News and blog posts

Significant breakthroughs - reflecting on announcements in EU, US and Australia

Whilst the international EITI Board has been meeting in Jakarta this week, three important pieces of news have reached us from around the world.

Firstly, today Australia’s Foreign Minister Kevin Rudd and Resource Minister Martin Ferguson announced that Australia will implement a pilot of the EITI. This is a significant breakthrough for several reasons.

Domestically, implementation of the EITI will help inform the debate about whether the Australian people are getting a fair share of the revenues from the mining boom. The EITI has no view on whether companies should be paying more or less tax. But we are convinced that authoritative information and a mechanism for discussing these important issues is critical for building trust and a common understanding of how to maximize the benefits of Australia’s natural riches.

Regionally, Australia is practicing what is preaches. It is setting an example for other resource-rich countries in the region. We hope that countries like Papua New Guinea and the Philippines will join Australia, Indonesia and Timor-Leste in implementing the EITI.

Globally, Norway, the US and now Australia are showing that the EITI is just as relevant for OECD countries as it is for other countries. The EITI now has extraordinary momentum, and the recent announcements from the US and Australia will revitalise efforts to engage resource-rich emerging economies like Brazil, Mexico and South Africa (see the press release published on the EITI website).

Secondly, back in Europe, the Commissioner Michel Barnier and the European Commission announced earlier this week a set of disclosure requirements for public and large private extractive companies in EU countries. These companies will have to publish all payments to governments they operate in (again, a press release was published by us earlier this week).

Thirdly, in the US, President Obama announced that he has appointed US Secretary of the Interior Ken Salazar as the senior individual for the oversight of the US implementation of the EITI. Ken Salazar’s blog on the announcement at reiterates President Obama’s determination that EITI implementation “will help guarantee the taxpayer a full and fair return from their resources”.

We can draw two important conclusions from these developments. Firstly, the perceived benefits of implementing the EITI are much clearer over the years since it was first launched as an idea in 2002. Secondly, as our Chair Clare Short often argues, the EITI is catalysing wider transparency developments in the sector globally.

It is clear that the reasons why countries like the United States, Australia and Indonesia have decided to implement the EITI standard are very different from the original objectives of tackling what some call a resource curse. The benefits of transparency for informing public debate have become evident: Australians and Americans want to know if their companies are paying a fair and reasonable level of taxes and royalties, and that they are paying every dollar; Europeans and Americans want to know if their companies are operating fairly across the globe. It is getting harder and harder for countries to argue that it is not relevant to their situation.

On the second point, the EITI should be both aspirational and inspirational. It alone does not lead to good management of the extractive sector, but it does provide an important platform from which other necessary processes can evolve. The American announcement was made in the context of the Open Government Partnership. The Australian announcement accompanied a bold Mining for Development Initiative. The European announcement seeks to complement the EITI standard and cover new sectors.

Meanwhile, the EITI  Board meeting in Jakarta has been dealing with a good mix of implementation issues and longer-term strategic aspects of the EITI. It discussed EITI implementation in Cote d’Ivoire, Albania, Burkino Faso, Cameroon, Mauritania and Madagascar, with each country testing different aspects of the model.  In several countries, EITI Validation, the quality assurance mechanism, has led to discussion and further improvements of EITI reporting before they are becoming EITI Compliant.

The Board has also begun a strategic review examining how the model should develop in the long-term to remain relevant and further improving transparency. Publish What You Pay, the mining companies represented by the International Council on Mining and Metals and the World Bank are amongst those that have submitted input.

What these news stories demonstrate clearly is something that all Board members agreed in Jakarta: Tremendous progress has been made, but the EITI cannot stand still whilst the global debate about the management of the extractives sector evolves around it.