Africa Program global witness

Honorary co-hosts: The Honorable Senator U.S. ENERGY SECURITY and The Honorable Senator Russ Feingold AND OIL REVENUE Presentations made at a conference held at the Woodrow Wilson International Center for Scholars on March 21, 2007 TRANSPARENCY

CONTENTS

1 1 FOREWORD 6 Karin Lissakers, Director Howard Wolpe, Director, Africa Program Revenue Watch Institute Woodrow Wilson International 9 Nick Welch, Manager, International Relations Center for Scholars Shell Oil Company Simon Taylor, Director & Co-founder Global Witness 12 PANEL II: POLICY OPTIONS ON OIL REVENUE TRANSPARENCY 2 AGENDA CONTENTS 13 Bennett Freeman, Senior Vice President for 3 EVENT SUMMARY Social Research and Policy, Calvert Asset 4 ENERGY AND TRANSPARENCY: A VIEW Management FROM CONGRESS STATEMENT ON BEHALF 14 Dr. Stephen Krasner, Director of Policy OF SENATOR RICHARD LUGAR Planning, U.S. Department of State Neil Brown, Special Advisor Office of U.S. Senator Richard Lugar 15 Simon Taylor, Director, Global Witness

5 PANEL I: OIL REVENUE TRANSPARENCY 17 PRESENTER BIOGRAPHIES AND ITS LINK TO ENERGY SECURITY

5 Charles McPherson, Technical Assistance Advisor, Fiscal Affairs Department International Monetary Fund FOREWORD

* This report is comprised of speeches taken verbatim from panelists’ presentations.

FOREWORD

This is a report on a half-day conference, co-sponsored by the Wilson Center and Global Witness, and with the support of the Offices of Senator Richard Lugar and Senator Russell Feingold, on the implications of poor gov- ernance and a lack of transparency in global energy transactions both for the economic development and politi- cal stability of oil producing countries, and for long-term US energy security. The conference brought together a very diverse set of experts from diverse sectors—from the oil industry, from the financial sector, from investors, from civil society, and from the US government. The resulting exchange was exceptionally rich and productive, both in generating an in-depth understanding of the dimensions of the related issues of energy transaction trans- parency and energy security, and in suggesting ways and means of strengthening energy transparency regimes and in building more constructive relationships between energy suppliers and energy consumers. We believe the con- ference deliberations were worthy of dissemination to a broader public audience—hence, this publication. We of course would welcome any questions or reactions this document might stimulate.

Howard Wolpe Simon Taylor Director, Africa Program Director & Co-founder WWICS Global Witness

Report Author: Jayne Thomisee Editing: Steve McDonald and Doreen Chi Cover Photograph: Tom Stoddart Interior Photographs: Heidi Fancher PANEL I: OIL REVENUE TRANSPARENCY AND ITS LINK TO ENERGY SECURITY 2 (R-IN) , Adjunct Senior Fellow for Africa , Advisor to Deputy Director of , Fiscal Affairs Department, IMF (D-WI) , Senior Vice President for Social Research , Senior Vice , Director of Policy Planning, U.S. Senators Richard Lugar Richard Senators , Director, Revenue Watch Institute Revenue Watch , Director, : , Director, Africa Program and Project on , Director, , Director, Global Witness , Director, , Manager of International Relations, Government Princeton N. Lyman Robert G. Houdek : : Russ Feingold Feingold Russ Stephen Krasner Simon Taylor RECEPTION Policy Studies, Council on Foreign Relations Policy Studies, Council on Foreign Karin Lissakers Nick Welch Shell Corp. II: POLICY OPTIONS ON OIL REVENUE PANEL TRANSPARENCY Moderator: Panelists Bennett Freeman WELCOME Howard Wolpe AND ITS LINK I: REVENUE TRANSPARENCY PANEL TO ENERGY SECURITY Moderator: Panelists Charles McPherson Department of State and Policy, Calvert Group Calvert and Policy, National Intelligence for Analysis, Office of the Director of National Intelligence for Analysis, Office National Intelligence Leadership and Building State Capacity and Honorary co-hosts Honorary 21, 2007, March Wednesday, Auditorium Center 6th Floor Wilson “ TRANSPARENCY” SECURITY AND OIL REVENUE “U.S. ENERGY “ 5:15 – 6:00 P.M. 4:00 – 5:15 P.M. 2:45 – 4:00 P.M. 2:30 – 2:45 P.M. AGENDA EVENT SUMMARY 3 A EVENT SUMMARY • • ITS LINKTOENERGYSECURITY PANEL I:REVENUETRANSPARENCY AND sure would,intheend,becounter-productive. disclo- with atleastonepanelistarguingthatmandatory the EITI. There wasnoconsensusonthelatterproposal, disclosure mechanismsthatwouldreinforcemandatory agenda todevelop additional,butequallyimportant, callingforabroader policy (EITI), withsomeexperts inspired Extractive Industries Transparency Initiative andstrengthening ofsupporting theBritish-importance oil revenue transparency. Allpanelistsemphasized the considered alternative policy optionsforstrengthening parency, andtransparency ofconcessions. et transparency, contracttransparency, trans- reserves transparency inthebroadest terms,toencompassbudg- tion. Panelists ofconceiving alsonotedtheimportance was seenby allasacriticalfirststepincombatingcorrup- countries.Revenuerity inoil-importing transparency national instabilityinoil-richnationsandenergyinsecu- parency inenergytransactionscancontributetoboth parency. Allpanelistsfocusedonhow alackoftrans- links between U.S.energysecurityandoilrevenue trans- non-profit, private andfinancialsectorsdiscussingthe policy debate. The firstpanelfeatured speakersfrom the energy securityasacentralelementoftheU.S.foreign presentedopportunities by thegrowing of importance ed intoenergysecuritypolicy. andhumanrightsagenda aswell asintegrat- oil. Thus, transparency ofabroader U.S. shouldbepart foundation forstableandsecure access toandsupplyof Governments accountabletotheirown citizens are the developed nations. consumers inoil-importing zens ofresource-rich developing countriesaswell as countries.Lackoftransparency citi- importing hurts countriesanddependableaccessforoil- exporting governance iscriticaltolong-termstabilityforoil- from fragilestatesisjeopardizing supplysecurity. Good The increased andgrowing dependencyonoilsupplies A secondpanelofnon-profit andgovernment experts diverse set ofpanelistsaddressed thechallengesand ON OILREVENUETRANSPARENCY PANEL II:POLICYOPTIONS • • • • • mechanisms. bankdisclosure andconsidernew fueling corruption that policymakerstakeaccountoftherole ofbanksin ing ofcivilsocietycapacity. Additionally, itwasurged transactions through increased fundingforthebuild- including greater formonitoringofenergy support policiesthataddressto pushfornew current gaps, According tosomepanelists, theUSGmustcontinue Asian players. prices, highdemand,andcompetitionwithnew leverage intimesofhigh were important particularly China andothercountriesinEITI.U.S.pressure and diplomatic pressure mustbedeployed toengage New incentives mustbeidentifiedandhigh-level governments. for companiestopublishwhattheypayindividual disclosure legislation for theUSGtopassmandatory achieve revenue transparency. These panelistscalled mechanismsareadditional regulatory neededto nent by somepanelistswhileothersthoughtthat EITI’s nature wasseenasacritical compo- voluntary become fullycompliantby 2008. of engagedcountries,andensure thatpilotcountries engage more countries,strengthen thecommitments funding,andbilateralassistancetoEITI support, stressed thattheU.S.shouldincrease itsdiplomatic EITI.However,actively supporting somepanelists It wasnotedthattheU.S.Government (USG) is other dimensions. transparencystart, mustbebroadened toinclude Some panelistsfeltthatwhilethismaybeagood information iscriticalforcitizen empowerment. revenue transparency, onereason beingthataccessto andholdings.EITIcurrentlyand reserves focuseson transparency ofrevenues, expenditures, contracts, nance. Transparency hasmanydimensions,including Transparency isakeycornerstoneofgoodgover- 4 ENERGY TRANSPARENCY: A VIEW FROM CONGRESS The that traditionally have not worked that traditionally have That is why this morning the Senator Senator is working very hard with the Secretary of Secretary with the very is working hard Senator banks for and multilateral development State leg- Last year initiatives. transparency strengthened on this topic Lugar Senator by islation authored need to other institutions we are There was passed. support, such as EITI. coalitions. joined with the Development Minister of Norway, Minister joined with the Development to launch the Lugar-Solheim Solheim, Erik a have We ideals. our shared to promote Initiative need to lot of parts in the system that we working bring together to push this issue up much higher maximum impact will have We on the agenda. cooperation, and integration with our through policy agendas. wider foreign together. Development constituencies interested in constituencies interested Development together. interest overlapping a real issues have transparency in the with traditionally domestic constituencies business entre- national security, agriculture, energy, areas. and environmental preneurship, er constituencies • A second aspect that is missing is bringing togeth- A second aspect that is missing is bringing • institutions. need to strengthen we Third, • need to build international will andwe Finally, • , , Special Advisor, Office of U.S. Senator Lugar Office of , Special Advisor, There is now growing awareness that awareness growing is now There demand is surging and supply is just barely , enator Lugar is heavily engaged on transparency is heavily enator Lugar attention. energy is not just about gas prices, it is a national energy is not just about gas prices, it is should be an Transparency security problem. important Senator piece of that conversation. and has held to raise awareness, is working Lugar legislation to as introduced many hearings as well energy security. address the extent of it, and how it touches on different the extent of it, and how issues and developmental environmental security, is Lugar sometimes disconnected. Senator that are leading that effort his colleagues in Congress, with Wilson Woodrow and organizations like the valuable incredibly are Witness Center and Global to that effort. keeping up. If there is a terrorist attack or an insur- attack or an is a terrorist there If keeping up. dramatic effects on the price of oil, it can have gency, in dramatic effects on politics which in turn can have is changing is the Another thing that Washington. of is a rising level There politicization of oil supplies. and investment production over control government for political decisions and the blatant use of supplies that can lead to con- ends, if not all out aggression seeing geo-politics are we The effect is that flict. humanitarian ideals are Our change dramatically. agenda is weakened. and our development slowed markets ENERGY AND TRANSPARENCY: AND TRANSPARENCY: ENERGY FROM CONGRESS A VIEW Neil Brown • the problem The first is to recognize opportunity OPPORTUNITIES FOR PROGRESS OPPORTUNITIES options to make this unique several are There moment an opportunity rather than a risk. •political is a focus of widespread Energynow ENERGY AND POLITICS ENERGY AND POLITICS geopolitics, and poses a is shifting global Energy number of risks: • has been a fundamental change in global oil There S and other energy security issues, and this discussion is and other energy security taking place at a crucial dis- moment for continued action. cussion and renewed PANEL I: OIL REVENUE TRANSPARENCY AND ITS LINK TO ENERGY SECURITY 5 Charles McPherson, Technical Assistance by governance and human development indicators Advisor, Fiscal Affairs Department, prepared by the World Bank and others. Quite sim- International Monetary Fund ply, the sought-after stability and sustainable devel- opment have not materialized. I have been asked to speak to the role of International Financial Institutions (IFIs) in promoting transparen- LINKAGES: ENERGY SECURITY cy and our perception of the linkages between trans- AND TRANSPARENCY parency and energy security. I will begin with a bit of Successfully addressing the so-called “resource curse” context, then identify some critical linkages, summa- depends fundamentally on good governance. Good rize the expected benefits of transparency and the chal- governance has several dimensions. It includes clear and lenges to achieving transparency, and close briefly with stable laws, high levels of government capacity, fiscal the role of the IFIs in addressing these challenges.. monetary and budgetary discipline, open dialogue between government and society, a competitive private CONTEXT: GROWING DEPENDENCY sector, and low levels of corruption. One of the corner- ARENCY AND ITS LINK TO ENERGY SECURITY JEOPARDIZING ENERGY SECURITY stones of good governance is transparency. Like gover- Developing countries and economies in transition nance itself, transparency has many dimensions, among hold 94% of the world’s reserves and account for them: transparency of revenues, transparency of expen- 88% of world exports of oil. Similar numbers apply diture, of policies, laws and regulations, and adminis- to natural gas. Dependable access to these oil and gas tration. This broad concept of transparency is needed supplies is critical to the energy, and indeed the eco- to effectively tackle the resource curse and ultimately nomic security of major oil and gas importing coun- the threat it poses to energy security. OIL REVENUE TRANSP tries, the U.S. foremost among them. Dependable access, in turn, is inextricably linked with the stabil- BENEFITS OF TRANSPARENCY ANEL I:

P ity of exporting countries and their progress on paths Transparency brings a number of benefits. First, toward sustainable development. Unfortunately, transparency encourages inclusion, bringing in stake- progress has proven elusive and many oil-rich devel- holders by providing information and fostering dem- oping countries have records of serious economic ocratic debate. Second, it increases accountability underperformance and social and political unrest. and reduces the risk of waste and corruption. Third, Further, evidence suggests that the presence of oil it enhances access to loan and equity finance. Lenders increases the likelihood of violent conflict. More and investors look to a country’s record in governance often than not, one finds these countries clustered in and transparency before committing large sums. the bottom third of the various rankings of countries Fourth, transparency improves macro-economic management. All of these benefits can be expected to contribute to the goals of greater stability and sus- tainable development.

CHALLENGES TO ACHIEVING TRANSPARENCY The challenges to achieving transparency are consid- erable. They include: • Vested interests; Vested interests opposed to gover- nance reform and transparency are very powerful and well financed. Rooting out corruption and installing transparency in countries where these conditions exist is exceptionally difficult, even dangerous. PANEL I: OIL REVENUE TRANSPARENCY AND ITS LINK TO ENERGY SECURITY 6 , Director Over the past five or six years, the benefits and or six years, the past five Over ne striking feature of the Resource Curse is that Curse of the Resource ne striking feature some of the wealthiest countries in terms of natural some of the wealthiest in terms of poorest among the world’s are resources for the majority of quality of life and living standard Karin Lissakers O get this right if we are going to be of help in turning going are get this right if we The Extractive performancearound in these countries. a Bank, World the by conducted Review Industries policies and practices in the of all its review thorough The Review industryextractive sectors, was instructive. focus on policies and programs Bank’s the increased and management revenue supporting good governance, as a result rich countries. Also in resource transparency Cooperation, Finance the International of the Review, favor- policies sector arm, introduced private the Bank’s Programs at the company level. able to transparency an emphasis on reflect and policies at the IMF all now sup- the IMF actively and Both the Bank transparency. Transparency Industries port the global Extractive administration and Bank World The (EITI). Initiative has Fund Trust management of the EITI Multi-Donor been an important of support source to countries par- has now Fund Trust The ticipating in the Initiative. for technical some $12 million in committed funds comple- engagements are These institutional assistance. and stakehold- a range of bilateral programs mented by er dialogues with the industryand civil society audi- partnership. topics in transparency ences to address reform in introducing of transparency the power for The drive become widely appreciated. have The traction. has real now transparency increased not going to go risks to energy supply security are by can expect them to be reduced we however away, and their part- The IFIs the pursuit of transparency. the partnership angle, which has ners, and I stress made sig- have been absolutely critical to progress, the But years. the past half dozen nificant gains over very and they are difficult list of challenges remains if engaged to remain challenges. All of us will have them. to overcome are we Revenue Watch Institute Revenue Watch Sustained high- Sustained : Oil wealth itself can be a wealth Oil Sovereignty is a word very is a word Sovereignty . . Weak institutional capacity is Weak . “Rogue aid” refers to the no-strings- refers aid” “Rogue Finally, sector-based reforms will stand a sector-based reforms Finally, level, high-profile commitment from both oil-rich both commitment from high-profile level, exporting countries countries and developed Too importantimporters to success. is extremely of campaigns to introduce often the effectiveness in oil-rich devel- transparency and good governance oil- been undermined by oping countries has importing countries looking the other way when or corruption out of of governance they see a failure They do not supplies. obtaining secure concern over criticiz- overly supply security by want to jeopardize ing the country oil. supplying that challenge to reform. Why tackle painful reforms if Why tackle painful reforms challenge to reform. them? to ignore can afford you often evoked and misused by governments to mask governments and misused by often evoked reforms. and transparency to governance resistance much better chance of succeeding if they are part of much better chance of succeeding if they are countrywidea broader good for promoting program was the case in as and transparency, governance campaign when its oil sector transparency Nigeria was introduced. attached aid provided to oil-rich exporters by attached aid provided importing countries anxious to access that oil, thus dia- and transparency governance undercutting aid, of development other sources logues initiated by and International Bank World among them the (IMF). Fund Monetary always a challenge to the implementation of reform always a challenge to the implementation be especially so in oil-rich coun- and may programs ruling oil wealth elites benefiting from tries where to their institutions as a possible threat see stronger is the issue of funding. positions. And then there needed to build The technical assistance resources required. at the level seldom available capacity are IFI RESPONSES the central recognized unequivocally have The IFIs in resource and transparency importance of governance to have We dependent countries. revenue rich, resource • Context. • Institutional capacity • Institutional • Oil wealth • independence Oil wealth • “Rogue aid” • The sovereignty defense sovereignty • The • Importing country Importing ambivalence •

“We want the state oil companies to operate efficiently and increasing the transparency of their operations, which is a subset of the larger transparency challenge, is very important.” —Karin Lissakers

7 people. A lot of thought, and effort by governments, where Nigeria is headed, partly because there has been civil society and even private companies are coalesc- a really strong reform movement under the govern- ing to try to address this problem. The most imme- ment in the last few years. We haven’t seen the payoff diate and obvious beneficiaries will be the citizens in from that yet, but we will if the government that suc- producing countries. But these efforts also have ceeds the Obasanjo government carries forward the direct spillover benefits for consuming countries like reforms. So we should focus on conflict and the the United States, which are so dependent on impact on us as consumers. imported oil, gas, and other vital minerals. Another effect of the lack of transparency, which has gotten much less attention, is that lack of trans- CONSEQUENCES OF A LACK OF TRANSPARENCY parency hurts the state oil companies. The largest oil There is a very clear line of causality between corrup- and gas reserves are not controlled by the Shells and tion and conflict, when rent seekers fight over the the Exxons and BPs anymore. Eighty percent of glob- spoils; between corruption, poverty, and conflict al oil and gas reserves are under the control of nation- when the citizens revolt over being cheated out of al oil companies (NOCs). In case after case one can ARENCY AND ITS LINK TO ENERGY SECURITY their own resources; and between corruption, poverty, see how the murky financial relationship between conflict, and supply disruption, as we have seen in the these NOCs as operating companies, and the state as Niger Delta. This costs us directly as consumers. It consumer of the resources the NOC generates, dam- costs the people who live in the Niger Delta the most, ages the operations of the company. The ability of a but it also costs us in terms of what we pay at the gas state company like Pertamina or PEMEX or PdVSA pump being increased by the uncertainty and volatil- or the NIOC to set aside enough investment capital ity in the global oil markets. to operate at an efficient level and to maximize the OIL REVENUE TRANSP If you want to be crass about it, we can look at the development of the resources they have under their resource curse in terms of our direct self-interest. In direct control can conflict with the state’s desire to ANEL I:

P Cote d’Ivoire and Zimbabwe commodities are part of divert this cash to meet immediate budget or politi- the conflict and you see how quickly and how dramat- cal demands or to enrich individual officials. ically some low-level conflict, of the kind we see in the So, again, if you look at the issue in terms of our Niger Delta, can suddenly explode and rip a country crass self interest, we want the state oil companies to to pieces. This can lead to a protracted decades-long operate efficiently, and increasing the transparency of conflict and civil war. Angola is a case in point, so if their operations, which is a subset of the larger trans- you think there are problems now in the Niger Delta parency challenge, is very important. The leadership they’re actually quite modest compared to the poten- in some state oil companies recognizes this and are tial for a much wider conflict. I don’t think that that’s allies, at least quietly, where some other parts of the government may not be allies for obvious reasons in the fight for transparency. We need to focus a little more on that aspect and think a little more creatively about how we can engage the NOCs. The issue of the lack of transparency and lack of disclosure of contracts is also a very important part of the transparency fight. In most resource-rich develop- ing countries the natural resources belong to the citi- zens. Contract transparency is an important way to build public trust. We should assist with direction-set- ting to parliamentarians in this regard. 8 PANEL I: OIL REVENUE TRANSPARENCY AND ITS LINK TO ENERGY SECURITY Transparency is the key to citizen empowerment. is the key to citizen Transparency Azerbaijan and Nigeria, unexpectedly decided, for var- unexpectedly Azerbaijan and Nigeria, to be the leaders and the pilots for this ious reasons, also the EITI design by beyond went Nigeria initiative, a lot of information to the doing audits and adding Azerbaijan has before. there public domain that wasn’t to also begin to implement EITI. been one of the first a simple initiative—allIt’s the companies, including are country, the state companies that operate in a their payments to the state. And the to report required the extrac- from publishes its receipts state, in return, template a mining reporting There’s industries. tive template, covering an oil and gas reporting and there’s payments in kind, profit bonuses, royalties, signature is exercise of the benefits of this oil, and so on. One of man- that it has indeed highlighted the weaknesses in some of agement and accounting and accountability the domestic state companies. THE ROLE OF CIVIL SOCIETY to yet trickled down the information hasn’t Nigeria In public services to the communities where the ground, coming, though, because the It’s delivered. are of publishing, took the initiative Minister Finance which is all the distribution of oil revenues, monthly, revenue, government of Nigeria’s the main source to all the individual the central government from the states to the municipalities. Once states and from it is pos- up at the municipal level that number shows that to startsible for citizens asking local officials how money is being spent. the If transparency. focus on revenue why we That’s is coming in to pub- much money how know citizens lic coffers they can start to ask questions about where the That is really being spent. it’s going and how it’s EITI is interesting Curse. key to escaping the Resource but a key aspect of it is that it is voluntary, because it’s both at the international a multi-stakeholder process, country Every that and at the national level. level an going to implement EITI has to create decides it’s implementation committee at the national oversight com- representatives, which includes government level and civil society representatives. pany representatives —Karin Lissakers In that vein, it is important that vein, for the transparency In on players need to bring the emerging market We The countries. in some producing is progress There EITI is an interesting phenomenon because it’s a vol- phenomenon because it’s EITI is an interesting untary but it has begun to gain momentum initiative, This is partly because two countries, and adherence. AREAS FOR ENGAGEMENT AREAS FOR ENGAGEMENT that we it is obvious policy, terms of U.S. foreign In for our is no credibility There it both ways. have can’t and trans- governance good preach policy stance if we countries and look the in some developing parency for exam- Guinea, Equatorial other way in cases like to be importantple, because they happen of suppliers its standpoint, a credibility not just bad from oil. It’s a long-term energy security standpoint. from bad even important of in terms and consistency are Credibility our leverage. directly. campaign to engage the financial sector of large with a group is working Watch Revenue to tryinvestors agencies to take to convince risk rating issues when rating sovereign account of transparency coalition Pay You What The civil society Publish risk. in the US regulators capital markets continues to press companies to listed extractive to require and Europe governments. publish their payments to individual in hope a bill to that effect will be introduced We The coalition is also engaging the soon. Congress setting agencies. international accounting standards when to be held to account our banks have Finally, with long they make oil-backed loans to governments history and when they of financial mismanagement to looted assets. safe haven give China has a publicly stated policy that they don’t board. They will in other countries. about governance care not going to “inter- and they are to get resources invest the long run, in internal policies. Over that will fere” our standpoint copy- and bite them. From turn around to bring China to Trying ing them is not the way to go. them be partthe table and have of the international and of transparency a global standard push to develop is pos- It these sectors is the way to go. over governance sible that a concerted the G8 governments from push at the 2007 summit will bring China into the dialogue. money is coming in to public coffers they can start to ask questions about where ask questions can start to public coffers they coming in to money is being spent.” how it’s going and it’s “Transparency is the key to citizen empowerment…If the citizens know how much the citizens empowerment…If key to citizen is the “Transparency

“We‘ve been a strong supporter from the very beginning of the Extractive Industries Transparency Initiative. [However], the EITI itself, as a voluntary piece, is only really covering the transparency of payments.” —Nick Welch

9 We are dealing with a lot of autocratic states • Finally, we need to protect civil society. We have where citizens have very few chances to speak, much just had the drama of Sarah Wykes of Global less sit at the table with senior government officials Witness who was arrested and held for almost a and company representatives. EITI has created an month in Angola on spurious charges. umbrella under which that is possible and is happen- There are other citizens, local citizens in Congo ing. This has created both better relations between Brazzaville and elsewhere, who have also been arrest- citizens, groups and the government, and also a ed and charged because they dare to question how somewhat friendlier environment for companies. the state is managing oil and gas resources. It takes a Many of the international operating companies have concerted international effort by everybody to make decided that this transparency initiative is good for sure that this kind of harassment doesn’t happen. business. But EITI still only covers a relatively small The only cure for the Resource Curse, in the end, is set of countries. the empowerment of the citizens to ask and demand accountability from their authorities over the man- U.S. POLICY OPTIONS agement of these resources. ARENCY AND ITS LINK TO ENERGY SECURITY There are number of things the U.S. government should be doing: Nick Welch, Manager, International • The U.S. government should use more of its diplo- Relations, Shell Oil Company matic and aid resources to promote EITI and help countries implement it. Among the major industri- Oil companies certainly recognize that because of our al countries the U.S. gives a pittance to support the operations we have to be part of this debate. We know initiative. We give a million dollars. Other countries that it’s something that’s very important. In Nigeria, OIL REVENUE TRANSP are giving tens of millions of dollars. It’s up to for example, we are grappling with this issue. We Congress to allocate more for EITI support. know very well that the issues in the delta are about a ANEL I:

P • We should pass legislation in the U.S. requiring lot of things, but insofar as they are about transparen- listed companies to publish what they pay to indi- cy and governance, we clearly recognize the role that vidual governments. That would level the playing this subject matter has. field. Europe is considering something like this. We I find myself in agreement with a fair bit of the could lead by example as we did with the Foreign analysis of the other panelists so I will try to pull out Corrupt Practices Act (FCPA) and get other major a couple of industry-specific slants and perspectives to countries that are on a capital market basis to do the open things up a little bit. We’ve been a strong sup- same. We should encourage the International porter from the very beginning of the Extractive Accounting Standards Board to adopt an accounting Industries Transparency Initiative. rule that makes all these payments transparent. And IFIs have to increase the transparency of their own investment activities in the extractive industries. • The U.S. needs to practice what it preaches at home. We have a scandal in the way the Interior Department manages our national mineral resources on federal and Indian lands. We need to get a trans- parency initiative on that front to show that we are not just talking about poor developing countries. There should be a global standard of proper trans- parency and management. PANEL I: OIL REVENUE TRANSPARENCY AND ITS LINK TO ENERGY SECURITY 10 This is worth stressing because it is also access and because it is This is worth stressing securing access newer players have when you Equally, as is important for us in other respects Transparency PARADOXES OF TRANSPARENCY OF TRANSPARENCY PARADOXES worth bring- that are a couple of paradoxes are There When people do get a hold of the ing up as well. the ability to make timely investments which are timely investments the ability to make and what is sometimes Instability things that matter. an effect on can have nationalism’ called ‘resource both in gas and oil. access and timely investments, particularly the role talk about we the case when That’s competing for supplies. of consuming countries the world to different all over oil can flow Whereas in gas of flexibility, a certain degree and there’s markets constraints, such as often infrastructure are there those gas pipelines and long-term contracts making go in a particular direction. flows also in countries, then they are in projects and investing for very of time to often tying up gas flows long periods this important how new not to the US. It’s markets, companies that Western of the role plays out between debate currently transparency part of this revenue are not part of this debate of companies that are and the role going to be made that are decisions are There right now. which will be veryon investments a long-term and have This is not specifically big impact on energy security. very we’re U.S. focused but, in fact, global, because able were if we world. Even much in an interdependent of countries the governance to succeed in improving specifically supplying oil to the U.S. that does- that are market. things because oil is traded in a global solve n’t just energy security isn’t regional, While gas is more places that just one country is getting about improving issue. of a global much more It’s from. resources an energy security Thinking about access from well. of transparency want more point of view we as well, get the point We reserves and holdings. data around and this is some- being broader, about transparency Agency and oth- Energy thing which the International clearly has risen transparency ers talk about. Revenue a on the international agenda and clearly it does have linkage to the issue of energy security. —Nick Welch This is important because these revenues can be veryThis is important because these revenues ENERGY SECURITY AND TRANSPARENCY: ENERGY SECURITY AND TRANSPARENCY: OTHER FACTORS closely The question is, to what extent is transparency linked to the issue of the energy security? Clearly trans- as a whole is a key cornerstone of good gover- parency It’s transparency. not just about revenue it’s nance. But the current In overall. about good governance really a case for linkage. energy security there’s debate around important an energy company point of view from It’s You broadly. just to set the energy security scene more of ways—diver-can define energy security in a variety and of sources sity of types of energy and diversity affordability—and I would include the issue of social is clear- Thus transparency impact. and environmental an not, from but it’s ly important stability, in terms of the only factor. energy company point of view, LINKAGES BETWEEN U.S. ENERGY SECURITY LINKAGES BETWEEN AND TRANSPARENCY publishing There’s elements to this. three are There earn, and publish- what you publishing pay, what you as a voluntary The EITI itself, spend. ing what you things Nigeria In the pay side. is covering initiative, gov- the Federal a little with gone downstream have going out to the ernment publishing the revenues important. and that’s states as well of to the size substantial, particularly in relation bad used poorly they can have If economies overall. a they can have they can be used well Where affects. as let me be ‘crass’, Now good effect on development. just look at it one of the earlier speakers suggested, and point of view as narrow our own for a moment from of those soci- opposed to looking at the wider welfare costly finan- is destabilization that is there When eties. secu- safety, it can also be costly in terms of lives, cially, see a very why we clear reason We rity and well-being. should support not just the EITI, but other initiatives to an sphere direct our own that perhaps go beyond these issues. of influence that can help sphere indirect as those of the citizens as well interests in our own It’s it a better environment That makes of these societies. good for us. self-evident that that’s for us, and it’s recognize that trying to bring in other consuming countries in the world is really in the world consuming countries bring in other that trying to recognize for this.” important “… [W]e are all in strong [W]e are all in have to resources…we to these for access competition “…

11 information there could be the possibility of disrup- shouldn’t deny the fact that if this were easy we tion in the short-term. That is the price one might wouldn’t be here now. This is compounded in peri- pay. From an energy security point of view we ought ods of high prices where leverage is reduced, giving to recognize that we might need to pay for the longer us all the more reason to think about the extra things term benefits of greater stability. Now instability in that need to be done. the Niger Delta is not a result of the Nigerian Another paradox is that we are all in strong com- Extractive Industries Transparency Initiative. But once petition for access to these resources. It is a difficult information starts coming out it can be disruptive. time for companies to really put a lot of pressure on That’s not a reason to argue against it, but if you’re some of these issues when what was referred to as linking transparency to energy security you have to ‘rogue aid’ is in play as well. That’s not an excuse for think about some of the short-term impacts as well, not trying to take forward the agenda, but we have particularly in times of high oil prices and high to recognize that trying to bring in other consuming demand. This is not a reason not to be transparent. countries in the world is really important for this. There are many good recommendations for the There are some signs of this in relation to Sudan.

ARENCY AND ITS LINK TO ENERGY SECURITY U.S. government to address this issue, but the big But what we need to do is to find measures which problem is identifying the incentives for those con- will work and incentives. We have to incentivize trolling the resources. What are the incentives for people somehow or another to make them see that them to open up and change the way they operate? this is a good thing to do. It’s a road that has some Clearly, some people are “being transparent” so there difficulties, particularly at the moment, but clearly are incentives. But it is a difficult issue and we something worth pursuing. OIL REVENUE TRANSP ANEL I: P PANEL II: POLICY OPTIONS ON OIL REVENUE TRANSPARENCY 12 by engag- by Against this stark backdrop, the good news is that oil backdrop, Against this stark ing other governments not currently part of the not currently ing other governments and Libya, Angola, Indonesia, (such as process others) to join. • First, the USG should press to widen the USG should press • EITI First, THE USG AND EITI – A CONVERGENCE OF THE USG AND EITI – A CONVERGENCE INTERESTS AND AGENDA FOR ACTION its strategic merits and a delay in recognizing Despite Administration the Bush engaging fully in the process, U.S. between of interests this convergence has recognized goals in particu- national and energy security and EITI’s Department is engaging seriously on the The State lar. establishing the U.S. as a in ways that are EITI Board for implementing EITI not only and force voice strong consistent in a strategic context but also in ways that are with the multi-stakeholder accountability that must be at its the heart if it is to succeed. Given of the EITI process enormous stake in the success of the EITI framework, the USG has a number of tools at its disposal that it can These forward. the process to move and should deploy tools span the range of USG bilateral and multilateral diplomacy and assistance channels and capabilities. An agenda for action can and should include: rupts governance and erodes the rule and erodes of law; exacerbates rupts governance deprives national unity; and threatens conflicts regional and their right to development local communities of of Long-term squandering condemns them to poverty. it not oil companies themselves: undermines revenues only disrupts social but challenges their production their local operations; and license to operate; endangers in puts companies It their global reputations. threatens surrogate the unwanted position of acting as de facto and it can make companies appear com- governments, security by plicit in human rights abuses committed armed attacks and called in to quell local unrest, forces disruption of oil operations. on the agenda of the key elements of the is now revenue international community—especially key oil pro- the all in the con- as the G-8 countries, above ducers as well on to stay here is now transparency text of EITI. Revenue U.S. national the agenda of the USG in the context of policy. energy security and foreign security, , Senior Vice President , Senior Vice POLICY OPTIONS ON OPTIONS POLICY Moreover, lack of revenue transparency and transparency lack of revenue Moreover, peaking from my personal views, my personal and not necessarily peaking from those of Calvert, my comments will focus on three inter- those of Calvert, my comments will focus on three U.S. first, the close connection between areas: related second, the transparency; energy security and oil revenue States the United between of interests convergence that the USG (USG) and EITI and roles Government the essential can play in supporting finally, the process; will help that civil society dimension of the EITI process determine its ultimate success of failure. for Social Research and Policy, Calvert Asset and Policy, for Social Research Management While oil revenue transparency is not a new concept, it transparency While oil revenue traction in the U.S. in the gained more has appropriately and energy context of post-9/11 U.S. national security is that the proposition The core security imperatives. of oil are durable foundations of access to and supply peoples, accountable to their own which are governments regions. including to the peoples of their oil-producing legit- the stability and even such accountability, Without In open to challenge. are imacy of those governments unfolds of local community situations, the cycle extreme and violence; attacks on oil pipelines and facili- unrest and disruptions of supply. shutdowns tates; production and accountability has distorting effects on governance skews pat- of public revenue Squandering development. elites; cor- and furtherterns of investment entrenches U.S. ENERGY SECURITY AND OIL REVENUE TRANSPARENCY S Bennett Freeman PANEL II: PANEL OIL REVENUE TRANSPARENCY OIL REVENUE

“The core proposition is that the durable foundations of access to and supply of oil are governments which are accountable to their own peoples.” — Bennett Freeman

13 • Second, the USG should push to deepen EITI by ed—and that the regional Multilateral Development ensuring accountability on the part of governments and Banks (Inter-American Development Bank, African companies alike for implementing its commitments. Development Bank, Asia Development Bank, Accountability standards and benchmarks are at the European Bank for Reconstruction and Development) heart of the current debate over validation criteria, and follow suit. Such requirements can and should also be ARENCY it is critical that those criteria are developed and applied extended to private banks through Equator Principles. rigorously, consistently and independently. • Third, the USG should draw clear lines as to the cred- These are elements that the USG can combine into an ibility of particular governments’ commitments. overall coordinated strategy to carry EITI forward in light While there is a reasonable point of view that the whole of that convergence of interests connecting revenue trans- point of EITI is to improve governance and strengthen parency to U.S. energy security, national security and for- the rule of law in the context of revenue transparency, eign policy. the reality is that there are some governments where governance is so poor and the rule of law is so weak that EITI AND CIVIL SOCIETY – THE VITAL LINK even the most basic commitments cannot be credibly In conclusion, the principle that must be at the heart of implemented. In that vein, Congo-Brazzaville and EITI is that energy security and supply depend funda- Equatorial Guinea should be put on notice that there mentally on improving governance and strengthening the will be no free ride—whether in arresting a civil socie- rule of law in supplier countries. EITI is even more fun-

POLICY OPTIONS ON OIL REVENUE TRANSP ty member of the EITI Board in the case of the former damentally about laws and people than it is about rev- or maintaining a dismal human rights record in the case enue flows and budget accounts. That is why the of the latter. This can be done by being less generous in accountability processes being developed right now are so ANEL II: P allowing high-level bilateral contacts—especially meet- critical—and why the arrests in Congo-Brazzaville and ing with the President and the Secretary of State—until even more recently of Sarah Wykes of Global Witness by fundamental change is clearly on the way. the Angolan authorities matter so much. That is why the • Fourth, the USG can reinforce its diplomatic efforts USG should deploy all the bilateral and multilateral with bilateral assistance. Implementing EITI may diplomatic and assistance tools at its disposal—and that depend first and foremost on political will, but it also is why it must view EITI as part of its democracy and depends on capacity. The time has come—indeed it human rights agenda, as well as consistent with its is overdue—for the United States Agency for national security and energy security interests. EITI is all International Development (USAID) and the of these things—and the USG has a golden opportunity Millennium Challenge Corporation (MCC) to devel- to move the process forward in ways that are consistent op and apply specific programs and benchmarks to with the full spectrum of its interests. support EITI implementation via technical assistance to support the mechanics or achieving transparent Dr. Stephen Krasner, Director of Policy revenue accounting and budgeting in particular coun- Planning, Department of State tries. Another key assistance priority should be to develop programs to facilitate stakeholders engage- The question of oil revenue transparency is critical not ment in EITI implementation so that the process only for the countries and citizens where oil is pro- builds governance and civil society from the bottom duced, but also for energy security at a global level. The up as well as top-down. U.S. government is committed to EITI as well as a • Fifth, the USG can use its influence in the World broader anti-corruption agenda. EITI has made signifi- Bank to ensure that the new mandatory disclosure cant progress over the last several years as people recog- requirements at the IFC are enforced and implement- nize the need for revenue transparency in the energy PANEL II: POLICY OPTIONS ON OIL REVENUE TRANSPARENCY 14 Accountability and transparency are ways that this ways are and transparency Accountability The U.S. has the most vigorous act against Foreign The U.S. has the most vigorous is basically to get a position in government. This has veryThis in government. is basically to get a position is almost corruption. for individual high incentives It viewed as that are resources have inescapable when you goes essentially to the revenue but yet public resources, destabi- that oil has been know We central government. We oil is produced. countries where lizing in many of the at a global level. energy security that it threatens know not the only although they are issue can be addressed, They are a check on corruption. They do provide ways. better pub- likely to enhance the possibility of providing lic services, like education and health. especially in areas and accountability transparency effective do have you If something likely to get solid economic growth, are you countries. that has not happened in many oil producing EITI AND ANTI-CORRUPTION STRATEGIES EITI AND ANTI-CORRUPTION STRATEGIES forward on accountabil- EITI is a mechanism for moving and its voluntary is voluntary, It ity and transparency. has been critical. Clearly one thing that is essential nature The is that it is voluntary countries. for implementing unique at the multi-stakeholder organization of EITI is it’s well to see how and it is interesting international level The U.S. has strongly up to this point. actually worked encouraged other countries to supported have EITI: we are and we member, participating as a board are join, we funds to support the EITI activities through providing bilateral activities of USAID. EITI is part of a larger anti- corruption the administration has pursued agenda which vigorously. supported have a series of transparency We used bilateral assistance have at the G8 and we initiatives anti-corruptionto promote efforts in many countries. supported have We USAID, other civil society through for Endowment agencies, and National government supported (NED), and have civil society Democracy that know been harassed, but we activists when they have this is an ongoing problem. of any countryCorrupt Practices would be and we enthusiastic if other countries enacted similarly aggres- legislation.sive backed the The U.S. strongly Consensus of which anti-corruption was a Monterey the Millennium created We component. strong —Dr. Krasner Stephen As an analogy, when we look at human rights agree- when we As an analogy, THE OIL CURSE: INSTABILITY VS. THE OIL CURSE: INSTABILITY ACCOUNTABILITY coun- that oil has been a curse for many of the know We concen- It why. know and we oil wealth, tries that have makes it easier in the hands of the state. It trates power alternative to repress resources for the state to develop self- to think about their own leads individuals It voices. that the path to their self-interests and to believe interests This administration has been very much focused in a but of larger way on the challenge of not just governance, could we . If a world of effective creating would clearly make internation- we that objective, reach we would make war less likely, we al cooperation easier, being of individuals in their own the well would promote effective- would enable countries to govern countries, we the would reduce territories, and we ly within their own democra- Effective for transnational terrorism. incentive a critical not just elections, although elections are cies are need rule of law, We democracies. component of effective institutions rights, government of minority protection mechanisms of alternative that will build capacity, media. As accountability including civil society and a free said, this Rice have and my boss Secretary Bush President not a goal that is going to of generations. It’s is the work be accomplished in the next few EITI is one piece years. many others. are and there of this process U.S. ENERGY SECURITY AND TRANSPARENCY: THE LARGER CONTEXT sector. The critical challenge is to make sure that EITI sure The critical challenge is to make sector. an issue in regards This is gesture. is not just an empty not done very but have up, signed to countries that have problematic. things that are done even much and have issue for EITI as it this will be a critical Moreover, forward. moves whether between correlation is no zero-zero ments, there a country and its actu- accord has signed a human rights al behavior. this and be alert that need to recognize We members of this does not happen with EITI. All of the that going forwardthis will be the recognize the board critical, central issue. good deed, and then nothing actually happens. Going forward this will be the forward this will happens. Going actually and then nothing good deed, central issue.” critical, “EITI can’t just be an initiative where countries sign up, get a check for doing a up, get a check countries sign where just be an initiative can’t “EITI

“EITI is a mechanism for moving forward on accountability and transparency. Clearly one thing that is essential is that it is voluntary for implementing countries.” —Dr. Stephen Krasner

15 Challenge Account and now the MCC to implement with expenditures, only the revenue piece. However, this Monterey principles. More generally, at the multi-lat- process is critical and needs our support fully to make eral level we’ve supported the UN Convention against sure that EITI is not just an empty initiative as some corruption, the Organization for Economic others, but a real path for resource countries to follow. Cooperation and Development (OECD) anti- ARENCY bribery/corruption and the World Bank Strategy on Simon Taylor, Director, Global Witness anti-corruption and governance. There have been a series of G8 initiatives, including Although the “Oil Revenue Transparency: A Strategic in St. Petersburg last year, at Sea Island in the U.S. Component of U.S. Energy Security and Anti- where we launched anti-corruption compacts that are Corruption Policy” report that Global Witness actually designed to look at revenue spending rather launched today has a U.S. focus, this all should be than revenue incomes, and in Evian. We are very taken to some extent in the wider context of an inter- pleased with the Germans who will also make anti-cor- national perspective. Some of the delivery and push ruption and natural resource transparency a critical from the side of international civil society has to come component of the meetings this year in Heiligendamm. from the 300-plus member Publish What You Pay coalition. There is now a huge global movement and CHALLENGES AHEAD FOR EITI AND OIL we are very grateful to have this huge coalition along- REVENUE TRANSPARENCY side us across the world doing this work. I will focus

POLICY OPTIONS ON OIL REVENUE TRANSP EITI remains a work in progress. The secretariat is in on the key areas that Global Witness has pushed for the process of being established, the board will make and then look at some of the disincentives and some of decisions about validation procedures this year, and val- the wider components that it would be useful to think ANEL II: P idators will be chosen. The critical issues in front of about in the context of EITI and its capacity to deliv- EITI are the following: er because EITI is just a component in a wider set of • First of all, how many countries will actually be fully needed changes. compliant by 2008? Everyone on the Board is hope- ful that Azerbaijan and Nigeria, the two pilot coun- KEY AREAS FOR DIPLOMATIC ENGAGEMENT tries, will be fully compliant by 2008. It is important To start off, we would like to see a huge increase in a that they are because four years without actually hav- diplomatic push for EITI. In many oil-rich countries it ing any country fully implementing this initiative will is fair to say that the elites who run the countries see the not be a good start. countries as their private fiefdoms. In the last decade we • Also, will other countries join? We have been encour- have seen this in many countries where the principle aging other countries to join EITI, including China, aim of the elites is to asset-strip, that is, to take virtual- India and Russia. Both the United States and the UK have pressed China on EITI on several occasions. We have pointed out to the Chinese that joining is some- thing that is not just an indication of good behavior and acting as a responsible stakeholder in the interna- tional environment, but is also very much in China’s long-term interest. We are hoping that China will see its way to become an EITI member. We know that EITI is not enough, but we do think that it is a critical piece and an excellent building block, and we are committed to making it work. It doesn’t deal PANEL II: POLICY OPTIONS ON OIL REVENUE TRANSPARENCY 16 Thus, we would like to see mandatoryThus, we as disclosure THE BROADER TRANSPARENCY CONTEXT THE BROADER TRANSPARENCY in banks and discussing oil-backed also interested are We expect banks to disclose. can’t say we loans. Some is, “Who to that response my answer is the However, The population of the coun- the oil? owns Who client? is a moral obligation to the clients Thus there tries does.” disclose, then they are the banks don’t If and the citizens. is of a compliant with asset-stripping. A good analogy can plug We bathtub with two holes in it at either end. at one end, but the money is still transparency revenue We the banks. draining out of the other end through need to hold the banks accountable on the basis of the is a loans and the basis of asset-stripping. Riggs Bank their assets liquidat- good example of this—why weren’t asset-strippers faced the possibility that their money ed? If and they could be held accountable, they could be frozen need to look at this, and we We differently. would behave money is being held. on this issue of where working are the Furthermore, as discussions on bank disclosure. well to the respond donor community needs to collectively important- asset-stripping that has been occurring. Most is needed, particularly in diplomatic outreach more ly, of civil society. to the protection regards closing if we can get it right. However, there is a real there right. However, can get it closing if we to the capacity of EITI to deliver doubt in my mind as Angola, Guinea, Equatorial in the countries like The elites of Cambodia. or now Congo-Brazzaville, in or interest an incentive have these countries don’t to say anything one wants No being held accountable. is that Thus the core suppliers. upsetting their to avoid a non-starter can add some other disclo- unless we it’s mandatory high time to add a mechanisms. It’s sure pay- revenue mechanism for companies to disclose kind of mechanism is that it The beauty of that ments. mechanism possible to disclose. One all players requires Commission (SEC). and Exchange is the Securities mechanisms instead of just one. may be several There forward with of moving may be a problem There mechanisms that are domestic oil companies, but there would Thus, we them to disclose as well. would require like to see mandatory disclosure. —Simon Taylor The incident when BP stood up and said that they This includes increased financial support to enable This includes increased DISCLOSURE: DISINCENTIVES MECHANISMS AND MANDATORY Pay You What launched the Publish we The reason coalition with other participants had was because we talking to oil companies and years spent three already looking for a voluntary in mechanism to get disclosure trail-blazing by in hero interested never were We place. such disclosure wanted a broad any of the companies; we is There was transparent. stream revenue that the entire no point in only having half of the companies disclose. to kick would disclose payments and Angola threatened them out of the country with the salient problem shows in the most difficult countries. EITI is voluntarism to include a number of countries dis- going probably ly everything they can get their hands on. They take ly everythingthey can get their hands on. places in the put them in various those assets and they need to see these We system. international banking issues to point where the That’s issues for what they are. to ring true fail being as far as not do with sovereignty would like to Thus, we these problems. able to address uses all kinds of diplomatic push that really see a greater to bring some of these countries into approaches creative EITI process to join the have they really a position where and take part. to be protect- data and revenue civil society to interpret of Sarah The arrest ed in the case of civil harassments. of a pattern with local activists comes on the back Wykes who faced nine months last year Congo-Brazzaville from in the of what can only be called judicial harassment This is the other diplomatic push—to extreme. work civil society can participate. out a mechanism whereby in transparency revenue is no point in delivering There if civil soci- accountability of governance to create order to monitor the space or protection have ety doesn’t out a mechanism by to work have We accountability. which civil society can participate in the transparency enough if the cost of not good efforts Our are process. standing up is to get trumped up charges and then be to do something have so we in the slammer, thrown about this. society can participate. There is no point in delivering revenue transparency revenue transparency in delivering There is no point can participate. society to there is no room when of governance to create accountability in order accountability.” monitor “This is the other diplomatic push - to work out a mechanism whereby civil mechanism whereby - to work out a push is the other diplomatic “This

BIOGRAPHIES 17 NEIL BROWN is Special Advisor to Senator Richard G. Houdek served as the first American Ambassador to the Lugar (R-IN) and a Professional Staff Member of the State of Eritrea (1993–1996) and in Washington as the Senate Foreign Relations Committee. Neil handles ener- Deputy Assistant Secretary of State for African Affairs gy security issues and directs the Lugar Energy (1991–1993), Chief of Mission in the U.S. Embassy in Initiative. Previously Neil has worked with the Center Addis Ababa (1988–1991), and Ambassador to Uganda for Strategic and International Studies, the American (1985–1988). University in Cairo, and the Harvard Institute for International Development. Neil has a Bachelor’s DR. STEPHEN KRASNER is the Director for Policy BIOGRAPHIES degree from and Masters Degrees Planning at the U.S. Department of State. Prior to his from Oxford University, which he attended as a Rhodes appointment, Dr. Krasner was director of the Center on Scholar. Neil was raised on a small farm in Iowa where Democracy, Development, and the Rule of Law his family still resides. (CDDRL), deputy director of the Stanford Institute for International Studies (SIIS), an SIIS senior fellow, a sen- BENNETT FREEMAN is the Senior Vice President for ior fellow by courtesy at the Hoover Institution, and the Social Research and Policy at the Calvert Group. Prior to Graham H. Stuart Professor of International Relations this, he led Burson-Marsteller’s Global Corporate at Stanford University. His work has dealt primarily Responsibility practice. He previously co-authored an with trends in state sovereignty, American foreign poli- independent human rights impact assessment of BP’s cy, and the political determinants of international eco- Tangguh LNG project in West Papua, Indonesia, the first nomic relations. Previously, Dr. Krasner served as a HRIA undertaken in advance of a major energy project in member of the Policy Planning Staff in the Department the world. Mr. Freeman served in three positions as a and worked as Director for Governance and Clinton presidential appointee in the State Department, Development at the National Security Council, where most recently as Deputy Assistant Secretary for he worked primarily on the Millennium Challenge Democracy, Human Rights and Labor. In that capacity, Account. Dr. Krasner has taught at Harvard University, he led the development of the Voluntary Principles on UCLA, and Stanford, where he was chair of the politi- Security and Human Rights, the first human rights stan- cal science department. Dr. Krasner has been a fellow at dard forged by governments, companies and NGOs for the Center for Advanced Studies in the Behavioral the extractive sectors. Mr. Freeman currently serves on Sciences and at the Wissenschaftskolleg zu Berlin. He is the Board of Directors of Oxfam America, the Steering a fellow of the American Academy of Arts and Sciences Committee of Amnesty International USA’s Business and and a member of the Council on Foreign Relations. Human Rights program, and is an Alternate Civil Society member of the Board of the Extractive Industries KARIN LISSAKERS is Director of the Revenue Watch Transparency Initiative (EITI). Institute and senior advisor to George Soros on globaliza- tion issues. Lissakers previously held the post of United AMBASSADOR BOB HOUDEK joined the National States Executive Director on the Executive Board of the Intelligence Council (NIC) as the National Intelligence IMF, by appointment of President Clinton, where she Officer for Africa in October 1997. In September 2006, represented the Fund’s largest shareholder during a peri- he was asked by the Deputy Director of National od of turmoil in international markets and a U.S.-led Intelligence for Analysis to become advisor on the proj- campaign to redesign the international financial architec- ect to rebuild the capability of the African intelligence ture and reform the IMF. Lissakers has also served as community. Previously, he served as an Advisor to the deputy director of the Policy Planning Staff of the U.S. Chief of Staff of USAID on the President’s Greater Horn Department of State and was staff director of the foreign of Africa Initiative. During the first half of 1997, he was economic policy subcommittee of the U.S. Senate detailed to the USAID Office of Foreign Disaster Committee on Foreign Relations, the first woman to hold Assistance (OFDA), serving as negotiator on a Disaster such a post. Lissakers taught at Columbia University for Response Team (DART) in Eastern Zaire. Ambassador many years and her research and writing have focused on BIOGRAPHIES 18 is currently director of both director is currently , , a former seven-term member of , a former seven-term is the Manager for International Relations for International is the Manager the Africa Program and the Project on Leadership and and the Project the Africa Program Wilson Woodrow Capacity at the State Building Center for Scholars. A specialist in African International politics, for ten of his fourteen in the Congress, years on Africa of the House the Subcommittee chaired Wolpe to entering Congress, Affairs Committee. Prior Foreign of Representatives served House in the Michigan Wolpe City Commission. and as a member of the Kalamazoo Science Department of has taught at the Political Wolpe of and at the Institute University Michigan Western and of Michigan, of the University Studies Policy Public Policy has served in the Foreign as a visiting fellow as a Institution, of the Brookings Program Studies and as a Center public policy scholar, Wilson Woodrow Service and to the Foreign Bank World consultant to the received Wolpe Department. of the U.S. State Institute the from College, and his PhD Reed from his BA degree Technology. of Institute Massachusetts Congress and former presidential special envoy to special envoy and former presidential Congress Lakes Region Great Africa’s HOWARD WOLPE HOWARD NICK WELCH to taking up this appoint- Prior Company. Oil for Shell for Shell Relations of UK External ment, he was Head UK Ltd in joined Shell in London. Nick International after a Manager, Relations 1996 as Government February first on Working in the UK Civil Service.number of years internation- small firms policy and subsequently on large he served projects, al infrastructure both as Private and Trade for of State to the UK Secretary Secretary joining gov- Before of Energy. Industry and the Minister Commercial ernment service as a Regional he worked company and has for a multinational brewing Manager as a technical writer and teacher overseas. also worked to drive campaigns to end impunity, resource-linked con- resource-linked campaigns to end impunity, to drive abuses. environmental flict, human rights, and 2002, In (PWYP) Pay You What Publish he co-launched the led to the UK Government’s Campaign, which directly Initiative Transparency Industry launch of the Extractive (EITI). of an international movement is now PWYP the across from Organizations 300 Civil Society over globe—the safe participationin the EITI of civil society for the delivery of is an absolute prerequisite process rents. natural resource over accountable governance is Adjunct recently joined the recently is one of three founder/directors of founder/directors is one of three PHERSON C International Monetary Fund as Adviser in its Fiscal as Adviser Fund Monetary International Affairs Department for fis- with particular responsibilities rich countries. cal and financial policies in natural resource he was Senior IMF, to taking up his position at the Prior at work His Bank. World at the and Gas on Oil Adviser and sector sector reform focused on petroleum the Bank the lending activities in Angola, Argentina, Nigeria, also managed the He and elsewhere. Federation, Russian Industries participation in the Extractive Bank’s joining the Bank, (EITI). Before Initiative Transparency at two international oil spent 15 years McPherson Mr. of senior positions in inter- companies, holding a variety agreements. national negotiations and government SIMON TAYLOR CHARLES M AMBASSADOR PRINCETON LYMAN AMBASSADOR PRINCETON the interplay of international business and U.S. foreign the interplay of international at the Carnegie Associate has been a Senior She policy. and is a member of Peace for International Endowment Relations. the Council on Foreign Senior Fellow at the Council on Foreign Relations, at the Council on Foreign Fellow Senior and held University, at Georgetown Professor Adjunct at the Studies Chair for Africa Policy the Ralph Bunche to 2006. 2003 from Relations Council on Foreign included in government career Ambassador Lyman’s for of State Assistant Secretary assignments as Deputy of Refugee Director Africa, Ambassador to Nigeria, Africa, and Assistant to South Ambassador Programs, Affairs. Organization for International of State Secretary Ethiopia. Ababa, Addis of USAID in was Director He of the Director 1999 to 2003, he was Executive From at the Aspen Institute. Initiative Interdependence Global Boards, is a member of several Ambassador Lyman the of Diplomacy, including the American Academy Foundation, the Amy Biehl Plan/USA, for Peace, Fund Africa, and the U.S.- in South Trust the Buffleshoek has a Council. Ambassador Lyman Africa Business South He University. Harvard Science from in Political Ph.D. policy, has published books and articles on foreign HIV/AIDS, UN African affairs, economic development, and peacekeeping. reform Global Witness, an organization established in 1993 to an organization established Witness, Global and expose the corrupt exploitation of natural resources GLOBAL WITNESS building initiative in Burundi, designed to increase the Global Witness exposes the corrupt exploitation of natu- ability of the country’s leadership to advance the post-war ral resources and international trade systems, to drive transition and economic reconstruction. The strategies campaigns that end impunity, resource-linked conflict, and techniques developed in Burundi are now being and human rights and environmental abuses. adapted to conflict and post-conflict situations worldwide. Global Witness was the first organization working to The Africa “Congressional Staff Forum on Africa” series break the links between the exploitation of natural seeks to respond to increased policymaker interest in the resources, and conflict and corruption; and the results of African continent. The Africa Program also oversees the our investigations and our powerful lobbying skills have Africanist Doctoral Candidate Fellowship Program, sup- been not only a catalyst, but a main driver behind most of ports residential fellows, and works closely with the the major international mechanisms and initiatives that Center’s other projects and programs on cross-regional have been established to address these issues, including issues, such as governance, the development of state the Kimberley Process and the Extractive Industries capacity, crime and corruption, and pressing health and Transparency Initiative (EITI). Away from the policy social problems such as the AIDS pandemic. arena, Global Witness’ hard-hitting investigations have had direct and major impacts, such as the IMF withdraw- AFRICA PROGRAM STAFF al from Cambodia in 1996 over corruption in the logging Howard Wolpe, Program Director industry and the imposition of timber sanctions on Natalie Jackson, Program Associate Charles Taylor’s Liberia in 2003. Roseline Tekeu, Program Assistant Effective natural resource management is one of the Doreen Chi, Program Assistant keys to ending Africa’s poverty, and making it, and other areas of the developing world, the economic power- WOODROW WILSON INTERNATIONAL houses they should be. It is for this reason that we are CENTER FOR SCHOLARS continuing to deploy the accumulated thinking, experi- ence and skill that we have developed over the past Lee H. Hamilton, President and Director decade, to help bring about this change. There is no alternative. BOARD OF TRUSTEES Joseph B. Gildenhorn, Chair THE AFRICA PROGRAM David A. Metzner, Vice Chair WOODROW WILSON CENTER The Africa Program was established at the Woodrow Wilson PUBLIC MEMBERS: James H. Billington, Librarian of Congress; Center for Scholars in 1999 with the generous support of the Allen Weinstein, Archivist of the United States; Bruce Cole, Ford Foundation. Chair, National Endowment for the Humanities; Michael O. The program serves as one of Washington, DC’s leading Leavitt, Secretary, U.S. Department of Health and Human forums for informed debate about the multiple challenges Services; Condoleezza Rice, Secretary, U.S. Department of and opportunities that face Africa, and about American State; Cristián Samper, Secretary, Smithsonian Institution; interests in—and policy toward—the continent. The pro- Margaret Spellings, Secretary, U.S. Department of gram serves as a bridge for academics, diplomatic practi- Education. Designated Appointee of the President from tioners, policymakers, and members of the private sector, Within the Federal Government: Tamala L. Longaberger. who share a common interest in developing informed and effective policy decisions on Africa. PRIVATE CITIZEN MEMBERS: Carol Cartwright, Robin B. Cook, With the support of the World Bank’s Post-Conflict Donald E. Garcia, Bruce S. Gelb, Sander R. Gerber, Charles Fund, the Africa Program launched a major capacity- L. Glazer, Ignacio Sanchez

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