The U.S. Retreat from Extractive Industry Transparency–What Next?, 13 Apr 2017

The US Department of the Interior recently took steps to halt its work on implementing a global transparency initiative for the resource sector, known as the Extractive Industries Transparency Initiative (EITI). This announcement came on the heels of the Congressional action repealing a related rule, adopted by the SEC pursuant to Section 1504 of the Dodd-Frank Act, that required oil, gas and mining companies to publish their payments to governments. The two issues are related but distinct...[The] Extractive Industries Transparency Initiative (EITI) applies in those countries whose governments choose to join the initiative (including the US) and requires payments to be disclosed both by the recipient government as well as by all extractives companies that operate in that country... EITI produces valuable information from governments about the payments they receive for their natural resources, whereas mandatory legal rules like 1504 are necessary to ensure meaningful and broad reporting from companies, including in those resource-rich countries such as Equatorial Guinea and Angola that are not part of EITI but are in desperate need of more transparency. Indeed, the US EITI experience shows that even in those countries that do commit to implementing EITI, EITI alone might not be enough to compel all companies to report, if it is not backed by domestic legislation.

Officials at Interior appear to be retreating from their ill-advised decision to effectively withdraw from EITI, but these mixed signals, especially when viewed together with the Congressional action, send a troubling message about the US government’s changing stance on anticorruption, and set back a long history of US leadership on these issues. Nonetheless, while these recent US developments are a setback from a US anticorruption perspective, the rest of the world is powering ahead with this much needed transparency...

[Some] skeptics of extractive transparency, including on this blog, have questioned whether the EITI is a success story at all. The extent of the EITI’s success depends on how it’s measured. The EITI has been the most successful in institutionalizing transparency as a global norm; it has also been largely successful in operationalizing robust reporting and auditing standards, according to a recent meta-study. On the question of whether the EITI makes a difference to developmental and economic outcomes, the research to date is less clear, and it may simply be too early to tell... As for whether the EITI can reduce corruption, the answer likely depends on factors like the active involvement of civil society in a country’s EITI process... [In] 2015 EITI adopted a groundbreaking international protocol to protect the active participation of civil society in the EITI process. As a result, oppressive and corrupt regimes like Azerbaijan can no longer benefit from the positive signalling of their EITI participation while continuing to silence their critics. Indeed, Azerbaijan was recently suspended from EITI for failing to improve its treatment of civil society groups.