Skip to main content
  • News
  • Events
  • Blog
  • Search

Natural Resource Governance Institute

  • Topics
    Beneficial ownership
    Economic diversification
    Mandatory payment disclosure
    Revenue sharing
    Civic space
    Energy transition
    Measurement of environmental and social impacts
    Sovereign wealth funds
    Commodity prices
    Gender
    Measurement of governance
    State-owned enterprises
    Contract transparency and monitoring
    Global initiatives
    Open data
    Subnational governance
    Coronavirus
    Legislation and regulation
    Revenue management
    Tax policy and revenue collection
    Corruption
    Licensing and negotiation
  • Approach
    • Stakeholders
      • Civil society actors
      • Government officials
      • Journalists and media
      • Parliaments and political parties
      • Private sector
    • Natural Resource Charter
    • Regional knowledge hubs
  • Countries
    NRGI Priority Countries
    Colombia
    Guinea
    Myanmar
    Tanzania
    Dem. Rep. of Congo
    Mexico
    Nigeria
    Tunisia
    Ghana
    Mongolia
    Peru
    Uganda
    OTHER COUNTRIES
  • Learning
    • Training
      • Residential training courses
        • Advanced
        • Executive
        • Anglophone Africa
        • Francophone Africa
        • Asia-Pacific
        • Eurasia
        • Latin America
        • Middle East and North Africa
      • Online training courses
        • Massive open online course (MOOC)
        • Interactive course: Petronia
      • Trainers' modules
        • (empty)
    • Primers
    • Glossary
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
      • 2020-2025 Strategy
      • Country prioritization
    • NRGI impact
    • Board of Directors
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Contact us
    • Financials
    • Grant-making
    • Privacy policy
  • News
  • Events
  • Blog

You are here

  1. Home
  2. Blog

Transparency in Eurasia: Answering Frequently Asked Questions

11 April 2014
Author
Ingilab Ahmadov
Topics
Civic space, Economic diversification, Global initiatives, Licensing and negotiation, Revenue management, Sovereign wealth funds
Countries
Mongolia, Azerbaijan, Kazakhstan, Kyrgyz Republic, Russia
Stakeholders
Civil society actors
Precepts
P2 P6 P9 What are Natural Resource Charter precepts?
Social Sharing

In mismanaged economies, the path to government accountability and sustainability begins with transparency—but there is often resistance along the way. After all, power is at stake.

Transparency within the extractive sector, specifically, is twice as challenging—first, because inordinate sums of oil, gas and mining revenue can enrich and perpetuate corrupt governments, and second, because great wealth in the hands of a few often denies citizens the full measure of benefits that flow from publicly owned natural resources.

Ingilab Ahmadov

 

And yet, transparency in the extractive industry is extremely important if society intends to turn non-renewable natural resources into more sustainable human resources. Otherwise, wealth is squandered, and countries risk facing the ruins of poverty and the bondage of debt.

When addressing such issues within the Extractive Industries Knowledge Hub, we try to answer the following questions, which we are often asked at our courses, workshops and training sessions.

Such questions are not infrequent or incidental, and yet their answers serve to underpin effective transparency initiatives in skeptical societies.

Why is the push for better governance and transparency such a challenge in this region?

In post-Soviet countries like Azerbaijan, where our regional Extractive Industries Knowledge Hub operates, skepticism about the benefits of transparency and openness is very common, and this is understandable. In many former Soviet republics, governments were seen as the punitive organ that maintains order at all costs, a secretive authority that equates “information leakage” to high treason. One challenge is that ordinary citizens still have little access to relevant information about natural resource revenues. They see government commitments to accountability as “external requirements,” rather than voluntary, earnest efforts driven from within. But things are changing. Many post-Soviet countries have joined the Open Government Partnership (OGP), a multilateral initiative that promotes transparency through concrete government commitments. Another well-known initiative in this region is the Extractive Industries Transparency Initiative (EITI). Our hub trainings help civil society—as well as members of parliament, journalists and state officials—recognize the benefits of EITI, OGP and transparency in general.

The Eurasia Extractive Industries Knowledge Hub is helping many oversight groups measure and manage the economic and social impacts of natural resource revenues.

 

Why is transparency necessary if stability and prosperity can be achieved without it, as in Qatar, the United Arab Emirates, Saudi Arabia or Kuwait?

Another question concerns Arab countries that forego transparency rules but live in prosperity. Here we have explained to our training participants that a limited number of Gulf states are exceptions to the rule—first, because their per capita volume of oil and gas is seemingly limitless compared to other regions with larger populations, and second, because their current systems of revenue management and distribution is only a semblance of equity and fairness.

Upholding transparency within the extractive sector is expensive. Wouldn’t it be more effective to fund poverty relief efforts directly?

We are often asked to explain the costs of transparency, incurred through regular reporting exercises and communication efforts. Such expenses, often no more than several hundred thousand dollars, are a drop in the bucket compared to the millions or even billions of dollars stolen through corruption or wasted by mismanagement. In Azerbaijan, for example EITI expenses are less than $100,000, which covers an official audit and report, wages for three state oil fund employees involved in EITI implementation, trip expenses for EITI, and the preparation of EITI reports. Once the new and more comprehensive EITI Standard is enforced, these expenses may increase, but not without significant returns. In the long run proper transparency can prevent fraudulent accounting and theft and save countries millions of dollars.

Why don’t more developed countries participate in EITI? Are their commitments to support this initiative merely lip service?

A fair question; however, people ask it less frequently now that the United States has sought to join EITI, and several European countries have expressed similar intentions. But one thing is obvious: If we do not want to devalue EITI, developed countries such as the UK, France, the Netherlands and Canada should be at the forefront of this initiative, not merely non-participant donors.

Why haven’t years of transparency initiatives brought more positive change to governance in these countries?

The near-term benefits of participation in such initiatives are certain, including more trust and stability for government, a more level playing field for businesses, and greater energy security for citizens. Still, it is clear that EITI itself can be improved, as the new standard suggests. Without provisions to include all income and expense transactions within the sector, total transparency is elusive.

Expectations about transparency should be realistic. Transparency alone cannot solve every problem in extracting countries. But it’s a critical first step.

Ingilab Ahmadov is the director of the Eurasia Extractive Industries Knowledge Hub at Khazar University in Baku, Azerbaijan. To learn more about the Revenue Watch Institute’s six regional hubs, including Eurasia, click here.

Related content

Countries Struggling with Governance Manage $1.2 Trillion in Resource Wealth

David Mihalyi, Anna Fleming
8 September 2017

As Extractive Economies Struggle, Eurasian Stakeholders Devise Solutions

David Mihalyi, Andrew Bauer,
7 January 2016

Transforming Natural Resource Wealth into Sustainable Prosperity: Eurasia Regional Knowledge Hub Training Course

Event type: 
Training
Saturday, May 21, 2016 - 09:00 to Saturday, May 28, 2016 - 17:00
Baku, Azerbaijan

Blended Learning Course in Revenue Management

Event type: 
Training
Sunday, April 15, 2018 - 09:00 to Monday, July 2, 2018 - 17:00
Baku, Azerbaijan

Paradox of Plenty, Redux: Azerbaijan Grapples with Low Oil Prices

Farid Guliyev
18 May 2016

Recent Tweets

  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    How #NOCs operate can greatly influence efforts to fight #climatechange. But global climate policy too often ignore… t.co/xivrQ52Hux
    1 day 12 hours ago.
    Reply Retweet Favorite
  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    NRGI’s @hervelado, @davidmihalyi & @AmirShafaie discuss what they have learned from @AidData’s new loan contracts d… t.co/BT6GH4cope
    1 day 14 hours ago.
    Reply Retweet Favorite
  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    NRGI supports @opengovpart in driving a transparent recovery from the pandemic, tackle systemic inequalities, addre… t.co/cJMEwkpE0F
    1 day 17 hours ago.
    Reply Retweet Favorite
  • NRGInstitute
    NRGInstitute
    @NRGInstitute
    Follow @NRGInstitute
    📑 NRGI's @acgillies explores how oil-rich kleptocratic regimes have responded to the dual crises of the pandemic an… t.co/BaeaDCzyAY
    2 days 11 hours ago.
    Reply Retweet Favorite
Helping people to realize the benefits of their countries’ endowments of oil, gas and minerals.
Follow on Facebook Follow on Twitter Subscribe to Updates
  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Gender
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Myanmar
    • Nigeria
    • Peru
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Contact us
    • Financials
    • Grant-making
    • Privacy policy
  • News
  • Blog
  • Events
  • Search