Nathaniel
The BBC reports on 64 British mercenaries who allegedly plotted to overthrow the oil-rich government of dirt-poor Guinea. “In 2004 [Guinea] had the world's fastest-growing economy. It might not be reflected in the life of the average citizen -- but it was enough to attract the attention of people with plans for a coup,” the BBC reports. The takeover failed, but democracy in Guinea is as fragile as ever.
After a lunge towards accountability inspired by public uprisings over the past two years, Guinea appears to be losing ground in its battle for a more democratic government. According to a new report by the International Crisis Group (ICG), there are few signs that life in Guinea is improving for the average citizen despite the discovery of large oil reserves -- a find that has attracted large scale international investment. The few concrete results of President Conte's appeasement tactics following the 2007 union strikes are quietly being revoked. Most prominently and recently, in May 2008, Prime Minister Lansana Kouyate was dismissed and replaced by Tidiane Souare -- a close ally of President Lansana Conte who is unlikely to help Guineans benefit more from Guinea’s economic success. Without clear divisions between the Presidential and Prime Minister positions, democratic reform and budget transparency seems unlikely. Corruption, on the other hand, is certainly a possibility. Meanwhile, ICG indicates the credibility of the much-awaited December 2008 legislative elections is already being undermined.
The Prime Minister position of Guinea is no longer a fulcrum of popular will as it was once hoped to be. Once there is no one to keep Conte accountable to the public, Guinea seems headed firmly back toward dictatorship. The divide between resource wealth and common poverty is profound, and highly visible. Without efforts to distribute this wealth, the people of Guinea may again turn to striking and there is a real possibility of violence.
Intervention points are few, but aid agencies may play a role. The International Crisis Group recommends, “Direct assistance to the government should be made conditional on the organization of legislative elections in December 2008 and the provision of financial and logistic support and security measures necessary to launch the independent commission of inquiry into the events of June 2006 and January-February 2007.”
-- by Lacy Clark --
-- image by Jon & Mel Kots (CC) --
Monday, June 30, 2008
Guinea: Oil Wealth Draws Mercenaries & Misery
Friday, June 27, 2008
"Publish What You Pay" Goes to Washington
Oil companies: Against corruption, for transparency. At least, that was the testimony as the U.S. Congress debated a bill that would require oil, gas & mining companies to disclose their dealings with foreign governments.
I went to the hearing at the House Financial Services Committee related to the new Bill, H.R. 6066, requiring private oil, gas and mining companies to publish their payments to governments. As expected, all witnesses and members of the committee who attended support the bill, except one of the members who asked a couple of good questions concerning the competitiveness of American companies obliged to disclose vs. those (mainly Chinese) companies that are not.
In my opinion, the best part of the hearing was the exchange between the members of the committee and Alan Detheridge, former Vice President of Shell (Dutch). He says that transparency is going to help companies and the industry, which are often accused of exploiting poor countries when in reality, they are transferring a lot of money to governments. Especially in countries with corrupt dictatorships, the companies would be better off publishing the amount of money they are transferring to the governments. He gave some examples in Nigeria or Angola when the governments did not want Shell to publish anything and threaten the companies who were pursuing transparency to kick them out.
However, there is still one important question pending (not well answered by this witness): if transparency is going to help companies, why they don’t want to disclose their payments? Few members pointed out that a company without a disclosure obligation would be at a disadvantage against those who don’t have to do so. On the other hand, a witness from Revenue Watch gave an example of a Swedish company that had to disclose information in Angola and even though the Angolan government did not want them to do so, the Swedish government required them to do it. That didn’t affect their business.
Another interesting discussion was related to sanctions. The bill does not include any civil or criminal penalty. A member of the committee insisted in the need to have sanction mechanisms otherwise nobody will comply with the law. The same witness mentioned above said that reputation is important for companies and he thinks that at least American and European companies will comply with the law.
-- by Denise Ledgard --
Friday, February 8, 2008
The Resource Curse Revisited
Susan Aaronson examines prospects for trade and accountable government in light of a new initiative to increase transparency around extractive resources. Might the Resource Curse be exorcised?
The promise of free trade to elevate living standards in poor countries has driven international development policy since WWII. Countries rich in oil, gas or minerals sell them to rich countries, and the money goes to desperately needed infrastructure, like safe drinking water. If only it had worked out that way. Instead, the concentration of wealth in oil rich states has often produced profoundly undemocratic nations, a phenomenon known as the Resource Curse.
But is this inevitable? Nearly 200 years after the theory of comparative advantage called for realigning economies around trade, the background institutions assumed to exist by the theory, such as basic transparency and reliable contracts, are -- perhaps -- starting to arrive.
Dr. Susan Aaronson (a Global Integrity Report: 2006 contributor) examines a new initiative to increase transparency in states dependent on extractive resources. Aaronson writes: In 2003, the British government proposed a new strategy – the Extractive Industry Transparency Initiative (EITI), to address these problems. This initiative created a voluntary system to which governments rich with oil or minerals agree to adhere. These states entrust an independent administrator to compare extractive sales and revenues as declared by oil companies and recorded by governments. In addition, “all companies operating in the relevant sectors in countries implementing EITI have to disclose material payments to the government” and then make this information public. Such reporting reduces the ability of policymakers to demand bribes of companies, while increasing the ability of citizens to monitor government.
The analysis: Natural Resources, Often a Curse, Can Also Serve the Public
UPDATE: Susan has kindly provided Commons readers with the source data (with academic citations) for the article cited above.
Aaronson, "Is EITI the Future of CSR because it Aligns the Public and the Business Interest?"(MS Word, 300kb)
Aaronson and Winston, "Extractive Industry Indicators" (MS Powerpoint 1.5Mb)
Thursday, January 31, 2008
Bill Clinton goes to Kazakhstan and everyone wins
A blockbuster story from the New York Times by Jo Becker and Don Van Natta Jr. It's lengthy, so I'll hit the highlights here.
A Canadian mining mogul, Frank Giustra, flies to Kazakhstan and meets with de facto president-for-life Nursultan A. Nazarbayev. Bill Clinton tags along. The three have dinner together, and shortly afterwards, everyone wins.
Two days later, Giustra secures a lucrative mining deal to extract uranium from Kazakhstan. Nazabayev secures the endorsement of Bill Clinton, receiving praise for “opening up the social and political life of your country.” (Which for the record, our data shows has not occurred). And a few months later, Bill Clinton's foundation receieves US$31.3 million from Giustra. A nice little thank you.
Clinton says it's all coincidental and they never discussed mining. When Giustra is pressed by the Times, he says he “may well have mentioned my general interest in the Kazakhstan mining business" to President Nazabayev on the night they met.
New York Times has the full story.