3.5 billion people live in
resource rich countries. Many don’t see any results from the extraction of
their natural resources. This phenomenon is known as the “Paradox of Plenty” or
the “resource curse”. It refers to the paradox that resource rich countries
tend to have less economic growth and worse development outcomes than countries
with fewer resources. Resource wealth is most often concentrated in the hands
of corrupt elites, politicians and industry insiders, meaning for the rest of
the population the resources are a curse rather than a blessing. Global Witness
estimates that since the starting of the oil boom in the 60ies in Nigeria, the
country has lost about $400 billion to corruption. This is a vast figure for a
country where large parts of the population live under $1 a day. In 2010,
Africa’s oil, gas and mineral exports were worth roughly seven times the value
of international aid to the continent ($333 billion vs $48 billion) (http://snipurl.com/258r214 ). Therefore
developing countries need to maximize revenue from the finite resources and
make sure that revenues go into building schools, infrastructure and hospitals.
The stakeholder network of
resource extraction in resource rich but poor countries is pretty
sophisticated. Let me name the stakeholders that I think are the most important
ones: the extractive companies; the investors; the companies’ host and home
governments (including all important offices); the citizens in the host
countries; international, national and regional non-governmental organizations;
governmental organizations and last but not least international donors.
A global movement of
anti-corruption (Global Witness, Publish What You Pay, Transparency
International etc.) and human-rights organizations (Amnesty International,
Human Rights Watch etc.) has been trying to change the disastrous situation by
pushing for transparency measures. A special role has the Extractive Industry Transparency
Initiative (EITI). As the EITI is a coalition of governments, companies, civil
society groups, investors and international organizations, it is a
multisectoral stakeholder network that involves all important stakeholders. EITI
increases transparency over payments by oil and mining companies to governments
and government-linked entities, as well as transparency over revenues by the
host countries’ governments.
But in this August with U.S.
regulators setting demanding rules for U.S.-listed firms (http://snipurl.com/258rz3u ) these
“soft law initiatives” got important support by “hard law”. In September the
European Parliamentary committee has also voted for a draft anti-corruption
law. Although the final text of the proposal is yet to be published, they
agreed on a detailed project reporting to regulatory authorities starting from
a minimum threshold of 80’000 Euros (http://snipurl.com/258rz3u ). The
project reporting will enable citizens to follow the money from natural
resource deals. As oil majors and other resource firms have already signed up
to international guidelines enshrined in the EITI, they believe in transparency
and appreciate the new regulations.
If an effective EU
directive is established it would enhance the global comparability as well as
transparency and would be good for industry and citizens alike. Multisectoral stakeholder
groups wouldn’t be jobless: they could try to extend reporting beyond the legal
core.
This example shows how important multisectoral stakeholder networks can
be to raise awareness and the development of hard law. Let’s hope these new
regulations will make resources work for people.
Sabrina Stucki
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