# **<u>IIC: Hybrid Approaches to Globalized Regulation</u>**

Hybrid approaches -- -- involving multiple governmental and non-governmental stakeholders, as well as approaches where important responsibility for some combination of design, monitoring and enforcement lies principally in the hands of a transnational body -- comprise yet another recent institutional innovation in globalized regulation. The key defining feature of these hybrid approaches is a process of rulemaking that involves both governmental and non-governmental stakeholders. Monitoring generally has a strong global dimension; enforcement depends in part on reputation.

The two illustrative hybrid examples considered here are the Extractive Industries Transparency Initiative (EITI) and the Kimberley Process Certification Scheme (KPCS). (A third example, the ILO/IFC Better Work program was discussed earlier.) Both programs have been widely acclaimed as innovative initiatives to combat the corrosive effects on governance in institutionally weak and collapsed states of corruption and illegality associated with the exploitation of natural resource rents. Both have addressed rulemaking, monitoring and enforcement in innovative ways.

**_Rulemaking._** The role of non-governmental stakeholders was decisive in the genesis of both programs. A key precursor to the EITI was the release in 1999, by the international NGO Global Witness, of the study “A Crude Awakening”, which documented the links between oil, banking and corruption in Angola. Immediately thereafter Global Witness, together with the Open Society Institute, Oxfam, Transparency International, Save the Children and other NGOs launched a campaign to pressure global oil and mining companies to “Publish What You Pay”. The then British Prime Minister, Tony Blair announced the multi-stakeholder EITI initiative at the 2002 World Summit on Sustainable Development; the EITI was launched the following year.

The antecedents of the Kimberley Process were strikingly similar: a 1999 campaign, also initiated by Global Witness, to expose the role of diamond revenues in fuelling conflict; by November 2000, the United Nations General Assembly had passed a resolution supporting the creation of an international certification scheme for rough diamonds; within two years, governments, the private sector and civil society actors had agreed on the KPCS.

As benchmarked in Table 6, the KPCS is more comprehensive in its coverage than is the EITI. The KPCS has 75 member country governments – both diamond-exporting and diamondimporting countries; together these members account for 99 percent of the world diamond trade. The EITI distinguishes between „implementing‟ and „supporting‟ countries. As of late 2010, thirty three country governments (32 natural resource exporting developing countries plus Norway) had signed up as „candidate‟ countries for EITI implementation; five of these (Liberia; Azerbaijan; Timor Leste; Mongolia; and Ghana) had been validated (as per criteria discussed further below) as compliant with the EITI criteria. All of the G-7 members are among the EITI‟s 17 „supporting‟ countries. But some major oil exporting countries (e.g. Angola, Sudan) currently are not part of the EITI process; and none of the BRICS countries have signed up as either supporters or members.

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