RWI Newsletter - June/July 2011

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Revene Watch Institute

June / July 2011


Rebecca Morse, RWI program associate, Discusses Resource Development on U.S. Native Lands

RWI is publishing a report on development of natural resources on American Indian lands. Why did RWI begin looking at this issue?
The interest grew out of RWI's monitoring of the U.S. government's management of oil, gas and mineral revenues from federal and offshore lands. The same federal agencies that oversee public lands also hold resources located on Native American lands in trust for tribes and individuals. These resources make up a significant share of overall U.S. mineral wealth.

The revenues can have a large impact on economic development. The reality is that many U.S. tribes with energy resources have poverty levels and unemployment rates on par with some of the least developed populations in the U.S. or developing countries.

What's the U.S. government's role in oil, gas and mining industry on Native lands?
What's distinct here is the legal relationship between tribes and the federal government, a relationship defined by legislation and a long history of court cases, and known as the trust doctrine. At its core is a mandate for the government to act in the best interest of tribes. But in resource management, this is an ambiguous mandate. Historically, there has been a lot of skepticism that the government has secured the best deal possible for tribes.

There now is constant negotiation around this trust responsibility. Tribes feel that deciding whether or not to extract is a choice for them to make, but some need technical assistance and other help from the government to manage development. So there's a tension between the strong interest to have more autonomous control and the limited capacity, financial resources and experience of some tribes.

There's a history of government mismanagement of Native-owned resources.
We've seen a number of cases where the federal government's management of tribal assets has been dysfunctional. There's very little certainty that tribes have gotten the most revenues out of resource deals on the Interior Department's watch.

For this reason some tribes have started conducting their own audits. One is the Southern Ute Tribe, the most profitable resource-rich tribe, which recently sued BP America for underreporting royalties and assigning royalty payments to the wrong leases, which is essentially fraud. The result was a $5.2 million civil penalty, the largest ever levied in this kind of case.

What other development challenges do tribes face?
There's an old story that if you look at a map of oil development, you'll see drilling rigs everywhere except on reservations. This is partially because it's more expensive and difficult for outside developers to work with tribes thanks to the web of government departments involved in the process, and the higher fees and taxes involved.

Also, states are allowed to tax development activities on tribal lands, which has led some tribes to decide not to tax oil or mineral extraction at all, to make development more attractive. In Arizona, this has led in some years to the state making more money from extraction on Hopi tribal lands than the tribe itself.

Why have some tribes benefitted from their resources but not others?
In recent years, the example of a couple of very successful energy resource tribes—the Navajo Nation and the Southern Ute Tribe—has shown the way in terms of effective development. One important factor is that both have given attention to natural resource development issues over a period of decades.

The Navajo Nation has emphasized long-term planning, and established a savings fund for future generations. Southern Ute now manages most oil and gas development on its own lands. But before that, the tribe stopped leasing land for a decade, after discovering that the leases the federal government negotiated on its behalf weren't producing the benefits they should have. It was a sacrifice in income, but over that decade, the tribe established its internal capacity. It made its own analyses of reserves and resources and established a tribal energy department. When Southern Ute started leasing again, the tribe was in a stronger position to negotiate and control the process.

Many tribes would say that the key factor is sovereign control of resource development, but management and capacity issues, too, can prevent tribes from fully developing their resources.

Is there a broader regulatory shift towards more Native control of resources?
In 2005, Congress passed legislation that was meant to minimize some of the regulatory burdens, although to date no tribe has taken advantage of it. But there is greater awareness at the federal level about the need for accountability and good governance in the resource sector. The Obama administration has opened up new dialogue with tribal leaders, while an Energy Department tribal summit held in May drew high-level representatives from key agencies. That was a real demonstration that the federal government is taking Indian energy development seriously.


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PWYP Africa Coalitions Meet in Kinshasa
Publish What You Pay held its regional Africa meeting in Kinshasa, DRC, from 24-27 May, bringing together all of the continent's PWYP coalitions. The conference assessed the challenges that are part of Africa's oil, gas and mining transparency agenda.

Guinea Transparency Advocates Call for Concrete Actions
At a recent civil society meeting in Conakry, Guinean transparency advocates urged the government to take more definitive steps to ensure transparency in the country's natural resource management. Their demands included publishing the 2006-2010 EITI report, ensuring contract transparency and holding government officials accountable for signing bad mining agreements.

Columbia Panel Covers Oil Transparency in Africa
On 27 April, three international experts discussed the best ways to battle the oil industry's lack of transparency, at the Columbia University panel "Power and Pressure: The Media in Africa." The conversation highlighted that though each country's situation is unique, promoting good governance and transparency is always a collaborative effort.

Army Revolts in Burkina Faso Worry Investors
Ongoing unrest in Burkina Faso, including protests from military, police, students and shopkeepers, has caused concern among foreign mining investors. Two Canadian gold mining companies with significant holdings in the country could be affected by the discord, prompting analysts to caution against investing in politically unstable environments.

Ghanaian Civil Society Praises New Bill
Ghana's Civil Society Platform on Oil and Gas welcomed the passage of the country's long-awaited Petroleum Revenue Management law in a detailed commentary that assesses how the law will increase transparency and government accountability.

RWI Co-Hosts "Reporting Oil" Media Training in Ghana
On 6-8 May, RWI, PenPlusBytes and the Ghana Journalists Association held a forum on improving media coverage of oil issues, attracting editors of major Ghanaian media houses.

Cameroon Mining Communities Demand Further Reformsa
On Cameroon's EITI-awareness day, two communities in the country's eastern mining region demanded a revised and more transparent mining code. The demand follows a 2010 revision of the national mining code that communities say excluded their participation and that also lacks a mechanism to check mining companies' declarations, allowing mining revenues to be lost through informal trade channels.

Libya Rebels Promise Oil Transparency
As rebels in Libya's National Transitional Council seek access to national oil assets, they have declared their commitment to transparency and responsible resource management. In a statement, the self-declared provisional government promised, "Public funds will be made transparent and will be used for the betterment of the Libyan people and the development of the country."

Asia Pacific

Jakarta ASEAN Conference Sparks Call for Transparency Framework
At the annual ASEAN Civil Society Conference/People's Forum, held in May in Jakarta, Indonesia, participants called for a comprehensive transparency framework for the region's oil, gas and mining industries. Following a workshop on oil and mining in Southeast Asia, the conference declaration challenged government, industry and citizens to "harmonize" mineral policies and practices and consider a moratorium on "mega-projects" in Burma.

Vietnam EITI Gains Support
On 17 May, Vietnam's Government Inspectorate and the Swedish Embassy held a roundtable discussion on mining transparency and corruption. The event demonstrated growing support for EITI implementation from politicians and industry. An EITI working group is being formed by Vietnam's Ministry of Industry and Trade, the Chamber of Commerce and Industry and civil society group CODE, as well as a national EITI network.

Central Asia and Caucasus

Eurasia Hub Launches Investigative Journalism Trainings
In April the Eurasia Regional Knowledge Hub held its first investigative journalism workshop to promote cross-border investigations by journalists from Azerbaijan, Georgia, Kazakhstan and Ukraine. Journalists studied investigative techniques, advanced internet research, statistics and cross-border reporting skills. A future training will cover budget and oil revenue issues.

Azerbaijani Civil Society Decries Opaque National Oil Company Deals
In May, the NGO coalition of Azerbaijan released a statement condemning state oil company SOCAR for entering into nontransparent production sharing agreements with offshore companies. The statement noted SOCAR's recent agreement with the offshore company UGE-Lanser, signed in May, and called for public hearings regarding significant contract decisions.

Latin America

Peru Proposes Mandatory EITI Implementation
On 3 May, Peru's Congress and civil society groups in the country's EITI working group met to propose making disaggregated EITI implementation mandatory. Under the current voluntary process, companies operating in Peru can decide whether to participate or to release information on a disaggregated basis.

RWI Leads Contracts and Diversification Workshops in Quito
On 11 May, during the third meeting of the Latin American Regional Network on Extractive Industries, in Quito, Ecuador, RWI led two technical workshops on research and strategies on contracts monitoring and economic diversification. The meeting brought together RWI partners working on concessions and contracts monitoring, to exchange experiences and strategies.

RWI Advises Bolivia on Service Contracts
In April, RWI's legal team and energy consultant Anthony Paul met with high-ranking Bolivian officials and technical staff from the state-owned hydrocarbon company to advise on oil service contracts. Bolivia is redrafting its oil legal framework and signing new service contracts for hydrocarbon exploration, to increase private investment in the sector.

Brazil's IBASE Publishes Pre-sal Data
On 9 May, the Brazilian Institute of Social and Economic Analysis (IBASE) launched a website that catalogues data and documents on Brazil's oil-rich Pre-sal region. As oil extraction becomes a larger part of Brazil's economy, and the Pre-sal reserves dominate national production, IBASE will continue making relevant data available to the public.


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Commodities Giant Accused of Zambian Tax Avoidance
In April, the largest global commodities trader, Glencore, was accused of massive tax dodging at its Mopani copper and cobalt mine in Zambia, during the same period it posted record earnings. A report commissioned by the Zambian government indicated that Glencore's tax avoidance may have cost the Zambian government $76 million annually.

Innovative Crackdown on Tax Avoidance in Africa
In May the African Tax Administration Forum announced a multi-country inquiry into SABMiller, the world's second biggest brewer. SABMiller is accused of using tax havens to siphon millions in profits and avoid taxes in developing countries. By coordinating investigations across South Africa, Ghana, Zambia, Tanzania and Mauritius, the inquiry marks a new approach with relevance to other sectors, including extractives.

Transparency and Accountability Initiative Web Launch
In May, the Transparency and Accountability Initiative, a donor collaborative committed to strengthening democracy and development through empowering citizens to monitor governments, launched a new website. The website will feature new research and policy ideas across a range of transparency and accountability issues.

Capacity Building

RWI Presents Training and Capacity Building Program Factsheets
Learn more about RWI's flagship capacity building programs from program factsheets:

RWI and Parliamentary Center Build Contract Capacity in Ghana's Parliament
In May, following the disclosure of Ghana's oil contracts, RWI, the Parliamentary Centre and Ghana's Parliament hosted a workshop on contract transparency and analysis. Susan Maples, co-author of Contracts Confidential, led the workshop, which sought to strengthen parliamentary understanding of contract content and the importance of contract disclosure.


RWI Joins First Global Conference on Transparency Research
In May, RWI staff members attended the First Global Conference on Transparency Research at Rutgers University-Newark. The conference assembled leading international scholars to discuss the significance of transparency. RWI Senior Economist Akram Esanov presented on "Transparency and the Cost of Capital," and how transparency reduces the cost of sovereign borrowing.

EU Development Days Highlights RWI Work
Revenue Watch's research and advocacy are highlighted in the proceedings overview from December's EU Development Days conference in Brussels. Throughout the conference, Revenue Watch called for EU action on creating a disaggregated, country-by-country reporting standard for company payments to governments. The overview also highlighted the Revenue Watch Index, a measurement of information made available to the public about oil, gas and mining operations in 41 countries.

Panel: Oil, U.S. Policy and Middle East Revolts
On 18 May, Georgetown University in Washington, D.C., sponsored a panel discussion on the U.S. relationship with oil states experiencing unrest, such as Libya, Yemen and Bahrain. The panel asked whether the U.S. should do business with authoritarian leaders in exchange for oil and stability, and how that choice will impact long-term U.S. interests.

Cornell University Hosts Resource Curse Conference
In April, Cornell University's Institute for African Development hosted a two-day symposium on the concept of the "Resource Curse" in Africa. The conference covered examples from around the world and drew global scholars and representatives from the World Bank and the African Development Bank.

Resource Center

RWI's Resource Library Pilots Peruvian Regional Focus Project
RWI's online Resource Center has launched a pilot project for regional audiences and stakeholders in Peru. This project highlights the work of national and local Peruvian partners with new Spanish- and English-language materials that address key extractive issues in the region.

GPC: "Ranking de Transparencia de las empresas mineras"
A 2010 report from Peru's Grupo Propuesta Ciudadana (GPC) establishes a transparency ranking for companies operating in Peru's mining sector and highlights good company practices.

Red Muqui: "Resumen anual de las principales normas del sector minero"
Red Muqui summarizes Peru's principal mining sector regulations in 2010.

SPDA: "Manual para autoridades: superposición de lotes de hidrocarburos con áreas naturales protegidas"
Sociedad Peruana de Derecho Ambiental's manual explains the legal framework for hydrocarbon activities in Peru's Natural Protected Areas and lists companies operating in these high biodiversity areas.