Memorandum submitted by Global Witness
OVERVIEW
1. Global Witness is a non-governmental
organisation, founded in 1993, which campaigns against the misuse
of natural resources to fund corruption and conflict. Our work
on logging, oil and mining in more than a dozen countries, including
Cambodia, Angola, Liberia, the Democratic Republic of Congo, Kazakhstan
and East Timor, has made us an influential voice against corruption
and warlordism.
2. We were co-nominated for the 2003 Nobel
Peace Prize for our work on conflict diamonds which led to the
creation of the Kimberley Process, and we are a founder member
of the Publish What You Pay coalition and a key participant in
the Extractive Industries Transparency Initiative, launched by
the British government in 2003. In 2005 we received the annual
Gleitsman Foundation International Activist Award.
3. The World Bank and IMF's lending and
assistance give them great influence over the 50-odd developing
countries that produce natural resources like oil, gas, minerals
and timber. In both institutions, awareness is growing that many
such countries will remain mired in poverty, instability and conflict,
unless they can manage their natural resources in a way that is
sustainable, transparent and accountable to the public.
4. Unfortunately, the Bank and the Fund
have been reluctant to tackle natural resource governance in a
coherent and holistic way, relying on ad-hoc measures in particular
countries or, in some cases, ignoring the question altogether.
Britain could do much more, as a leading shareholder in the Bank
and Fund, to promote the joined-up approach that is desperately
needed.
5. Here, in summary, are the questions which
best express our concerns:
(i) What steps will the British government
take to ensure that the World Bank requires borrower governments,
in countries which depend on natural resources and have a history
of poor governance, to be transparent about the revenues they
earn from these resources?
(ii) In countries like the Democratic Republic
of Congo and Liberia, where fighting between predators for control
of natural resources has been a major cause of recent wars, will
the British government ensure that the World Bank makes the transparent
and accountable management of natural resources a condition of
all its non-humanitarian aid?
(iii) The IMF recently published a Guide
to Resource Revenue Transparency, which details the institutions
and policies that resource-rich-but-poor countries should put
in place to promote transparency and reduce the risk of corruption.
What steps will the British government take to ensure the IMF
implements the Guide's recommendations in all resource-rich countries
that receive its assistance?
(iv) Will the British government use its
influence to stop the World Bank supporting destructive models
of industrial logging in countries like Cambodia, which hurt local
people and the environment and enrich rogue logging companies
and corrupt officials?
OIL AND
MINING REVENUE
TRANSPARENCY
6. Lack of transparency about the flow of
revenues from the oil and mining industries to the governments
of resource-rich countries in the developing world has made possible
the misappropriation of billions of dollars of these revenues
by corrupt officials, deepening the poverty of countries such
as Nigeria, Angola, Indonesia, Kazakhstan and Equatorial Guinea,
and damaging their development prospects.
7. Recognising this problem, the British
government in September 2002 initiated the Extractive Industries
Transparency Initiative (EITI), which brings together governments,
oil and mining companies and civil society groups to promote the
public disclosure of revenue flows from the oil and mining industries
to governments in resource-rich developing countries, in order
to deter corruption. Roughly 20 countries and most leading global
oil companies are now involved in EITI.
8. Although the World Bank and IMF have
both endorsed the EITI, neither institution is using the full
weight of its influence to promote resource revenue transparency.
Both continue to treat revenue transparency as an optional extra
on their policy wish-lists, rather than as a basic condition of
their interventions, whose absence will undermine all their other
work in countries that are rich in natural resources, but vulnerable
to corruption.
9. We believe that the British government
can and should spearhead a co-ordinated effort by other Bank and
Fund shareholders to ensure that revenue transparency is mainstreamed
across their operations in all resource-rich-but-poor countries.
THE WORLD
BANK AND
REVENUE TRANSPARENCY
10. The World Bank has taken a step in the
right direction by requiring that corporate investment projects
in oil or mining which receive its financial support must publicly
disclose their payments to governments, in line with the EITI
principles. However, the Bank does not require governments which
borrow from it to be similarly transparent, even where they are
dependent on natural resource revenues, and where there is a history
of weak governance. This creates the risk that Bank loans in such
countries may be merely filling the gaps created by corruption.
11. The need for transparency is particularly
pressing in countries emerging from conflict, such as the Democratic
Republic of Congo and Liberia. A struggle between armed factions
for control of natural resource wealth, aided by predatory private
companies, was a major cause of the devastating wars in both countries.
If the international community fails to instil transparent and
publicly accountable management of resource revenues, this struggle
may renew, tipping these countries back into war.
12. We would like to ask the Committee that
the government, both as a donor in its own right and as a shareholder
in the World Bank, should work to ensure that all non-humanitarian
aid (including debt relief) to resource-rich countries, particularly
those with a history of poor governance and those emerging from
conflict, should be made conditional on transparency of resource
revenue flows, on the creation of systems of public revenue management
that are truly accountable to citizens, and on increased public
spending on development priorities such as health, education and
basic infrastructure.
THE IMF AND
REVENUE TRANSPARENCY
13. The IMF has also endorsed the EITI and
recently published a Guide to Resource Revenue Transparency, which
neatly and effectively describes the laws, measures and institutions
that a resource-dependent country should have in place, in order
to ensure that its management of resource revenues is transparent
and accountable to citizens.
14. However, the IMF does not require that
countries which receive its financial support actually implement
the measures recommended by the Guide, nor are IMF staff required
to report on these issues in their Article IV surveillance reports
on member countries. We would like to ask the Committee to question
the government as to how it intends to ensure that the IMF requires
these steps by borrower countries which are dependent on resource
revenues, as a condition of lending.
FORESTRY MANAGEMENT
AND CORRUPTION
15. Many of the developing world's large
remaining forests are at risk of rapid destruction by unsustainable
logging by rogue companies in league with corrupt officials, to
the detriment of local people and the natural environment.
16. In Cambodia, the World Bank has spent
the last ten years supporting a logging concession system which
has enriched such companies and their allies in the government,
despite abundant evidence of corruption. Global Witness staff
were banned from Cambodia recently for daring to publish such
evidence.
17. A Forest Sector Review in 2004, funded
by DFID and the World Bank, called for this concession system
to be replaced by new systems that meaningfully involve local
communities. We ask the Committee to call on the British government
to use its vote to ensure that the Bank implements the recommendations
of this Review and stops supporting a concession system which
has penalised the Cambodian people and enriched a small and corrupt
elite.
18. More broadly, the British government
should use its influence as a shareholder to stop the Bank from
promoting destructive models of industrial logging in developing
countries which damage the livelihoods of local people, reward
rogue companies and fund official corruption.
October 2005
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