EITI++ targets resources

Wednesday July 2

Countries rich in natural resources -- oil, gas and other minerals -- are often also among the world's poorest. While exploitation of these resources can provide a way to secure sustainable economic growth, benefits have typically accrued to relatively small elite groups, thereby increasing inequality and making little impact on the level and scale of poverty.

At the 2002 World Summit on Sustainable Development in Johannesburg, then UK Prime Minister Tony Blair proposed a voluntary global standard for companies to publish what they pay and governments to disclose what they receive in respect of mineral resources. The Extractive Industries Transparency Initiative (EITI) was formally launched at an international conference the following year in the form of a coalition of governments, companies, civil society groups, investors and international organisations.

However, EITI effectiveness has been criticised on several grounds:

Many developing countries are reluctant to embrace the initiative and thus undertake the governance reforms necessary to make it effective.

Civil society participation is constrained: pro-EITI activists in several countries, including some candidate states, continue to report facing official threats, harassment and even imprisonment.

Companies are reluctant to join -- or, having joined, to comply with -- EITI. A recent Transparency International survey of 42 oil and gas corporations in 21 countries classified only one-third as 'high performers' in payment disclosure. Moreover, many resource companies still remain outside the initiative, in part due to fears that that they will be disadvantaged or penalised in relation to non-signatories when bidding for government contracts.

In April, the World Bank launched EITI++, intended to broaden the scope of transparency across the entire extraction and utilisation value chain. EITI++ is intended to complement rather than displace EITI. It will have its own advisory committee of stakeholders and the Bank proposes a multi-donor trust fund designed to respond quickly to resource-country requests for technical assistance in improving governance standards.

EITI++ has been positively but cautiously received in development circles. However, the new trust fund has yet to be established and NGOs with experience of EITI point to the crucial requirement for participating governments to accept much greater involvement of civil society.