Extractive Industries Transparency Initiative

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Logo of the Extractive Industries Transparency Initiative

The Extractive Industries Transparency Initiative (EITI) is an international organisation that has developed a standard that assesses the levels of transparency around countries’ oil, gas and mineral resources. This standard is developed and overseen by a multi-stakeholder Board, consisting of representatives from governments, extractives companies, civil society organisations, instutitional investors and international organisations. The EITI Standard is implemented in 44 countries. It consists of a set of requirements that governments and companies have to adhere to in order to become recognised as 'EITI Compliant'.

The Chair of the EITI is Clare Short, former UK Secretary of State for International Development. The former Chair of the EITI was Peter Eigen. The EITI International Secretariat is located in Oslo, Norway and is headed by Swedish former diplomat Jonas Moberg.

History of the EITI[edit]

The idea of an “Extractive Industries Transparency Initiative” (EITI) was launched in September 2002 by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg. In December 2003, the EITI received official endorsement from the World Bank Group. A few years prior to this launch, civil society and company representatives alike had been lobbying for a global remedy to counter the lack of transparency around the vast government revenues from natural resources.

In the late 1990s, several academic pieces on what was increasingly becoming known as the “Resource Curse” or “Paradox of Plenty” were published by such acolytes as Jeffrey Sachs, Joseph Stiglitz, Terry Lynn Karl and Paul Collier. Journalists and writers were identifying more and more stories of corruption, conflict and mismanagement of the extractive sector. The problem went beyond the well-known Dutch Disease, the economic phenomenon where natural resource wealth makes other export sectors uncompetitive. Other common effects included the capturing of the revenues by elites, the stunting of the development of tax systems and exacerbated regional and community tensions.

The idea of the EITI followed campaigning by Global Witness, other civil society organisations and people like George Soros, increasingly under the campaign name of “Publish What You Pay”. This campaign slogan was drawn from the Global Witness report “A Crude Awakening” launched in December 1999, which focused on what it saw as the opaque mismanagement of oil in Angola. The report concluded by calling on the operating companies to adopt “a policy of full transparency [in] Angola and in other countries with similar problems of lack of transparency and government accountability”.

In February 2001, Lord John Browne, the then Chief Executive Officer of BP, responded to the campaign and committed to publish payments made to the Government of Angola, sparking a strong reaction. In his 2010 memoir “Beyond Business”, Lord Browne explains how he received a cold letter from the head of the Angolan national oil company Sonangol, stating that “…it was with great surprise, and some disbelief, that we found out through the press that your company has been disclosing information about oil-related activities in Angola”. Lord Browne goes on to conclude “Clearly a unilateral approach, where one company or one country was under pressure to ‘publish what you pay’ was not workable”. In order to achieve transparency, a global effort to level the playing field and require all companies in a country to disclose payments was needed.

At a conference in London in 2003, a set of principles to increase transparency over payments and revenues in the extractive sector were agreed and a pilot phase of the EITI was launched. At the second EITI Conference in May 2005 an International Advisory Group (IAG) was established under the Chairmanship of Peter Eigen. Members of the IAG included: Azerbaijan, France, Nigeria, Norway, Peru and the United States; Anglo-American, BP, Chevron and Petrobras; the Azerbaijan EITI Coalition, Global Witness, Revenue Watch Institute, West African Catholic Bishops Conference; and F&C Asset Management. It was supported by the UK government, the International Monetary Fund, and the World Bank. The third EITI Global Conference was held in Oslo, Norway in October, 2006, the fourth in Doha, Qatar in February 2009, the fifth in Paris, France in March 2011, the sixth in Sydney, Australia in May 2013, and the seventh and most recent EITI Global Conference took place in July 2014 in Mexico City.

EITI Standard[edit]

The EITI Standard is an international standard that ensures transparency around countries’ oil, gas and mineral resources. The EITI Standard provides the requirements and guidance on how to report activity in the oil, gas and mining sectors and ensures that this information is available to the public. The Standard also covers areas such as license transparency, transit and state oil sales.

EITI implementing countries[edit]

All countries with extractive industry sectors can implement the EITI Standard. A government intending to implement the EITI Standard is required to undertake certain steps before applying to the international EITI Board for EITI Candidate status. These include announcing a clear statement of the government’s commitment, developing a work plan that sets objectives for what the country wants to achieve with the EITI and how it intends to reach EITI Compliant status, and establishing a multi-stakeholder group together with companies and civil society.

Twenty-six countries have status as EITI Compliant countries. This means that the country has completed at least one reconciliation report checking revenues paid by companies to governments, and also effectively passed a Validation report, where the entire process which produces reconciliation reports is put under review.

The following 15 countries have status as EITI Candidate countries:

The Democratic Republic of Congo, which was suspended as a Candidate country in 2013 for insufficient reporting, independent audits and monitoring, was given Compliant status in July 2014.[1] Germany and the United Kingdom are undertaking EITI pilots and other countries have also officially stated that they intend to implement EITI, including Myanmar, the United States of America, Canada and Colombia.

EITI Supporting Companies[edit]

Extractive companies are at the core of EITI implementation by annually reporting payments to the government in implementing countries and helping to govern the EITI process at the local and international levels. Company advocacy has resulted in several countries beginning EITI implementation. Nearly 80 companies involved in oil, gas, and mining support the EITI. The EITI is also supported by over 95 institutional investors with total assets under management of more than US $19 trillion.

Criticism[edit]

The body's credibility was questioned after it permitted an Ethiopian application for membership in 2014.[2]

References[edit]

  1. ^ "Congo Improves Natural-Resources Accounting". The Africa News.Net. Retrieved 5 July 2014. 
  2. ^ Biron, Carey L. (21 March 2014). "In Accepting Ethiopia, Transparency Group 'Sacrifices Credibility'". Inter Press Service. Retrieved 21 March 2014. 

External links[edit]

Extractive Industries Transparency Initiative website

EITI and Sustainable Development, IIED