“We will not have succeeded until the citizens of resource-rich countries see real improvements in their lives”

Clare Short

Recently appointed as chair of EITI after the retirement of its founder, Peter Eigen, Clare Short has often been outspoken on global matters. She held ministerial responsibility for international development in the UK’s Labour government for six years until her resignation in May 2003 in protest at the invasion of Iraq. She has now retired from British politics but continues to champion development issues. Active since 2006 and now headquartered in Oslo, EITI is a joint effort and alliance of corporate players, civil society, governments and institutions to monitor the flow of payments from the extractive industry sector and thus contribute to greater transparency and accountability. 


Global: Since EITI started operations, what do you see as its achievements so far and what are the most likely reachable goals over the medium and long term?

Clare Short: A recent independent evaluation provides a long list of EITI’s achievements over the past few years: a broad consensus that payments and revenues should be published has been forged; a global standard on how this should be done has been developed and is being implemented by 35 countries across all continents; and, most importantly, citizens in these countries – nearly a billion people – now have the right to see how much money is coming in from their country’s resources, and question how it is used. 

We have more to do. First of all, I want to see the number of countries grow – more citizens should have the right to know how much their government receives from their natural resources. We are especially keen to see more emerging economies following in the footsteps of Indonesia to implement the EITI [standard]. Secondly, we need to do more to get the information into the hands of ordinary citizens so that they can demand reform. We need more innovation on how this new wealth of data in the EITI reports can be used by academics, journalists, business, government and civil society. It is only if the information is disseminated, analysed and debated that it will create accountability. 

EITI’s aim is to create a shift in the culture of the extractives sector from opacity and secrecy to transparency and accountability. We have made some progress in a few years, but we are under no illusions: much remains to be done, and EITI is just one piece of the puzzle – a necessary but not sufficient step. 

In your own work with international development issues, you have occasionally been a severe critic of extractive industries in developing countries. Can you now say that there are positive signs of a genuine will among oil and mining companies to change their behaviour and to be more open in their dealings – especially when working amid the weaker regulatory environments of developing countries?

There are many places where resource extraction has not delivered adequate benefits to local people. It remains true that resource-rich countries on average have more poverty than comparable non-resource rich countries. 

A growing number of companies have woken up to the reality that in order to succeed in the long term, transparency is the way to go. They have learned the hard way about the risk involved in operating in countries where there is little trust and also the risk of corrupt practices which breach their domestic law. To mitigate these risks, and because they know that it is the right thing to do, companies are now working with governments and civil society in organisations such as EITI. In several countries, it is the extractive companies that are calling upon the national governments to act more transparently, and to implement the EITI standard. 

I’m encouraged by the number of companies that are supporting EITI. I hope that this is a reflection of a desire to be part of the solution. But there are still many companies that do not really favour transparency and are only willing to permit very limited reporting, and maybe see the EITI as a fig leaf rather than a route to full transparency. Of course, governments can require fuller reporting, and some are doing so. 

What would you say are the benefits for a country like Nigeria, which was declared EITI Compliant earlier this year although there has been little obvious progress across the wider society in reducing corruption levels or in enhancing conditions for ordinary citizens?

We need to stop kidding ourselves: there is no silver bullet that will fix the problems in a large and complex country like Nigeria. But we have to start from where we are. If all was in good order, there would be no need for EITI. Will there still be corruption in Nigeria with full transparency around resource payments? Yes. Will there be less of it? Probably. 

What we do know is that EITI reporting in Nigeria has uncovered billions of dollars of financial discrepancies and outstanding payments to the government. The people of Nigeria can now see very detailed accounts of how much they are earning from their natural resources and where the money is going. This improves trust in the government’s sense of accountability to the people – albeit from a low base. 

For those resource-rich poor countries that may not yet be fully committed to EITI, do you think that working towards compliance is seen as a sufficiently attractive option – especially when governments and officials can easily be influenced by the promise of immediate benefits offered by under-the-counter deals, which may indeed be aggressively pushed onto them by investing companies?

Like it or not, as with any international convention, sovereign states can chose whether they want to implement the EITI standard. Leaders in some resource-rich countries have chosen to deny their citizens the possibility to see what happens to the money from their natural resources. Without leaders with a commitment to reform and good governance, things do not change. 

But there are reasons to be optimistic. Firstly, around the globe there are government leaders that are trying to do the right thing, and are starting to see that transparency is the way to go. Secondly, as we have seen in North Africa and the Middle East, citizens in many countries are fed up with government corruption and are rising up. Transparency is one of the key demands of the protestors. 

Would you expect EITI compliance to become a global standard any time soon?

With 35 countries implementing the EITI [standard] and more joining, EITI is making good progress towards becoming a global standard. It is critical that countries don’t just stop at compliance: they can use the EITI platform to debate wider issues affecting their country. That might be bidding, contracting, operating, allocating or spending. It might be that the reports can go deeper to list payment-by-payment, or physical volumes or sales. It might be that the principles can be applied to other sectors – for example, forestry, fisheries or agriculture. We are seeing innovations in countries that really want to use the EITI as a route to better management of the whole of their extractive sector, thus improving the benefits of the sector to the citizens of their countries. To me, that is even more important than being a global standard. 

What has been the response to EITI among resource companies registered outside the USA and EU, such as those from China, Russia, India, Brazil and South Africa? Do you sense they would rather operate without the inhibition of EITI requirements?

In the 35 EITI implementing countries, companies from non Western countries comply with the reporting requirements. Once a country decides to join, then all companies are required to report. In several cases, non-Western companies are also part of the local multi-stakeholder group, responsible for the local governance of the EITI process. In addition, some of these companies are among the over 50 oil, gas and mining companies that are supporting EITI on the international level. 

Increasingly over the past year, the transparency requirements of the US Dodd-Frank Act (requiring US-registered firms to report payments to foreign governments) as well as similar new proposals being discussed in the EU, have been openly criticised by a number of powerful corporations. Is there a risk of EITI’s previous efforts and achievements unravelling in the face of such reluctance? Or do you think the Act might actually succeed in setting higher standards of transparency around the world?

It is true that many companies were very critical of the Dodd Frank proposals and argued that EITI was a better way forward. There has been a noticeable lack of criticism of the EU proposals.

In my view, Dodd-Frank and the proposed EU rules are complementary to EITI. Collecting data on companies’ payments in New York, Washington, London and Frankfurt is one thing, making sure that transparency leads to accountability in the countries that have the resources is another. A key strength of EITI is that it is not only about publishing the numbers, but about publication in country: and countries implementing EITI have a platform for dialogue about all aspects of the use of their country’s natural resources. I hope that EITI multi-stakeholder groups will become more important and better informed following these new listing rules. 

Some observers say that EITI requirements are too narrowly focused on certain kinds of payment rather than on broader improvements in transparency across the social and political spectrum within countries. Do you expect to see the requirements extended significantly over time?

The consultation on the future of EITI is open and we welcome all comments and contributions. I ask all to bear in mind that the EITI is leading to innovations in countries that extend beyond the core standard. What I observe when I go to Kinshasa, Jakarta or Oslo, is that when you bring civil society around the same table as the government and companies, the debate rarely stops at tax and royalties. The EITI standard holds everyone together but governments that want to go further can use EITI to do so. 

Do you think the battle against corruption around the globe is making good headway or is it simply naive to expect any real progress while the rewards of wealth are so alluring?

I think that in recent years we have made a lot of progress in challenging corruption and demanding transparency from all parties, but there is still a long way to go. We will not have succeeded until the citizens of resource-rich countries really see the benefits in faster economic development and real improvements in their lives.

About the author:

Clare Short is Chair of the Extractive Industries Transparency Initiative (EITI)


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