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THE LINK BETWEEN REVENUE TRANSPARENCY

AND HUMAN RIGHTS

HEARING

BEFORE THE

COMMISSION ON SECURITY AND 

COOPERATION IN EUROPE

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

APRIL 22, 2010

Printed for the use of the

Commission on Security and Cooperation in Europe

[CSCE 111–2–4]

(

Available via http://www.csce.gov 

COMMISSION ON SECURITY AND COOPERATION IN EUROPE 

LEGISLATIVE BRANCH COMMISSIONERS

HOUSE SENATE

ALCEE L. HASTINGS, Florida,

Co-Chairman 

EDWARD J. MARKEY, Massachusetts 

LOUISE McINTOSH SLAUGHTER,

New York 

MIKE McINTYRE, North Carolina 

G.K. BUTTERFIELD, North Carolina 

CHRISTOPHER H. SMITH, New Jersey 

ROBERT B. ADERHOLT, Alabama 

JOSEPH R. PITTS, Pennsylvania 

DARRELL E. ISSA, California

BENJAMIN L. CARDIN, Maryland,

Chairman 

CHRISTOPHER J. DODD, Connecticut 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEANNE SHAHEEN, New Hampshire 

SAM BROWNBACK, Kansas 

SAXBY CHAMBLISS, Georgia 

RICHARD BURR, North Carolina 

ROBERT F. WICKER, Mississippi

EXECUTIVE BRANCH COMMISSIONERS

Michael H. Posner, Department of State 

Alexander Vershbow, Department of Defense 

Michael C. Camun ̃ ez, Department of Commerce 

(II) 

THE LINK BETWEEN REVENUE TRANSPARENCY 

AND HUMAN RIGHTS 

APRIL 22, 2010

COMMISSIONERS 

Page 

Hon. Alcee L. Hastings, Co-Chairman, Commission on Security and Cooperation in Europe .............................................. 1

Hon. Benjamin L. Cardin, Chairman, Commission on Security and Cooperation in Europe .............................................. 18

WITNESSES 

Daniel B. Baer, Deputy Assistant Secretary, Bureau of Democracy, Human Rights and Labor, U.S. Department of 

State ......................................................................................... 2

Ian Gary, Senior Policy Advisor/Manager Extractive Industry, Oxfam America ................................................................. 10

Anthony Richter, Chairman of the Governing Board, Revenue Watch Institute ............................................................... 13

Max Bokayev, Chairman, Arlan ................................................ 15

APPENDICES 

Prepared statement of Hon. Benjamin L. Cardin .................... 26

Prepared statement of Hon. Alcee L. Hastings ........................ 28

Prepared statement of Hon. Christopher H. Smith, Ranking 

Member, Commission on Security and Cooperation in Europe ........................................................................................... 29

Prepared statement of Daniel B. Baer ...................................... 30

Prepared statement of Ian Gary ................................................ 36

Prepared statement of Anthony Richter ................................... 42

Prepared statement of Max Bokayev ........................................ 51

(III) 

(1)

THE LINK BETWEEN REVENUE 

TRANSPARENCY AND HUMAN RIGHTS 

April 22, 2010

COMMISSION ON SECURITY AND COOPERATION IN EUROPE

WASHINGTON, DC

The hearing was held at 2:30 p.m. in room 430 Dirksen Senate 

Office Building, Washington, DC, Hon. Alcee L. Hastings, CoChairman, Commission on Security and Cooperation in Europe, 

presiding. 

Commissioners present: Hon. Alcee L. Hastings, Co-Chairman, 

Commission on Security and Cooperation in Europe; and Hon. Benjamin L. Cardin, Chairman, Commission on Security and Cooperation in Europe. 

Witnesses present: Daniel B. Baer, Deputy Assistant Secretary, 

Bureau of Democracy, Human Rights and Labor, U.S. Department 

of State; Ian Gary, Senior Policy Advisor/Manager Extractive Industry, Oxfam America; Anthony Richter, Chairman of the Governing Board, Revenue Watch Institute; and Max Bokayev, Chairman, Arlan. 

HON. ALCEE L. HASTINGS, CO-CHAIRMAN, COMMISSION ON 

SECURITY AND COOPERATION IN EUROPE 

Mr. HASTINGS. All right, good afternoon and welcome to the Helsinki Commission hearing on ‘‘The Link Between Revenue Transparency and Human Rights.’’ Over the past few years, the Commission has actively worked to make revenue transparency an integral 

part of U.S. foreign policy and also worked to encourage revenue 

transparency among the 56 participating States of the Organization for Security and Cooperation in Europe. 

According to Transparency International, 6 of the top 10 oil-exporting countries to the United States are among the most corrupt 

countries in the world. A lack of transparency within governments 

and the energy sector poses both a threat to energy exports and the 

ability of governments to properly manage revenue for their citizens. These governments are not accountable to their citizens and 

have taken advantage of the resources of the Nation in pursuit of 

the self-interest of a few corrupt leaders. 

Oil and gas companies have generated enormous revenues for a 

number of countries yet rather than improving the lives of ordinary 

families, this money has often fueled wars and corruption, weakened economic development and worsened poverty. 

One of the key ways the international community has sought to 

counteract the political and economic instability inherent in the reVerDate 0ct 09 2002 11:25 Oct 26, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 U:\WORK\042210.TXT KATIE
2

source curse is through programs that seek to instill transparency 

and accountability into the resource-payment system. EITI is the 

leader in this field. 

Corruption in these nations not only affects the citizens of those 

countries but it comes back to us squarely here in the United 

States in terms of energy security. Here’s the linkage: Corruption 

and kleptocracy in resource-rich countries lead to political instability, drive up oil prices and present significant risks to U.S. investments. 

As citizens in oil-producing countries become disgruntled with 

their own governments and with foreign investors whom they believe to be corrupt, such citizens can foster political unrest and 

threaten oil supplies. And we haven’t begun to talk about the incredible human toll in countries where citizens are deprived of 

basic services while the government leaders buildup their offshore 

bank accounts. 

Each of the countries we are talking about today whether it be 

Russia, Kazakhstan, Turkmenistan, Uzbekistan, or Azerbaijan, 

they face some aspect of this resource curse. And while the situation in each country is unique, we can generalize and say that the 

lack of transparency in politics and in oil-and-gas deals is at the 

root of many of their social problems. 

EITI is a crucial first step. But I’m concerned that with regard 

to civil society and free press, we may be stopping far short of the 

finish line and declaring winners before they have completed the 

race. 

I’m looking forward to hearing today’s witnesses and I hope that 

they will address the situation in some of the recently validated 

countries such as Azerbaijan, where we see continued assaults on 

freedom of speech and on civil society and how that bodes for the 

future of EITI implementation. 

I would apologize for many of my colleagues—I know some of 

them had plans to be here but the House of Representatives recessed early today and that caused some of them that are our 

members to head home to their constituencies. Senator Cardin, the 

Chair of this Commission is voting at this time but I expect that 

he will join us shortly. 

But I’m pleased that we do have excellent panels here today that 

will give us their perspective on this issue. We have provided the 

biographical information and curriculum data of our respective witnesses. That’s been distributed. But I would like to just introduce 

our first presenter, Mr. Daniel Baer, the Deputy Assistant Secretary for Democracy, Human Rights and Labor at the State Department. Mr. Baer, you may begin. 

DANIEL B. BAER, DEPUTY ASSISTANT SECRETARY, BUREAU 

OF DEMOCRACY, HUMAN RIGHTS AND LABOR, U.S. DEPARTMENT OF STATE 

Mr. BAER. Thank you very much, Mr. Chairman. My statement 

says good afternoon, Mr. Chairman and distinguished members of 

the committee, but I’ll address you alone. 

Mr. HASTINGS. We’re all here. We have the cameras and the recording and, trust me, we do put it up on our Web site, so you’re 

being watched. 

3

Mr. BAER. [Laughter.] All right. Duly noted. 

I appreciate the opportunity to appear before you today and to 

speak on the link between revenue transparency and human rights 

in resource-rich countries within the context of the efforts of the 

Department of State to support civil society and to promote human 

rights globally. I ask that my full written statement be submitted 

for the record. 

Mr. HASTINGS. Without objection. 

Mr. BAER. Today, over 50 countries, representing 3.5 billion people, are considered rich in natural resources such as oil, gas and 

minerals. However, nearly half of the 3.5 billion in resource-rich 

countries live on less than $2 a day. This fact presents an obvious 

puzzle. If the countries are resource-rich, why are their people so 

poor? 

As you know, one explanation for this puzzle is what development economists have called the resource curse, a theory that explains how apparent abundance can lead to economic underdevelopment and, in many cases, armed conflict. 

The sustainable and responsible management of natural resource 

wells is a complex challenge, one that defies easy solutions. There 

are no silver bullets. Decisions about how to manage volatile revenue flows so that natural resources can become a basis for social 

investment and sustained economic growth are difficult even when 

all the facts are on the table. 

In reality, many of the facts have often been hidden. Revenues 

from resources are often unknown by citizens, controlled by an 

opaque group of government leaders and dispensed without consultation or a transparent process, a fact that exacerbates the challenges and negative consequences of the resource curse. 

Secrecy contributes to and enables poor governance. Transparency and accountability in the management of natural resources 

can help counter corruption, improve governance and foster economic growth. Transparency is not a panacea but it is an important first step. It’s a way of putting more facts on the table. 

It’s no coincidence that countries where corruption is prevalent 

often exhibit poor respect for human rights, as illustrated in the 

most recent edition of the State Department’s Country Reports on 

Human Rights Practices. It is important to underline the link between corruption and human rights as well as the key role that 

civil society can play in fighting corruption and promoting respect 

for human rights. Corruption corrodes a government’s ability to 

protect human rights and to ensure its own respect for human 

rights. Transparency and access to information empower individuals to make informed decisions, from exercising their voting rights 

to monitoring state expenditures. Conversely, endemic corruption 

can obstruct law enforcement and judicial processes. 

In our annual Country Reports on Human Rights Practices, we 

have in recent years increased efforts to highlight the link between 

human rights abuses and the lack of accountability surrounding 

the extraction of natural resources. 

Our reports have underlined that in countries where citizens lack 

the right to access government-held information and where corruption and the extract of industries remains a serious problem, transparency activists, NGOs and journalists have been subject to harVerDate 0ct 09 2002 11:25 Oct 26, 2012 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 U:\WORK\042210.TXT KATIE
4

assment, arbitrary arrest and detention and even death threats for 

investigating and reporting corruption allegations. Our reports also 

underline the same link to trafficking and labor rights abuses, including the use of forced labor and child labor in unsafe mines. 

Our reporting has and continues to inform our policy. Fighting 

corruption has long been a central element of U.S. foreign policy. 

As far back as 1977, which incidentally is the same year that we 

began the Country Reports on Human Rights Practices, the United 

States enacted the Foreign Corrupt Practices Act and made it illegal for U.S. citizens to bribe foreign officials for the purpose of obtaining or retaining business. The United States was similarly the 

principal force behind the 1997 OECD Anti-Bribery Convention 

and the United Nations Convention against Corruption. 

President Obama reaffirmed our commitment in Ghana last year, 

saying, what America will do is ‘‘increase assistance for responsible 

individuals and institutions with a focus on supporting good governance,’’ including ‘‘concrete solutions to corruption on concrete solutions to corruption like forensic accounting, automating services, 

strengthening hot lines and protecting whistle-blowers to advance 

transparency and accountability.’’

In U.S. transparency-promotion efforts, partnerships with and 

support for civil society are central. Civil society can play a key role 

in fighting corruption of all kinds but only if governments respect 

their obligations to give it proper space. Civil society could be a 

particularly powerful force for its citizens when working with companies and governments in multi-stakeholder initiatives in efforts 

to increase transparency and respect for human rights. 

When done right, multi-stakeholder initiatives can create 

transnational advocacy networks, led by a group of governments, 

NGOs and corporate entities that collaborate to establish common 

standards, predictable accountability mechanisms and institutionalized sharing of best practices. 

The subject of today’s hearing, the extractives industry transparency initiatives, EITI, is a prime example. NGOs gave the initial push toward greater resource transparency, then at their summit in Evian in 2003, G–8 leaders agreed upon an action plan that 

included piloting on a voluntary basis, an intensified approach to 

transparency in countries where revenues from extractive industries are important. 

The EITI principals were subsequently agreed at a conference at 

Lancaster House in London. The EITI provides a uniform criteria 

against which each implementing country is assessed in a validation process. Criteria include assessments of the quality and accuracy of payments and reporting and of the ability of civil society to 

engage in the process. 

Currently, 29 EITI candidate countries are implementing. And 

two other countries, Liberia and Azerbaijan, have recently completed the validation process. Each of the remaining candidate 

countries is in various stages of implementation, undertaking a 

multistep process to strengthen revenue transparency. 

As I mentioned already, the EITI was founded on the basis of an 

initiative by civil society. And one of EITI’s strengths is that significant involvement of civil society, including human rights organizations, is central. And while its primary purpose is supporting 

5

revenue transparency this ongoing inclusion of civil society is an 

important feature of the EITI. 

The EITI in itself is not sufficient to eradicate corruption. It is 

not a substitute for an open and participatory budget process. However, it can be an essential part of the solution and it represents 

an important step. The multi-stakeholder approach of the EITI is 

creating a platform for dialogue and engagement which previously 

did not exist in many countries and the EITI reporting process is 

generating data on revenues that were either unavailable or difficult to access previously. 

As we proceed, we will work to ensure that the participation of 

civil society is preserved and that implementation of EITI continues in a way that bolsters the credibility of the initiative. The 

still-to-be-completed process of implementation for the EITI candidate countries points to the challenges ahead. Stepped-up efforts 

will be needed to ensure that EITI principles are translated into 

reality. 

In the longer term, we will continue to emphasize the benefits of 

enhanced fiscal and budgetary transparency, including through 

EITI and similar multi-stakeholder initiatives to all participants; 

reduce corruption; better governance; increased transparency and 

openness; more accountability; an improved investment climate; 

and greater respect for individual rights. As Secretary Clinton has 

put it, ‘‘Sunshine is the best disinfectant.’’ Thank you very much 

and I look forward to answering your questions. 

Mr. HASTINGS. Let me start with China’s role in all of this, Dr. 

Baer. How do you perceive it? 

Mr. BAER. Up until now, China—we would encourage China to 

join the United States as a supporter of the EITI. Obviously, China 

is an important player in the global stage, they are an important 

downstream processor for the extractives industries and this is an 

initiative that we would welcome them to support. 

Mr. HASTINGS. And what about other countries in South America? What role are they playing? 

Mr. BAER. Well, I think at this critical juncture where we’ve kind 

of launched a process and we’re in the first class, if you will, of 

members, the most important thing is to get the process going in 

a way that builds credibility. 

And at this point, there’s always a question with multi-stakeholder initiatives about whether you expand the membership as 

your first focus or whether you get the thing going. And you kind 

of have to do both at the same time. You have to build the car and 

drive it. So certainly, we would support other countries who see the 

EITI as a useful way to anchor and publicize their commitments 

to transparency. We would support their becoming candidate countries and we would support other countries joining us as supporters 

of EITI. 

Mr. HASTINGS. So you do agree then, that there’s a link between 

transparency and good governance? 

Mr. BAER. Certainly, I fully agree that there’s a link between 

transparency——

Mr. HASTINGS. Does one lead to the other? 

Mr. BAER. One is a prerequisite, I would say, for the other. I 

mean, when we talk about the link between transparency and good 

6

governance, especially in this context, we’re talking about good governance in two different senses, actually; two different senses of 

the word ‘‘good’’ because we’re talking about good governance in the 

sense of non-corrupt governance transparency is a good way to put 

up obstacles for corruption in places where resources are extracted—but we’re also talking about good governance in the important way that you talked about in your opening statement in 

terms of governance that does the right thing for its people. 

And even in the best circumstances, we talk about the resource 

curse and what it means for countries, the resource curse—part of 

the resource curse is what’s known as Dutch disease and the resource curse affects not only countries that have poor governance 

but countries that have good—well-entrenched institutions of governance. It’s a challenge for anyone, and as I said, we see transparency as putting the facts on the table. Managing those facts, 

managing the fluctuation in commodity prices, the fluctuation in 

exchange rates, et cetera, is difficult no matter whether you have 

the best minds around the table or you have corrupt minds around 

the table, so it’s good governance in two senses. 

Mr. HASTINGS. I don’t disagree with the thing that you said; I’m 

concerned to know, though, how the U.S. initiatives increase good 

governance and lead to better human rights. 

Mr. BAER. I think the EITI is one of many tools in our tool kit. 

And the U.S. Government provides a full range of assistance to 

countries—not just the EITI. We provide a full range of assistance 

not only to governments—willing governments that want to improve governance in terms of helping them reform judicial sectors 

or law enforcement—but also to civil society and bolstering civil society’s ability whether it’s training journalists to report on corruption and other human rights concerns or bolstering civil society’s 

ability to create a forum for debate within countries. 

At the end of the day, what we’re trying to do is not hold these 

countries accountable ourselves but help empower the citizens of 

these countries to hold their governments accountable to do right 

by them. 

Mr. HASTINGS. Right. Dr. Baer, I take advantage of this moment 

to say to you that I have been to the countries I’m about to address: Turkmenistan, Uzbekistan, and Azerbaijan. In Azerbaijan, I 

had the responsibility of leading the election observation of one of 

their recent Presidential elections. Uzbekistan, I believe I’m the 

only Member of Congress that has spent a week there [Laughter.]——

Mr. BAER. Lucky you. [Laughter.] 

Mr. HASTINGS [continuing.] And/or that have been there at least 

six different times. And in Turkmenistan—I just share this with 

you because it goes into the aspect of human rights, I believe. I 

traveled to Turkmenistan a few years back with a now-deceased 

member and good friend of mine, a Republican, Gerald Solomon. It 

was one of the most interesting trips that I’ve ever been on and it 

was at Thanksgiving time and we visited the Peace Corps that had 

a limited number of people there but that were doing an awesome 

job with just the few people that they had. 

Turkmenistan is the only place that I have been in the world 

that I could not coax a smile out of a child. I don’t care whether 

7

I’m in Africa or China, in the United States, I care about little children and I try to make them comfortable and I can always coax 

a smile out of them. I had the most blank stares from children in 

that place of any that I’ve ever been to. 

In Azerbaijan and Uzbekistan—and I might add when I was in 

Turkmenistan, the reference to Turkmenbashi, he’s now deceased, 

was prominent everywhere. Everywhere you went, you saw pictures of their leader. 

In Uzbekistan, I have had the good fortune of getting to know 

President Karimov. And in Azerbaijan, I evidently have been on 

the wrong side of the views of the present government. But I was 

treated hospitably in those places. 

But one of the things that I have a habit of doing is going off 

the reservation from the State Department or the Defense Department and either catching a bus or riding a trolley or walking 

among the people. And clearly, all of these countries are missing 

some links to better human rights and better civil societies. 

Toward that end, how then does Azerbaijan get certified with reference to EITI? Talk to me about that. How does that happen and 

how do we ignore, or if we do not ignore, how do we turn a blind 

eye to the fact that there’s little space for the media in civil society. 

A frequent contributor to our efforts here is Freedom House and 

they’ve long signified that Azerbaijan was not free. I made a critical review of their election process when I was there and I stand 

by it. Based on what I saw. I’m from Florida and if there’s a bad 

election, I know about [inaudible]—elections. [Laughter.] So I 

called it like I saw it. But yet I look up and I see that they’re on 

the certification list and you mentioned in your testimony the two 

more recent ones, Liberia and Azerbaijan. Talk to me about those 

two, for example, and we’ll leave Uzbekistan and Turkmenistan for 

another time. 

Mr. BAER. I’d like to pick up toward the end of your question 

with the question of turning a blind eye, and say that certainly we 

agree with your concerns and absolutely we cannot turn a blind eye 

to the concerns about constrictions on the media, on human rights 

activists, on civil society in Azerbaijan. That remains a focus of our 

human rights reports released last month and it remains a focus 

of our diplomacy and our programming and we need to hold fast 

to that. 

As far as the certification of Azerbaijan, I will refrain from comment about the certification process because it was done by the 

board. My understanding is that it was carried out according to the 

initiative’s predetermined process and that Azerbaijan met the 

standards. 

I will say two things, however. One is that there was a work 

place that was assigned to Azerbaijan when they were certified on 

civil society and on making sure that civil society was brought to 

the table in terms of the context of implementing the EITI in-country. We have followed and will continue to follow that work plan 

because we think that is crucial. 

The other comment that I would make is that I think with these 

multi-stakeholder initiatives, first of all, churches are for sinners, 

not just for saints, and part of our goal is to get the sinners in and 

to get them to commit to standards so that they can improve. And 

8

we should see this as a dynamic process which, having made these 

commitments, gives us something to anchor our comments and our 

consistent pressure to, and so that’s something that we should look 

at going forward. 

The other thing is that it’s not just—it’s not just civil society that 

should be helped by EITI but also EITI’s success depends on civil 

society. The transparency is only valuable—you know, bringing the 

facts to the table and not having anybody around the table to talk 

about them isn’t valuable. It calls to mind the—if a tree falls in the 

forest and no one’s there to hear it. And so I think we see a twoway street there. And certainly, the future of the EITI depends on 

us continuing to work tirelessly to make sure that civil society has 

a place at the table and to counter through our diplomacy and programming restrictions on civil society in places like Azerbaijan. 

Mr. HASTINGS. I think your remarks are very salient in that regard and all, but what role could the United States and more specifically this particular structure, the Organization for Security and 

Cooperation in Europe, what role could we have in supporting already-existing initiatives to promote transparency and combat corruption? 

Mr. BAER. Yes, well I think the OSCE in many ways reflects—

is an institution that reflects the connection between transparency 

and good governance that we talked about before. The unique aspect of the OSCE in terms of its comprehensive approach to security and seeing the connections between political, military security, 

environmental, and economic security and the human dimension 

really goes to the heart of what initiatives like EITI are about, and 

certainly in the context of this sort of hearing. I think continuing 

to advocate for that comprehensive approach to security is one 

thing at the rhetorical level. 

At the most concrete level, I think that the field missions of the 

OSCE can be critically important in terms of advocating for implementation in countries. I know that members and their staff travel 

frequently to visit these field missions and I think that by shining 

a spotlight on their work, you contribute to their ability to do that 

and I think that’s critically important. 

Mr. HASTINGS. Right. One final question and then I’ll move onto 

the next panel is the role—well, do you perceive any policy measures that the United States could take to further promote transparency in these resource-rich countries? And what about the role 

of international-lending institutions such as the World Bank and 

the International Monetary Fund? How do you address that? 

Mr. BAER. Let me take that in two parts. As a general policy 

area, I think that one of the things we’ve seen in recent years is 

an aggressive attack on civil society in many places around the 

world. And I think one of the policy measures that we can take 

generally speaking is to be equally aggressive in countering that 

attack. 

Civil society, those are the voices that have to hold governments 

accountable in the end and we should be steadfast in our commitment to protect the space in which civil society operates to make 

sure that they have the capacity that they need to hold governments accountable. 

9

In terms of the international financial institutions, I do know 

that certainly the World Bank is a supporter of the EITI. We support the EITI through the World Bank’s multi-donor trust fund and 

certainly the World Bank and other international financial institutions are involved in many of the extractive industry development 

deals around the world. 

I would defer to my colleagues at Treasury since they manage 

the relationship with those institutions but I do know that there’s 

political support from the World Bank and I do know that technical 

assistance of the sort needed to implement EITI is often part of the 

broader package that defines the relationship of those institutions 

with the countries they’re working with. 

Mr. HASTINGS. I mean my remarks now to be complimentary and 

not patronizing. I appreciate, genuinely appreciate, your testimony—clear, concise and quite frankly I’m glad that you have the 

portfolio that you do and that you are available to this committee 

to provide information to us as you have now, and I can assure you 

we’ll continue to call upon you and your colleagues to address this 

particularly difficult area and nascent development issue. 

I had said I had one last question but as I was thinking along 

about your testimony, you spoke about the G–8 and actions that 

they had undertaken and then you mentioned Lancaster House 

where there was some kind of followup. 

One of my criticisms, not of the State Department but just give 

me some feedback on this. One of my criticisms is the gap between 

the big meeting and the action and the followup and another big 

meeting. I could go from the ministerial in OSCE to regional meetings and go back and forth. 

And that doesn’t seem to me to be a sustained effort to accomplish the ends that we all want. And to my way of thinking, it’s 

really an all-day, everyday thing and not just, we had a feel-good 

meeting and everybody came together, the G–8 shook hands, they 

sipped some wine, they made a statement and then they met at 

Lancaster House, and who the hell knows about all of this and how 

do we get to know about all of this, and when is it that we can 

have a matrix that demonstrates that we did what we intended to 

do and what the failures and lack of follow-through did or did not 

do? 

Now, that’s a whole lot but I ask you to sum that up for me. 

Mr. BAER. I will try, Mr. Chairman. [Laughter.] Certainly, I 

wholeheartedly agree with you that at some point you have to say, 

talk is cheap, let’s do it. And I think that what we see across the 

board with these multi-stakeholder initiatives is that, indeed, they 

are voluntary. 

In terms of being voluntary, you get to choose whether to join 

them. But they only matter if you make joining mean something. 

And the way to make joining mean something is to not only have 

a set of principles but also to have an accountability mechanism 

that allows other members to respectfully but purposefully hold 

you accountable for living up to the commitments that were made. 

And so I think that one of the things that we will be continuing 

to work on, not only in the context of EITI but with other multistakeholder initiatives, is to make sure that it’s not—and the accountability mechanism can’t be a ‘‘gotcha.’’ It’s not a ‘‘gotcha’’ 

10

mechanism. It’s a way to drive concrete changes on the ground. 

And we want to make sure that we’re putting in place accountability mechanisms that are dynamic, that aren’t just a threshold 

and you get over it and then you can coast; that are dynamic, that 

drive at constant improvement and that really do mean that it’s a 

365-day-a-year initiative and not just a series of meetings by highups. 

Mr. HASTINGS. I like that. Thank you, sir, very much. You certainly are welcome to stay but I understand you may have to be 

about your business. But I thank you for your presentation and 

would now like to call up our next panel. If you would, Dr. Baer. 

Mr. BAER. Thank you very much. 

Mr. HASTINGS. Thank you, sir. I’d like now to welcome Mr. Ian 

Gary, the senior policy advisor for extractive industries with Oxfam 

America. And then Mr. Max Bokayev with Arlan, an NGO from 

Kazakhstan. And finally, Mr. Anthony Richter, the chairman of the 

governing board of the Revenue Watch Institute. And as I indicated 

earlier, the biographical data on all of these gentlemen is available 

at our desk outside. 

Why don’t we start with you, Mr. Gary? You’re in the middle. 

IAN GARY, SENIOR POLICY ADVISOR/MANAGER EXTRACTIVE 

INDUSTRY, OXFAM AMERICA 

Mr. GARY. Well, thank you Co-Chairman Hastings and thank you 

to the members of the U.S. Helsinki Commission for their interest 

in this important and timely issue and for the opportunity to testify. 

Oxfam America’s worked to address the problems of resource-rich 

countries which have been described in the first panel for more 

than 10 years. Oxfam America is a member of the global Publish 

What You Pay coalition, a coalition of groups that help citizens in 

resource-rich developing countries hold their governments accountable for the managements of revenues from oil, gas and mining industries. 

As we’ve mentioned in the first panel, many experts have identified secrecy in extractive industries as a major obstacle to reform. 

In many countries, contracts between foreign firms and host governments are shielded from public view and there is little information about payments from companies to governments. 

In addition, governments are often not providing their citizens 

with accurate, timely and complete information about government 

budgets and expenditures. While addressing these transparency 

gaps has been at the heart of the international reform agenda, 

most agree that improving transparency in the extractive industries is a necessary but not sufficient ingredient for reforming the 

management in use of extractive industry revenues. 

Starting in 2002 after the establishment of the Publish What 

You Pay campaign, as you’ve heard, the EITI has been seeking to 

increase transparency in resource-rich states. EITI’s rules include 

the active participation of civil society groups. 

While transparency in the efforts of EITI are an important first 

step, it has taken a long time to make progress and many policymakers and participants, I would argue, have lost sight of the bigger picture. 

11

The transparency agenda does not work without improvements 

in political accountability mechanisms, including basic human 

rights such as freedom of expression and association. In some countries, there is a yawning chasm between limited progress on transparency and little or no progress on human rights. EITI must not 

just be a technocratic exercise of publishing numbers; otherwise we 

may end up with the creation of a Potemkin village of good governance designed for donor consumption while underlying problems of 

political accountability remain unaddressed. 

So the question is, does EITI contribute to increasing democratic 

debate and improving human rights? In some countries, it is clear 

that EITI has disclosed new information and provided a platform 

for civil society groups to engage with their own governments. In 

Ghana, for example, the EITI process in the mining sector has 

raised awareness about weakness in government royalty collection 

and heightened the debate on the use of oil revenues that will flow 

into Ghana starting next year. 

But in Ghana, there is a vibrant civil society, active press and 

a generally favorable human rights environment. In other countries, the impact of EITI in human rights, the development of independent civil society and improvements in the use of government 

revenue is questionable. EITI might help open up the previously 

taboo subject of government revenues from extractive industries in 

some countries, but there is often a limit as to how much openness 

will be tolerated and whether the government will allow information disclosed through EITI to be used by watchdog groups, journalists and parliamentarians. 

In Azerbaijan, there is some evidence that civil society capacity 

has improved during EITI implementation. But progress in EITI 

implementation has been set against a weak human rights record 

for the country, as you just mentioned. The country received EITI 

compliance status in February 2009 even though no multi-stakeholder working group had been established, a requirement under 

EITI and in spite of questions regarding the accuracy and comprehensiveness of EITI payment information. 

Throughout 2009, the status of Azerbaijan came into question as 

the country did not fulfill the conditions that the board had set for 

Azerbaijan in order to retain its compliant status. Azerbaijan finally fulfilled these conditions in February of this year, 1 year after 

it was initially deemed compliant by the board. While Azerbaijan 

had somewhat prematurely been deemed compliant, the State Department and other human rights observers noted a worsening of 

government restrictions on freedom of association during 2009 and 

found that the government does not respect freedom of expression 

or the press in practice. 

In Equatorial Guinea, a country marked by massive oil-fueled 

corruption and ruled by an authoritarian regime, the country was 

allowed to join EITI as a candidate in 2008, even though the 

human rights situation is dire and the few civil society groups 

which exist operate under severe restrictions. Equatorial Guinea 

was dropped from EITI on April 15th, after it was not granted an 

extension in order to complete its validation process. 

In other countries, the gulf between EITI and human rights practice has also been wide and the board has not taken forceful action. 

12

Activists have been harassed, arrested, prevented from traveling 

abroad and had their NGOs deregistered by the government. For 

example, in Gabon, in 2008, activist Marc Ona was detained and 

prevented from traveling abroad and many NGOs involved in the 

local Publish What You Pay coalition in the country were 

deregistered by the government. All this occurred while the government of Gabon served on the EITI board. 

So how should the United States improve its international effort 

on these issues? A few suggestions: First, the United States should 

develop concrete strategies for human rights promotion and protection in resource-rich states, with clear targets and benchmarks. 

Where EITI is being implemented, such strategies should be integrated with donor support for EITI processes. EITI, by itself, cannot serve as a stand-in for such strategies and it would be unwise 

to think that EITI alone will spur significant progress on human 

rights, civil society development or anti-corruption efforts. To pretend otherwise would in some cases mean that EITI was being 

used simply as a fig leaf to cover up a lack of such strategies by 

donors and a lack of progress on human rights and political accountability. 

Second, the U.S. State Department’s Bureau of Democracy, 

Human Rights and Labor should actively engage in the global EITI 

process, for example, through participation in EITI’s rapid response 

board committee, focused on protection of civil society activists. 

Third, the United States should increase support for efforts by civil 

society journalists and others to disseminate and popularize information disclosed as a result of EITI. Such steps, such as radio programs in local languages, are relatively inexpensive and can be 

quite powerful. 

Finally, while EITI is making some progress in some countries, 

the pace and depth of progress today and the fact that many resource-rich countries are outside the process show that other complementary measures are needed. 

The U.S. Congress should pass the Energy Security through 

Transparency Act, which was introduced in the Senate last year, 

and we hope companion legislation will be introduced in the House 

shortly. This legislation in the Senate, sponsored by Senators 

Lugar and Cardin, the Chairman of this Commission, would increase the disclosure of oil, gas, and mining company payment information to host governments around the world. The legislation 

would complement EITI and provide regular information on payments to host governments. 

This type of disclosure would not depend on the waxing and waning of political will or the voluntary participation of countries in 

EITI. This legislation is endorsed by a broad range of anti-poverty, 

human rights, environment and faith-based groups and, for example, by a mining industry representative, Newmont Mining. We 

would also like to see the Obama administration clearly support 

the Energy Security Through Transparency Act. 

With these words, thank you for allowing me to testify today and 

I look forward to your questions. 

Mr. HASTINGS. I just wanted to make one observation. We did 

have that measure that Senators Cardin and Lugar introduced. We 

passed it in the House in the Financial Services Committee [inVerDate 0ct 09 2002 11:25 Oct 26, 2012 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 U:\WORK\042210.TXT KATIE
13

audible] all right. The language itself should be in conference so 

hopefully we will be able to do that. 

But thank you for your testimony. Because we have given Mr. 

Bokayev added time, Mr. Richter, maybe if you’re ready, you go forward and then we will hear from Mr. Bokayev. It really doesn’t 

matter to me but we agreed to give him additional time. 

ANTHONY RICHTER, CHAIRMAN OF THE GOVERNING BOARD, 

REVENUE WATCH INSTITUTE 

Mr. RICHTER. Thank you, sir. Chairman Hastings, thank you for 

the opportunity to talk to you today about the link between natural 

resource revenue transparency and human rights. It’s a particular 

pleasure to come before this Commission, which under you and 

Senator Cardin has shown outstanding leadership on the issue of 

transparency. I’m also pleased to be here before the Helsinki Commission at this time because Kazakhstan is both the Chair-in-Office of the OSCE and an EITI candidate country. 

Briefly about Revenue Watch: We are a non-profit policy institute 

and grant-making organization that promotes the responsible management of oil, gas and mineral resources in resource-rich countries. We’ve been involved in the extractive industries transparency 

initiative since its inception and I’m currently a member of its 

international board representing civil society. 

I’d like to make just three brief points and allow time for discussion and for the final panelists. First, I’d like to address the connection between revenue transparency and human rights. Second, 

I want to make a couple of observations about the adherence of resource-rich countries to international governance and rights norms. 

Third, I’d like to describe what EITI, the global voluntary standard 

in resource revenue transparency, is doing to address questions of 

rights and democracy. I’ll conclude, if I may, with some policy recommendations for your consideration. 

First, how are revenue transparency and basic freedoms connected? Clearly, revenue transparency can only be meaningful in a 

society that respects basic rights and freedoms. These rights are 

necessary for the public to learn the facts about how their society 

is governed, to air this information in the media and to hold free 

elections when they want a change. Among other things, revenue 

transparency needs good NGO laws, an independent judiciary, a 

strong parliament capable of playing its oversight role as well as 

a free and independent media. You need these freedoms and rights 

in order to use the data that comes out of EITI reports. 

My second point: What is the record of resource-rich countries on 

adherence to rights and governance norms? Well, by and large, it’s 

not very good. Poor governance and corruption in resource-rich 

countries correlates highly to violation of rights. One indicator that 

we’ve been looking at to get at some detail on this is the rate at 

which resource-rich countries in the EITI sign up to human rights 

and governance instruments. The table in my testimony shows 

much work needs to be done to get a better overall sign-up to these 

instruments. 

For example, very few EITI countries have signed the OPCAT, 

the Optional Protocol to the Convention against Torture and other 

Cruel, Inhuman or Degrading Treatment or Punishment. The same 

14

is true for the Convention for the Protection of all Persons from Enforced Disappearance. Resource-rich countries, not surprisingly, 

also lag in the area of freedom of information. Worldwide, there 

has been dramatic progress made by campaigners for freedom of information—82 countries have adopted freedom of information laws. 

But of the countries implementing EITI, only six have a law providing access to information. A number of the EITI countries have 

also failed to ratify the U.N. Convention against Corruption and as 

we all know, ratification is only the beginning. 

So if we need a better rights environment in resource-rich countries, then we need a targeted and integrated strategy, then, to advance rights and freedoms. Third point about the EITI: How does 

EITI, the world’s major voluntary transparency standard—what 

does it say and do about rights? The EITI deals with the issue of 

democracy and rights largely through guaranteeing the participation of civil society in the multi-stakeholder process. EITI believes 

that transparency without such participation is hollow. The EITI 

criteria principles and rules articulate a clear framework for civil 

society to play an active, free, full and independent role in the process. 

So what is EITI doing about this and how are they taking the 

rights and freedoms agenda forward? I call your attention to some 

recent important developments. First, the recent decision of the 

board in the case of Ethiopia: In one of its most significant recent 

decisions, the board declined to admit Ethiopia as an EITI candidate due to its proclamation of charities and society. The board 

decided, in effect, not to admit Ethiopia, quote ‘‘until the proclamation on charities and society is no longer in place,’’ because the law 

restrained NGOs too much. This is the only such instance in the 

history of EITI where a country has failed to be admitted and the 

grounds for this action were clearly rights-based. 

Second, EITI’s Rapid Response Committee: The EITI board has 

created a Rapid Response Committee to deal with what it calls, 

quote, unquote, ‘‘implementation problems.’’ It also intervenes to 

protect civil society. When civil society actors are harassed or feel 

that they are no longer independent, the committee intervenes and 

it does so with considerable force, though sometimes from behind 

the scenes. 

Third, in December 2009, EITI adopted a new policy giving the 

board power to impose sanctions ranging from suspending to delisting a country that violates EITI principles or criteria. And finally, EITI has created a working group on participation of civil society organizations in EITI. The discussion of the Ethiopia case 

may have led in part to the establishment of this working group 

to address the conditions required for participation of civil society 

and it will soon prepare coherent and comprehensive guidance for 

the board. 

In conclusion, I’d like to offer four recommendations for your consideration. First, in resource-rich countries, the U.S. Government 

should adopt a clearly integrated approach that focuses human 

rights support into other policies directed at countries rich in natural resources, including pressing resource-rich countries to adopt 

all important human rights treaties and governance norms and 

supporting the adoption for freedom of information laws in resource 

15

rich countries, as well as ensuring that the International Convention on Civil and Political Rights Article 19 is fully observed, as 

EITI and civil society, including the media, cannot function properly without such guarantees. 

Second, the EITI board should in a timely and rigorous manner 

undertake the assessment it is now starting under the working 

group on civil society participation. It should define the necessary 

conditions that need to be in place to ensure that independent civil 

society can freely and meaningfully participate in the EITI process. 

This assessment should guide the revision of the EITI sign-up criterion for countries that are interested in becoming EITI candidates. 

One final recommendation to the Helsinki Commission and to 

the OSCE: The Helsinki Commission should press for the OSCE to 

endorse EITI and forge closer links between resource revenue 

transparency and human rights observance. The shared desire to 

hold an OSCE summit, for example, with meaningful outcomes, 

opens a door for discussion on resource revenue transparency with 

a view of an endorsement of the EITI by the summit. 

Additional steps could include signing an MOU between the 

OSCE and the EITI; the economic and environmental coordinator 

could work on combating corruption; there could be a discussion at 

the parliamentary assembly and, as I suggested, the EITI could 

form a part of the summit agenda. 

We join other members of the Publish What You Pay U.S. coalition in urging Congress to pass the Lugar-Cardin Energy Security 

Through Transparency Act. We believe that this would provide critical leadership in reference to a conversation which has taken place 

earlier in today’s proceedings. I think it would set an excellent example for other countries, whether in this hemisphere or otherwise, 

that the United States is showing leadership in this area. 

Thank you, Chairman Cardin. I am ready to answer your questions. 

Mr. CARDIN. Thank you very much. Mr. Bokayev? 

MAX BOKAYEV, CHAIRMAN, ARLAN 

Mr. BOKAYEV. Thank you. I would like to thank the U.S. Helsinki 

Commission for invitation to testify at this hearing, which covers 

an issue of critical importance to Kazakhstan. I hope to give you 

a perspective on the real challenge being faced on the ground in a 

country where extractive industries play such an important role. 

Today, I will share with you my views from my experience as 

NGO activist. Since 2003, I have been the Chairman of the NGO 

Arlan, based in Atyrau, the largest oil-producing region in 

Kazakhstan. We help citizens affected by extractive industries 

projects, to protect their rights to participation, access to information and access to justice. We also work with citizens’ groups to 

conduct advocacy to improve the transparency of oil revenues, as 

well as the environmental and social performance of specific oil 

production projects. 

As you may know, oil is a central part of the Kazakhstan economy. Most of the largest oil companies in the world operate in 

Kazakhstan, such as Chevron, Exxon Mobil, ConocoPhillips, Shell, 

Total, and others. Modern Kazakhstan is facing all the political 

16

and the economic problems that are typical to developing countries 

rich in natural resources. The warnings of economists, sociologists, 

and political allies made to the leaders of Kazakhstan in the early 

and mid-nineties has now become our reality. 

We are seeing significant evidence of the so-called resource curse. 

The lack of transparency in the governance of the oil sector has facilitated rampant corruption in the bidding and contracting process, allowing corrupt public officials to loan them millions of dollars 

of public funds, public funds that could be used to provide social 

services and economic development opportunities. 

Some of you may know the scandal called ‘‘Kazakhgate.’’ The 

criminal case names the Kazakhstan President, Mr. Nazarbayev, 

as an unindicted co-conspirator. The defendant, James Giffen, a 

consultant to the Kazakh Government, is accused of channeling 

more than $78 million in bribes to Mr. Nazarbayev and the head 

of the country’s Oil Ministry, the money doled out by American 

companies seeking access to Kazakhstan’s vast oil reserves. 

Kazakhstan officials said that the charges have nothing to do 

with their president as they concern American citizens, though several American activists addressed the U.S. Department of Justice 

on behalf of Kazakhstan. They requested to stop the proceedings, 

taking into account the strategic importance of U.S. relations with 

Kazakhstan. 

In response to allegations of corruption by companies, the statecontrolled bodies will be indifferent as specific state interests arise. 

In these cases, the state uses various pressing methods, starting 

with sponsorship extortion and ending with complete overhaul of 

countries. It is no surprise that Transparency International Corruption Perception Index gives Kazakhstan a score of 2.7 out of a 

possible 10, signaling the belief that public officials are corrupt. 

Against this backdrop, the human rights situation in Kazakhstan 

has dramatically worsened. For example, in Atyrau region, 17 percent population doesn’t have any access to drinking water. The infant mortality rate in this region is higher than the national average of 20.8. For comparison, in developed countries, the infant mortality is below six. In Mangghystau, another big oil region, the 

rural poverty rate is 63.5 percent. 

The government has been working diligently to repress independent media and human rights activism. Many journalists and 

others working to hold the government to account for its mismanagement and laundering of public revenues have been met 

with harassment, intimidation and violence. The government 

amended Kazakhstan’s media law to give itself unlimited power to 

shut down independent and opposition media outlets for technical 

violations. It also created registration procedures for new media 

outlets that were highly difficult to meet. 

Exacerbating this situation is that in more than 20 years of my 

country’s independence, there has been a lack of basic established 

democratic institutions. The elections conducted during the entire 

period of the independence have never met the standards of the 

OSCE. Given this context, it is not surprising that the government’s commitment to implement EITI and as a memorandum of 

understanding back in 2005 was received by civil society with great 

hope and enthusiasm. 

17

I work closely with the NGO coalition called Oil Revenues—

Under Public Oversight to push for EITI implementation. Even 

fractional improvement in the transparency of state revenues could 

have contributed to more effective governance and to the establishment of a relationship of trust between the government, companies 

and civil society. 

The implementation of EITI is overseen by the multi-stakeholder 

group, the National Stakeholder Council on EITI. The council is 

chaired by the wise minister of energy. Civil society is represented 

in the council by the coalition Oil Revenues—Under Public Oversight. This coalition holds all three civil society seats on the council 

and actively participates in the council’s work. 

The EITI reports produced by Kazakhstan are all aggregated, so 

there is no company-by-company payment data. However, they 

cover almost all kinds of payments made by extractive companies 

to the government. While the validation results indicate progress 

achieved by Kazakhstan in implementing EITI, they also highlight 

issues which stakeholders will need to address. Kazakhstan is 

amongst 16 countries which were granted an extension of the validation period by the EITI board. 

Companies and NGOs have different perceptions of the meeting 

validation criteria. While NGOs are saying that the glass is halfempty, the companies argue that it is half-full, saying that 

Kazakhstan’s strong commitment to EITI is clearly evident. 

We take this extension with responsibility to meet validation criteria within 6 months. Only 122 countries’ companies out of 7700 

are covered by the EITI. Not all material payments are covered by 

reporting. The companies’ reports not always are audited in accordance with the international standards. The detailed working plan 

is not published. We hope that in 6 months, all validation criteria 

will be met without any exception. However, even after 5 years, it 

is still impossible to say unambiguously that the transparency of 

payments has translated into concrete improvement and that it has 

made an impact on the positive development of civil society and 

human rights. 

On the one hand, these 5 years of implementation of the EITI 

again proves that transparency in the extractive industries starts 

with transparency in the administrative, legal and judicial systems 

of the state. Under authoritarian regime with excessive dominance 

of big, extractive companies in the economy and given weak civil 

society, the role of the EITI is reduced to issuing of usual regional 

accounts. 

But the other hand, despite all the difficulties, the EITI national 

multi-stakeholder group is the only place where representatives of 

independent NGOs can delegate their representatives and this 

right is given to them by the EITI. Being aware of the limited mandate of the EITI, the Kazakhstan civil society activists raise the 

question of expanding the mandate even before the signing of the 

EITI MOU. 

But whenever NGOs suggest going beyond the formal requirements of the EITI and considering the transparency in a broader 

sense, representatives of extractive companies and the state officials say in one voice, this is not within the mandate of the EITI. 

Like many other representatives of civil society of Kazakhstan, I 

18

strongly believe it is necessary to further deepen and widen the 

EITI. 

In particular, my recommendations would be to achieve that the 

government and extractive companies acknowledge the mandatory 

publication of detailed disaggregated EITI reports; achieve transparency of information and social investment projects of extractive 

companies; obtain transparency of contracts for subsurface use and 

strengthening the role of the state representative bodies and civil 

society in the management of revenues from extractive industries. 

However, despite good intentions, government assuming EITI obligations will face challenges and it will take political will to work 

through those challenges. It is in this context that the leadership 

and support of developed countries is needed. So taking this opportunity, I would like to urge U.S. lawmakers to pass the Energy Security Through Transparency Act in your Senate. With this legislation, United States will set a standard for revenue payment transparency in the extractive sector, as well as its support to EITI. This 

will in turn help to strengthen the position of civil society throughout the world, particularly in Kazakhstan. 

In closing, I would like to say that in the Kazakhstan as well as 

in many other countries, the subsurface has been declared to be the 

property of the people. If we also consider that the subsoil is the 

property of not only the present generation but of future generations, it becomes clear that the sustainable management of revenues from these subsoil resources is the protection of the human 

rights of future generations. In my opinion, this is the argument 

that demonstrates the link between revenue transparency and 

human rights. 

Thank you for your work to understand and improve transparency mechanisms so that we can together ensure the real participation of citizens in the equitable distribution and use of resource revenues and in the management of these revenues to protect the human rights of future generations. Thank you. 

Mr. HASTINGS. Thank you very much. As all you can see, we 

were joined by the Chair of the Commission that I am fortunate 

to Co-Chair with. Senator, if you have any remarks you’d like to 

make or I’ll go forward. I apologize for having to step outside; I 

went outside to meet with Egyptian generals so I didn’t hear your 

testimony, Mr. Richter, but I did read it and I do compliment you. 

You’ve done something that almost helps to eliminate the need for 

hearings and that is you’ve given us recommendations of substantial import and I take them to heart, including passing the CardinLugar transparency matter. But, Senator, if you would want to? 

HON. BENJAMIN L. CARDIN, CHAIRMAN, COMMISSION ON 

SECURITY AND COOPERATION IN EUROPE 

Mr. CARDIN. Well, first let me thank Co-Chairman Hastings. I 

apologize to the witnesses—the Senate Committee on Budget was 

marking up the budget. It’s one of the committees that does not 

use—we have to be personally present; we can’t use proxies in that 

committee and there are usually a lot of partisan votes so it’s required that we be personally present in the committee room during 

the entire presentation so I apologize for missing the testimony. We 

19

did get the budget done—we passed it out, so that’s the good news. 

We’re moving forward on that. 

The EITI and transparency is critically important in the—not 

only the OSCE region but globally. We are pleased that the initiative has gained a lot of interest and more countries are participating in it. However, it is a voluntary program and it is based 

upon transparency. There is no requirements in the program for 

fighting corruption. 

So I think, Mr. Chairman, what I will do is yield to you for your 

questions, and then I have some questions that I would like to ask 

the panel of witnesses. To me, this is an extremely important subject. 

We’ve had numerous hearings in the Foreign Relations Committee, including one today, dealing with global hunger and food 

security. And front and center in that hearing was whether there’s 

transparency in the U.S. participation with other countries that 

will set up the institutions within that country, that they can really 

do something permanently for food security. So whether it’s mineral wealth that has become a curse in so many countries—if you 

can’t get the wealth to the people, if you can’t get the food to the 

people, if you can’t share the wealth of the nation, then in reality, 

you’ll never be able to overcome the problems of the country. 

And quite frankly, corruption is the cancer that has been eating 

away at the ability of so many countries to be able to use transparency and wealth—mineral wealth—to feed their people, to take 

care of the health needs of their people, to house their people, and 

to allow their people to have the opportunities that should be made 

available. So I really want everyone to know how important I think 

this subject is. 

I will also raise, during my questions, that if you’re going to be 

able to deal with transparency, you have to have an independent 

press—independent journalists. And if journalists are intimidated 

or arrested or beaten up, you don’t have the transparency that’s 

implied in the EITI, and it doesn’t work. So all these things go together, and I think we need to have a coordinated effort along with 

transparency in the extractive industries. 

Mr. HASTINGS. Thank you very much, Mr. Chairman. Mr. Richter, as I indicated to you, I had to leave the room, but I do have 

some questions that I would like to put to you now. A number of 

countries are outside the framework of EITI. And I guess the question is, what really is the hope of implementing transparency programs in countries that are so difficult? And I think you were here 

earlier, when Dr. Baer was testifying, and I identified three countries, at least, but there are more, that are on the list, that present 

the same kind of problem. So is there hope for implementing transparency programs? 

Mr. RICHTER. Well, I think you, sir, Chairman Hastings, referred, 

earlier in your remarks, to Turkmenistan as a particularly difficult 

case, and this is one that we have also looked at. I think it’s a key 

point that, though Turkmenistan does not meet the EITI sign-up 

criteria, it’s still incumbent on governments, companies and civil 

society to push Turkmenistan to uphold and promote the same 

kind of principles. 

20

One fact, which you probably know well, having visited under the 

time of Saparmurat Niyazov, that when he led the country, a staggering 75 percent of government spending was off budget. That has 

changed just a little bit under President Berdimuhamedow. But 

there’s new opportunities for us to engage with the government of 

Turkmenistan. I could point, for example, to a new Turkmenistan 

Stabilization Fund which is being created. 

The fund, if we have some advice to offer, should provide proper 

accounting of all the financial flows and disclose operations to the 

public. The fund should be audited by an independent body. Offbudget funds should be brought into supervision. These are—we 

have quite a number of specific recommendations for 

Turkmenistan. There’s a question as to the leverage. Another 

area——

Mr. HASTINGS. What’s the aegis for the fund? Under what aegis 

is——

Mr. RICHTER. I would have to—I’d be happy to respond in writing 

subsequently—find all the details about how the fund is being administered, in addition to some concrete suggestions on how to——

Mr. HASTINGS. But is this under EITI, or——

Mr. RICHTER. No, sir. It’s a Turkmen Government——

Mr. HASTINGS. All right. 

Mr. RICHTER. It’s a Turkmen Government fund. I could offer you 

some details subsequently. The other area which relates, also, to 

U.S. energy security interests is the creation of the Nabucco pipeline. If the Nabucco pipeline gets built, Turkmenistan, as a supply 

country, would benefit from it, and if the United States is involving 

public moneys in the construction of the Nabucco pipeline, this 

would give us the standing to ask that these type of transparency 

principles be employed in Turkmenistan. 

Those are a couple of specific examples—the stabilization fund, 

the Nabucco pipeline—where we might have some leverage, some 

sway. Sir, you also referred to Uzbekistan, which is another particularly troubling and difficult case. I believe yesterday, or quite 

recently, a long-term arrangement was signed between Uzbekistan 

and the Russian Federation committing volumes of natural gas in 

that direction. But instead, I think that not all of our interest in 

transparency should be directed toward those type of natural resources. 

In Uzbekistan, there is a dreadful problem with mass, state-directed use of child labor in the cotton fields. Each fall, according 

to well-researched reports, some 1.5 to 2 million school-age children, for months at a time, are sent to the cotton fields in hazardous environmental conditions, earning a bare pittance. And that 

cotton is then exported by state-controlled agencies abroad. 

Tracing the destination of that cotton through their production 

line of various garment-makers is one of the projects that’s been 

undertaken by a group of companies and civil society groups, both 

in Europe and the United States that are interested in this, with 

the aim, ultimately, of getting the Government of Uzbekistan to 

come to the International Labor Organization and get the type of 

assistance that would be available to them under that framework. 

So if we’re interested in transparency and human rights, there are, 

21

in the case of Uzbekistan, albeit not in the natural resources sector, there is something that we could sink our teeth into. 

Mr. HASTINGS. Well, in the interest of time, I will only ask you 

an additional question, and that’s how we increase, in non-Western 

countries, their effect on the discussion of transparency and human 

rights. You know, I’ve left Russia off the table. I did, with Dr. Baer, 

mention China. But what arguments would we use with the nonWestern investors and governments to help convince them that 

they should also be interested in seeing that human rights are respected in countries where they invest? And I might add, not only 

countries where they invest, but within their own confines of their 

sovereigns? 

Mr. RICHTER. Sir, I’ll try to be more concise on this one. I think 

that when one is looking at some of the non-Western countries, I 

don’t believe that it’s necessary, in the case of something like EITI, 

to invoke a human rights argument. There are other arguments 

which are in favor of implementing EITI which are equally persuasive, because these are, after all, companies that are interested in 

the bottom line. 

I think companies from non-Western countries are equally interested that corruption not diminish their bottom line. I think that 

they, equally, with Western countries, understand that transparency reduces risks and increases predictability in their business 

operations, that there are cheaper costs of capital when financing 

a project that’s transparent, as opposed to one that’s opaque. And 

finally, I have been pleased to notice, in countries such as Afghanistan, which has recently joined as a candidate to the EITI, and in 

other countries, that non-Western companies observe the rules of 

the road. 

If EITI is the law of the land—if these are the rules of the road—

they’re going to follow them. And so there’s a whole number of reasons why, including that it’s just the way things are done there. 

And that’s the way we mainstream the transparency way of doing 

business. And I think it applies to all companies. 

Mr. HASTINGS. All right. I thank you. Mr. Bokayev—and I’m told 

that you—well, first, you made an excellent presentation in 

English, but if you’re uncomfortable, I’m told that you do have a 

translator/interpreter with you, and certainly, we would be glad for 

that if needed. But Kazakhstan is ranked as ‘‘not free.’’ And certainly, that case is made often by Freedom House and the survey 

that they conduct on political rights and civil liberties. You have 

been very active. What is your experience, if any, with reference to 

censorship of your activities in Kazakhstan? 

Mr. BOKAYEV. Because of my humble English, I need some help 

from my colleague. Anthony, please help me. 

Mr. RICHTER. He might have me back on the microphone again. 

I offered to help him with Russian. 

Mr. HASTINGS. Give him time to translate some of it. 

Mr. BOKAYEV [through interpreter]. Thank you, sir. As such, I 

haven’t experienced censorship personally, however it should be 

said that all of the mass media are under the state. There are, 

however, independent oppositional media, but they are mainly just 

in print, and there is a need to bolster media in television and 

radio. 

22

Mr. HASTINGS. All right. Go ahead. 

Mr. BOKAYEV [through interpreter]. There are cases, though, 

when a court can detain an entire print run of a newspaper—for 

example, when they touch on the interests of a highly placed person. So there was an article about the alleged corrupt activities of 

one of the oilmen, Mr. Kulibayev, and as a consequence, the print 

runs of three newspapers were seized. 

Mr. HASTINGS. All right, I thank you very much. In the interests 

of time—we were supposed to run until 4 and I don’t want to hog 

up all the time—so I’d ask the Co-Chair if he will go forward at 

this time. Mr. Gary, if you and Mr. Bokayev would be so kind, I 

would like to submit to you a few questions in writing, and if you 

would follow them up, then we will post them on our Web site, as 

well. 

Mr. GARY. Be happy to. 

Mr. HASTINGS. All right. Senator? 

Mr. CARDIN. Well, again, let me thank all three of you for being 

here. I found your testimony to be very helpful, in trying to put 

this in context. I’m trying to get an understanding as to how effective the EITI initiative has been. It is, to me, fundamental for 

transparency that, that should—at a minimum, we need to have 

that type of information if we’re going to build good governance in 

a country. So I find that to be, I guess, a basic. 

My question—Mr. Gary, let me get you involved here, at least 

first—is, I’d like your honest assessment, as to those countries that 

are participating—I know it’s at different levels at the EITI—how 

effective has transparency been in improving governance in those 

countries? Are we making progress with the countries that are participating? 

Is there a need for us to look at a more enforceable framework, 

beyond the EITI? This is particularly important where you can 

have partnerships with countries where you may have some leverage as to what they are willing to do. So there may be some opportunities, or there are international organizations that could start 

down the path of a more enforceable arrangement. 

And then I would like you to sort of give me your view as to how 

important, for effectiveness of an EITI initiative, the institutions of 

a free press and the ability to fight corruption—whether we’ve been 

able to see any of the connecting of the dots between transparency 

and effective fighting of corruption. I know that’s a list, but I would 

appreciate your assessment as we look at not only expanding the 

EITI, which we plan to do, but perhaps strengthening the EITI. 

Mr. GARY. Well, I think your question gets to the core of the 

issues. And I think, as I described in my testimony, we’ve sort of 

come to a point where transparency went off on one track and 

human rights went off on another track. And we need to bring the 

tracks back together. And so one of my recommendations was that 

the U.S. Government, in resource-rich countries, needs to have an 

integrated strategy related to transparency, human rights and 

anti-corruption—so to bring those strategies together. 

In many countries, you will have EITI practice, but the United 

States will not be enforcing or moving toward a human rights 

strategy at the same time. So if you take the case of Equatorial 

Guinea, EITI implementation, going forward, at least on a techVerDate 0ct 09 2002 11:25 Oct 26, 2012 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 U:\WORK\042210.TXT KATIE
23

nical level, NGOs extremely circumscribed in the type of activities 

they can undertake. 

They have to register with the Minister of Interior. They can’t 

hold public meetings without prior permission. There’s no free and 

independent broadcast media. Yet, at the same time, while EITI 

was being implemented, we welcomed the president of Equatorial 

Guinea, a few years ago, to the State Department for meetings 

with the secretary of state. 

So I think one answer to the question is that we have to have 

carefully calibrated diplomatic engagement and incentives put in 

place to improve human rights practice while we’re looking at 

transparency practice. I also think that there are some countries 

that will never sign up to EITI. And there are some countries that 

are implementing EITI, but only at its most basic level. As we’ve 

heard, in some countries, EITI reporting happens on an aggregated 

level. In other words, a lump sum is disclosed, rather than company-by-company payments. That’s the case in Kazakhstan. 

All the companies that Mr. Bokayev mentioned—Western companies, like Exxon and Chevron and Shell and BP, Total, and 

ConocoPhillips, for example—all of them would be covered by this 

Energy Security Through Transparency Act. And so if that act 

were to become law, colleagues of Mr. Bokayev and his organization would have disaggregated payment information. So in addition 

to having EITI, we need to have other types of regulations, and a 

cocktail of measures, I think, is important. 

To the question of freedom of press and active press, I think this 

is essential. I’ve seen, on the ground in Ghana, where EITI reports 

were made public and then, in Ghana, where you have independent 

radio stations, you have independent newspapers, you have community radio, and the NGOs that work with the journalists, who 

train the journalists and train parliamentarians about the importance of information and what it means, and what the EITI reports 

are saying and what types of improvements the government has to 

make. 

For example, in Ghana, it came out that the government wasn’t 

collecting the kind of taxes that it could be collecting when a mine 

changed hands from one company to another. Many opportunities 

for revenue were being lost, and journalists were able to highlight 

that. So wherever there are countries where transparency is taking 

place, but there really isn’t any civil society or journalists on the 

ground to be able to use that information, you’re really having, as 

I mentioned in my testimony, really, sort of a Potemkin village, or 

spectacle of good governance and transparency, rather than moving 

anything forward. 

Mr. CARDIN. Mr. Richter, do you want to join in this, as to—appreciate your observations as to whether there’s hope that we can 

get some coordination here. I think the point that Mr. Gary mentions about coordinated strategy makes sense. We don’t want a 

country to join EITI for cover; we want them to join EITI as part 

of a commitment for good governance. 

And yes, we want to put pressure on them to move forward in 

the EITI as part of good governance. So it’s—but if you just say, 

OK, sign the papers and we’re done with you, and then you can 

lock up your journalists and you can prevent the information from 

24

being useful and you have a corrupt society, you’re not really accomplishing much by being a member of the EITI. 

Mr. RICHTER. Thank you, Chairman Cardin. First of all, I’d like 

to agree broadly with what my colleague, Ian Gary, has said about 

an integrated approach. It really is the case that we need to bring 

to bear both the capacities of a DRL—the bureau of democracy 

rights and labor—together with that part of the U.S. State Department, which is energy, which is dealing with this issue. 

And whether you see it as an energy issue or whether you see 

it as a rights issue, I think, makes a good bit of difference. We 

don’t necessarily need to choose, but we ought not to stovepipe, either. There ought to be a kind of common approach. There are 

other initiatives at the State Department—I believe the international energy advisor, David Goldwyn, has a new energy governance and capacity initiative which has been launched. So there 

really are opportunities and there’s a crying need to work on these 

things together. 

I’m not sure whether this was seen earlier, but we put together 

a list of the EITI countries’ record of adherence to international 

human rights and governance norms. So here’s a case where the 

two bureaus can get together and say, look, these people have an 

atrocious human rights record. How come they don’t sign up to 

OPCAT or how come they don’t have a freedom of information law 

to improve their governance? How do we work together to bring 

about the optimal result? 

On the question of whether EITI is working, I think that, you 

know, this is such a complicated initiative that it’s clearly going to 

take a while—and it’s going to take a while after validation has 

taken place—to know. It’s not too early to say that in a country 

like Liberia, for example, where you’ve had a very progressive 

version of EITI, innovative, with disaggregated reporting, where 

they caught a embezzler in the first report that they published because of this disaggregated reporting—someone who had walked off 

with, I believe, about $150,000. And that came out. That’s a really 

great example of what it can be when the EITI has that ownership 

and leadership from the country. 

But I also would agree with what Ian Gary said, that we’re in 

favor of a blend of approaches. That’s why we’re so grateful for 

your leadership, sir, with the Lugar-Cardin ESTT. But we’re also 

looking at a range of other interventions. The International Accounting and Standards Board is putting out new guidelines for 

discussion, which one would hope would have an effect of bringing 

to light those country payments. Work with ratings agencies, also, 

is another way of using the market system and the system of pricing risk to value more highly transparency. So there are carrots; 

there are sticks; and we’re all for using the full range of tools at 

our disposal. 

Mr. CARDIN. Thank you. Mr. Bokayev, we very much appreciate 

you being here, first of all. I just really want to thank you for your 

testimony. It’s important that we can hear, directly, what’s happening in Kazakhstan. You know, we’re all proud of some of the 

major achievements in Central Asia that Kazakhstan has led. They 

have the presidency of the OSCE. It’s a major step forward for the 

people of Kazakhstan and the people of Central Asia. 

25

We think Kazakhstan has implemented some reforms that are 

important. But it’s our impression that if you were to publish—if 

you could get published—a critical analysis of the Kazakh Government’s handling of mineral issues in the country, that your safety 

could very well be jeopardized. Is that impression correct? 

Mr. BOKAYEV [through interpreter]. If I understood the question 

correctly, are we under any kind of direct pressure for our work on 

EITI? And the answer is no, but in respect of pressure, in the recent elections, several journalists had cases fabricated about them, 

and they were—that they had some corruption problems—and they 

were dealt with very harshly. And then of course, there’s the case 

of Yevgeny Zhovtis, known to all of us. And these are really shameful cases. 

So at present, for example, there’s an effort to find out from national state companies about, say, their environmental record, and 

trying to get information from them can be quite difficult. And we 

sense that we’re being pressed to back off when we want to get 

from state-owned companies this type of information that’s in the 

public interest to have. 

Mr. CARDIN. Thank you. I appreciate your response. Again, I appreciate all three of our witnesses. This is an issue that the U.S. 

Helsinki Commission has raised internationally, and will continue 

to do that. And it’s a matter that the United States State Department has made a very high priority. So it’s an area that we intend 

to continue to follow. And I think the hearing today has given us 

a lot of information that will be useful in our work. So thank you 

all very much. 

Mr. HASTINGS. Thank you very much, Senator and Chairman. 

And gentlemen, I echo those sentiments, as well. I’d also like to 

thank our persons who have been so patient, that sit in the room 

and have something to say, and I’m just talking about the persons 

who have come to the hearing. It’s deeply appreciated. One of the 

things that I find disconcerting, as a policymaker, is when we go 

to a hearing, like this one and many others all over the Congress, 

people sit in the audience that have a substantial amount of information that they would like to contribute. 

And I’ve tried to find a way to have that happen, and the only 

thing that I know is to encourage you to go to our Web site and 

that you undertake to feed into it, on any of the particulars that 

were brought forward here, ideas that you may have. But I thank 

you for your patience, and for all of you being here. And certainly, 

I thank our witnesses as well. This concludes our hearing. Thank 

you so very much. 

[Whereupon, at 4:05 p.m., the hearing was adjourned.]

26

APPENDICES

PREPARED STATEMENT OF HON. BENJAMIN L. CARDIN, 

CHAIRMAN, COMMISSION ON SECURITY AND COOPERATION 

IN EUROPE 

Good afternoon and welcome to the Helsinki Commission hearing 

on ‘‘The Link between Revenue Transparency and Human Rights.’’ 

Over the past few years, I and my Commission colleagues, particularly our Co-Chairman Mr. Hastings, have actively worked to make 

revenue transparency an integral part of U.S. foreign policy and 

also to encourage revenue transparency among the 56 participating 

States of the Organization for Security and Cooperation in Europe 

(OSCE). 

Transparency in financial transactions has taken on even greater 

importance as the world economy suffers from tremendous setbacks. The financial crisis means that the reduction in international prices for oil, gas, metals and minerals translates into a 

decline in government revenues in commodity dependent economies. So as revenues decline, we have seen the need for greater 

transparency as companies and investors have become increasingly 

risk-averse and preferential to markets with a stable and transparent business environment; in addition to the need within these 

resource rich countries to boost their ability to spend wisely on behalf of their citizens. 

Recently, Senator Lugar and I introduced in the Senate the Energy Security Through Transparency Act, a bill that would create 

a new transparency standard for reporting of extractive payments 

to governments. It would also advance U.S. efforts to promote good 

governance of extractive industries through increased transparency 

at home and abroad. We have bipartisan support with 13 co-sponsors, so I’m looking forward to moving the bill forward soon. 

But action in the U.S. is not enough. It’s clear that we need a 

concerted effort by the international lending institutions to use 

their leverage in order to create more accountability. This weekend 

the World Bank and the IMF are holding their Spring Meetings, 

and transparency certainly will be on the agenda. In particular I 

hope to see the promotion of sustainable and responsible investment in extractive industries around the world, with clear expectations for good governance. 

The Extractive Industries Transparency Initiative, or EITI, is a 

unique mechanism aimed at increasing transparency and accountability, and I personally think EITI has brought us light years 

ahead in terms of creating a global standard for transparency. But 

revenue transparency is just one step in the process, and we need 

to not lose sight of the ultimate goal—and that is less corruption 

and better governance. 

Transparency in and of itself does not necessarily lead to better 

governance. 

In today’s hearing I want to take a look at how we can take those 

next steps that will lead us to better governance and improved 

human rights. 

27

One of the key components of EITI is the development of civil society and a free media—but frankly in the early stages of EITI implementation we see little progress on civil society and media, the 

folks who will be the watchdogs in this process, despite a strong 

emphasis on getting the disclosure mechanisms in place. 

The OECD—and common sense—tells us that lack of press freedom is one of the key factors enabling corruption to flourish. Development of civil society and a free and independent media are therefore key pre-conditions for improving human rights, but unfortunately the trend for press freedom and civil society in many of 

these countries is not positive. In today’s hearing I hope we can explore how we can move forward with the tools we have in place 

now, perhaps ways we can improve the EITI process, but also discuss what other steps we should be taking to advance human 

rights. 

I’m pleased that we have an excellent panel today who will give 

us their perspective on this issue. The witnesses bios have been 

distributed so let me simply introduce our first speaker, Mr. Daniel 

Baer, Deputy Assistant Secretary for Democracy, Human Rights 

and Labor at the State Department. On our second panel, first 

we’ll hear from Mr. Ian Gary, the Senior Policy Advisor for Extractive Industries, with Oxfam America; then Mr. Max Bokayev with 

Arlan, an NGO from Kazakhstan; and finally, Mr. Anthony Richter, Chairman of the Governing Board of the Revenue Watch Institute.

28

PREPARED STATEMENT OF HON. ALCEE L. HASTINGS, COCHAIRMAN, COMMISSION ON SECURITY AND COOPERATION 

IN EUROPE 

Thank you, Mr. Chairman. According to Transparency International, six of the top ten oil-exporting countries to the United 

States are among the most corrupt countries in the world. A lack 

of transparency within governments and the energy sector poses a 

threat to both energy exports and the ability of governments to 

properly manage revenue for their citizens. These governments are 

not accountable to their citizens and have taken advantage of national resources in pursuit of the self-interest of a few corrupt leaders. Oil and gas companies have generated enormous revenues for 

a number of countries, yet rather than improving the lives of ordinary families, this money has often fueled wars and corruption, 

weakened economic development and worsened poverty. 

One of the key ways the international community has sought to 

counteract the political and economic instability inherent in the resource curse is through programs that seek to instill transparency 

and accountability into the resource payment system. EITI is the 

leader in this field. 

Corruption in these nations not only affects the citizens of those 

countries, but it comes back to us squarely here in the U.S. and 

Europe in terms of energy security. Here’s the linkage: corruption 

and kleptocracy in resource-rich countries lead to political instability, drive up oil prices, and present significant risks to U.S. investments. As citizens in oil-producing countries become disgruntled with governments and foreign investors whom they believe to 

be corrupt, these citizens can foster political unrest and threaten 

oil supplies. And we haven’t begun to talk about the incredible 

human toll in countries where citizens are deprived of basic services while the government leaders build up their offshore bank accounts. 

Each of the countries we are talking about today—whether it be 

Russia, Kazakhstan, Turkmenistan, Uzbekistan and Azerbaijan—

face some aspect of this resource curse. And while the situation in 

each country is unique, we can generalize and say that the lack of 

transparency in politics, and in oil and gas deals, is at the root of 

many of their social problems. 

EITI is a good first step, but I am concerned that with regard 

to civil society and the free press, we may be stopping far too short 

of the finish line and declaring winners before we’ve completed the 

race. I am looking forward to hearing today’s witnesses, and I hope 

that they will address how the situation in some of the recently 

validated countries, such as Azerbaijan where we see continued assaults on freedom of speech and on civil society, bodes for the future of EITI implementation. 

Thank you.

29

PREPARED STATEMENT OF HON. CHRISTOPHER H. SMITH, 

RANKING MEMBER, COMMISSION ON SECURITY AND COOPERATION IN EUROPE 

Thank you, Mr. Chairman, and welcome to everyone joining us 

this afternoon. 

Government corruption, including but not only in extractive industries, damages the political culture of many countries, and contributes to the impoverishment of millions of people. It is a grave 

problem, and it leads to many human rights violations, as when officials accept bribes to take people’s property and give it to mining 

companies or developers—this is a very common occurrence in 

many countries—or connive at the murder of journalists investigating corruption. 

Corruption is a form of theft, and, while laws and intergovernmental processes will never completely eradicate it, we have seen 

that good laws and determined efforts can reduce corruption, and 

foster more honest political and business cultures. One of the great 

success stories in this respect has been our own Foreign Corrupt 

Practices Act. When Congress was debating the bill, its opponents 

said it would not reduce corruption but only decimate U.S. international business in favor of rival countries. It didn’t do any such 

thing, and, gradually, other countries have moved toward accepting 

the norms first established by the FCPA. Such norms have also 

been promoted, for example, by the Parliamentary Assembly of the 

OSCE PA, at its 2000 meeting in Bucharest, and, in a different 

way, by H.R. 557, legislation which I co-sponsored and which will 

stop U.S. funds form bankrolling UN Corruption. 

Mr. Chairman, there are serious reasons to doubt whether some 

of the most important current transparency initiatives, including 

the Extractive Industries Transparency Initiative (EITI), have been 

effective. The EITI’s members and candidate members include 

some of the most corrupt and repressive governments in the 

world—governments whose willingness to permit EITI procedures 

to genuinely root out corruption one may well question. 

I look forward to learning from our witnesses about the successes 

and failures of transparency initiatives, and to discussing what role 

our government can play in improving them. Thank you, Mr. 

Chairman, for calling this hearing.

30

PREPARED STATEMENT OF DANIEL B. BAER, DEPUTY ASSISTANT SECRETARY, BUREAU OF DEMOCRACY, HUMAN RIGHTS 

AND LABOR, U.S. DEPARTMENT OF STATE 

Good afternoon Chairman Cardin and distinguished Members of 

the Commission on Security and Cooperation in Europe. I appreciate the opportunity to appear before you today and to speak on 

the link between revenue transparency and human rights in resource-rich countries, within the context of the efforts of the Department of State to support civil society and to promote human 

rights globally. 

THE ‘‘RESOURCE CURSE’’

Today over 50 countries representing three and a half billion people are considered rich in natural resources such as oil, gas, and 

minerals. However, nearly half of the 3.5 billion in resource rich 

countries live on less than $2 / day. This fact presents an obvious 

puzzle: if the countries are resource rich, why are their people so 

poor? 

As you probably know, one explanation for this puzzle is what 

development economists have called the ‘‘resource curse,’’ a theory 

that explains how apparent abundance can lead to economic underdevelopment and, in many cases, armed conflict. 

The resource curse phenomenon results from a confluence of related factors which tend to accompany natural resource wealth. Resource revenues lead to the appreciation of national currencies, 

negatively affecting non-resource exports and causing a decline in 

those industries. Countries excessively dependent on resource revenues find themselves particularly vulnerable to price swings in 

commodity markets. Research has shown that government dependence on resource revenues can also undermine the responsiveness 

of state institutions and the ability of citizens to hold governments 

accountable, especially when information is closely held in the 

hands of a few. When accountability mechanisms are weak, opportunities for corruption increase and non-tax revenues are easily diverted from state budgets, reducing social expenditures and damaging the credibility of the government. Dissatisfaction with corruption or non-transparent allocation of resource revenues, combined with the negative effects that resource dependency has on 

broader economic development, can give rise to tensions—often refracted through other social divisions like ethnicity or religion—

that strain and tear the social fabric of a country. Tragically, in 

some cases, we have seen that natural resources can then become 

a source to finance militias, leading to armed conflict and assorted 

human rights abuses. 

The sustainable and responsible management of natural resource 

wealth is a complex challenge, one that defies easy solutions. There 

are no ‘‘silver bullets’’. Decisions about how to manage volatile revenue flows so that natural resources can become a basis for social 

investment and sustained economic growth are difficult, even when 

all the facts are on the table. In reality many of the facts have 

often been hidden: revenues from resources are often unknown by 

citizens, controlled by an opaque group of government leaders, and 

dispensed without consultation or a transparent process, a fact that 

31

exacerbates the challenges and negative consequences associated 

with the resource curse. 

Secrecy contributes to and enables poor governance. Transparency and accountability in the management of natural resources 

can help counter corruption, improve governance, and foster economic growth. Transparency is not a panacea, but it is an important first step, it is a way of putting more of the facts on the table. 

CORRUPTION AND HUMAN RIGHTS

It is no coincidence that countries where corruption is prevalent 

often exhibit poor respect for human rights, as illustrated in the 

most recent edition of the State Department’s Country Reports on 

Human Rights Practices. It is thus important to underline the link 

between corruption and human rights, as well as the key role that 

civil society can play in fighting corruption and promoting respect 

for human rights. 

International human rights conventions make clear the obligation of governments to ensure respect for human rights. As organizations such as Transparency International and the International 

Council on Human Rights Policy have underlined, corruption corrodes a government’s ability to protect human rights and to ensure 

its own respect for human rights. Combating political and judicial 

corruption is a key element in a government’s ability to promote 

and protect civil and political rights. Transparency and access to 

information empower individuals to make informed decisions—from 

exercising their voting rights to monitoring how state expenditures 

are spent. Endemic corruption can conversely obstruct law enforcement and judicial processes. 

Fighting corruption has long been a central element of U.S. foreign policy. As President Obama said during a July 2009 speech in 

Ghana, ‘‘corruption is still a daily fact of life for far too many we 

have a responsibility to support those who act responsibly and to 

isolate those who don’t, and that is exactly what America will do.’’ 

As far back as 1977, the United States enacted the Foreign Corrupt 

Practices Act and made it illegal for U.S. citizens to bribe foreign 

officials for the purpose of obtaining or retaining business. The U.S. 

was similarly the principal force behind the 1997 OECD Anti-Bribery Convention, and the UN Convention against Corruption. 

In our annual Country Reports on Human Rights Practices, we 

have in recent years increased efforts to highlight the link between 

human rights abuses and the lack of accountability surrounding 

the extraction of natural resources. Our reports have underlined 

that in countries where citizens lack the right to access government-held information and where corruption in the extractive industries remains a serious problem, transparency activists, NGOs, 

and journalists have been subject to harassment, arbitrary arrest 

and detention and even death threats for investigating and reporting corruption allegations. Our reports also underline the same link 

to trafficking and labor rights abuses, including the use of forced 

child labor in unsafe mines. 

32

PROMOTING TRANSPARENCY AND ACCOUNTABILITY

Our reporting informs our policy. As President Obama said in 

Ghana last year, ‘‘what America will do is increase assistance for 

responsible individuals and responsible institutions, with a focus 

on supporting good governance [including] on concrete solutions to 

corruption, like forensic accounting and automating services, 

strengthening hotlines, [and] protecting whistle-blowers to advance 

transparency and accountability.’’ In the Bureau of Democracy, 

Human Rights and Labor, for example, we are examining ways to 

increase support for transparency promotion efforts in African 

countries, including for programs that train journalists on corruption investigations and build the capacity of NGOs and government 

regulatory agencies to monitor supply chains and curb trade in conflict minerals. We also continue to provide urgent assistance to 

local NGO activists, including transparency activists, who are 

under threat from repressive governments. In U.S. transparency 

promotion efforts, partnerships with and support for civil society 

are central. Civil society can play a key role in fighting corruption 

of all kinds, but only if governments respect their obligations to 

give it proper space. 

Civil society can be a particularly powerful force for citizens 

when working with companies and governments in multi-stakeholder initiatives in efforts to increase transparency and respect for 

human rights. When done right, multi-stakeholder initiatives can 

create a transnational advocacy network led by a group of governments, NGOs, and corporate entities that collaborate to establish 

common standards, predictable accountability mechanisms, and institutionalized sharing of best practices. 

The subject of today’s hearing, the Extractives Industry Transparency Initiative (EITI) is a prime example. NGOs gave the initial 

push toward greater resource transparency. Then, at their summit 

in Evian in 2003, G8 leaders agreed on an action plan that included piloting, on a voluntary basis, an intensified approach to 

transparency in countries where revenues from extractive industries (oil, gas and mining) are important. The EITI Principles were 

subsequently agreed at a conference at Lancaster House in London. 

Other important multi-stakeholder initiatives having direct bearing 

on extractive industries include the Voluntary Principles on Security and Human Rights and the Kimberley Process, and I would 

like, briefly, to address these initiatives. 

Voluntary Principles on Security and Human Rights 

(VPs): Established in 2000, the main purpose of the Voluntary 

Principles is to provide guidance to companies in extractive industries on how to improve the protection of human rights, with particular emphasis on the relationships between companies and both 

public and private security forces. Seven governments, 17 companies, and nine NGOs participate formally in the VPs process. Last 

month, Assistant Secretary Posner and I traveled to London for the 

annual plenary meeting of the VPs, which coincided with the beginning of the United States’ year-long chairmanship of the VPs Steering Committee. The VPs process has many strengths, and opportunities for future enhancements include improving and standardizing governance, accountability and the sharing of implementation 

33

1 Afghanistan, Albania, Burkina Faso, Cameroon, Central African Republic, Chad, Coˆte 

d’Ivoire, Democratic Republic of Congo, Gabon, Ghana, Guinea, Iraq, Kazakhstan, Kyrgyzstan, 

Madagascar, Mali, Mauritania, Mongolia, Mozambique, Niger, Nigeria, Norway, Peru, Republic 

of the Congo, Sierra Leone, Tanzania, Timor-Leste, Yemen and Zambia. 

best practices. To that end, our goal as chair is to lead a transformational process that strengthens the VPs as a results-oriented 

effort that delivers clear value for all participants and has greater 

impact on the ground. Ultimately, the more the VPs are implemented, the more stable the operating environments for the extractive companies and local communities will be, leading to better governance overall. 

Kimberley Process (KP): The Kimberley Process is a multistakeholder initiative launched in 2003 to certify the origin of 

rough diamonds from conflict-free sources, with the aim of preventing rebel groups from financing their efforts through the sale 

of ‘‘conflict diamonds.’’ The KP now includes 75 countries and includes industry and NGOs as observers. The KP is credited with 

helping to reduce the trade in conflict diamonds to less than one 

percent of the world’s total rough diamond trade. The approach 

taken through the KP certification scheme is to control international trade in rough diamonds through the adoption of domestic 

systems that make the rough diamond trade more transparent and 

secure. The U.S. plays a very active role in the ongoing work of the 

KP, which does not have a permanent secretariat or staff. A principal focus of attention for the KP at present is Zimbabwe, because 

of its Marange diamond fields which have been the scene of extensive smuggling and violence. As these discussions continue, we continue to promote the critical role of respect for human rights in the 

administration of KP participants’ diamond mining sectors. 

Extractive Industries Transparency Initiative (EITI): Established in 2003, the Extractive Industries Transparency Initiative aims to improve fiscal transparency through revenue reporting. 

The EITI calls for full public disclosure and verification of oil, gas, 

and mining company payments to host governments and of the 

host governments’ budget revenues from these industries. The EITI 

is a voluntary process that brings together governments, businesses, and civil society organizations. The EITI provides a set of 

uniform criteria against which each implementing country is assessed in a validation process. Criteria include assessments of the 

quality and accuracy of payments reporting, and of the ability of 

civil society to engage in the process. 

Currently 29 1 EITI Candidate Countries are implementing EITI, 

and two other countries, Liberia and Azerbaijan, have recently 

completed the validation process and have been declared compliant. 

Each of the remaining candidate countries is in various stages of 

implementation, undertaking a multi-step process to strengthen 

revenue transparency. 

The United States has been a strong supporter of greater transparency in the extractive sector, in government procurement, and 

in concession-letting. Additional supporting donor countries of the 

EITI include the UK, Germany, Canada, and others. A representative from the State Department’s Bureau of Economic, Energy and 

Business Affairs participates in EITI board committees. In September 2009, the United States joined the World Bank’s EITI trust 

34

fund facility with the contribution of $6 million of USAID funds. 

The U.S. is the second largest donor to the facility and sits on the 

trust fund facility Management Committee. The trust fund assists 

country-level multi-stakeholder efforts and is preparing to provide 

assistance directly to civil society for capacity building in EITI implementing countries. The U.S. also provides direct bilateral support to many resource-rich countries world-wide including in public 

financial management, procurement reform, legislative oversight, 

justice sector reform, budget transparency, expenditure tracking, 

access to information, and civil society strengthening. The U.S. has 

provided bilateral assistance specifically designated for EITI implementation in Peru, Nigeria, and the DRC. 

As I mentioned above—the EITI was founded on the basis of an 

initiative by civil society, and one of EITI’s strengths is the significant involvement of civil society, including human rights organizations. And while its primary purpose is supporting revenue transparency, this ongoing inclusion of civil society is an important feature of the EITI. Among the criteria for candidate country implementation is ensuring that ‘‘civil society is actively engaged as a 

participant in the design, monitoring and evaluation of this process 

and contributes towards public debate.’’ Candidate countries are directed to work closely with civil society as they design work plans 

and to include civil society in a country-level multi-stakeholder 

group to implement EITI. Furthermore, governments are expected 

to remove obstacles to EITI implementation, which could include 

restrictions on civil society’s right to associate, express opinions 

publicly, and access information free of undue influence or coercion 

from the government. 

As I said, last year, Liberia and Azerbaijan became the first two 

EITI countries to complete the EITI validation process and be certified as compliant. In both cases, the full implementation of EITI 

principles represents an obstacle for corruption and a step forward 

for transparency and for the promotion of the right of citizens to 

access government-held information, a right enshrined in the Universal Declaration of Human Rights. Also, six new countries became EITI Candidates, and a significant number of other countries 

either declared their intention to implement the EITI or were engaged in outreach conversations through the EITI Secretariat. On 

the industry side, the number of EITI-supporting extractive companies increased during 2009 to 45. 

This year, the EITI has made additional progress in expanding 

participation and fostering a climate of disclosure. During the April 

Board meeting in Berlin, Chad was accepted as an EITI Candidate 

Country after having met the four required initial indicators. In 

the Democratic Republic of the Congo, where the illegal trade in 

minerals continues to fuel conflict in the east, the government released its first EITI report in late March, marking the first time 

that tax revenue figures from the country’s natural resources have 

been made publicly available. In Gabon, the EITI has been a stepping stone for civil society’s engagement on transparency and accountability issues, providing a platform for discussing challenges 

in the development and management of natural resources and enabling civil society to engage in public debate on revenue management, previously a very sensitive subject. In Peru, the government 

35

published the country’s first EITI report in November, and in December it hosted other Latin American countries, including nonEITI but resource-rich countries, for a workshop to discuss measures to improve transparency in the extractives sector. In Liberia, 

the momentum behind EITI extended into other sectors, as the legislature passed a Public Financial Management Act, designed to reduce financial mismanagement and increase accountability. 

The EITI in itself is not sufficient to eradicate corruption associated with the extractive industries. It is not a substitute for open 

and participatory budget processes. However, it can be an essential 

part of the solution, and it represents an important step. The 

multi-stakeholder approach of the EITI is creating a platform for 

dialogue and engagement which previously did not exist in many 

countries, and the EITI reporting process is generating data on revenues that were either not available previously or difficult to access. As we proceed, we will work to ensure that the participation 

of civil society is preserved and that the implementation of EITI 

continues in a way that bolsters the credibility of the initiative. 

THE ROAD AHEAD

The still to be completed process of implementation for the EITI 

candidate countries points to the challenges ahead. Stepped-up efforts will be necessary to ensure that EITI principles are translated 

into reality. In a recent meeting in Berlin, the international multistakeholder Board of the EITI granted the request of 17 Candidate 

Countries currently working toward becoming EITI compliant to 

extend their deadline for completing EITI validation. The Board 

did not approve the request for a deadline extension from Equatorial Guinea, and Sao Tome and Principe’s application for a voluntary suspension also was not approved. 

In the longer term, we will continue to emphasize the benefits of 

enhanced fiscal and budgetary transparency, including through 

EITI and similar multi-stakeholder initiatives to all participants: 

reduced corruption, better governance, increased transparency and 

openness, more accountability, an improved investment climate 

and greater respect for individual rights. As Secretary Clinton has 

stated, sunshine is the best disinfectant. 

Many resource rich countries are faced with challenges that they 

cannot address alone. We remain committed to exploring opportunities to work with committed resource rich countries improve revenue transparency for the long-term benefit of their citizens, and 

to protect and promote human rights. 

Thank you.

36

1 EITI is a voluntary international initiative designed to increase the transparency of payments from oil, gas and mining companies to host governments around the world. EITI is governed by an international board and operates through ‘‘multi-stakeholder working groups’’ in 

EITI implementing countries. For more information on the principles, criteria, rules and membership of EITI see www.eiti.org 2www.publishwhatyoupay.org 

3The criteria used by the IMF is ‘‘ an average share of hydrocarbon and/or mineral fiscal revenues in total fiscal revenue of at least 25 percent during the period 2000–2005 or (ii) an average 

share of hydrocarbon and/or mineral export proceeds in total export proceeds of at least 25 percent’’, IMF, Guide on Resource Revenue Transparency (2007) http://www.imf.org/external/np/pp/

2007/eng/051507g.pdf 

PREPARED STATEMENT OF IAN GARY, SENIOR POLICY 

ADVISOR/MANAGER EXTRACTIVE INDUSTRY, OXFAM AMERICA 

INTRODUCTION

First, let me thank the members of the US Helsinki Commission 

for their interest in this important issue and for providing Oxfam 

America the opportunity to testify. In addition, I would like to 

thank Senator Cardin for his leadership on natural resource and 

transparency issues. 

This hearing is a timely opportunity to assess the progress made 

in the last decade on improving human rights and development 

outcomes of resource-rich countries. Oxfam America is an international humanitarian relief and development agency that has 

worked to address the problems of many natural resource-rich developing countries for more than 10 years. We are a member of the 

Oxfam International confederation that operates in more than 100 

countries. Our program on extractive industries focuses on the social, environmental and financial impact of oil, gas and mining operations in a dozen countries in Latin America, Africa and South 

East Asia. Our work includes support to community-based groups 

directly impacted by these operations as well as local watchdog 

groups participating in the Extractive Industries Transparency Initiative (EITI) and other reform efforts at the national and international level.1 In the US, Oxfam America’s Washington advocacy 

office works with companies, international financial institutions 

such as the World Bank, and the US government to promote policies that protect the rights of citizens in resource-rich states. 

Oxfam America is also a member of Publish What You Pay, a coalition of human rights, development, environmental, faith-based and 

anti-corruption groups that helps citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries.2

THE PROBLEMS OF RESOURCE-RICH STATES

The IMF has identified more than 50 countries as ‘‘resource-rich’’ 

and more than 1.5 billion people live on less than two dollars a day 

in those resource-rich countries.3 Many of these countries exhibit 

classic signs of what has been called the ‘‘resource curse’’, including 

underdevelopment; corruption and mismanagement of financial resources; political authoritarianism and weak or absent political accountability mechanisms; conflict; and human rights violations. 

These issues were not a prominent part of the international development agenda for decades, but within the last 10 years international non-governmental organizations (NGOs) such as Oxfam, 

37

Human Rights Watch, Global Witness, Revenue Watch Institute, 

Catholic Relief Services and many other courageous groups in developing countries have called attention to the tragic irony of extreme poverty in countries with abundant natural resource wealth. 

These groups have identified secrecy in extractive industries as a 

major obstacle to reform. In many countries, contracts between foreign firms and host governments are shielded from public view and 

there is little information about payments from companies to governments. In addition, governments are often not providing their 

citizens with accurate, timely and complete information about government budgets and expenditures. Addressing these transparency 

gaps has been at the heart of the international reform agenda. 

TRANSPARENCY REFORM EFFORTS—LOSING SIGHT OF THE BIGGER

PICTURE? 

Most agree that improving transparency in the extractives sector 

is a necessary, but not sufficient ingredient for reforming the management and use of extractive industry revenues. Starting in 2002 

after the establishment the Publish What You Pay campaign, the 

EITI has been seeking to increase transparency in resource-rich 

states. It took several years for this voluntary, multi-stakeholder 

process to agree on the rules for membership and implementation 

of EITI. These rules include the active participation of civil society 

groups—along with government and industry—in country-level 

working groups. While transparency and the efforts of EITI are an 

important first step, it has taken a long time to make progress and 

many policy makers and participants have lost sight of the bigger 

picture. The transparency agenda does not work without improvements in political accountability mechanisms, including basic 

human rights such as freedom of expression and association. As I 

will highlight, in some countries there is a yawning chasm between 

limited progress on transparency and little or no progress on 

human rights. EITI must not just be a technocratic exercise of publishing numbers. Otherwise, we may end up with the creation of 

a ‘‘Potemkin village’’ of good governance designed for donor consumption while underlying problems of political accountability remain unaddressed. The US government and other countries supporting EITI implementation must develop accompanying strategies and initiatives to improve the human rights situation in these 

resource-rich countries and to increase oversight opportunities related to government expenditures. Otherwise, ‘‘successful’’ implementation of EITI may have the perverse effect of masking these 

underlying problems. 

DOES EITI CONTRIBUTE TO INCREASING DEMOCRATIC DEBATE AND

IMPROVING HUMAN RIGHTS? 

In 2008, the first 22 EITI ‘‘candidate’’ countries were given a 

deadline of March 9, 2010 to have their progress independently 

‘‘validated’’. These validation reports would serve as input into a 

board decision as to whether or not they are fully ‘‘compliant’’ with 

the rules of the initiative. Of those 22 countries, only two met the 

deadline—Azerbaijan and Liberia—while the majority of countries 

were granted an extension with two countries dropped from EITI 

38

4Oxfam America, Ghana’s Big Test: Oil’s Challenge to Democratic Accountability, 2009. http:/

/www.oxfamamerica.org/files/ghanas-big-test.pdf 5Liberia EITI, ‘‘Addressing the roots of Liberia’s conflict through EITI’’, 2009. http://eiti.org/

files/EITI%20Case%20Study%20-%20Liberia.pdf 6Michael Brakke, et al, authors. Fighting Corruption, Strengthening Governance: The Role of 

Civil Society in the Extractive Industries Transparency Initiative, Woodrow Wilson School of 

International and Public Affairs, February 2009. http://pwypusa.org/clientimages/39924/

princetoneitifinalreport.pdf 7State Department 2009 Human Rights Report: Azerbaijan. http://www.state.gov/g/drl/rls/

hrrpt/2009/eur/136020.htm 

(Equatorial Guinea and Sao Tome and Principe.) In some countries, 

it is clear that EITI has disclosed new information and provided a 

platform for civil society and government engagement. In Ghana, 

for example, the EITI process in the mining sector has raised 

awareness about weaknesses in gold mining royalty collection and 

heightened the debate on the use of oil revenues that will flow from 

2011 onwards.4 But in Ghana, there is a vibrant civil society, active press and a generally favorable human rights environment. In 

Liberia, EITI reporting has raised awareness in communities and 

led to questions about company payments and how the government 

is using revenues. Liberia has also enshrined EITI practice in the 

Liberia EITI Act, a law that requires all government agencies and 

companies to comply with EITI and to disclose operating contracts.5

In other countries, the impact of EITI on human rights, the development of independent civil society and improvements in the use 

of government revenues is questionable. In some cases, EITI may 

help open up the previously taboo subject of government revenues 

from extractive industries, but there is clearly a limit as to how 

much openness will be tolerated and whether the government will 

allow information disclosed through EITI to be used by watchdog 

groups, journalists and others for accountability purposes. 

In Azerbaijan, there is some evidence that civil society capacity 

has improved during EITI implementation but progress in EITI implementation has been set against a weak human rights record for 

the country.6 The country received EITI ‘‘compliant status’’ in February 2009 even though no multi-stakeholder working group had 

been established—a requirement under EITI—and in spite of questions regarding the accuracy and comprehensiveness of EITI payment information. Throughout 2009, the status of Azerbaijan came 

into question as the country did not fulfill the conditions that the 

Board had set for Azerbaijan in order to retain its Compliant status. Because Azerbaijan missed its 15 August 2009 deadline for fulfilling these conditions, the board was forced to review Azerbaijan’s 

status at two subsequent board meetings. Azerbaijan finally fulfilled these conditions in February 2010—one year after it was initially deemed compliant—and it was at this stage that Azerbaijan’s 

compliant status was reconfirmed. 

While Azerbaijan had, somewhat prematurely, been deemed 

Compliant by the EITI board, the State Department and other 

human rights observers noted a worsening of some human rights 

in the country during 2009. The State Department noted in its 

2009 human rights report on Azerbaijan that government restrictions on freedom of association actually worsened during 2009 and 

that the government does not respect freedom of expression or the 

press in practice.7

39

8State Department 2009 Human Rights Report: Equatorial Guinea—‘‘According to Human 

Rights Watch, Teodorin Obiang, the president’s son, spent more on luxury goods during 2004–

2007 than the government’s 2005 budget for education; purchases included a $35 million mansion, a $37 million jet, and luxury cars worth at least $2.6 million. President Obiang claimed 

information on oil revenues was a ‘‘state secret’’ and resisted calls for transparency and accountability.’’ http://www.state.gov/g/drl/rls/hrrpt/2009/af/135951.htm 9State Department 2009 Human Rights Report: Equatorial Guinea—‘‘The law restricts NGO 

activity, and the few existing domestic human rights NGOs focused on development issues involving social and economic rights, such as health and elder care. Although the law includes 

human rights among the areas in which NGOs may operate, no NGO reported publicly on the 

abuse of civil or political rights by the government or on official corruption Government restrictions, including burdensome registration requirements and lack of capacity to manage and provide the public with information, continued to impede the activities and development of domestic 

civil society.’’ http://www.state.gov/g/drl/rls/hrrpt/2009/af/135951.htm 10See Human Rights Watch, Well Oiled: Oil and Human Rights in Equatorial Guinea, 2009. 

http://www.hrw.org/node/84253 11 Adam Nossiter, ‘‘Underneath Palatial Skin, Corruption Rules Gabon’’, New York Times, 

September 14, 2009. Veronique Mistiaen, ‘‘African rainforest activist wins international Goldman prize’’, The Guardian (UK), April 20, 2009. 

In Equatorial Guinea, a country marked by massive oil-fuelled 

corruption 8 and ruled by an authoritarian regime, the country was 

allowed to join EITI as a ‘‘candidate’’ in 2008 even though the 

human rights situation in the country meant that it was doubtful 

that the government would permit real and independent civil society engagement in the process.9 Free elections have never been 

held. Independent opposition parties face harassment, arrest and 

criminal prosecution. There is no independent broadcast media in 

the country and all but a handful of print media are state-controlled. Even the few independent media outlets that exist are not 

at liberty to report on corruption or otherwise criticize the country’s 

leaders. In this environment of repression, there are hardly any 

independent civil society groups to speak of, and even fewer who 

dare work on sensitive issues such as human rights or corruption.10 Civil society organizations (CSOs) are under severe restrictions—they must get approval to operate from the Ministry of the 

Interior, must regularly report to the Ministry and must inform the 

government of any outside funding. Foreign NGOs hoping to work 

with local groups to build their capacity have faced numerous obstacles. Equatorial Guinea was dropped from EITI on April 15 after 

it was not granted an extension in order to complete its validation 

process. 

In other countries, the gulf between EITI and human rights practice has also been wide and the EITI board has not taken forceful 

action. Activists have been harassed, arrested, prevented from travelling abroad and had their NGOs deregistered. The government of 

Congo-Brazzaville arrested and charged two anti-corruption activists, including EITI board member Christian Mounzeo, in 2006, all 

while maintaining its ‘‘candidate’’ status. In Gabon in 2008, activist 

Marc Ona was prevented from travelling abroad and many NGOs 

involved in Publish What You Pay were de-registered by the government all while Gabon served on the EITI board.11

During the next few months, the EITI board will have to carefully scrutinize the final validation reports submitted by participating countries, especially with regard to the free, independent, 

and active participation of citizen watchdog groups in the countrylevel EITI process. It is also essential that civil society groups are 

not ‘‘prisoners of process’’—in other words, freedom of expression 

and association must be respected both inside and outside the formal EITI process. The EITI should not place itself in the position 

40

12See www.openthebooks.org for more information on the Energy Security through Transparency Act. 

of negotiating commitments from governments not to harass or obstruct civil society groups while these groups participate in the narrow confines of EITI while, at the same time, the broader environment for independent action remains restrictive or even deteriorates. Respect for human rights, including freedom of expression 

and association, is fundamental to the reform agenda in resourcerich countries. Transparency regarding financial flows in the oil 

and mining industries can help increase accountability around government spending decisions only in countries where citizens, journalists, and parliamentarians can ask questions of their own governments. 

While EITI is making some progress in some countries, the pace 

and depth of progress to date, and the fact that many resource-rich 

countries are outside the process, show that other complementary 

measures are needed. The US Congress, for example, should pass 

the Energy Security through Transparency Act (S. 1700) this year, 

to increase the disclosure of oil, gas, and mining company payment 

information to host governments around the world. This legislation 

would complement EITI and provide regular information on payments to host governments that would not be dependent on the 

waxing and waning of political will or the voluntary participation 

of countries in EITI.12 This legislation is endorsed by a broad range 

of anti-poverty, human rights, environment and faith-based groups. 

CONCLUSION AND RECOMMENDATIONS

For the US and other international ‘‘supporting governments’’ of 

EITI and other transparency efforts, it is important to see EITI as 

one part of broader and more comprehensive strategies that should 

be developed for resource-rich states that include human rights 

promotion, political accountability and improvements in transparency in other areas, such as government budgets and contracts, 

that are not yet part of the EITI mandate. EITI by itself cannot 

serve as a stand in for such strategies and it would be unwise to 

think that EITI alone will spur significant progress on human 

rights, civil society development or anti-corruption efforts. To pretend otherwise would, in some cases, mean that EITI was being 

used as a fig leaf to cover up a lack of such strategies and a lack 

of progress on human rights and political accountability. 

In closing, I would like to offer a number of recommendations to 

the USG and for the EITI process. 

• The US State Department should develop concrete strategies 

for human rights promotion and protection in resource-rich states, 

with targets and benchmarks. Where EITI is being implemented, 

such strategies should be integrated with donor support for the 

EITI process. 

The US should not limit itself to countries where EITI is 

being implemented. For example, in Equatorial Guinea the US 

should develop and implement a ‘‘road map’’ on human rights 

and anti-corruption that would include support for workspaces 

for civil society groups (‘‘Democracy Centers’’) and funding for 

civil society work on human rights, transparency and rule of 

41

13See EG Justice, ‘‘Transparency and Accountability in Equatorial Guinea: Policy Recommendations for the Obama Administration’’, July 2009. www.egjustice.org 

law issues; exchange opportunities for Equatoguinean civil society activists; and visa denials for Equatoguinean officials 

credibly implicated in corruption.13 The road map could also 

set concrete benchmarks that the government would need to 

achieve in order to be granted future high-level diplomatic visits, for example removing barriers to civil society development; 

verifiable declaration of assets by government officials; and 

publication of national budget information. 

• The US State Department’s Bureau of Democracy, Human 

Rights and Labor should actively engage in the global EITI process, 

for example through participation in EITI’s ‘‘Rapid Response’’ board 

committee focused on protection of civil society groups. 

• For the first time, the 2009 State Department Annual Human 

Rights Reports have a section on ‘‘Official Corruption and Government Transparency’’. This section should report on the ability of 

civil society groups to freely participate in the EITI process if the 

country is a participant. 

• The US should increase support for efforts by civil society, 

journalists and others to disseminate and popularize information 

disclosed as a result of EITI process. Such steps—such as radio 

programs in local languages—are relatively inexpensive and can be 

powerful. 

• The US Treasury should not approve international financial institution financing for extractive industry projects in countries that 

do not meet minimum governance threshold criteria regarding 

transparency, human rights and the rule of law. For example, in 

2008 the World Bank’s International Finance Corporation had 

scheduled a board discussion of a $500 million bauxite project in 

Guinea shortly before the coup in December 2008. Given the situation in the country, it was extremely unlikely that government revenues from the project would have put to good use. 

• The US Congress should pass the Lugar/Cardin Energy Security through Transparency Act (S.1700). 

• The EITI board should consider revising participation criteria 

so that candidate countries must show that there are no restrictive 

laws, cumbersome procedures or practices which restrict independent civil society operation. 

• The EITI Board should complete, in a timely and rigorous 

manner, the assessment it is now conducting of the necessary conditions that need to be in place to ensure that independent civil society can freely and meaningfully participate in the EITI process. 

This assessment should inform the revision of the EITI sign-up criterion for countries that are interested in becoming EITI Candidates. Prior to becoming EITI Candidates, countries should show 

that there are no restrictive laws, cumbersome procedures or practices which restrict independent civil society operation. 

Thank you for allowing me to testify today to discuss this important subject. I look forward to answering any questions committee 

members may have.

42

PREPARED STATEMENT OF ANTHONY RICHTER, CHAIRMAN 

OF THE GOVERNING BOARD, REVENUE WATCH INSTITUTE 

Chairman, Members of the Commission, 

I thank you for the opportunity to talk to you about the link between natural resource revenue transparency and human rights. 

The Revenue Watch Institute is a non-profit policy institute and 

grantmaking organization that promotes the responsible management of oil, gas and mineral resources in resource-rich countries. 

We have been involved in the Extractive Industries Transparency 

Initiative (EITI) since its inception and I am currently a member 

of its International Board. 

I would like to talk to you about three issues relating to the subject of today’s hearings: first, how revenue transparency and 

human rights are connected; second, the record of resource rich 

countries on adherence to human rights; and third, the work of 

EITI in dealing with questions of rights and democracy. I will conclude with some policy recommendations for your consideration. 

REVENUE TRANSPARENCY AND THE NEED FOR RIGHTS

There is now a substantial consensus that natural resource revenues must be transparent. There are several reasons for this: first, 

energy security, as consuming countries increasingly view transparency as a way of minimizing uncertainty about supplies. Second, in the current economic downturn transparency is seen as 

helping to price risk more accurately. Third, transparency is seen 

as a way to foster better development outcomes. Finally, and for 

some, most importantly, transparency is viewed as an important 

weapon in combating corruption. 

Countries with non-renewable natural resource wealth face special opportunities and special challenges. If used well, these resources can create greater prosperity for current and future generations; if used poorly, they can cause economic instability, social conflict and lasting environmental damage. The transparent, accountable and effective management of non-renewable resources can be 

an engine for economic growth, promote the welfare of the population in general and be environmentally sustainable. And most importantly, where corruption and mismanagement are present in 

such economies there are often human rights abuses. 

Revenue transparency can only be meaningful in a society that 

respects basic rights. Basic rights enable the public to learn and 

discuss the facts about how their society is governed, to air this information in the media, and to have recourse to elections. Among 

other institutions, revenue transparency needs good NGO laws, an 

independent judiciary, a strong parliament capable of playing its 

oversight role as well as a free and independent media. 

There are two significant areas where revenue transparency and 

human rights interact: first, with respect to the rights of civil society advocates and organizations to promote transparency and accountability. Advocates of transparency face politically motivated 

harassment. EITI has confronted cases in several countries—including Niger, the Republic of the Congo, and Gabon. Some of these 

are described in more detail in the testimony submitted today by 

Oxfam America. We share their concerns. 

43

1 Aryeh Neier, ‘‘The New Double Standard,’’ Foreign Policy, No. 105 (Winter, 1996–1997), pp. 

91–102. 

The second link between revenue transparency and rights is the 

question of what political arrangements and basic freedoms are 

necessary for transparency mechanisms to be meaningful. Do you 

need basic democracy and human rights first? It may seem obvious, 

but corrupt resource rich countries do not sign up to conventions 

or protect rights very well. 

RESOURCE RICH COUNTRIES AND RATIFICATION OF HUMAN RIGHTS

AND GOVERNANCE INSTRUMENTS

I have appended a table showing the status of countries participating in the Extractive Industries Transparency Initiative, including those which recently lost their candidate status. The table 

shows that many of the EITI countries have committed to international human rights instruments. But the performance in human 

rights protection of many of these countries is poor. The table also 

shows a high number of these countries have failed to sign up to 

important instruments, such as the Optional Protocol to the Convention Against Torture & Other Cruel Inhuman or Degrading 

Treatment or Punishment and the Convention for the Protection of 

All Persons from Enforced Disappearance. A number of countries 

have failed to ratify the UN Convention Against Corruption. 

Resource-rich countries also lag in the area of freedom of information. Worldwide there has been dramatic progress made by campaigners for freedom of information. 82 countries have adopted 

freedom of information laws; in fact just this week Pakistan adopted a constitutional amendment guaranteeing a citizen’s basic right 

to information. The broad international advance of this issue is a 

cause for celebration. But of the countries in the EITI only 6 of 34 

have a law providing access to information: Albania, Azerbaijan, 

Kazakhstan, Kyrgyzstan, Norway and Peru. Further research 

along these lines looking at ratifications and performance of other 

indicators is needed. 

The responsibility for change lies not only with the countries 

themselves. Oil, gas and mineral wealth insulates countries from 

international criticism. In a perceptive article in Foreign Affairs 

Aryeh Neier identified the inconsistency in applying human rights 

norms, calling this a ‘‘new double standard.’’ In short: human 

rights abuses in countries with geopolitical or economic significance 

receive less criticism than countries without the same trade, energy 

or strategic significance. Major resource exporting countries have 

strategic significance to consumers, and may thus get a pass where 

human rights abuses are concerned.1 A shared concern for good 

governance, built on a shared expectation of human rights, is reflected in new transparency mechanisms such as the Extractive Industries Transparency Initiative. 

THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) AND

CIVIL SOCIETY

The Extractive Industries Transparency Initiative, created in 

2003, is the global standard for companies to disclose their payments to governments and for governments to state their receipts. 

44

2Paul Collier, ‘‘The Natural Resource Charter and EITI,’’ http://eitransparency.org/blog/natural-resource-charter-and-eiti 3Precept 2, The Natural Resource Charter, http://www.naturalresourcecharter.org/images/

docs/NATURAL%20RESOURCE%20CHARTER.pdf 

In each country EITI is run by government and supervised by a 

multistakeholder group consisting of government, companies and 

civil society. The results for each country are independently audited and published. Then the entire process is externally validated 

and finally judged to be compliant or not by the EITI’s international board. The free participation of independent civil society 

is an essential element of this process. 

The EITI deals with the issue of democracy and rights largely 

through guaranteeing the participation of civil society. Transparency without such participation is hollow. The EITI’s criteria, 

principles, and rules articulate a framework for civil society to play 

an active, free, full and independent role in the process. A country 

must meet these conditions in order to be deemed compliant with 

EITI’s transparency standard. Appendix II contains some of the 

key references to civil society from the EITI Rules. 

A COMPLEMENTARY TRANSPARENCY INITIATIVE: THE NATURAL

RESOURCE CHARTER

The Natural Resource Charter, in the words of one of its founders, Paul Collier, author of The Bottom Billion, ‘‘is intended to complement EITI in spelling out, in clear precepts, the entire decision 

chain by which natural assets can become a blessing instead of a 

curse.’’ 2 The Charter articulates an even clearer link than EITI 

does between transparency and human rights. In part the Charter 

states, ‘‘The principle that the public has a right to full and timely 

information necessary to meaningfully participate in environmental 

and social decision-making, which resource extraction invariably 

involves, has been enshrined in international instruments including the Universal Declaration of Human Rights, the Rio Declaration, the Aarhus Convention, and the OECD Guidelines for Multinational Enterprises.’’ 3 The Natural Resource Charter is not an 

international convention with rules, adherence procedures and 

sanctions. However, the Charter does represent the most formally 

articulated statement of best practices for resource rich countries. 

EITI EXPERIENCES AND MECHANISMS DEALING WITH THE RIGHTS OF

CIVIL SOCIETY

The prestige associated with implementation of EITI provides a 

strong incentive for implementing countries to adhere to its guidelines. Participating governments are highly motivated to maintain 

their status within the initiative. The EITI Board has repeatedly 

used its authority to address harassment of civil society organizations or denial of the freedoms civil society needs for its participation to be meaningful. Cases have arisen in Azerbaijan, Gabon, 

Guinea Conakry, Mauritania, Niger, and the Republic of the Congo. 

The following examples of EITI’s actions or structures illustrate its 

growing commitment to protect civil society participation. 

45

4 EITI 9th Board Meeting Minutes http://eiti.org/files/

Minutes%20of%20the%209th%20EITI%20Board%20Meeting%20-final.pdf 5 EITI 11th Board Meeting Minutes http://eitransparency.org/files/

Final%20Minutes%20of%20the%2011th%20Board%20Meeting.pdf 6 EITI Policy Note #5, http://eiti.org/files/PolicyNoteNo05.pdf 

7 EITI 11th Board Meeting Minutes http://eitransparency.org/files/

Final%20Minutes%20of%20the%2011th%20Board%20Meeting.pdf 

ENSURING THAT THE CONDITIONS ARE RIGHT FOR EITI 

IMPLEMENTATION

To further strengthen EITI’s leverage in dealing with rights 

abuses, it has been suggested that ‘‘implementing countries formally commit themselves to respect the UN Declaration of Human 

Rights and recognize its applicability to the representatives of the 

civil society involved in EITI. It also was suggested that EU Member States prepare a statement announcing that their use of the 

EU Guidelines on Human Rights.’’ 4

Decisions of the Board: The Case of Ethiopia In one of its most 

significant recent decisions the board declined to admit Ethiopia as 

and EITI candidate due to its excessive constraints on freedom of 

association. The board concluded that Ethiopia’s ‘‘Proclamation on 

Charities and Society’’ would prevent civil society groups from 

being sufficiently independent and meaningfully participate in the 

process. The board decided, in effect, not to admit Ethiopia ‘‘until 

the Proclamation on Charities and Society is no longer in place.’’ 5

This is the only such instance in the history of EITI where a country has failed to be admitted and the grounds for this action was 

clearly rights-based. 

EITI’S RAPID RESPONSE COMMITTEE

The EITI Board has created a Rapid Response Committee to deal 

with what it calls ‘‘implementation problems,’’ largely to protect 

civil society. When the Committee intervenes it does so with considerable force. This can involve EITI’s Chair and members of the 

multistakeholder committee, which includes governments and companies as well as civil society groups. The emphasis is on ending 

harassment, coercion or constraints on civil society, without which 

EITI literally cannot function. In December 2009 EITI adopted a 

policy imposing sanctions, ranging from suspending to de-listing a 

country that violates EITI Principles or Criteria.6

Interventions by EITI’s Rapid Response Committee have helped, 

if not to correct general patterns of human rights abuse, then to 

stop harassment in specific cases, using the influence and authority 

of the Initiative. 

Working Group on Participation of Civil Society Organizations in 

the EITI The discussion of the Ethiopia case has led, in part, to the 

establishment of a Working Group to address the conditions required for participation of civil society.7 The Working Group will 

soon prepare coherent and comprehensive guidance fto the board. 

The EITI Board should, in a timely and rigorous manner, undertake the assessment it is now commencing via the Working Group 

on Civil Society Participation, of the necessary conditions that need 

to be in place to ensure that independent civil society can freely 

and meaningfully participate in the EITI process. This assessment 

46

should guide the revision of the EITI sign-up criterion for countries 

that are interested in becoming EITI Candidates. 

CONCLUSIONS

The international movement to foster transparency in resourcerich countries has emerged as one of the most potent and fast 

growing campaigns of recent times. To be effective, transparency 

needs to develop in a context that provides for meaningful participation by civil society including NGOs, parliament, and the media. 

The track record of resource-rich countries both in ratification to 

and implementation of international human rights treaties remains 

an area of very significant concern. Those concerned with the advance of transparency in these countries must also see to it that 

basic rights are protected. 

The EITI is not a human rights framework, but rather a transparency standard. But EITI has helped to create the space where 

transparency supporters in civil society can test the political will 

of their countries to adhere to the commitments they have made 

by signing onto international human rights agreements; it is also 

a ‘‘gateway’’ or springboard for transparency and good governance 

initiatives. As the global transparency standard the EITI is evolving a body of language, actions, and decisions, that define its expectations with respect to the democratic feedoms and rights needed 

for it to work. The principles, criteria, and rules make it clear that 

civil society’s participation must be full, active, independent, and 

free of constraint and coercion. 

To make revenue transparency mechanisms effective a concerted 

effort is needed to protect human rights and create an enabling environment of basic rights and freedoms in resource-rich countries. 

RECOMMENDATIONS

To The United States Government and Congress: 

• Adopt a clearly integrated approach that focuses human rights 

support into other policies directed at countries rich in natural 

resources; 

• Press resource-rich countries to adopt all important human 

rights treaties such as the Optional Protocol to the Convention 

Against Torture & Other Cruel Inhuman or Degrading Treatment or Punishment and Convention for the Protection of All 

Persons from Enforced Disappearance; 

• Press for full ratification and adherence by resource-rich countries to the United Nations Convention Against Corruption 

(UNCAC); 

• Consistently apply human rights standards to countries with 

strategic energy resources; 

• Continue to press for compliance with already ratified UN 

Human Rights instruments and treaties; 

• Support adoption of freedom of information laws in resourcerich countries; 

• Ensure that the International Convention on Civil and Political Rights Article 19 is fully observed as EITI and civil society 

(including media) cannot function properly without such guarantees; 

47

• Encourage adoption within the EITI of a robust EITI Policy 

Note on Civil society Participation outlining clearer expectations of applicants, Candidate and Compliant countries, and 

encouraging the US State Department’s Bureau for Democracy, 

Rights and Labor to work closely with US government representation on the board; • Endorse better NGO laws in resource-rich countries using the 

experiences of groups such as the International Center for Notfor-profit Law. • Building on the work of groups such as the National Democratic Institute (NDI) and the International Republican Institute (IRI), to build the capacity of parliaments to play their 

critical oversight role; • Develop a broad-based integrated program to protect rights of 

transparency advocates in resource-rich countries bringing in 

the experience of organizations Freedom House, NDI, IRI, etc. • Pass the Lugar/Cardin Energy Security through Transparency 

Act (S.1700). 

To the Organization for Cooperation and Security in Europe 

(OSCE): • Endorse EITI and forge closer links between resource revenue 

transparency and human rights observance The shared desire 

to hold an OSCE Summit with meaningful outcomes opens a 

door for a discussion or resource revenue transparency with a 

view of an endorsement of EITI by the Summit. 

Thank you for allowing me to testify today to discuss this important subject. I look forward to answering any questions Commission members may have.

48

Appendix I: Status of Ratification of Human Rights Instruments by EITI Countries 

(As of 20 April, 2010) 

UN Convention 

Against Corruption (UNCAC) 

International Convention on the 

Elimination of All 

Forms of Racial 

Discrimination 

(CERD) 

International Covenant on Civil 

and Political 

Rights (CCPR) 

Optional Protocol 

to the International Covenant 

on Civil and Political Rights 

(CCPR–OP1) 

International Covenant on Economic, Social & 

Cultural Rights 

(CESCR) 

Convention 

Against Torture & 

Other Cruel Inhuman or Degrading 

Treatment or Punishment (CAT) 

Optional Protocol 

to the Convention 

Against Torture & 

Other Cruel Inhuman or Degrading 

Treatment or Punishment (CAT–OP) 

Convention for 

the Protection of 

All Persons from 

Enforced Disappearance 

(CPPED) 

African Charter 

on Human & People’s Rights 

American Convention on Human 

Rights 

Afghanistan ....................... 25–Aug–08 ..... 6–Jul–83 ......... 24–Jan–83 ...... N/A .................. 24–Jan–83 ...... 1–Apr–87 ........ N/A .................. N/A .................. N/A .................. N/A Albania .............................. 25–May–06 ..... 11–May–94 ..... 4–Oct–91 ........ 4–Oct–07 ........ 4–Oct–91 ........ 11–May–94 ..... 1–Oct–03 ........ 8–Nov–07 ....... N/A .................. N/A Azerbaijan .......................... 27–Feb–04 ..... 16–Aug–96 ..... 13–Aug–92 ..... 27–Nov–01 ..... 13–Aug–92 ..... 16–Aug–96 ..... 28–Jan–09 ...... N/A .................. N/A .................. N/A Burkina Faso ..................... 10–Oct–06 ...... 18–Jul–74 ....... 4–Jan–99 ........ 4–Jan–99 ........ 4–Jan–99 ........ 4–Jan–99 ........ N/A .................. 3–Dec–2009 ... 6–Jul–84 ......... N/A Cameroon .......................... 6–Feb–06 ....... 24–Jun–71 ...... 27–Jun–84 ...... 27–Jun–84 ...... 27–Jun–84 ...... 19–Dec–86 ..... N/A .................. N/A .................. 20–Jun–89 ...... N/A Central African Rep. ......... 6–Oct–06 ........ 16–Mar–71 ..... 8–May–81 ....... 8–May–81 ....... 8–May–81 ....... N/A .................. N/A .................. N/A .................. 26–Apr–86 ...... N/A Chad .................................. N/A .................. 17–Aug–77 ..... 9–Jun–95 ........ 9–Jun–95 ........ 9–Jun–95 ........ 9–Jun–95 ........ N/A .................. N/A .................. 9–Oct–86 ........ N/A Congo ................................ 13–Jul–06 ....... 11–Jul–88 ....... 5–Oct–83 ........ 5–Oct–83 ........ 5–Oct–83 ........ 30–Jul–03 ....... N/A .................. N/A .................. 9–Dec–82 ....... N/A Coˆte d’Ivoire ...................... N/A .................. 4–Jan–73 ........ 26–Mar–92 ..... 5–Mar–97 ....... 26–Mar–92 ..... 18–Dec–95 ..... N/A .................. N/A .................. 6–Jan–92 ........ N/A 

Democratic Rep. Congo ..... N/A .................. 21–Apr–76 ...... 1–Nov–76 ....... 1–Nov–76 ....... 1–Nov–76 ....... 18–Mar–96 ..... N/A .................. N/A .................. 20–Jul–87 ....... N/A Equatorial Guinea * ........... N/A .................. 8–Oct–02 ........ 25–Sep–87 ..... 25–Sep–87 ..... 26–Sep–87 ..... 8–Oct–02 ........ N/A .................. N/A .................. 7–Apr–86 ........ N/A Ethiopia * .......................... 26–Nov–07 ..... 23–Jun–76 ...... 11–Jun–93 ...... N/A .................. 11–Jun–93 ...... 14–Mar–94 ..... N/A .................. N/A .................. 15–Jun–98 ...... N/A Gabon ................................ 1–Oct–07 ........ 29–Feb–80 ..... 21–Jan–83 ...... N/A .................. 21–Jan–83 ...... 8–Sep–00 ....... N/A .................. N/A .................. 20–Feb–86 ..... N/A Ghana ................................ 27–Jun–07 ...... 8–Sep–66 ....... 7–Sep–00 ....... 7–Sep–00 ....... 7–Sep–00 ....... 7–Sep–00 ....... N/A .................. N/A .................. 24–Jan–89 ...... N/A Guinea ............................... N/A .................. 14–Mar–77 ..... 24–Jan–78 ...... 17–Jun–93 ...... 24–Jan–78 ...... 1–Oct–89 ........ N/A .................. N/A .................. 16–Feb–82 ..... N/A Iraq .................................... 17–Mar–08 ..... 14–Jan–70 ...... 25–Jan–71 ...... N/A .................. 25–Jan–71 ...... N/A .................. N/A .................. N/A .................. N/A .................. N/A Kazakhstan ........................ 18–Jun–08 ...... 26–Aug–98 ..... 24–Jan–06 ...... 30–Jun–09 ...... 24–Jan–06 ...... 26–Aug–98 ..... 22–Oct–08 ...... 27–Feb–09 ..... N/A .................. N/A Kyrgyzstan ......................... 16–Sep–05 ..... 5–Sep–97 ....... 7–Oct–94 ........ 7–Oct–94 ........ 7–Oct–94 ........ 5–Sep–97 ....... 29–Dec–08 ..... N/A .................. N/A .................. N/A Liberia ............................... 16–Sep–05 ..... 5–Nov–76 ....... 22–Sep–04 ..... N/A .................. 22–Sep–04 ..... 22–Sep–04 ..... 22–Sep–04 ..... N/A .................. 4–Aug–82 ....... N/A Madagascar ....................... 22–Sep–04 ..... 7–Feb–69 ....... 21–Jun–71 ...... 21–Jun–71 ...... 22–Sep–71 ..... 13–Dec–05 ..... N/A .................. N/A .................. 9–Mar–92 ....... N/A Mali ................................... 18–Apr–08 ...... 16–Jul–74 ....... 16–Jul–74 ....... 24–Oct–01 ...... 16–Jul–74 ....... 26–Feb–99 ..... 12–May–05 ..... 1–Jul–09 ......... 21–Dec–81 ..... N/A Mauritania ......................... 25–Oct–06 ...... 13–Dec–88 ..... 17–Nov–04 ..... N/A .................. 17–Nov–04 ..... 17–Nov–04 ..... N/A .................. N/A .................. 14–Jun–86 ...... N/A Mongolia ............................ 11–Jan–06 ...... 6–Aug–69 ....... 18–Nov–74 ..... 16–Apr–91 ...... 18–Nov–74 ..... 24–Jan–02 ...... N/A .................. N/A .................. N/A .................. N/A Mozambique ...................... 9–Apr–08 ........ 18–Apr–83 ...... 21–Jul–93 ....... N/A .................. N/A .................. 14–Sep–99 ..... N/A .................. N/A .................. 22–Feb–89 ..... N/A Niger .................................. 11–Aug–08 ..... 27–Apr–67 ...... 7–Mar–86 ....... 7–Mar–86 ....... 7–Mar–86 ....... 5–Oct–98 ........ N/A .................. N/A .................. 15–Jul–86 ....... N/A Nigeria ............................... 14–Dec–04 ..... 16–Oct–67 ...... 29–Jul–93 ....... N/A .................. 29–Jun–93 ...... 28–Jun–01 ...... 27–Jul–09 ....... 27–Jul–09 ....... 22–Jun–83 ...... N/A Norway ............................... 29–Jun–06 ...... 6–Aug–70 ....... 13–Sep–72 ..... 13–Sep–72 ..... 13–Sep–72 ..... 9–Jul–86 ......... N/A .................. N/A .................. N/A .................. N/A Peru ................................... 16–Nov–04 ..... 29–Sep–71 ..... 28–Apr–78 ...... 3–Oct–80 ........ 28–Apr–78 ...... 7–Jul–88 ......... 14–Sep–06 ..... N/A .................. N/A .................. 12–Jul–78Sao Tome & Prin.* ............ 12–Apr–06 ...... N/A .................. N/A .................. 6–Sep–00 ....... N/A .................. N/A .................. N/A .................. N/A .................. N/A .................. N/A Sierra Leone ...................... 30–Sep–04 ..... 2–Aug–67 ....... 23–Aug–96 ..... 23–Aug–96 ..... 23–Aug–96 ..... 25–Apr–01 ...... N/A .................. N/A .................. 21–Sep–83 ..... N/A 

49

Timor-Leste ........................ 27–Mar–09 ..... 16–Apr–03 ...... 18–Sep–03 ..... N/A .................. 16–Apr–03 ...... 16–Apr–03 ...... N/A .................. N/A .................. N/A .................. N/A United Rep. of Tanzania ... N/A .................. 27–Oct–72 ...... 11–Jun–76 ...... N/A .................. 11–Jun–76 ...... N/A .................. N/A .................. N/A .................. 18–Feb–84 ..... N/A Yemen ................................ 7–Nov–05 ....... 18–Oct–72 ...... 9–Feb–87 ....... N/A .................. 9–Feb–87 ....... 5–Nov–91 ....... N/A .................. N/A .................. N/A .................. N/A Zambia .............................. 7–Dec–07 ....... 4–Feb–72 ....... 10–Apr–84 ...... 10–Apr–84 ...... 10–Apr–84 ...... 7–Oct–98 ........ N/A .................. N/A .................. 10–Jan–84 ...... N/A

TOTAL (of 34) ........... 28 ................... 33 ................... 33 ................... 24 ................... 32 ................... 31 ................... 8 ..................... 5 ..................... all African ....... all American 

* delisted or denied EITI candidature 

50

APPENDIX II: KEY REFERENCES TO THE ROLE OF CIVIL SOCIETY

FROM EITI DOCUMENTS

EITI Principles (2003). Principle #8 ‘‘We believe in the principle 

and practice of accountability by government to all citizens for the 

stewardship of revenue streams and public expenditure.’’

EITI Criteria #5 (2005) Civil society is actively engaged as a participant in the design, monitoring and evaluation of this process 

and contributes towards public debate.’’

Sign-up Indicator #2 ‘‘has the government committed to work 

with civil society and companies on EITI implementation?’’

Preparation Grid Indicator #5 Has the government established a 

multi-stakeholder group oversee EITI implementation? And to 

judget this evidence must be presented demonstrating that society 

groups and ‘‘other civil society such as media and parliamentarians’’ are and feel to be adequately represented, are independent 

operationally and in policy terms, without coercion or constraint, 

Preparation Grid Indicator #6 Is there active engagement with 

civil society, whether through the multi-stakeholder group or in addition to the multi-stakeholder group and are. CSO’s ‘‘free to express opinions on EITI without undue constraint or coercion.’’

Preparation Grid Indicator #8 Did the government remove any 

obstacles to EITI implementation (including a review of the legal 

framework)? 

Board Policy Note #5 establishes a procedure on how the EITI 

Board may temporarily suspend or de-list an EITI implementing 

country. Where the EITI Board is concerned that adherence to the 

EITI Principles and EITI Criteria is compromised, it shall task the 

International EITI Secretariat with gathering information about 

the situation and submit a report to the EITI Board. The most explicit reference is made to EITI Criteria #5 (listed above), among 

others as a cause for suspension or de-listing.

51

PREPARED STATEMENT OF MAX BOKAYEV, CHAIRMAN, ARLAN 

I would like to thank the members of the U.S. Helsinki Commission for their invitation to testify at this hearing, which covers an 

issue of critical importance to Kazakhstan. I hope to give you a perspective on the real challenges being faced on the ground in a country where extractive industries plays such an important role. 

My name is Max Bokayev. Today I will share with you my views 

from my experience as Chairman of a Kazakh non-governmental 

organization (NGO), and as regional coordinator for a national 

NGO coalition focused on oil revenue transparency. I will also 

share my views based on my experience as the project leader of an 

EITI Roundtable process organized in 2005, with the participation 

of members of parliament of the Republic of Kazakhstan. 

Since 2003, I have been the Chairman of the non-governmental 

organization, Arlan, based in Atyrau, the largest oil producing region of Kazakhstan. We help citizens affected by extractive industries projects to protect their rights to participation, access to information and access to justice, which, as you know, are enshrined in 

the Aarhus Convention. We also work with citizens groups to conduct advocacy to improve the transparency of oil revenues, as well 

as the environmental and social performance of specific oil production projects. 

As you may know, oil is a central part of the Kazakhstan economy. [In 2006, oil revenues comprised roughly 38% of total government revenues, and represented roughly 11% of GDP.] Kazakhstan 

is the second largest oil producer of the former Soviet republics, 

and is home to some of the most important oil and gas fields in the 

world. Most of the largest oil companies in the world operate in 

Kazakhstan, such as Chevron, ExxonMobil, ConocoPhillips, Shell, 

Total and others. For example, the Kashagan field, which is the 

largest known oil field outside the Middle East and the fifth largest 

in the world in terms of reserves, is located off the northern shore 

of the Caspian Sea, near my home city of Atyrau. A series of complex pipeline projects with significant environmental and social 

risks, such as the BTC Pipeline project, connects these fields to 

markets. 

As a result of the massive scale of oil development, modern 

Kazakhstan is facing all the political and the economic problems 

that are typical to developing countries rich in natural resources. 

The warnings of economists, sociologists and political analysts 

made to the leaders of Kazakhstan in the early and mid-nineties—

has now become our reality. 

We are seeing significant evidence of the so-called ‘‘resource 

curse’’. The lack of transparency in the governance of the oil sector 

has facilitated rampant corruption in the bidding and contracting 

process, allowing corrupt public officials to launder millions of dollars of public funds; public funds that could be used to provide social services and economic development opportunities. 

Some of you may know the scandal called ‘‘Kazahkgate’’. 

The criminal case names the Kazakhstan president Mr. 

Nazarbayev as an unindicted co-conspirator. The defendant, James 

Giffen, a consultant to the Kazakh government, is accused of channeling more than $78 million in bribes to Mr. Nazarbayev and the 

52

head of the country’s oil ministry. The money, doled out by American companies seeking access to Kazakhstan’s vast oil reserves. 

Kazakhstan officials said that the charges have nothing to do 

with their president as they concern an American citizen; though 

several American attorneys addressed the US Department of Justice on behalf of Kazakhstan. They requested to stop the proceedings taking into account the strategic importance of US relations with Kazakhstan. 

In response to allegations of corruption by companies, the state 

control bodies will be indifferent unless specific state interests 

arise. In these cases, the state uses various pressing methods starting with sponsorship extortion and ending with complete overhaul 

of contracts. 

It is no surprise that the Transparency International Corruption 

Perception Index gives Kazakhstan a score of 2.7 out of a possible 

10, signaling that the public believes that public officials are corrupt. 

Against this backdrop, the human rights situation in the Republic of Kazakhstan has dramatically worsened. Such basic human 

rights as access to water, to clean air, and to labor rights remain 

problematic. For example, in Atyrau, Kazakhstan’s biggest oil region and where I am from, 17 % population does not have any access to drinking water. The infant mortality rate in this region is 

higher than the national average of 20.8. For comparison, in developed countries, the infant mortality is below 6. In Mangystau, another big oil region, the rural poverty rate is 63.5 %. 

The government has been working diligently to repress independent media and human rights activism. Many journalists and 

others working to hold the government to account for its mismanagement and laundering of public revenues, have been met 

with harassment, intimidation and violence. Newspapers and journalists have been charged with libel for writing about the corrupt 

actions of politicians, and individuals from the media or human 

rights groups have been anonymously assaulted or their lives destroyed. The government amended Kazakhstan’s media law to give 

itself unlimited power to shut down independent and opposition 

media outlets for technical violations. It also created registration 

procedures for new media outlets that were highly difficult to meet. 

Exacerbating this situation is that in the more than 20 years of 

my country’s independence, there has been a lack of basic, established democratic institutions. The elections conducted during the 

entire period of the independence have never met the standards of 

the OSCE. The current single-party parliament is deprived of its 

necessary control and regulatory functions. For example, opposition 

politicians do not have access to mass media. 

Given this context, it is not surprising that the government’s 

commitment to implement EITI under the Memorandum of Understanding back in 2005 was received by civil society with great hope 

and enthusiasm. I worked closely with the NGO Coalition called 

‘‘Oil Revenues—Under Public Oversight!’’ to push for EITI implementation. Even fractional improvement in the transparency of 

state revenues could have contributed to more effective governance 

and to the establishment of a relationship of trust between the government, companies and civil society. 

53

The implementation of EITI is overseen by the multistakeholder 

group, the National Stakeholders Council on EITI. The Council is 

chaired by the Vice Minister of Energy. Civil society is represented 

in the Council by the Coalition ‘‘Oil Revenues—Under Public Oversight’’. This coalition holds all three civil society seats on the Council and actively participates in the Council’s work. So far, 

Kazakhstan has produced 2 EITI reports and is expecting to 

produce 2 more reports in 2010. The EITI reports produced by 

Kazakhstan are all aggregated, so there is NO company-by-company payment data, however, they cover almost all kinds of payments made by extractive companies to the government. 

While the validation results indicate progress achieved by 

Kazakhstan in implementing EITI, they also highlight issues which 

stakeholders will need to address. 

Kazakhstan is amongst 16 countries which were granted the extension of the validation period by the EITI board. Companies and 

NGOs have different perception of the meeting validation criteria. 

While NGOs are saying that a glass is half empty, the companies 

argue that it is half full, saying that Kazakhstan’s strong commitment to EITI is clearly evident. We take this extension with responsibility to meet validation criteria within 6 months. Only 122 

companies out of 700 are covered by the EITI, not all material payments are covered by reporting, the companies’ reports not always 

are audited in accordance with the international standards. The detailed Working Plan is not published. We hope that in 6 months 

all validation criteria will be met without any exceptions. 

However even after five years, it is still impossible to say unambiguously that the transparency of payments has translated into 

concrete improvements and that it has made an impact on the positive development of civil society and human rights. 

On the one hand, these five years of implementation of the EITI 

again proved that transparency in the extractive industries starts 

with transparency in the administrative, legal and judicial systems 

of the state. It also became clear that the EITI is both good and 

effective only if there are effective democratic institutions. Under 

the authoritarian regime (even under the so-called ‘‘soft’’ 

authoritarianism of president Nazarbayev), with excessive dominance of big extractive companies in the economy and given weak 

civil society, the role of the EITI is reduced to issuing of usual ritual accounts. 

But on the other hand, despite all the difficulties—the EITI National multi-stakeholder group is the only place where representatives of independent NGOs can delegate their representatives. And 

this right is given to them by the EITI. 

Being aware of the limited mandate of the EITI, the Kazakhstan 

civil society activists raised the question of expanding the mandate 

even before the signing of the EITI MoU. But whenever NGOs suggest going beyond the formal requirements of the EITI and considering the transparency in a broader sense, representatives of extractive companies and the state officials say in one voice: this is 

not within the mandate of the EITI. 

Like many other representatives of civil society of Kazakhstan I 

strongly believe: It is necessary to further deepen and widen the 

EITI, in particular my recommendations would be to: 

54

Achieve that the government and extractive companies acknowledge the mandatory publication of detailed, 

disaggregated EITI reports 

Achieve transparency of information on social investment 

projects (on strategic philanthropy) of extractive companies 

Obtain transparency of contracts for subsurface use and 

strengthening the role of the state representative bodies and 

civil society in the management of revenues from extractive industries 

However, despite good intentions, governments assuming EITI 

obligations will face challenges and it will take political will to 

work through those challenges. It is in this context, that the leadership and support of developed countries is needed. For example, 

the current prime minister of Kazakhstan, having learned that 

only a couple of developing countries in EITI disaggregate revenue 

payment data, proposed to introduce data disaggregation in 

Kazakhstan only after its introduction in Norway. The signals sent 

by developed countries have great influence and appeal to government officials in developing countries. 

So, taking this opportunity, I would like to urge U.S. lawmakers 

to pass the Energy Security Through Transparency Act in your 

Senate. With this legislation, the United States will set a standard 

for revenue payment transparency in the extractive sector as well 

as its support to EITI. This will, in turn, help to strengthen the position of civil society throughout the world, particularly in 

Kazakhstan. 

In closing, I would like to say that in the Republic of 

Kazakhstan, as well as in many other countries, the subsurface has 

been declared to be the property of the people. If we also consider, 

that the subsoil is the property of not only the present generation 

but of future generations, it becomes clear that the sustainable 

management of revenues from these subsoil resources is a protection of the human rights of future generations. 

In my opinion, this is the argument that demonstrates the link 

between revenue transparency and human rights. 

Thank you for your work to understand and improve transparency mechanisms, so that we can, together, ensure the real participation of citizens in the equitable distribution and use of resource revenues, and in the management of these revenues to protect the human rights of future generations. 

Thank you.

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