EITI progress and countries' back-pedalling.

The Economist highlights this week the progress of the Extractive Industries Transparency Initiative (EITI), to bring transparency and reduce corruption in the oil and other minerals industries across the world.

The article highlights some cases of "back-pedalling" in Africa, where countries find ways around the requirement of transparent accounting to siphon off money to corrupt individuals. Still, one could argue that the EITI exactly helps to highlight such behaviour.

Similarly, Azerbaijan which lost [eiti.org] its EITI compliant country status earlier this year, and was downgraded to candidate. The major concern here is the involvement of civil society. NRGI put out a press-release [resourcegovernance.org] condemning the beating of one of its advisory council board members, Ilgar Mammadov, by "high-ranking staff" of a prison where he's held since 2013.
Mr. Mammadov was arrested in in 2013 on charges of inciting mass violence in relation with an anti-government protest, and subsequently sentenced to 7 years in jail. The Council of Europe and European Court of Human Rights have ruled that the judgement was illegal and ordered his release [amnesty.org]. The government chose to ignore that ruling. The Council of Europe withdrew [azerireport.com, see also CoE website] from a working group it had initiated with Azerbaijan due to its suppression on human rights defenders in past years. Following the beating Mammadov's life is reportedly [azerireport.com] in danger now.

We posted earlier on Azerbaijan, see here.

Azerbaijan jails journalist who exposed president's family links to gold mine ownership

A court in Azerbaijan sentenced, Khadija Ismayilova, a journalist to 7.5 years in prison for tax evasion and embezzlement (see reports by the Guardian, incl. response of mother, FT, and Radio Free Europe).

Working for Radio Free Europe, she has exposed the links of the family of the President Aliyev to profitable Azerbaijan businesses, including a Gold mine [rferl.org] in the west and mobile phone operator.

However, the gold mine is not the 'big thing' in Azerbaijan (the mine reportedly contains US$2.5B worth of minerals), oil and gas is. Although there is strong interest in this story from western governments, including the US [rferl.org], and international organisations, Azerbaijan position in the supply of natural gas from the Caspian sea to the same countries, makes a criticism muted. BP has largest stake in the gas project Shah Deniz in Azeri Caspian Sea, next to Socar, the national oil and gas company, followed with smaller stakes of others. Norway's Statoil and France' Total recently sold [bloomberg.com, see also FT] their stakes in the project.

Some human rights organisations now press governments to consider sanctions [eurasianet.org] on Azerbaijan for its crackdown on and jailing of human rights activists and journalists. As the article in Eurasianet indicates, the potential for sanctions has recently increased as the geopolitical position of and western corporate interests in Azerbaijan have diminished.

The situation that would make potential action against the Azeri government possible, may simultaneously also be the reason why the government is behaving as it does. Weakened links with western countries may make it feel more independent. At the same time, de decline of energy prices makes there less of the spoils to around, which may explain the resulting tendency of the more autocratic leaning governments to start using the stick to stay on top. This was also something that came up during our visit to Baku in February.

Ms. Ismayilova thought it funny she was jailed for things that she accuses the government and presidential family of. She wrote in her closing statement [rferl.org] to the court that she would continue exposing government abuse from prison.

New Research: Sovereignty, the ‘resource curse’ and the limits of good governance: a political economy of oil in Ghana

Jon Phillips [kcl.ac.uk], Elena Hailwood and Andrew Brooks [kcl.ac.uk], all King's College London

write on

Sovereignty, the ‘resource curse’ and the limits of good governance: a political economy of oil in Ghana

Abstract:

The idea of a resource curse has influenced policy makers and led to calls for good governance to avoid the pitfalls of oil sector development. Through discussion of Ghana’s recent insertion into the global political economy of oil, this paper describes the limits of the resource curse framing and associated liberal institutional management approaches to the inherently political nature of oil exploration and production. The paper describes ways in which sovereignty has been exercised both in opposition to and in support of foreign capital, and the role of discourses of ‘good governance’ in structuring the material politics of resource access.

Published in Review of African Political Economy, available here [tandfonline.com].

Iran deal, Who get's to the riches first?

With the Iranian nuclear deal steadily progressing, there are reports on western oil companies trying to make deals with Iran on developing their oil and gas production. I found two conflicting reports on who's in the lead, European or US companies.

The Economist wrote a few months ago:

American officials, for their part, are diligently tightening the screws. When a large delegation of French businessmen returned from Tehran last year, many were warned by the American embassy in Paris that they should tread carefully and not sign preliminary contracts in Iran if they wanted to retain access to American financial markets. A group of Germans received a similar warning a few months later. The thought of having their dollars frozen under American banking sanctions, or of being locked out of America’s capital markets altogether, has cooled enthusiasm for doing business in Iran. 

Yet some foreign businessmen moan that American companies are not playing by the same rules. Rather than operate openly in Iran, many American firms are busily using local front men. One such middleman in the oil and banking business, who is a frequent visitor to Iran’s oil ministry, says prime contracts have already been snapped up. “If there is a nuclear deal, you will find overnight that the Americans have signed one-year options on the best projects,” he says. “The Europeans will be queuing up, but they will end up negotiating with Exxon Mobil and Chevron, just as happened in Libya.”

Such talk is particularly galling to companies from Western countries that were reluctantly pulled into applying sanctions. “We can’t help but think we have been played by the Americans,” says one European business leader.

Yet the Financial Times writes,

For the likes of Royal Dutch Shell, Eni of Italy and France’s Total, among those whose officials have met Iranian counterparts in Tehran, that day may be months away. Negotiations with US energy groups — absent since the nationalisations that followed the 1979 Islamic revolution — could be even further off. A complex range of restrictions will need to be rolled back in the US.

and further

Legislation and executive orders impose such wide-ranging restrictions on US business dealings with the country that American companies take them to mean that even hypothetical discussions about post-sanctions contracts are illegal. Not one US oil company says it has held talks about possible deals with Iran. Exxon’s understanding of the law is that its executives are barred from talking about business with any Iranian officials. Chevron says that it “acts in full compliance with US law and does not engage in business discussions with Iran.” Conoco, similarly, says it is not engaged in any such talks.

I find the FT report more convincing. The one "middleman" the Economist puts forward doesn't sound very credible when saying that contracts have already been "snapped up".  The rest sounds very speculative (I'm not familiar with the case of Libya or which time period this person was referring to, but probably the time that Ghadaffi signed the nuclear non-proliferation treaty, and became a 'respectable' leader again).