Although there is strong potential for the EITI to have a positive impact in the governance of Iraq’s oil and gas sector, the potential has yet to be fulfilled. The MSG has made attempts at demonstrating impact but has been constrained by the limited scope of their objectives, which have primarily focused on producing reports.
Constructive engagement: The EITI has provided a platform for discussions among stakeholders that does not otherwise exist in Iraq, and there is evidence of civil society engaging actively and constructively in the EITI. There has also been a drive in 2016 to engage more closely with parliamentarians, although it is not clear what this engagement is intended to lead to beyond the passing of an EITI-specific law. Meanwhile, the focus to date on production of reports rather than on addressing broader governance challenges in the sector have discouraged more active participation from industry and led civil society to question the value of their engagement. Importantly, stakeholders in Federal Iraq and in the KRG recognise the potential of the EITI as a platform to engage more closely with the KRG on matters of transparency in the sector. Despite strong expressions of interest from all stakeholders consulted, progress on this front has been limited. Finally, a deeper and more constructive engagement with the MoO could help ensure that national priorities for the sector are better reflected in EITI work plans and lead to more useful recommendations.
Economic contributions: There is consensus among stakeholders from the three constituencies that the EITI has helped bring transparency to the main source of Iraq’s revenues, the sale of oil by SOMO. However, stakeholders have struggled to move beyond these disclosures to explain the broader picture in which these payments are made and there is not a clear understanding of what else the EITI could be doing to address the broader challenges of the sector. Although the 2015 annual progress report notes that EITI disclosures on revenue contributions from the IOCs may have led the MoO to renegotiate some contracts in ways that could have saved the GOI up to USD 2.3 million, this claim was not supported by stakeholders at the MoO who argued that the impact of the EITI in Iraq’s extractive sector has been constrained to the publication of reports. Analysts consulted said that the kind of information that the EITI is expected to provide on economic contributions would be both useful and relevant in an Iraqi context as there are many areas that are not well understood.
Public understanding: According to stakeholders from all constituencies, the EITI has contributed to raising public understanding of oil revenues through the publication of reports and their dissemination in public events. During an MSG meeting attended by the International Secretariat, MSG members from CS said that in spite of the shortcomings of the EITI in Iraq it at least provided a level of transparency of oil revenues that was unique in the region. According to CSOs, EITI reports were the first source of public information on what revenues went to the Development Fund for Iraq (DFI). This information has been used by civil society to compare revenues reported in EITI reports to revenues reported in the Iraqi budget (Iraqi Transparency Alliance for Extractive Industries, 2015). One analyst said that they sometimes used EITI reports to get background information on the sector. At the same time there is general consensus among all stakeholders consulted that the EITI’s impact on improving public understanding has been limited and the process has been largely introspective. Workshops and dissemination activities have focused on the publication of the report and the reconciliation of oil sales data instead of addressing how the data could be used to address broader challenges in the sector.
Strengthening government systems: The Director General of SOMO considered that the reconciliation of oil sales with the buyers had contributed to strengthen the transparency and accountability of the oil sales process. There was consensus among stakeholders about the importance of ensuring a that the sale of Iraq’s oil was transparent and well managed as the main source of revenue to the state. Secretariat staff argued that the passing of the EITI law would also help to strengthen government systems by institutionalising the EITI.
Besides providing transparency to oil sales, stakeholders from all constituencies said that the EITI was not having an impact on the governance of the extractive sector. The reasons given varied. According to the industry representative in the MSG, the main reason was that stakeholders were reticent to use the process to address real governance problems in the government, choosing instead to focus on the role of international oil companies. A senior government representative at the Ministry of Oil said that Iraq EITI was not contributing to encourage public debate because it was focused on its own internal reporting. Some civil society representatives who were not in the MSG said that the EITI could be more effective in encouraging public debate if information were provided more regularly, for example through regular publications on the IEITI website.
Recognition: Brand recognition has been the biggest priority for Iraq EITI. Distribution of IEITI merchandise and commemorative plaques form an important part of workshops and dissemination arrangements organised by the secretariat and members of the MSG. A number of MSG members from government and civil society lamented that in spite of their efforts the EITI was not as widely known as they would have liked. According to a senior representative of the MoO, there is a concern in the ministry that brand recognition may crowd out other activities and goals of the EITI. One consultant said that the EITI had had a real impact during the first two years of its existence insofar as it had helped to raise awareness about the revenues to the government from oil sales. After Iraq had been declared compliant under the EITI Rules, however, the process had been deteriorating and with it the impact it had sought to deliver.
Increasing distance from the MoO and other government agencies is creating a real threat to the sustainability of the EITI in Iraq. The MSG and the national secretariat have tried to address this by reaching out to influential former government representatives and individuals in the government and through EITI-specific legislation, but progress is slow.
Funding: The EITI in Iraq is nominally co-funded by the Government of Iraq and the World Bank, although funding was not provided in 2015 and 2016. There were also concerns raised by the secretariat about whether funding would be available for 2017, although assurances were given to the International Secretariat by the MoO that this would be the case. The de facto dependence on the Bank to provide funding is a risk to the sustainability of the programme, especially as the current EGPS agreement foresees a higher level of government funding than was the case under the MDTF. While funding for implementation until the end of 2018, financial support for IEITI thereafter will to some extent depend on the government’s ability to cover its commitment to co-fund the process. Importantly, external funding appears to have also contributed to the isolation of the EITI from the rest of the government systems because the funding is provided directly to IEITI upon request from the Ministry of Finance.
Institutionalisation: The EITI in Iraq has over time developed into a semi-independent entity that receives funding directly from the World Bank and where the national secretariat’s accountability to the government or to other stakeholders is difficult to ascertain. Nominally this accountability happens through the chairmanship of the Secretary General of the Council of Ministers, Dr. Al Alaq, but stakeholders from all constituencies agree that he is too busy to engage in the EITI and that he delegates on the National Coordinator, Alaa Mohie El-Deen, in his role as Vice Chair of the MSG. Stakeholders from civil society and from the MoO have expressed concern that over time this has developed into a “oneman show” which has had the effect of ostracising the EITI from the broader government and increasingly has led the MoO to disengage from the MSG. Rather than seek to engage the MoO more closely, the national secretariat and the MSG have sought political patronage of influential political figures outside the government such as former Minister of Oil Ibrahim Bahr Al-Olum.
Secretariat staff expressed concern that the fact that a presidential decree was the only legal foundation for the EITI posed a risk to the sustainability of the process because presidential decrees could be changed or revoked at the will of the government at any time. The MSG and the secretariat have therefore over the last three years sought to draft and pass an EITI-law that would institutionalise the EITI as an independent government agency with a dedicated budget line. Progress has been slow, however, and the draft law has not yet been presented to parliament.