My last blog post addressed progress made in the extractive industries, in terms of fighting corruption, and in particular the new U.S. law (the Dodd-Frank Act) that will impact some of the largest gas, oil and mining companies in the world when it goes into effect in 2011. I also mentioned a few initiatives that have played an important role in advocating for this law and for a global norm on transparency. Another important player in this field is the Extractive Industries Transparency Initiative (EITI), as rightly pointed out by a reader and colleague. Launched in 2002, EITI advocates for transparency in the extractive industries through the publishing of financial information and promoting a culture of transparency that involves dialogue, empowering civil society, and building trust among stakeholders. A fundamental principle of the EITI is the development of multi-stakeholder initiatives to oversee the implementation and monitoring process, which is supported through a multi-donor trust fund, managed by the World Bank.
Currently, EITI has about 30 countries that are in the process of implementing EITI’s principles. Five countries have attained “Compliant Status”, meaning that they have gone through a rigorous two-year validation process. To maintain this status, however, these countries will need to get revalidated every five years. As of now, the EITI compliant countries are: Azerbaijan, Liberia, Timor-Leste and just last month, Ghana and Mongolia. As pointed out in EITI’s newly launched video, more countries are expected to become compliant in the next coming months.
Due to the rigorous and long-term validation process, a potential challenge might be the incentive for countries to stay with the process. Another challenge is the complexity of the issue itself that needs to be communicated to a broad range of stakeholders. In their case study on EITI, Koechlin and Calland address further challenges such reaching consensus amongst a diverse set of stakeholders (whom have different interests), and identifying an appropriate selection process of representatives, specifically the selection and/or exclusion of civil society organizations. Another concern is that the implementation of EITI is driven by the international community.
Long-term political commitment and public support are crucial for EITI’s success. For example, the success in Liberia (the first country to become compliant) is mostly based on the strong commitment and leadership of President Ellen Johnson-Sirleaf. In 2009, the President signed the EITI principles into law (LEITI Act), requiring all government agencies and extractive industry companies, as well as forestry and rubber, to fully comply with the process. Liberia is the second country, after Nigeria, to implement such a law. The President continues to effectively tie the LEITI Act to her platform by focusing on building trust among communities and engaging in a national dialogue about the country’s resources. With the President’s support of LEITI and her understanding of the importance of communication, the initiative has been able to engage a multitude of stakeholders in the EITI process.
Factors driving implementation on the ground will, of course, vary and depend on the political economy environment. For example, the approach to EITI in Azerbaijan (the second country to become compliant) has been more grassroots-based compared to Liberia. First of all, the democratic governance system in Azerbaijan is relatively young, the public sector is still being developed and there is civic pressure for access to information. To this point, highly organized and motivated coalitions and networks of non-state actors have greatly contributed to the country’s compliance status. Just to mention a few, the Transparency of Oil Revenues and Public Finance program is a coalition that links transparency to concrete improvements for people through research, advocacy and capacity building; the Civic Response Network focuses on increasing community involvement and dialogue with the government in the regions directly impacted by oil extraction; while the Investigative Journalist Network serves as capacity building and monitoring resources, and has drawn public attention to challenges in the EITI monitoring process.
As more countries attain compliant status, it will be interesting to see if synergies can be drawn between what works and what doesn’t in implementing EITI’s principles. As the EITI process is still incomplete in the majority of countries and a revalidation process is required for those that reach compliance, long-term commitment among coalitions on the ground will be necessary for ‘revenue transparency’ to take root and be sustained. However, based on the progress made thus far, coupled with continued dedication and work of coalitions on the ground, a global standard on transparency should be within reach.
Photo Credit: Flickr user alphadesigner