Today, March 9, is the day about twenty countries, including Nigeria, Gabon, and Equatorial Guinea, who have signed on to the Extractive Industries’ Transparency Initiative (EITI) were supposed to finish and have filed their Validation forms. Validation is EITI’s “quality assurance mechanism,” a step toward achieving Compliance with the EITI standards.
The Initiative is designed as a process by which countries and extraction corporations open their books and make their financial dealings available to public oversight. The idea, which began in 2002 and was fostered by then-British Prime Minister Tony Blair, was intended to stem the overwhelming corruption of the oil, gas and mining sectors. The thinking was, if everyone knows how much money is being paid for the oil/gas/minerals, the corruption can be tracked and stopped. Ideally, the money could and should go toward sustainable development; the alternative is the resource curse.
Validation requires the country to bring together multiple stakeholders, including some from civil society, to develop a plan by which the financial numbers reported by the extraction company and those reported by the government can be reconciled and made public. (This is not as easy as it sounds, since the extraction revenue is not only one stream, like pure royalties, but can include other sources, like signing bonuses, fees, and taxes.)
Compliance requires an independent audit at international standards. Countries who sign on have two years to come up with an acceptable Validation plan. To date, only two countries — Liberia and Azerbaijan — are actually in Compliance. Multiple NGOs have dedicated themselves to transparency advocacy, such as Publish What You Pay, Global Witness, Revenue Watch, and others.
Will the countries make the deadline? There are reasons to hope and reasons to doubt. Many developing world countries may lack the capacity to meet the goals of EITI (the accounting, the legal stuff etc). Jonas Moberg, Head of the EITI Secretariat, says he does not expect all the countries that are supposed will meet it successfully. (Gabon and Equatorial Guinea already have asked for extensions.) If a country shows serious progress, it can take a little longer. But not forever.
Will EITI end the resource curse and corruption? Transparency is necessary but not sufficient. But just by itself, the Validation process has helped in two ways, Moberg said in an interview. “You will need other measures and it won’t solve everything, but you have to start somewhere… The (Validation process) has had a tremendous impact on building trust.”
All this is true: transparency will be quite an achievement and could deal a body blow to the endemic corruption. Still, even with transparency, corruption, waste and mismanagement can linger. “How the money will be spent is not our mandate.”
The problem is that EITI, like so many other worthy initiatives, depends on the political goodwill of the country and leaders involved — and of course that is not a sure thing. Like so many international norms, like human rights or democratic governance, signing on to the ideal does not mean an actual attempt at implementing the reality. It’s like that old joke in the movies, “You was serious about that?” Although it is easy to see why civil society wants transparency, it isn’t very clear how transparent we’re talking here — will it include leaders’ bank accounts and salaries?
It is hard to be totally convinced by so many countries so steeped in decades of corruption. What is the incentive for some of these leaders? It is also uncertain how some of the National Oil Companies, which consider their business dealings in these countries and industries to be private, will respond. Although China has shown some willingness toward disclosure when required, it has also a history of considering such information a state secret, including the Rio Tinto case. Its increasing power in extraction countries remains a wild card in the EITI equation.
