RWI Newsletter - December 2012 / January 2013

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Revenue Watch Institute

 

HIGHLIGHTS
CALENDAR
  • 9–15 December 2012 and 12–20 March 2013, Budapest: Advanced Course in Budapest: "Reversing the Resource Curse: Theory and Practice" (Learn more >>)
  • 14 December, Beirut: RWI-MENA will be hosting a Regional Advisory Meeting to focus on recent developments in target countries including Libya, Iraq, Tunisia, Egypt, and Yemen and on the opportunities that can promote our engagement in the region
  • 20 December, Jakarta: The Institute for Essential Service Reform's “Multi-Stakeholder Forum for Dialogue Ensuring the Sustainability of Natural Resource Extraction in Southeast Asia”
  • 23-27 January, Davos: World Economic Forum
  • 4–7 February, Capetown, South Africa: South Africa Mining Conference: Investing in African Mining Indaba
RECENT PUBLICATIONS
RWI IN THE NEWS

The past few months have featured exciting developments for Revenue Watch, including an innovative global workshop on subnational governance, a capacity building program with parliamentarians in the Middle East, technical assistance to various governments, workshops with civil society in Libya and Peru and in-depth multi-stakeholder course on reversing “the resource course.” Also, Daniel Kaufmann began work as RWI’s president. He describes his initial vision for our future work in the Q&A below that leads the newsletter.

During this same period, the U.S. Securities and Exchange Commission's issued final rules for carrying out Section 1504 of the Dodd-Frank Act, rules that now are being challenged in U.S. courts by the American Petroleum Institute. The rest of the world has worked quickly to follow the SEC's lead: the European Union will soon finalize legislation to build on the mandatory standards established by Dodd-Frank, the Extractive Industries Transparency Initiative is raising its standards and the G8 and G20 have made clear their support for better reporting.

With new leadership, Revenue Watch is beginning to focus more broadly on governance challenges in oil, gas and mining, working with many stakeholders and partners, and is also helping rethink the fight against corruption in general and in extractives. We are pleased to share highlights of our work with partners including civil society, governments, academic institutions, media, parliaments and the private sector, at recent events taking place from Budapest to Brasilia, Manila to Baku.

We welcome comments and feedback; please contact us at media@revenuewatch.org.

Q&A: RWI's New President, Daniel Kaufmann

You have worked for many years on governance and corruption issues.  How is this relevant for RWI’s future work on natural resource management?

Simply put, improving governance of natural resources is the development challenge of today. For over 60 countries, how they manage their oil, gas and minerals will make or break their development prospects. It will determine whether their citizens will remain poor in the midst of abundance or benefit from their natural wealth.

The challenge is enormous: most resource-rich countries have yet to make serious improvements in their quality of governance. An abundance of natural resources is often associated with mis-governance, but some successes—including that of my own country, Chile, remind us that there is no such thing as a pre-ordained resource curse.

For decades we have measured governance around the globe, viewing it as the set of institutions and rules by which authority is exercised. It includes three dimensions: the political (the selection, monitoring and replacement of authority); the economic (effective policies, regulations and provision of public services) and the institutional respect (rule of law and corruption control).

Some believe governance is all about corruption. Not so. Corruption is a potent symptom of governance and institutional failure, and is associated with enormous socio-economic costs, including extractives. But corruption is largely a symptom. That is why I say “one cannot fight corruption by fighting corruption,” but by addressing fundamental systemic governance weaknesses instead. Announcing yet another “ethics commission,” code of conduct or “anti-corruption campaign” won’t make a difference. What will is having an effective judiciary, free media, effective public finances, and a transparent and competitive contracting and procurement system. The traditional approach to anti-corruption needs a reboot—it will improve the prospects of resource-rich countries.

Each of these political, economic and institutional dimensions of governance is important for improving the management and use of oil, gas and mineral resources. For instance, if there is no enabling governance environment in a country (effective rule of law, mobilization and use of resources, free press, NGOs operating freely, etc.), then the mere publication of oil revenues in an official report will not make a real dent. National-level governance is critical for the extractives.

And then there are critical, sectoral-level governance challenges, such as how decisions are made when debating whether to extract resources or not, how contracts are done (often countries get a rotten deal due to mis-governance), and how national oil or mining companies operate. And the governance of these multinational companies is another huge challenge, including their interface with governments. There are also pending governance challenges at the subnational level, which remain unaddressed and thus we need our focus.

I could go on, but words will only get us so far. We need more data and more deeds. The power of data and rigorous analysis is critical to spur good deeds—what I call evidence-based policy-making. Data empowers civil society, the private sector and reformers in government to influence change. Working with our many local and global partners we can be more effective and persuasive when our advocacy, training, capacity building and technical assistance are backed by data and rigorous analysis. We expect to make empirical contributions in this field in the coming months.

Read the rest of the interview >>

HIGHLIGHTS

Advanced Course in Budapest: "Reversing the Resource Curse: Theory and Practice"

The effort to promote good governance in resource-rich countries has gained momentum over the last decade, but it is unclear how much rising powers with expanding energy needs support this effort and if and how they will engage in it. It is equally unclear whether civil society groups in developing countries are strong enough to take full advantage of transparency when it is practiced.

In this light, Revenue Watch in partnership with the School of Public Policy at the Central European University and the Natural Resource Charter in December began "Reversing the Resource Curse," an advanced course in Budapest, Hungary, for dozens of representatives from civil society, government, international organizations and academia.

The course, whose second half takes place in March 2013, examines the political economy of governance in resource-rich states and look into how it impacts policy debates and practice, domestically as well as internationally. The course also offers practical lessons for policy improvement, based on best practices from across the globe.

Oil Governance Challenges New Government in Libya

RWI convened members of civil society (pictured, right) for a workshop from 27-29 November in Tripoli, Libya. Given that oil generates 75 percent of Libya’s government revenues and 90 percent of export earnings, the sector’s governance represents a leading challenge for the newly elected government. The workshop and a separate meeting with Libyan parliamentarians addressed the importance of oil sector transparency and accountability measures, including their potential incorporation into the constitution, which is to be drafted in the next few months. Workshop participants also explored the prospect of Libya joining EITI, intricacies of Libya’s contracts with foreign companies and the systems of revenue management and allocation in the oil-dependent state.

Supporting Myanmar's Reforms in Natural Resource Extraction

In October, RWI went to Myanmar as the first step in a process of developing a program to support civil society's engagement in EITI. President Thein Sein announced in July that Myanmar would seek to join EITI--one in a series of reforms--and has shown every intention of moving quickly on this front. RWI cautioned a credible EITI process will require substantial capacity-building within civil society, as well as a secure space for civil society to operate, and we have been working with the Department for International Development-Burma to develop a work plan for supporting these efforts. We met with a number of Yangon-based civil society groups working in natural resource governance, media training groups and the Myanmar Development Resources Institute (MDRI), a think tank which was recently appointed as the coordinator of the newly-established Myanmar EITI Leading Authority.

We will be going back in late January to reach out to a broader spectrum of organizations, including groups from the resource-producing regions, and to organize with key local partners a civil-society workshop, an event aimed at members of Parliament, and a multi-stakeholder forum aimed and building awareness of EITI.

EITI International Board Looks to Strengthen Standards After Dodd-Frank

In late October, the Extractive Industry Transparency Initiative (EITI) International Board met in Lusaka, Zambia, to discuss how the transparency initiative can be further strengthened, and it featured representatives from RWI.

Anti-Corruption Conference Addresses Legal Corruption, Urges an End to Impunity.

RWI president Daniel Kaufmann spoke at the International Anti-Corruption Conference, held from 7-10 November in Brasilia. Kaufmann spoke in the opening plenary, in which he focused on the modern face of corruption: legal corruption, which can be found in the form of campaign contributions, lobbying or exchange of favors to politicians, regulators and other government officials by companies and individuals. He explained how legal corruption is a problem not only in countries with weak governments, but also in stronger nations such as U.S. and U.K. (He elaborates on this topic in this blog post.) Kaufmann also spoke at the panel that focused on transparency in oil and mining sectors, joining speakers from the Extractive Industries Transparency Initiative (EITI) and Transparency International. Luke Balleny interviewed Kaufmann for TrustLaw at the conference; you can read that interview here.

By the end of the conference, called "Mobilizing People: Connecting Agents of Change,"  attendees were urged to end impunity by empowering citizens to connect with each other to hold public and private institutions accountable for their conduct both at home and abroad.

Workshop Focuses on Subnational Resource Governance

From 25-26 October, RWI hosted an international subnational workshop (pictured, right) in London for 60 representatives from more than 20 countries from civil society organizations, government and global funding and research institutions. Subnational governments face a range of issues created by the extraction of natural resources, including land allocation questions, pollution, changes in the local economy, demands for services and guarantees of security and human rights.

The workshop allowed participants to share and learn from each other's experiences managing revenues from oil, gas and mining projects in their local, regional and provincial communities. Attendees learned about the challenges and success of RWI's subnational work in the Piura region of Peru and Blora and Bojonegoro districts of Indonesia. Twelve videos covering the different challenges faced by subnational governments in Peru and Indonesia were released to coincide with the workshop. Participants were also asked to comment and contribute to six draft papers on subnational governance of the oil, gas and mining sector.

World Bank Leads Conversation on Contract Transparency in Developing Nations

Striking Poverty, an online dialogue led by the World Bank, featured a conversation about how contract transparency is crucial to development in resource-rich nations. Michael Jarvis of the World Bank Institute moderated the discussion with RWI President Daniel Kaufmann, Publish What You Pay's Marinke van Riet and J. Chris Anderson of Rio Tinto.

Peruvian Business Leaders Discuss Corporate Responsibility at CADE Forum

The 50th annual Conferencia Anual de Empresarios (CADE) business executives' conference took place in the Arequipa, Peru in at the end of November, where over 1,000 business leaders, academics, journalists and policymakers discussed the role of the business sector in Peru’s development. RWI’s president, Daniel Kaufmann, gave a plenary presentation and opened a panel debate on “Decisions and Dilemmas for Business,” which considered what initiatives private sector leaders could take to address corruption.

AFRICA

RWI Expands Media Training to Guinea

On 26 November, 15 Guinean journalists began a 10-day training program on understanding and reporting on the mining and oil industries. Guinea boasts over half of the world's known bauxite reserves, large iron deposits and oil, gold and diamond deposits. During the program journalists will deepen their knowledge of the sector and fine-tune their reporting skills. With a mixture of theory and practice, the journalists are meeting speakers from civil society, government and industry, allowing them to build their understanding of how the sector works and who the key players are. A field trip to the bauxite-rich region of Boke (pictured, right) gave them an opportunity to witness mineral extraction and interact with local communities while putting their skills into practice as they worked on individual media reports.

The training program ends in February 2013 after additional field visits, mentoring and development of a written guide on the sector for media. Previous media trainings have been held in Ghana and Uganda.

ASIA-PACIFIC

IKAT Partner Workshop Focuses on ASEAN Advocacy

In the framework of the Revenue Watch IKAT-U.S. project, the Institute for Essential Service Reform (IESR) continued its Association of Southeast Asian Nations (ASEAN)-targeted advocacy for transparency standards in oil, gas and mining industries. This work will also promote the Extractive Industry Transparency Initiative (EITI). From 27-29 November, IESR conducted a workshop for IKAT regional partners from Cambodia, Philippines, Timor Leste and Vietnam, and representatives from Indonesian and Burmese NGOs. IESR worked to better equip regional partners to contribute to ASEAN advocacy. Participants had a chance to meet with Indonesian officials working on ASEAN, ASEAN officials and representatives of the EITI International Secretariat visiting Jakarta. IKAT activities are expected to contribute to stronger and better coordinated advocacy in the region and towards ASEAN specifically.

EITI on the Agenda in Philippines

Bantay Kita, a Publish What You Pay Philippines and Revenue Watch partner, held two important events in October. On 17 October, it participated in a forum on the oil and gas industries to stimulate interest in those sectors in the Philippines. Oil and gas issues are currently not part of the public discourse. And from 18-19 October, Bantay Kita held a "training of trainers" to reach out to communities and explain the role of EITI in the overhaul of the country’s mining law.

Participants of both events will be advocates of EITI and recruit and conduct trainings for organizations and professionals at the subnational level. During the events, the Indonesian Parliamentary Center talked about its role as a CSO representative in the EITI multi-stakeholder group. Bantay Kita will follow these events with subnational consultations in six areas for CSOs from different locations, to discuss the EITI agenda and the selection process for EITI representatives.

EURASIA

Eurasia Knowledge Hub Hosts Training for 2012 Graduates.

RWI and Khazar University conducted a “Training of Trainers” workshop from 27-29 November in Baku, Azerbaijan, as part of its Eurasia Regional Knowledge Hub program. The Eurasia hub’s goal is to identify a core group who will become trainers in their own countries, where they can tailor their teaching to each country's specific issues in the oil, gas and mining sectors. Seven participants from Azerbaijan, Kazakhstan, Kyrgyzstan and Tajikistan learned how to develop a training program, prepare professional presentations, manage questions and answers, work with challenging participants and other skills. At the end of the workshop, participants prepared and presented individual training programs.

LATIN-AMERICA

RWI and FundaciĆ³n Jubileo Lead Workshop For Bolivian MPs

With the rise to power of indigenous leader Evo Morales, new faces came into the Bolivian Parliament, most of them with no previous experience in government and a high percentage of indigenous origin. Their eagerness to have a more active role in legislative development and oversight regarding the hydrocarbon sector led them to seek help from civil society. On December 5, FundaciĆ³n Jubileo and RWI’s Fernando Patzy led a technical assistance workshop on issues like hydrocarbon contracts, concessions and revenue-sharing. Thirty members of parliament, including the Vice Minister of Hydrocabrons attended. (Senator Martha Poma, right, spoke at the event).

Latin America Regional Network Meets in Lima

From 26-28 November, the Latin America Regional Network on the Extractive Industries held its second meeting of the year, this time at the in the context of the Union of South American Nations summit. The main focus was discussion of possible advocacy around the region’s energy market and economic integration. Members also shared the experiences related to contract transparency and monitoring, where they have made significant progress.

New Legal Framework for the Mining Sector Debated in Brazil

On 3 December, RWI’s regional partner Brazilian Institute of Social and Economic Analyses organized a workshop to debate Brazil’s new legal framework for mining. During the event, with the participation of RWI Latin American Coordinator, Carlos Monge, civil society organizations criticized the lack of transparency during the creation of the new legal scheme to promote mining investments, and stated their concern about mining’s impacts on the environment and indigenous communities.

LEGAL

Canadian Working Group Makes Progress Towards Oil, Gas and Mining Transparency

Significant progress has been made in developing a framework for oil, gas and mining sector transparency. Since our working group was launched in September, RWI, Publish What You Pay-Canada, the Mining Association of Canada and the Prospectors and Developers Association of Canada have met regularly to hash out recommendations requiring disclosure of payments to national and subnational as well as domestic and international governments by Canadian oil, gas and mining companies. To date, the working group has discussed scope of reporting (e.g. type of payments), “project” definition and format of disclosure. The working group’s recommendations are expected to be presented to policymakers by mid-2013.

CAPACITY DEVELOPMENT

RWI Attends Global Seminar on Parliaments and Oil, Gas and Mining Industries

At the end of October, RWI joined the World Bank Institute, the International Monetary Fund and the Commonwealth Parliamentary Association in Vienna for a Global Seminar on the Role of Parliaments and Extractive Industries. RWI shared its knowledge on the licensing process and on parliamentary oversight of extractives with 12 parliamentarians from North America, Africa, Asia and Australia. Discussions focused on what role a parliament has in pushing for contract transparency and the monitoring of agreements. During working groups, participants discussed obstacles to effective oversight, such as proper access and analysis of information on extractives informing parliamentarians on government and companies’ performance in the sector.

NATURAL RESOURCE CHARTER

Improving Resource Management with the Revenue Watch Index

In early December, the Natural Resource Charter (NRC) reviewed its Benchmarking Framework, following the completion of a pilot benchmarking project in Nigeria. Discussions by researchers and users of diagnostic frameworks focused on how to effectively measure aspects of natural resource management, diagnose weak links along the decision chain, and to support development of policy responses.

Revenue Watch’s president, Daniel Kaufmann, discussed how the forthcoming Revenue Watch Index could supply NRC benchmarking in the future. Presentations by representatives of the Nigerian pilot exercise, the governments of Norway, Tanzania and Sierra Leone, the IMF and the World Bank will be available on www.naturalresourcecharter.org.

OPEN GOVERNMENT PARTNERSHIP

Open Government Partnership Steering Committee Meets in London

On December 4, the Open Government Partnership (OGP) Steering Committee met in London to discuss the structures and guidance of the Independent Reporting Mechanism (IRM), which will provide independent analysis of national progress on design and implementation of OGP action plans. The members of the Criteria and Standards Subcommittee of the OGP Steering Committee (governments of Brazil, South Africa, Tanzania, and the United States and civil society members RWI, Instituto Mexicano para Competitividad, and the Transparency and Accountability Initiative) provided input to shape the decision-making of the Steering Committee.