July 16, 2004
Re: The Extractive Industries Review and revenue transparency
Dear Mr. Melkert ,
We are writing to comment on an important element of the World Bank management's response to the Extractive Industries Review (EIR). The EIR recommends various important and timely opportunities for the World Bank to fundamentally improve its policies and practices. These suggestions are strongly interdependent and failure to implement all will undermine the effect of any measures taken. However, Management Response currently disregards many of the recommendations. With this letter, we encourage the World Bank Group to make concrete and specific commitments to implement all recommendations of the EIR.
While we recognize that the issue of transparency is meaningless without firm steps in areas like governance, human rights and free, prior, informed consent, we are encouraged by the Bank's recognition that revenue transparency in the oil, gas and mining industries is "essential for better governance". However, we are concerned that the Bank may be missing an opportunity to address this issue in a systematic and effective way as Management seems unwilling to commit to clear transparency requirements from its clients. Revenue transparency may be the recommendation that is most easy to adopt in an effective way. Failure to do so would constitute a serious sign of bad faith to civil society around the world.
The EIR urged the Bank to "vigorously promote" transparency of oil, gas and mining revenues at country and company level. To do this, extractive companies need to publish what they pay to governments, and governments publish what they earn, so citizens can verify the data and ensure that revenues are used accountably to alleviate poverty and promote sustainable development.
In response to the EIR, the Bank management is proposing that investment projects in the oil, gas and mining industries which receive Bank financial support (i.e. from IFC and MIGA) will be obliged to disclose their revenue payments to governments. Although details need to be clarified, this is a welcome proposal which we urge you to support.
However, citizens of Bank borrower countries cannot exercise oversight over the management of revenues from oil, gas and mining, ensuring that they are accountably used to promote development and reduce poverty, unless they have full information on all revenue flows. This means transparency of significant payments to the state by all extractive projects, not just those financed by IFC and MIGA, and transparency in the receipt of such revenues by governments.
The Bank should take a comprehensive approach by requiring revenue transparency from all resource-rich borrower countries in return for all its non-humanitarian funding, from the IBRD and IDA as well as IFC and MIGA. But despite recognizing the centrality of transparency to better governance at the country level, the Bank is proposing only to "encourage" transparency on a voluntary basis, in a small number of countries, with a review after three years.
This piecemeal and voluntary approach may work in countries where there is political will, or where pressure for transparency from civil society and the international community has been effective. But in countries where political will does not exist or where local civil society cannot work freely, voluntary engagement is unlikely to lead to genuine transparency.
In such cases, would the Bank continue to lend even if a government declined to be transparent about its own revenues? To do so would be to seriously undermine the Bank's own credibility, and worse, its own aims of promoting development and reducing poverty.
Fortunately, the Bank can resolve this problem by requiring revenue transparency as a condition of all its non-humanitarian loans and technical assistance, not just to IFC or MIGA project partners but to all governments of resource-rich countries which receive funding from the Bank.
This would mean published audits of the receipt and spending of extractive revenues by borrower governments and implementation by these governments of the Extractive Industries Transparency Initiative or comparable programme of disclosure, as well as publication of project documents of public interest, such as production-sharing agreements, within a specific timeframe.
The Country Assistance Strategy for each resource-rich borrower country would need to explain risks and mitigation measures and spell out what the Bank will do to help a government strengthen its capacity for accountable revenue management. The Bank also needs to ensure genuine consultation for civil society in designing and implementing all these steps.
We urge you as an Executive Director, to call on the Bank to require transparency of revenue flows from oil, gas and mining in all resource-rich client countries, covering companies that pay revenues and governments that receive them. In order for this to be a meaningful step, we would like to repeat our strong call for the World Bank Group to adopt concrete measures to implement all EIR recommendations. Only then may the World Bank be better able to serve the world's poor.
Yours sincerely,
Micha Hollestelle
Co-ordinator PWYP NL
Co-endorsers:
Mike Aaronson
Director General, Save the Children UK
Anton Artemyev
Coordinator, Kazakhstan Revenue Watch
Ernest Tay Awoosah
ISODEC (Ghana)
Pamela Baldwin
World Learning for International Development (US)
Manish Bapna
Executive Director, Bank Information Center
Jean Baptiste Talla
Coordinator - Justice and Peace Commission, Association des Conférences Episcopales de la Région de l'Afrique Centrale
Baudouin Hamuli Kabarhura
President, CENADEP (Dem. Rep. of Congo)
Chris Bain
Director, CAFOD (UK)
Caoimhe de Barra
Policy and Advocacy Coordinator, Trocaire (Ireland)
Techa Beaumont
Mineral Policy Institute (Australia)
Christian Mounzeo
Rencontre pour la Paix et les Droits de l'Homme (RPDH) and on behalf of Coalition Congolaise Publiez Ce Que Vous Payez (Congo-Brazzaville)
Diane Chesla
AfricaFiles (Canada)
Johan Cottenie
11.11.11 Coalition of the Flemish North-South movement
Jose De Echave
Accion Solidaria para el Desarrollo (Peru)
Christine Eberlein
Berne Declaration (Switzerland)
Heidi Feldt
World Economy, Ecology and Development (Germany)
Arvind Ganesan
Director - Business and Human Rights, Human Rights Watch (United States)
Farid Gardashbayov
Public Finance Monitoring Center (Azerbaijan)
Ian Gary
Strategic Issues Advisor - Africa, Catholic Relief Services (United States)
Ikubaje John Gbodi
Programme Officer, Centre for Democracy and Development (Nigeria)
Emmy Hafild
Executive Director, Transparency International - Indonesia
Alanna Hartzok
Earth Rights Institute (United States)
Micha Hollestelle
Policy Adviser - Peace & Conflict, Pax Christi Netherlands
Kirsten Hund
National Coordinator - Fatal Transactions, NiZA (The Netherlands)
Raja Jarrah, Programme Director, CARE International UK
François Jung-Rozenfarb
Head of Development, CARE International -France
Martin Kalungu-Banda
Senior Private Sector Policy Adviser, Oxfam Great Britain
Tunji Lardner
Chief Executive Officer, West African NGO Network
Grahame J. Leonard
CEO, Transparency International Australia
Pavel Lobachev
Coordinator, "Oil Revenues - Under Public Oversight!" Coalition (Kazakhstan)
Brice Makosso
La Commission Justice et Paix de Pointe-Noire (Congo-Brazzaville)
Gilbert Maoundonodji
Coordinator, Groupe de Recherches Alternatives et de Monitoring du Projet Petrole Tchad-Cameroun (Chad)
Rafael Marques
Country Director, Open Society Foundation - Angola
Geraldine McDonald
Peace and Conflict Officer, CIDSE
David Murray
Deputy Chairman, Transparency International UK
Henry Parham
Coordinator, Publish What You Pay
Jim Redden
Policy Director, Australian Council for International Development
Michel Roy
Director of International Advocacy, Secours Catholique / CARITAS France and on behalf of the French NGO platform "Publiez ce que vous payez"
Rosa Sala
Programa Regional Petróleo - Africa del Oeste, Intermon Oxfam (Spain)
Payal Sampat
International Campaign Director, Earthworks (United States)
Ned Seligman
Director, STeP UP (Sao Tome e Principe)
Lee Tan
Coordinator - Asia-Pacific Unit,
Australian Conservation Foundation
Yuki Tanabe
Japan Center for a Sustainable Environment and Society (Japan)
Bernard Taylor
Executive Director, Partnership Africa Canada
Simon Taylor
Director, Global Witness
Svetlana Tsalik
Director of Revenue Watch, Open Society Institute
David Ugolor
President, African Network for Environmental and Economic Justice and National Coordinator, Publish What You Pay campaign Nigeria on behalf of the Nigerian 46-member NGO coalition
François-Xavier Verchave
President, Survie (France)
David Waskow
Director - International Programs, Friends of the Earth (United States)
Publish what you Pay
Extractive Industries Review (EIR)
EIR Final Report
