EITI in Mongolia at the Tipping Point

The EITI (Extractive Industries Transparency Initiative) is no longer a stranger in the Mongolian resource governance discourses as witnessed at the First National Forum and 5th National Corporate Social Responsibility Forum, both organized in November, 2015.  The debate now focuses on how legalize this international initiative (a norm) and how to make it simpler, useful for media and general public.

A tiny office, funded by the EITI, has made substantial contribution to localizing the initiative with enthusiastic support from the Ministry of Mining and more importantly, a numerous mining-focused civil society organizations along their funders like the Open Society Forum and Natural Resource Governance Institute.

The national council, chaired by the Prime Minister, was established, the memorandum of understanding with government, private, and civil society organizations was concluded, and the standard operating procedures for the national council, local council, and secretariat were developed.  The EITI is now reflected in the State Policy in Mineral Resource Sector until 2025 and other executive directives. The secretariat of 3 staff coordinates with the Prime Minister’s Office, government agencies, provincial authorities, mining companies, and about 30 non-governmental organizations (i.e., Publish What You Pay network, Civil Council of Natural Environment).  The other important task of the EITI is the data collected and validated by the independent auditor for discrepancies from 2006.  By 2015, about 1800 companies provided their data for the public usage.  From this perspective, it might be safe to conclude that the EITI norm for transparency has arrived at the tipping point to become a local norm.  However, there are numerous challenges remain for passing the tipping point.

First, the EITI lacked support from the parliament and senior bureaucrats in the government. Despite the endorsement letter and ceremonial type of appearing of Prime Minister’s senior advisor, who are the secretary of the National Council and Mining Minister, the EITI has lacked a strong political will and support from the parliament, especially those members in favor of responsible, transparent mining.  Even though the bill on extractive industry transparency submitted to the parliament, the working group has not even submitted to the respective standing committee.  The main debate at the working is whether to keep EITI as a voluntary standard or mandatory one.  Given the political upheaval and upcoming elections, it is unlikely that MPs devote their efforts and resource to the EITI bill.

Second challenge is what would happen if the international funding from the World Bank, Open Society Forum, and limited funds from the government stops.  This is the most critical challenge for localizing the EITI.  Unless the government somehow finds ways to fund the EITI and its secretariat (or some other forms), the EITI would lose the momentum and remain only on the paper.

Despite these pessimistic observations, some companies, especially Western or Western-oriented Mongolian companies look at the EITI as a tool to increase their credibility in terms of responsible, transparent mining companies.  In the similar line, the Ministry of Mining and some government officials also understand its benefits of positive signalling to foreign investors and domestic audiences.  Once the Ministry of Mining and mining associations endorses this initiative, Chinese, Russian-Mongolian joint, and Mongolian state-owned enterprises submit their reports regularly, if not enthusiastically.  And, importantly, civil society actors and interested public now begin to ask how to use this new tool effectively.  Of course, this puzzle is not only occurring in Mongolia, but in all states joined in the international initiative.



About mendee

Jargalsaikhan Mendee is a Deputy Director of the Institute for Defense Studies of Mongolia. He holds a PhD in Political Science from the University of British Columbia, and MAs in International Relations from the US Naval Postgraduate School and in Asia-Pacific Policy Studies from the Institute of Asian Research of the University of British Columbia.
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