analysis examines the impact of the global financial crisis on resource-rich countries, and offers five recommendations for effective revenue management in times of "commodity shock." The analysis by RWI senior economist Antoine Heuty provides a starting point for countries seeking to mitigate volatility and safeguard the prospects for sound development.

Among RWI's suggestions are that "newcomer" resource-extracting countries are more vulnerable to the crisis and should receive specific support for strengthening their revenue management capacity; that to reduce dependency on commodity prices in a volatile market, countries should increase diversification and adopt prudent fiscal policies driven by medium and long-term expenditure frameworks; that resource-rich nations reinvest revenues domestically to build up their non-resource economy; and that EITI implementation is an important tool to promote transparency and enable proper public debate over the allocation of increasingly scarce resources. Read more and download the full report ...

Gabon's Harassment of Transparency Advocates Continues

On December 31, anti-corruption campaigners in Gabon, including PWYP Gabon Co-coordinator Marc Ona and coalition Gabon member Georges Mpaga, both RWI grantees, along with civil servant Grégory Ngoua Mintsa, and two journalists, Gaston Asseko and Dieudonné Koungou, were arbitrarily arrested and detained for a full week without formal charges or official warrants against them. The arrests follows a campaign of official harassment against Ona and other activists who have raised concerns about management of public money in Gabon and called for more transparency and accountability in the country's oil and mining sectors.

On January 7, the detainees were charged with "possession of a document for dissemination for the purpose of propaganda"' and with "oral or written propaganda for incitement of rebellion against state authorities." The charges relate to an open letter criticizing Gabon’s President Bongo published on the internet. The men's lawyer, Maître Ruphin Nkoulou Ondo, commented: "My clients are not the authors of this letter, which is in the possession of hundreds of people: are they all to be detained too?"

The men spent a total of 12 days in detention in appalling conditions which fall well below recognized international norms with no access to sanitation or medical facilities. The men were released on bail on January 12, 2009 following an outpouring of international criticism. Read more about Marc Ona and the fight for transparency in Gabon ...

New Open Budget Index Links Poor Performance, Lack of Transparency

In a panel discussion recorded February 10, 2009, experts from the International Budget Partnership and the Revenue Watch Institute discuss the 2008 Open Budget Index, and the links between poor performance and the lack of transparency in resource dependent countries. The index released by the International Budget Partnership released on February 2, is a biennial, independent, comparative measure of government budget transparency in 85 countries. This year for the first time, the report includes data on openness and public accountability in China, Sudan, Saudi Arabia, and the Democratic Republic of Congo.

According to an analysis by RWI, the 2008 Index data confirms a direct connection between the poor performance of resource-dependent countries and the lack of budget transparency and accountability in the 22 countries considered significant oil and gas producers. Revenue Watch's analysis is presented in a new brief, "Resource Dependence and Budget Transparency," which probes the question of an inevitable link between natural resource abundance and opaque budgeting. The brief was written by RWI senior economist Antoine Heuty with graduate associate Ruth Carlitz, who also led in the writing of IBP's report on the new Index.

Revenue Watch enjoys strong collaboration with the International Budget Partnership on multiple projects, and IBP Director Warren Krafchik sits on RWI's Governing Board. Read the full report, listen to audio from the panel discussion and download RWI's brief ...

Drafting a Charter to Guide the World's Use of Natural Resources

The Revenue Watch Institute is collaborating with a team of economists and legal and environmental experts to draft an international Natural Resource Charter. This pioneering document offers resource-rich societies a vision and a blueprint for the future of their country's natural resource sector. The most important audience for this document will be policy makers in resource-rich countries, but industry, intergovernmental organizations, citizen groups, and importing states are also key players in the decisions that determine the outcome of a society's attempt to harness resource wealth.

Among the economists, lawyers, political scientists drafting the Charter are Revenue Watch director Karin Lissakers and RWI board members attorney Joseph Bell, Prof. Paul Collier of Oxford University, Prof. Thomas Heller of Stanford University and Prof. Michael Ross of UCLA, as well as Prof. Tony Venables of Oxford University, Prof. Robert Conrad of Duke University and economist and Nobel laureate Michael Spence. These leaders do not represent any institution or special interest, but share the belief that natural resource wealth can be a powerful tool for social and economic advancement.

The Natural Resource Charter is a work in progress and all those interested are asked to participant in its revision and completion. Please learn more and contribute to the transparent and inclusive process of creating a new draft at www.ResourceCharter.org.

Read more about RWI and the Natural Resource Charter ... | Español

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RWI Conference: Efficiency of Public Spending in Azerbaijan, Kazakhstan and Russia

In November the Revenue Watch Institute (RWI) and the Soros Foundation Kazakhstan gathered more than fifty leaders of government ministries, parliament and civil society organizations in Astana, Kazakhstan for an international conference entitled "Efficiency of Public Spending in Azerbaijan, Kazakhstan and Russia." The conference grew in part out of research by RWI Senior Economist Akram Esanov, and his findings that efficient distribution of resource revenues, particularly in the areas of health, education and social protection programs is as vital to development as transparent handling of revenues. Revenue Watch convened the meeting to explore ways to improve this efficiency.

The focus of the conference was on improving health, education and other social protections through more efficient spending and management of resource wealth. Rising prices for oil and natural gas have boosted economies in Azerbaijan, Kazakhstan and Russia, but these former Soviet states cannot improve their standards of living or economic sustainability through increased spending alone.  RWI Senior Economist Akram Esanov says that in post-Soviet countries, health, education and social protection infrastructure are in disarray after a decade of political transition and economic stagnation. These nations must learn to spend their resource revenues in a systemically efficient way in order to maintain their "human capital." Esanov says "Spending and building is the easy part. Improving outcomes is a different issue. To assess the systemic efficiency of any improvements, we must look not only the comparative costs of new buildings across a region, but at how those buildings and institutions affect society: Will students’ test scores improve? Will sick patients get well?"

"It has been one of the problems of post-Soviet politics that ruling elites have sought to disengage from their publics, cutting the number of public 'conversations' drastically and, as a result, leaving less and less space for civil society to have an impact," says Samuel Greene, scholar-in-residence at the Carnegie Endowment for International Peace/Moscow Center. "Public spending is an important area where states and citizens still come into contact, however, and it is an opportunity on which civil society can and should capitalize."

The two-day event was co-hosted by the Soros Foundation-Kazakhstan and guests included leaders, experts and officials from Azerbaijan, Norway, Russia, the U.K. and the U.S. Deputy Prime Minister of the Republic of Kazakhstan the Honorable Yerbol T. Orynbayev made opening remarks to the participants. The conference featured the keynote address from Dr. Dennis de Tray, a distinguished expert in the field of economic development, and other speakers, including Karin Lissakers, Director, Revenue Watch Institute. Read more ...

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Modernizing Pemex: Revenue Watch Analysis of Mexico's New Reforms

In a new brief, Revenue Watch policy analyst Juan Carlos Quiroz analyzes reforms currently underway at Mexico's national oil company and delves into the history of Pemex and its relationship to Mexico's energy sector. The Mexican Congress has recently approved seven different bills to reform some aspects of its energy sector, including the national oil company's legal regime. These new initiatives would allow the state monopoly--Pemex--greater flexibility when seeking contracts with private companies (for services, leases and procurement of materials), and greater potential control over energy reserves and production. The goal of these reforms is to modernize Pemex and reverse declines in production and reserves without liberalizing the energy sector, losing control of strategic decisions or relinquishing ownership over reserves and production. Although Pemex has had success maximizing revenue for Mexico's government, these gains block the road to comprehensive reforms. Oil dependence and the availability of short-term windfalls promote wasteful expenditure without accountability from federal or local government, and Pemex is seen as a solution to budget holes that doesn't require diversification of revenues. The current moves towards transparency are a good step, but only the beginning of a conversation about Mexico’s future oil agenda. Read more ... | Español

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Ukraine-Russia Gas Crisis Makes the Case for Transit Transparency

The latest confrontation between Russia and Ukraine over natural gas, and the dispute's immediate impact on Eastern Europe's energy supply, illustrated how energy conflicts in one region can extend over pipelines and supply chains to countries thousands of miles away. In this highly politicized dispute, resources and the energy transit infrastructure became tools for economic and political intimidation.

Transparency in energy transport planning and pricing can help avoid monopolies, build public trust in government and foster stability, but this can only happen if accountable systems of revenue management are enforced, including in transit states such as Ukraine. Long-term transit stability is contingent on the social and economic development of countries hosting the transit pipelines. But Russia and its less transparent intermediaries still remain hugely influential in the post-Soviet states, and many of these nations are willing to trade transparent practices and other aspects of their new sovereignty in exchange for energy security from Moscow.

During the Ukraine crisis in January, several newer members of the EU-27 went directly to Moscow for help, exposing the European Union’s inability to broker and enforce a multilateral deal. This reality further undermined the EU’s image as a unifying and responsive entity, even as its member states suffered the fallout of international discord.

Though Russia and Ukraine came to an agreement after German intervention, questions remain concerning the political concessions made by all three players. As the deal stands, Russia will provide a discount to Ukraine on European prices for oil; Ukraine will maintain a favorable transit tariff for Russia’s pipeline; and there is speculation that the opaque intermediary RosUkrEnergo may be taken out of the equation. Read more ...

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• Devaluing Currencies and Empty Oil Coffers Spark Fears in Russia and Central Asia

RWI Grantee Indonesia Corruption Watch Investigates Lack of Transparency

RWI grantee Indonesian Corruption Watch (ICW) has made impressive headway in its monitoring and advocacy for revenue transparency in Indonesia's oil, gas and mining sectors. The extractive industries in Indonesia accounts for over 20% of the government's revenue, but remain largely opaque. When RWI began working with groups in Indonesia two years ago, it was clear that significant work was needed to enhance public oversight and create change within government systems. ICW's progress exceeded all expectations.

Just a year after receiving their first grant RWI, ICW has produced numerous, credible reports that have resulted in myriad institutional changes throughout the government. Among ICW's projects are: the compilation of an oil and gas and minerals and mining data base for both future analysis and public education; advocacy efforts through press outreach; meetings with Indonesia's Corruption Eradication Commission (KPK), the Financial Auditor’s Body (BPK) the parliament (DPR) and the DPD; interviews with extractive industry experts; and the uncovering of discrepancies in the state's cost recovery, reported revenue, royalties and subsidies from extractive activity.

The effects of ICW's work are already becoming visible. Thanks in part to their work identifying discrepancies in government revenues, over-reported cost recovery, backlogs of unpaid coal royalties, and variance in policies for mineral royalties, the Supreme Audit Agency (BPK) has ordered a special audit of all oil and gas contracts, the Commission for the Eradication of Corruption (KPK) has created a special task force to monitor the production and sale of oil and gas, the parliament has created a special committee to monitor the oil and gas industry, and the government is attempting to renegotiate some of its contracts. Read more ... | Bahasa Indonesia

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A New Focus on Transparency at U.S. State Department

Revenue Watch has been excited to see U.S. Secretary of State Hillary Clinton championing openness in government both at home and abroad. Marking "Freedom of Information Day" on March 16, Secretary Clinton said that United States was "ushering in a new era of transparency in government."

Clinton also cited these pivotal issues during her January confirmation hearings. During her introductory statements, Senator Clinton said that "helping African nations to conserve their natural resources and reap fair benefits from them" was among the top foreign policy objectives of the Obama administration, noting the links between equitable resource management to security, political, economic, and humanitarian interests.

Senator Ben Cardin (D-MD) questioned Clinton about the "resource curse." Cardin said, "There is an effort made for transparency and extraction, so that we set up the model system for how a nation should handle how its mineral wealth is used for the benefit of the people of their own country. The United States is participating in that discussion. I think we could be more aggressive in trying to move forward."
In her response, Senator Clinton expressed interest in a "regulatory framework that would give both protection and incentives to mineral rich countries so that they would be able to stand up for their rights and then use the revenues in a very positive way to enhance the well being of their people." Read more ...

World Social Forum Explores Impact of Extractive Industries

At the World Social Forum in Belem, Brazil, in late January, representatives gathered to share stories and develop common goals for the global network. Among them were civil society groups from resource-rich countries including Brazil, Canada, Mozambique, Bolivia, Ecuador, Chile, and Peru. Program associate Ingrid Anderson attended representing Revenue Watch.

The impact of the extractive industries were at the forefront of an intense debate, led by representatives from communities directly affected by the mining sector. Civil society groups voiced concerns about the current model of extraction, where natural resources, rather than helping local communities lift themselves out of poverty, are instead contributing to the loss of livelihoods, environmental damage, serious health issues, human rights abuses, and even violent conflict. Throughout the program, the message was clear: Natural resources should be managed responsibly for the benefit of the people.

 Belem is located in Brazil’s Amazon region, where the effects of extractive projects on the environment are a vitally important issue to the local community. The environment also took center stage at the Forum, with several participants giving firsthand testimony about the cost of extractive activity on the local ecosystem, particularly through water and air pollution. Additionally, mining companies were criticized for operating and profiting amidst dire poverty, and for not contributing to the well-being of surrounding populations. Civil society groups denounced the lack of meaningful consultations with communities located in mineral-rich areas about the decision to mine, and also challenged the absence of binding mechanisms to ensure that their decisions are respected. They also reported that insufficient knowledge about national and international laws, and the existing mechanisms for protecting citizen rights in grappling with extractive projects, remains a serious challenge. Read more about the World Social Forum at www.forumsocialmundial.org.br/ ...

Bi-Weekly Updates from Latin America

Revenue Watch Latin America Regional Coordinator Carlos Monge and colleagues have inaugurated a new series of biweekly updates on extractive industry and transparency news from across Latin America. These reports are available in both English and Spanish. Monge, along with Claudia Viale and León Portocarrero, provides fresh news and insight on pressing issues in the region, from the persistent conflicts between industry and the citizenry in Ecuador and Peru to the bilateral energy agreements between Ecuador and Venezuela. The latest issue tackles Bolivia's attempts to diversify its natural gas markets; Ecuador's announcement of open bids for its ITT oil field; and the wave of layoffs across the extractive sector in Latin America. Read the latest bi-weekly analysis ... | Español

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New Website for Publish What You Pay International

The global civil society coalition and Revenue Watch partner Publish What You Pay has relaunched their website, with a sleek and user-friendly design that allows visitors an intuitive glimpse of transparency activism happening worldwide. The new site, viewable in five languages, also features an interactive "resource centre," featuring a large and growing archive of information and advocacy materials that are searchable by country, topic , document type and year, allowing visitors a wealth of options for accessing materials specific to their interests or capable of sparking advocacy dialogue and the spread of successful ideas. Another innovative feature is PWYP's "Where we work" map, which graphically illustrates the impressive range of the coalition, providing information on PWYP member organizations across the globe. Read more at www.publishwhatyoupay.org ...