Category Archives: Weekly Reflections

We Need a Fact Finding Mission to Myanmar

Debbie Prasad, MAAPPS // Feb 20, 2o15

My country report was on Myanmar, and as they are new to the EITI, I was able to gather a lot of information regarding their progress in becoming a candidate country. It seems that they are very excited about the EITI and are working hard towards greater transparency in the extractive industry.

Along with finding about out Myanmar’s resources, an important part of the report was to focus on sub-national reporting. In the case of Myanmar, there is a lot of talk of local reporting, but to date, there is no real articulated plan for such reporting.

What is confusing to me as a researcher, is the fact that there are training sessions being currently held regarding sub-national reporting, but I have not been able to find evidence of what type of sub-national reporting procedures are being delivered to trainees. In addition to this, what is a little concerning in terms of transparency is the fact that, although may have been a reconciler appointed, I have not been able to identify who the reconciler is for the national reports.

The intriguing thing about Myanmar’s participation in the EITI is that although they (on the surface) are complying with the rules of transparency by producing reports, indicating work plans, and holding training sessions- important details are missing in the reports. Names of reconcilers are missing, articulated plans for sub-national plans are missing, and interestingly enough, on official MEITI published materials, indications civil society displeasure resulting in boycotting the EITI, are missing.

In the course of communicating with members of civil society and members of the MEITI, I was given conflicting opinions of the EITI. While the MEITI member claimed that there were sub-national reporting training sessions planned for February/March of 2015, at the same time, a civil society member voiced that they would be boycotting the MEITI because of human rights abuses in the extractive industry.

Until now, I believed that one was able to find a wealth of information through literature research, but with this experience, I truly feel that field work is valuable and necessary. I think that a site visit to Myanmar would be extremely helpful in assessing what is actually happening on the ground. So I end with saying….road trip to Myanmar anyone???

 

The EITI Journey in Indonesia – Part 1: Resource Extraction in the Jokowi Era

Justin Kwan, MAAPPS // Feb 20, 2015

On October 15, 2014, Indonesia completed a landmark achievement and became the first country within ASEAN to become an EITI compliant country. A mere five days later another landmark achievement was made when President Jokowi was sworn into office, one of the first leaders to originate from neither a military or political elite background. As part of his platform, Jokowi promised tomaximize the benefits that natural resource extraction has for Indonesian citizens, hoping to reduce some of the negative aspects associated with the oil and mining sectors. While these are extremely important milestones in the country’s journey to openness and transparency, the process of reform however has not been nearly as simple.

Prior to its EITI compliant status, the country nearly risked being delisted as an EITI candidate country for its inability to resolve many problems in its reporting which included: “accounting standards, access [to] corporate tax information, or in some cases document[ing] financial transactions” (Tantri and Bria, 2014). In the country’s second report, “40 percent of reporting companies (more than 100) missed the [reporting] deadline, delaying the coal and mineral section of the report and again calling into question the level of commitment from government and stakeholders” (Ibid). However, in October 2013, the EITI Board had granted the country an extension to reach compliance after stating it had made “meaningful progress.”

In the year 2015, Indonesia has much to accomplish now that it has become an EITI compliant country. The Natural Resource Governance Institute has called for stricter mechanisms to ensure that Indonesia maintains its EITI standard. They, along with other critics have cited the need for more transparency in the mining sector, especially in the licence approval process as well as in the way national and subnational governments coordinate resource management.

Despite this, the country has made great strides in transparency and open communication, especially after the dictatorship era of President Suharto from 1967 to 1998. Accordingly, the country has made an important transformation from a nation, which used to limit the free flow of information into a new era of reform and openness. This means that “a large amount of information on how Indonesia is benefitting from, and managing its resources is now in the public domain” (Bria and Heller, 2014). Slowly but surely, improvements are being made.

Resource management is a serious problem in Indonesia, and the country has put its hopes into its newest President. Many believe that Jokowi’s pragmatic style of governance will bring about reform in Indonesia, by “bringing change to a stagnating industry and breath[ing] fresh life into stalled negotiations with foreign mining companies” (Warburton, 2014). His message is simple: Reduce corruption! Raise up the people! Repair the economy! Since taking office nearly four months ago, Jokowi’s government has implemented a “One Map Policy”, a central map of Indonesia, which will be used by government agencies across the country to help track duplicate licences, resolve land disputes and unify the local government systems. Although it is too soon to tell whether or not this policy will be effective, or whether it will be subverted by the same local authorities and businesses that are making subnational tracking more difficult, the clear willingness towards reform by Jokowi represents a positive direction for the country.

EITI’s Mongolian Case Study

Stephanie Zimmerling,  MASc Mining Engineering // Feb 20, 2015

The EITI has published an interesting read on Implementing EITI as the Subnational Level (https://eiti.org/document/implementing-eiti-subnational-level). The document is from 2011, and therefore may be somewhat outdated, however, includes the EITI’s ‘Rationale for Subnational Implementation’. The Rational highlights increased transparency and knowledge of revenues from the extractive industry at the local level. EITI anticipates that this increased knowledge will empower citizens to hold governments accountable and be knowledgeable to criticize decisions made by their local government. The report includes case studies of emerging countries reporting EITI at a subnational level. Included in the report are Ghana, Indonesia, Mongolia, Nigeria, the Democratic Republic of Congo (DRC), and Peru. As a first step of this year’s project, reports have been produced internally on Ghana, Indonesia, the DRC and Peru with the goal of ultimately informing subnational reporting in Mongolia. While we have a developed a strong understanding of the situations in our countries of choice, we still have yet to breach the hurdles facing Mongolia.

This report expands on the early efforts Mongolia has made with regards to subnational reporting, where companies have disclosed unilaterally direct subnational payments. The report expands upon Mongolia’s taxation system and highlights the dependence of the regional and local governments on the central government for revenue transfers.  The report provides additional details on the system in place for revenue distribution from the extractive industry. While some money is transferred from the central government, revenue collected from mining companies at a regional level is dominated by donations made by the extractive industry to local governments. There is currently no efficient reporting system to capture these donations and the EITI report has revealed this payment flow holds the most discrepancies.  Accounting and administering donations can be very complex as donations are typically made off-budget. In Mongolia, the central government discounts transfers made by mining companies to ensure equality among non-mining regions. As a result, the subnational government is discouraged from reporting these revenues and the money is therefore unaccounted for.

In 2008, 6 districts of Ulaanbaatar, 18 aimags (provinces) and 57 soums (districts) reported their company receipts. All three EITI reconciliation reports released to date (2011) reveal large discrepancies in data accounting. Company payments largely exceeded government receipts indicating that the government did not report all revenue collected from the mining industry. These discrepancies are predominantly the result of donations made regionally. This has been identified by the EITI as one of the main challenges with subnational reporting in Mongolia.

 

Sources:

Aguilar, J., Caspary, G., & Seiler, V. (2011). Implementing EITI at the Subnation Level.

Yemeni EITI Meta-data

Bérangère Maïa N. Parizeau, MAAPPS // Feb 17, 2015

To reflect on the potential sub-national reporting frameworks that could be recommended for EITI standards in Mongolia, my cohort and I began our work by researching EITI member countries and their sub-national reporting strategies. We looked at the socio-political context and the processes involved in the implementation of EITI standards in some of the current member countries. Each graduate student individually studied one EITI member country. I decided to look at Yemen, which has a special status as the first Middle Eastern country to become an EITI member. Yemen is a country rich in minerals, gas, and oil. Oil is predicted to be exhausted in 10 to 12 years. It is important for Yemeni’s positive economic development that oil be manage intelligently.

I found fascinating to learn that until the 1990s, the north of Yemen was not structured around governmental institutions. Rather, the numerous Yemeni tribes traded with each other. The network of tribes was interconnected thru countless friendships, and facilitated by the honouring of those friendships. This is called tribal law. The political structure was based on the network of tribal alliances with minimal use of violence. The unique tribal societal politico-economic structure is a good reminder that there are limitless ways in which society can choose to structure itself. Keeping this in mind, I want to underline the importance of creative problem solving when addressing major challenges, and fostering decision-making processes outside expected norms to find intelligent solutions.

Yemen is currently undergoing a security crisis, crippling violence, and the possibility of political collapse. The parliament was recently dismantled by the Houthis rebels. The UN Security Council is demanding Houthis rebels to cease their threats, and called for the reassignment of President Abdu Rabbu Mansour Hadi to his post. Instability in Yemen has caused the country to be suspended from EITI several times between 2011 and 2014 because of Yemen’s lack of timeliness in reporting. Corruption has reach critical levels in Yemen. In fact it is one of Yemen’s core challenges.

It has been eye opening to research the current state of extractive industry transparency and EITI initiatives in Yemen. Yemen is the poorest country in the Middle East. More than 40 percent of the population is food insecure living on less than $2 a day. Yemen is currently experiencing a water crisis. Yemen is the country with the most arable land in the arab world. In December 2011, Tawakkul Karman, a Yemeni politician, and senior member of the Al-Islah political party, mother of three, became the youngest-ever Nobel Peace Laureate for her work as a peace builder activist in Yemen. The country’s civil society is very active, as is exemplified by peace activist and Nobel Peace prize recipient Tawakkul Karman. The multi-stakeholder group overviewing the standardization reporting processes in Yemen is composed of parliamentary members. Yemen is one of the few countries which had parliamentarians involved in revenue reporting and EITI standards implementation processes.

The World Bank has facilitated a knowledge exchange program between Yemen and Kazakhstan. This is a fabulous way to build Yemen’s transparency and accountability capacity in the extractive sectors. The pairing of two countries to build knowledge can be a great tool for knowledge transfer if it is exercised properly. In my opinion, this kind of knowledge transfer could be used more. It is a great way to develop ties and friendships between countries as well. In Yemen, the emerging role of civil society, and Civil Society Organizations (CSOs), are becoming more and more engaged with the various stakeholders and working towards building consensus. Although, too much of a narrow focus on consensus can detract from creative problem solving ideas.

Lessons Learned in Peru

Stephanie Zimmerling, MASc Mining Engineering // Feb 16,  2015

I have spent the past few weeks understanding and reporting on EITI in Peru. While familiar with the country’s dominance in the extractive industry, primarily in copper and gold, I was not familiarly with the decentralized nature of revenue distribution. Peru’s extractive industry revenue framework is built around the ‘canon minero’ and the distribution of mining royalties. These systems emphasize the decentralization in Peru and has put an increasing demand on regional governments. Since joining the EITI in 2004, civil society has criticized the reporting procedure for being irrelevant as it did not discuss wealth distribution at a regional level. Peru has already engaged in multiple sub-national reporting pilot projects.

Prior to the involvement of EITI, the International Finance Corporation (IFC) and the Canadian International Development Agency (CIDA) launched the MIM Peru Project (Improving Municipal Invest). The aim of the project is to address some of the issues present at a local level with regards to the canon fund allocation and to promote greater social accountability. The projects focuses on raising awareness about the importance of investments made with the canon funds and to encourage the expression of public opinion. Each of the projects work in collaboration with civil society organizations. The MIM project provided the information required by the organizations to enable the undertaking of a systematic monitoring of royalty transfers and municipal investment. The involvement of civil society organizations also allowed for more effective dissemination of information to citizens with the intent of promoting open dialogue between government authorities and the public concerning royalty investment. The projects have been successful and behavioural changes are present among communities.

Peru has also been at the forefront of EITI sub-national reporting. The Cajamarca region of Peru has been participating in a sub-national pilot project. The EITI has reflected upon the successes and struggles on these pilot projects as a means of informing the transition to sub-national reporting. Although subnational reporting makes sense in a decentralized nation like Peru, the ease of implementation may be significantly more difficult in centralized countries. The EITI has acknowledged that there are several constraints to overcome to implement subnational EITI successfully. Challenges include constraints of local capacity, legal uncertainty, access to funding, logistics and lack of infrastructure, political issues such as lack of political support, and a lack of engagement with local and civil society organizations. The approaches used by countries will vary in nature and need to be flexible and adaptive.