This interview was first published by Critical Resource and is reproduced here with their permission.
Global interest in the Extractive Industries Transparency Initiative (EITI) has never been higher. The number of EITI ‘compliant’ countries recently doubled to 11, with a further 24 seeking to implement the initiative as ‘candidate’ countries. The recent EITI global conference attracted a significant crowd, including prominent figures such as George Soros, Mo Ibrahim, and Shell’s CEO, Peter Voser. At the same time, as unrest in North Africa creates fresh demands for accountability from governments of resource-rich countries, and as the new transparency requirements in the US Dodd-Frank Act come into force, expectations and pressure on the EITI to deliver are also growing.
Steering the EITI through this defining time will be Clare Short, elected as chair of the EITI Board in March. Ms Short was a Member of Parliament in Britain from 1983 to 2010 and served as Secretary of State for International Development from 1997, until 2003 when she stepped down over the Iraq War. Not one to shy away from controversy, Ms Short has supported campaigners’ criticisms of the extractive industry in the past. Critical Resource spoke with Clare Short to find out more about her current views on the industry and the future of the EITI.
Critical Resource: You’ve been critical in the past about extractive industries – for example describing mining in the Philippines as “systematically destructive”*. What’s your overall assessment today of extractive companies – looking at their impacts and activities, do they deliver net benefits or net costs to society?
Clare Short: There are very 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. In these paradoxically poor countries local people say God gave us these riches but they have become a curse for us.
Extractive companies are beginning to take this seriously. They have learned the hard way about the risk involved in operating in countries where there is no trust and also the risk of corrupt practices which breach their domestic law. It is in order to mitigate these risks companies are now working with governments and civil society in organisations such as the EITI. Shining the light on the payments to the governments and government's record of receipts is a first step in trying to ensure that resources benefit all the citizens in resource-rich countries.
Critical Resource: Recent conflicts and popular uprisings in North Africa and the Middle East, for example in Libya and Egypt, have brought closer to international attention the misuse of resource revenues by corrupt rulers in these countries. Many governments and extractive firms have been criticised for their past interactions with both Gaddafi and Mubarak – do you think this is fair?
Clare Short: Nearly 2.5 billion people live in countries that are "not free" according to Freedom House, many of these people live in absolute poverty. It cannot be wrong to invest in these countries but companies that do invest should join with others in insisting on transparency and accountability. Let us hope we will see a flowering of democracy, transparency and accountability in the Arab world. Many have cause to examine their consciences about the situation in that region.
Critical Resource: Turning explicitly to the EITI, what are the three main things you would like to achieve – that is, what specific areas of progress would you like to see for the EITI – in the time you serve as Chair of the EITI International Board?
Clare Short: Over half a billion people can now know how much their government receives from the extractive industries. First of all, I want to see that number grow – more citizens should have the right to know how much their government receives from their natural resources. We are keen to see more large emerging economies following in the footsteps of Indonesia in implementing the EITI. Secondly, we need more innovation on how this new wealth of data in the EITI reports can be used by academia, journalists, business, government and civil society. It is only if the information is put to use that it will create accountability. But most important of all is that the poor people living in resource rich countries should have a better life and we need to do more to get the information into their hands so that they can demand reform.
Critical Resource: What do you make of some of the demands of campaign groups over how the EITI should be strengthened going forward: for example, that it should be broadened to focus on how resource revenues are spent as well payments made?… that it should cover also the disclosure of contracts and the awarding of licenses?… and that big resource exporters and importers like the US, Australia and the ‘BRICs’ should be pushed to sign up?
Clare Short: The EITI is still young and will continue to evolve. At the EITI Global Conference in Paris last month, a revised set of the EITI Rules were adopted that substantially strengthened the EITI requirements. The reporting requirements are for example more detailed.
I consider it unlikely that the global minimum EITI Rules will require disclosure of contracts and the awarding of licenses although I think it desirable that these processes should be more transparent. Given the coalition that EITI brings together, we cannot go faster than the companies allow. I am however encouraged by the fact that the implementation of the EITI in many countries is leading to a debate about improved contract practices. The EITI standard is only the first step in a journey, but it does create a platform for wider reforms in the natural resources value chain.
As I have already said, we give priority to reaching out to resource rich countries that are not yet implementing the EITI, including large growing economies like Brazil and South Africa.
Critical Resource: Do you think the new US transparency requirements in the Dodd-Frank Act** are what is needed? Could they ultimately have greater impact than the EITI? And do you support moves to pass similar laws in Europe and elsewhere? What do you make of the arguments by extractive firms that such requirements could put them at a competitive disadvantage, infringe national sovereignty – and may detract the work of the EITI?
Clare Short: Amongst the EITI stakeholders, there are different opinions on the effects of the requirements in the Dodd-Frank Act in the US and the proposals being discussed in the EU. But whatever view you take, it is clear that Dodd Frank and the proposed EU rules are complementary to EITI. If companies have to report in the countries where they are registered, they will have an interest in encouraging more countries to join EITI. This is because once a country joins EITI, all companies operating in the country - and national oil companies and non-listed companies hold a large majority of the world's oil - have to disclose. Also the EITI is not only about companies having to report their payments to government: governments have to report on revenues received, and there is an independent reconciliation and the results must be publicised in country so that the accountability is local. And last but not least, the EITI is not only about publishing the numbers: countries implementing the EITI have a platform for dialogue about all aspects of the use of their country's natural resources. The EITI multi-stakeholder groups will, if anything, be more important following listings requirements.
* Foreword to 2006 report on ‘Mining in the Philippines’
** These require oil, mining and gas firms registered on US stock exchanges to report payments to foreign governments, both by country and by project
Photo © Abi Johnson
Text © Critical Resource Strategy & Analysis Ltd