Ethnic Issues

EITI Broker: ‘The Government Must Have Political Will’

By Nyein Nyein 11 August 2015

In July of last year, Burma was accepted as a candidate country for the Extractive Industries Transparency Initiative (EITI), an international resource revenue reporting protocol. In preparation for this milestone, a multi-stakeholder group (MSG) was formed of civil society, government and corporate representatives to establish the country’s action plan and create responsible and accurate reporting mechanisms that address the concerns of all parties involved. By early next year, the MSG will be required to submit its first annual EITI report to a team of independent auditors.

The Irrawaddy recently spoke with Wong Aung, director of the Action Group for Resource Accountability in Myanmar and a CSO representative on the MSG, about preparations for becoming EITI compliant and why the issue of resource sharing is so important for Burma’s ethnic minorities.

What actions have been taken in the past year as an EITI candidate?

The EITI International Board granted Burma candidate status in July of last year. Since then we have held regular tripartite meetings [of the multi-stakeholder group]. We are preparing the report, which we need to submit next January. At the same time, we have had discussions on remedial measures to address the problems facing locals in project areas. Our first report will focus on oil & gas and mineral mining, including gems.

Are local people and extractive companies cooperating in the process?

Companies are trying to turn themselves into responsible, accountable and transparent businesses and to improve the role of the private sector to meet EITI standards. But it might take a pretty long time to secure the cooperation of local mining companies, including those owned by cronies. I found that some international firms, which already understand the nature of the EITI, are preparing for it. As regards the cooperation of the private sector, I think local companies only understand some aspects of the work that needs to be done within the EITI framework.

Time is ticking away toward the deadline. What are the challenges you face in ensuring a comprehensive report?

There are domestic and foreign firms engaged in oil & gas exploration and extraction on a national scale. There are challenges to including all of them in our report. The government might need to change some laws and regulations on resource governance which pose an obstacle to meeting EITI standards. Again, we would like to urge international companies engaging in the extractive industries to publicly share expertise about international rules and regulations, and then we should create an environment in which those rules and regulations can be effectively enforced.

How many international companies are working to meet EITI standards on their own while the government prepares for compliance?

Moore Stephens International, an accountancy firm, has been contracted to do a scoping study. It is fair to say that the company is somewhat effectively working with ministries to coordinate related work. EITI is just a tool to resolve problems in politics, the economy and issues of resource sharing that the country is facing. I hope problems can be solved in the long run by broader reforms, for example, by establishing an economy based on federalism, and fair profit sharing rights.

EITI has also come up during peace negotiations between the government and ethnic armed groups. What actions should the government take regarding its earnings from natural resources, and how could that impact the peace process?

Article 37 of the 2008 Constitution grants the central government total control over resources both above and below the ground throughout the country. At the same time, Articles 96, 188 and 196 give local governments some degree of authority over resources in states, divisions and special regions, but it is too limited. Perhaps President Thein Sein could do something within the socio-economic framework he is undertaking as part of the reform process, to grant local government greater authority over resources.

It is important that we create an environment in which ethnic leaders and concerned civil society organizations can actively participate in discussions on resource sharing. Unfortunately, in some cases, CSOs have very limited say regarding resource sharing, governance and the rights that are enshrined to them within the EITI. The government has included the EITI into peace discussions in case ethnic leaders wish to refer to it during the political dialogue that will follow the signing of a nationwide ceasefire agreement [NCA]. But I don’t think EITI is key to resolving the resource sharing issue. How could we solve these problems just by referring to the EITI? For example, more than half of the oil, gas, mines and forests have been exploited by the authorities. In my view, establishing the EITI as a common ground to resolve problems related to resource governance is not a problem, but trying to establish it as a means to introduce an economy based on federalism would not work.

Could you explain the federal economy you envision?

In a federal economy, businesses are allowed to operate freely in their respective sectors, and there is a distribution of tax revenues between the central and local governments with equalized distribution of profits from resources among states which are resource rich and those that are not. It involves a lot of work, such as calculating shares based on population.

These rights and entitlements can only be guaranteed constitutionally. A system of benefit sharing could be problematic as we still have many unresolved issues in our country. So we should work toward a federal system that can operate with a constitutional guarantee.

It is only recently that the government has begun making reference to federalism. How do the government representatives in the MSG respond to discussions about federalism?

During a political transition, whether it is a democratic transition or post-conflict, EITI is usually brought in to a certain extent for the sake of politics, economics and investment. African countries and other places undergoing political transformation are good examples. I have found that some government representatives involved in the process are willing to establish the EITI standard, but they don’t have the mandate. We’ll urge them after necessary changes are made to relevant laws, regulations and procedures. There are certain limitations on the discussions concerning federalism, and it is far beyond the capacity of the multi-stakeholder group to work out a practical answer for this.

Would there be consequences from the international community if the government fails to implement the EITI at fully compliant status?

The most important thing is that the government must have the political will to meet the EITI standard. If it is just trying to meet the minimum standards to attract foreign investment, nothing will change.

Different government ministries have a lot of constraints. They need to speak publicly and frankly about the process. If they falsify this process, there will only be more problems. They need to acknowledge their shortcomings and reveal the existing challenges as they are so they can take further steps to remedy the situation. If they don’t, it will undermine trust in politics, the economy and ethnic issues. It will contradict people’s expectations.