EITI: Getting Burma rigged for extractive surge

EITI: Getting Burma rigged for extractive surge

Just weeks before open tender for 18 onshore petroleum blocks, Burma’s President Thein Sein announced the country’s intention to join the Extractive Industries Transparency Initiative (EITI). The December 2012 announcement fulfilled the first, easiest requirement for candidacy: government decree.

The EITI, a G8-endorsed protocol for revenue reporting, is overseen by a non-governmental secretariat based in Oslo, Norway, which assists the standard’s implementation and effectiveness in resource-rich developing countries. The protocol is designed to help emerging extractive sectors create better revenue transparency habits, the ideal result being the elimination or reduction of corruption and ensuing problems.

Implementation differs by country, but invariably requires the creation of a tripartite working group comprising civil society, governmental and private sector stakeholders. Next week Burma’s multi-stakeholder group will convene for the first time to establish a work-plan for the project’s initial phases.

At its best, the relatively young initiative could temper irresponsible partners and federal misuse of funds. It could also add legitimacy to a windfall of investments in places and economies that many think are unprepared for rapid change.

While the announcement was well received and highly publicised, the government and private sector don’t seem to be waiting for the EITI. Burma’s onshore blocks have already been awarded, and industry news site Platts reported Wednesday that another 30 offshore blocks will be granted within weeks. Once awards are announced and licences granted, several international energy companies, many of which have never before operated in the former pariah, can begin harvesting the country’s proven 283.2 billion-cubic-metre natural gas reserves and 50 million barrels of known crude, of which there is thought to be much more. Rare earth, gemstones, woods and water-driven energy are also among Burma’s many extractable assets, long untouched through decades of isolation.

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Many of those assets are, perhaps without coincidence, found in volatile regions prone to civil and ethnic conflicts, which continue despite progress towards a nationwide ceasefire. Conflicts are occurring, it seems, near major industrial zones. So are human rights abuses, a leading justification for sanctions, which have largely been removed over the past three years of Burma’s political makeover.

While the EITI could offer evidence towards political recommendations, civil society has argued that it has led to a dangerous and popular misconception.

“Some seem to believe that the EITI alone is enough to make extractive projects in Burma ethical or beneficial,” said Catherine Martin, Climate Change Advisor for Burma Environmental Working Group, an alliance of ethnic and environmental rights advocates working in exile. “EITI only covers revenue transparency. It does not address the social and environmental costs of extractive projects, or the need for the free, prior, and informed consent of affected communities before such projects begin.”

The EITI has a specific and important function; it doesn’t create policy and it can’t regulate. The initiative solely applies to the creation of a public document – an annual EITI report – that shows where money came from and where it went. Clare Short, former British MP and current Chairwoman of the EITI board, told DVB that the protocol is “designed to use transparency to drive reform and improve the management of Extractive Industries for the benefit of the people.”

What the project does is this: the EITI board maintains a set of status requirements for membership, which includes strict rules about how to achieve acceptable levels of fiscal transparency. The main requirement is annual publication of an EITI report, which details money paid to governments, by companies, for extractive projects, often including tax revenues, production volumes and social allocation of revenues. Governments disclose what they received for extractive projects, companies disclose what they’ve paid to governments, the figures are then reconciled by independent auditors.

Another core rule for membership is required civil society participation in decision-making about what kind of information must be made public, by whom and with regard to what industries. This is done by establishing the multi-stakeholder group (MSG), which Burma has just recently accomplished.

A given country may opt to make complete contract disclosure a hard and fast requirement for all extractive projects, as has been encouraged for Burma by EITI technical advisors. The MSG also decides which industries must report (Burma is currently committed to the inclusion of gas, oil and mining in its reporting, with other industries like hydropower and fisheries likely to be included later).

[pullquote]“Civil society plays a crucial role as an equal member of the tripartite MSG structure” – Emma Irwin, MEITI Technical Advisor[/pullquote]

The MSG will also decide when reporting starts, i.e., whether major extractive projects such as the Shwe pipelines and the Latpadaung copper mine will be obliged to report how much money was exchanged with the Burmese government before the reform process began.

“Civil society plays a crucial role as an equal member of the tripartite MSG structure,” said Emma Irwin, Technical Advisor to Myanmar EITI, “acting as a kind of monitor and providing a scrutinising eye – which ensures that the system is implemented in the best possible way for the benefit of the country and its people.”

In theory, the EITI process is uncontroversial. In practice, the question is still: Does Burma’s civil society have enough freedom to meaningfully participate in reform?

Wong Aung, one of the nine appointed members of Burma’s EITI civil society steering committee (CSSC), has been involved in the process from the start. As the Coordinator of Shwe Gas Movement, an exile organisation that campaigns for fairness in the gas and oil sector, particularly regarding a dual pipeline project that runs from the Arakan coast to Yunnan, China, he at first opposed the initiative, but has since taken up an active role.

“Optimistically,” he said, “this is a good process, but I’m very cautiously taking part. I still have some scepticism.”

Burma’s activists, many just returning to their homeland after decades of exile, are still testing the waters in what is currently an experimental realm for alternative political ideas, according to Matthew Smith, Executive Director of Bangkok-based advocacy body Fortify Rights.

“Despite significant obstacles,” said Smith, “civil society has been extremely well prepared for the process leading up to EITI candidacy and should be commended. They should maintain their well-informed engagement and keep pushing the envelope.”

Wong Aung said that Burma’s civil society is ready to take a place in politics, while aknowledging that it may prove extremely challenging. “Since there are a lot of problems related to foreign investment, land confiscation and labour issues, people are very much willing to know about how the EITI will be able to handle it. However, I don’t think we’ve yet heard enough answers,” he said.

MEITI and the MSG members are still working on it, and only time will tell what role the initiative will play in Burma’s extractive governance, which is currently among the world’s worst.  Just after a December 2013 visit to Burma to meet with President Thein Sein and potential MSG members, EITI Chairwoman Clare Short told DVB that, “I urged all parties to maintain an ambitious long-term EITI agenda, but also pointed out that implementation will not be easy.”

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