By IPS Correspondents
OSLO, Nov 20 2006 (IPS)

An international initiative to battle corruption in oil, gas and the mineral industries could relocate to Norway.

The Extractive Industries Transparency Initiative (EITI) has developed into a formidable alliance of countries, companies, international organisations and NGOs that endorse greater transparency in the murky financial world of oil, gas and mining.

EITI has been endorsed by 22 resource-rich countries in Africa, Asia, Latin America and Central Asia since its launch by British Prime Minister Tony Blair in 2002.

It aims to make payments from companies to resource-rich countries for taxes, extractive licences and signature bonuses more transparent. This requires greater openness both from companies and the countries.

Despite the vast revenues generated in countries well endowed with oil, gas and mineral resources, corruption often ensures that a few of the elite are enriched at the expense of most citizens. Many of the most resource-rich countries are also the poorest, with widespread poverty and conflict.

“In our view EITI is a necessary first step in order to improve governance in resource-rich countries’,” Mona Thowsen, Norwegian coordinator for the international Publish What You Pay coalition of 300 NGOs told IPS.

“Extractive industries have shown that where governance is good large revenues and economic growth can be generated while poverty is reduced. But where the government is weak these resources cause conflict, poverty and corruption – the so-called resource curse,” says Thowsen.

Countries such as Nigeria, Chad and Angola are rich in oil but score appallingly in rankings such as the UN Human Development Index of average life expectancy, education and wealth, and the NGO Transparency International’s listing of countries seen by their people as corrupt.

Norway, which began producing oil in 1971, is widely seen as the only significant example of an oil-rich country successfully harnessing profits for the greater good of the nation.

World Bank president Paul Wolfowitz opened the third international conference on EITI in Oslo Oct. 16-17.

At the conference Norway offered to host the EITI secretariat for the next three to five years, pledging to support its operation annually with a little more than 930,000 dollars per year – estimated to cover about half of annual expenses.

Germany has also offered to host the secretariat, but Norway has been endorsed by the Publish What You Pay coalition. EITI’s new Board headed by Peter Eigen, founder and former chairman of Transparency International, has established a consultative group that is due to decide the location of the secretariat on Dec. 7.

”The most important thing for Norway is that EITI is run efficiently with a strong and efficient secretariat that can support the demanding activities of EITI globally. It’s not crucial where the secretariat is, Norway has simply responded to encouragement by many stakeholders that have suggested that the secretariat would be well placed here,” Leiv Lunde, coordinator for Norway’s Oil for Development programme told IPS.

According to Lunde the benefits of placing the secretariat in Norway are seen as Norway’s long experience with oil assistance as well as the specific expertise and activities inherent in the Oil for Development programme which aids the oil sectors of 17 countries to reduce corruption and increase efficiency.

At the October EITI conference in Oslo, a report recommending the establishment of the new governing board with responsibility for developing EITI and directing strategy, advocacy and PR was launched by EITI’s advisory group.

The board, which will convene periodically, will be supported by the secretariat as well as reporting to a bi-annual EITI conference. The report underscores that primary responsibility for implementing EITI lies with the resource-rich countries involved.

According to another report the success of EITI faces a range of challenges, alleging that only about half of the 22 endorsing countries have taken any concrete action to implement the initiative.

The report, commissioned by EITI from the Publish What You Pay coalition and Revenue Watch Institute, says that only two of the countries (Nigeria and Azerbaijan) have followed through properly on the process, finally producing audited reports of company payments and government receipts.

Eight countries have not even taken the first step of appointing someone to lead the process. The report quotes an anonymous member of an advocacy coalition in Sierra Leone as saying: “The main problem is that the government has signed on but has not done anything. There is no work plan. There are no structures, and it is not even clear who is leading the process.”

Mona Thowsen of Publish What You Pay underscores the importance of including civil society in the process.

“When civil society knows what the government pays and receives, a very critical step towards holding decision makers accountable has been taken. This also benefits companies as corruption creates political instability that can deter investment,” she told IPS.

The report calls the efforts of Germany, Britain, Norway and the Netherlands to encourage implementation of EITI “instrumental”, but also points to the need for EITI funders to provide increased support to implementing governments and civil society.

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