EITI in Azerbaijan: don't stop pedalling

By Ingilab Ahmadov, Public Finance Monitoring Centre, and
Emma Wilson, the International Institute for Environment and Development

“Implementing EITI is like riding a bicycle. If you stop pedalling, you fall off.”

At a workshop in Baku on 2 March 2012, participants discussed how to breathe new life into Azerbaijan’s EITI process, post-validation. How can it be enhanced so as to achieve sustainable development goals? How can it be deepened (through improved reporting) and broadened (by expanding to other areas, such as contracts or revenue management)? How can governance and transparency initiatives “beyond EITI” build on the gains already made?

Azerbaijan has always attracted interest as one of the first countries to sign up to EITI in 2003, and the first to pass validation in 2009. According to EITI rules, it must be revalidated in 2014. The Baku workshop was organised by the Public Finance Monitoring Centre (PFMC) and the International Institute for Environment and Development (IIED) with support from the British Foreign and Commonwealth Office. It was attended by 50 participants, including local NGOs, government departments, companies, the EITI Secretariat, Publish What You Pay and several civil society representatives from Kazakhstan.

Can we agree to disaggregate?

A key issue for Azerbaijan is shifting to disaggregated EITI reporting, company-by-company and project-by-project. Disaggregated reporting would enable anyone to see what each company operating in Azerbaijan is paying the government in taxes, royalties and license fees. The consensus approach to decision-making by the EITI multi-stakeholder group has held up this process. Most companies are happy to make the shift, but one or two argue that if it is not mandatory, why should they do it? It will nonetheless be easier to introduce disaggregated reporting at the country level rather than getting the international EITI Board to make it mandatory. As a recent overview of all the EITI Reports shows, a majority of the EITI countries now have disaggregated reporting. It may be possible to introduce partially disaggregated reporting (e.g. relating to social investment and environmental spending) as a first step. The Azerbaijani government says it is in favour of disaggregated reporting, and NGOs believe that government would, if it tried, be able to persuade the companies. International participants argued that the NGO coalition has more influence than it thinks and should keep pushing for change.

A major step in addressing corruption and poverty in Azerbaijan would be to increase the accountability of public expenditure, which is not currently possible through EITI. The EITI Secretariat representative noted the importance of making linkages with other sustainable development processes within the country. Participants also proposed building stronger links between the goals of EITI and environmental civil society coalitions. NGOs called for increased transparency about smaller companies – their shareholders, turnover, where they are registered – thus extending the principles of EITI along the value chain.

Beyond Baku, beyond the norm

While information dissemination is improving in Azerbaijan, with the website www.eiti.az being used more and more, local people living outside Baku currently see no relevance in the EITI agenda. Further dissemination efforts need to focus on these populations. NGOs were invited to approach companies for one-to-one meetings about EITI issues. Bilateral meetings between civil society and government representatives could also build trust and understanding outside of the MSG meetings.

In her presentation, the PWYP representative cited Frank Zappa: “Without deviations from the norm, progress is not possible”. EITI needs to be deepened and broadened, and actions “beyond EITI” can help to further the transparency and accountability agenda. What is clear is that for EITI in Azerbaijan, business as usual is not an option.

For more information contact Ingilab Ahmadov of the Public Finance Monitoring Centre (PFMC) and Emma Wilson of the International Institute for Environment and Development (IIED). For more information, see the Baku workshop report and the project web page