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Interview

“A lot to be done”

04/06/2012 – by Peter Eigen

Comments and interviews

Indonesia has joined EITI but is not implementing all rules yet: staff member of Pertamina, the national oil company

Indonesia has joined EITI but is not implementing all rules yet: staff member of Pertamina, the national oil company

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The Extractive Industries Transparency Initiative (EITI) wants the public to gain insight into resource-related transactions. Peter Eigen chaired the founding group of EITI in 2006 and the EITI Board until early last year. In an interview with Hans Dembowski, he assessed the progress made so far. Interview with Peter Eigen

The Corruption Perceptions Index has proven a useful campaigning tool for Transparency International, the anti-corruption network you founded in the early 1990s. This index ranks countries according to what role business­people say bribes and black money play in the economy. Why does EITI not use a similar tool?
It is true, the index has served Transparency well. It helps us argue our cause in a very clear and convincing manner. Transparency and EITI are quite different however. Transparency relies entirely on civil society activism, and in such a context, comparatively aggressive PR strategies make sense. EITI, on the other hand, is a multi-stakeholder initiative with members from the public and private sectors as well as non-governmental oganisations (NGOs).

And yet, some kind of public pillory would certainly boost attention for EITI.
Yes, of course, and to some extent, we do take that approach. There are three categories of countries that take part in EITI. We have 35 implementing countries, and 13 of them are “compliant”, which means they have proven to implement all EITI rules. Another 20 countries are “candidate countries”. They joined EITI and committed to implementing the rules within two and a half years. Finally, there are countries that are negotiating accession to EITI, which is an important way to declare the intention to improve matters. The official status of Yemen and Madagascar had to be suspended because of political crises. One country, Equatorial Guinea, was excluded from EITI. I don’t think it would make sense to try to come up with some kind of more refined ranking. The countries concerned are too different. The challenges Afghanistan must rise to, for instance, are completely different from those that Indonesia faces.

What was the greatest success so far?
It was a real achievement to get the multi-stake­holder approach going and to keep the momentum. All decisions depend on consensus, which means that progress is often slow and sometimes even blocked. For example, Ethiopia’s Prime Minister Meles Zenawi was willing to join EITI, but civil-­society organisations on the board were opposed to that step, pointing out that the Ethiopian government is restricting NGO activism. I personally felt it would have made sense to involve the Ethiopian government in EITI. Doing so might have expanded the scope for civil society in this country, among other things. There was no consensus, however, so Ethiopia could not join.

So you consider relying on consensus an obstacle?
No, not in principle. Actually, EITI needs consensus because its membership is extremely diverse, in­volving governments, private sector companies and NGOs. Even within these groups, the diversity is great. Very sophisticated international NGOs are cooperating with grassroots organisations from developing countries, for example. At the national levels of the member countries, similar challenges arise. Once more, EITI needs the support of all relevant parties.

And if one of these parties looses out in a vote, it will quit EITI?
That is the risk, and ultimately, EITI would be eroded. At the same time, consensus has a normative force of its own. Once a party has signed up voluntarily, it has no more excuses for non-compliance. On this basis, EITI is delivering tangible results. So far, some 80 reports on resource revenues in 30 different countries have been published. More than 900 million people live in the countries concerned. In many cases, even members of parliaments previously had no knowledge about the extent of these monetary flows. In Nigeria alone, resource revenues amounted to up to an annual $ 50 billion – and nobody could effectively be held responsible for such funds.

Are the reports all of the same quality?
No, they can only be as good as are the implementation rules the national EITI bodies agree on. Nigeria, for example, uses project-by-project reporting, so data for every single project must be published. In other places, the rules are not quite as rigorous, which is more comfortable for government agencies as well as businesses. By the way, the dispute over project-by-project reporting is presently raging in Brussels. The EU is working on new rules for financial markets and is considering mandatory project-by-project reporting, which the Dodd-Frank Act, the USA’s new financial market law, has introduced. Unfortunately, German industry is lobbying against this rigorous approach.

Many Arab countries export oil. Has the Arab spring led to more interest in EITI?
Well, Tunesia recently declared it wants to join, and that is a start. In the past, there was interest in EITI in the Arab world, but only Iraq and Yemen joined.

What is your take on renationalising the resource sector? The Bolivian government, for instance, renegotiated its deals with multi­national corporations.
What really matters is to make sure that the people in general benefit from the resource sector. This sector must not only serve investors and the members of the local power elite. In comparison, it is of minor relevance, who exactly “owns” a mine or an oilfield. I recall that Zambia managed to nationalise copper mines in the 60s without changing the management control of mining operations or improving income distribution. Zambia’s neighbour Botswana took a different approach: The focus was on financial flows and shared responsibilities. I was a legal adviser to Botswana’s president at the time. Botswana negotiated joint ownership of 50:50 for the government and private sector, but that mainly mattered for getting a grip on the management. All in all, national ownership really is not the single most crucial issue.

What needs to happen next?
Well, a lot remains to be done. It would be most welcome if the BRICs – Brazil, Russia, India and China – joined EITI. The Chinese are taking part at the national level of some member countries, and in that context, they apply EITI rules. But apart from that, the BRICs are staying aloof so far. EITI, of course, generally needs more members, especially among the advanced economies. Moreover, trans­parency is healthy at subnational levels too, but so far the focus has been on central governments. Finally, it would make sense to apply EITI rules to forest resources and agriculture. We really need quite a bit of progress to turn the resource curse into a resource blessing everywhere.

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Print Edition no. 6 2012, 2012/06, Page 242

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