transparency

No silver bullet: the EITI’s challenge to improve transparency in extractive industries

From June 17 to 19, the Extractive Industries Transparency Initiative (EITI) united representatives of governments, private companies, and civil society organizations for its Global Conference in Paris. Launched in 2002 by then-UK Prime Minister Tony Blair, the EITI is the global standard for open and accountable management of oil, gas, and mineral resources. It has garnered wide support, as it is currently being implemented in 52 countries.

The standard is based on a simple notion: natural resources should be managed in an open and transparent way because they belong to the people. When countries implement the EITI, they are required to disclose information about revenue from extractive industries, how that revenue passes through governments, and how it is spent to benefit their citizens. In each country, the standard’s implementation process is overseen by representatives from the government, the private sector, and civil society.

EITI has great potential to make extractive industries fairer and more environmentally sustainable. As governments and firms become more accountable to their citizens and consumers, they have more incentive to adopt better social and environmental practices and share the benefits of these resources with local communities that are impacted by their extraction.

However, the EITI is not a silver bullet. It’s simple, top-down approach carries its own advantages and disadvantages. As several speakers highlighted, transparency does not necessarily lead to accountability. Without proper dissemination of the mechanism’s resulting information, its social and environmental benefits can amount to little. The role of civil society, journalists, and activists is crucial for the EITI’s success.

Transparency is more than just a best practice. Access to information is a right, and as such it should also be promoted from the bottom up. This rights-based approach may complement initiatives such as the EITI, which looks at the problem from an economic standpoint.

Several international instruments already exist that can and should be promoted to this end. For example, the Escazú Agreement was launched in 2018 in Costa Rica and signed by 16 countries in the framework of the UN Economic Commission for Latin America (ECLAC). This agreement commits countries to ensure access to information and to justice on environmental issues, therefore promoting a more proactive role by countries to ensure initiatives such as the EITI have a positive impact on society and ecosystems. The nascent nature of this agreement means its effectiveness is yet to be seen. To date it has only been ratified by Guyana, an EITI country that recently discovered vast offshore oil reserves that will dramatically change the composition of its economy. What happens in Guyana will put these frameworks to the test and provide lessons learned for other countries in the region and beyond.

The EITI also has the potential to address the worldwide phenomenon of corruption, which affects almost every area of human development. Although it does not solve the problem by itself, the EITI shines a spotlight on the right places, like contracts that deal with oil, gas, and minerals. Those contracts have traditionally been a stage for corruption, leading to devastating consequences for many developing countries. In this context, the awareness-raising and advocacy roles of a free and independent press and an active civil society are crucial. Furthermore, the EITI carries its own risks as governments can use their candidacies to “show” they are addressing corruption while not making significant progress. However, this can only be a temporary strategy, as countries are periodically assessed against the standard.

Ensuring fairer and more environmentally friendly extractive industries requires more than just implementing the EITI standard. The international community must provide the resources for governments and civil society to fill in the gaps and turn transparency into accountability, respect for human rights, and environmental sustainability.

image001.jpg
 

By Joaquin Vallejo