In the first week of November the United States announced that it would cease to implement the Extractive Industries Transparency Initiative (EITI), thus choosing to exit an international club that has spread the norm of transparency with considerable success. In this post, Liz David-Barrett reflects on what this means for extractives globally and what it tells us about how international norms spread.
The EITI is a voluntary initiative through which governments commit to disclose the payments they receive from companies in the extractives sector – oil, gas, forestry and mining – as well as simultaneously compelling the companies operating on their territory to publish what they pay. The logic is that this transparency, overseen by a multi-stakeholder group comprising government, the private sector and civil society should help to curb corruption. That in turn will mean that more of the revenues earned from resource wealth reach the people, combating the ‘resource curse’.
There is a lively debate on whether the EITI works or not. Some researchers argue that it is not much more than ‘cheap talk’, a cynical effort to signal good intentions on which governments never follow through. The EITI is seen as a sham particularly in countries where governments repress civil society, undermining the ability of the multi-stakeholder group to hold the key actors to account. Then again, the fact that US oil companies fought it so hard – the withdrawal is a victory for companies that lobbied to keep their tax affairs secret – suggests that implementation of the EITI standard does change the power balance among citizens, governments and companies.
Ken Okamura and I have argued that, even if the evidence is mixed on whether the EITI curbs corruption in implementing countries, the initiative has at least served to spread norms about transparency and disclosure in the extractive sector. We find that the promise of reputational benefits is a key motivation for governments to join and that the reputational capital earned through implementing the standard translates into material rewards such as increased aid. But that does not undermine what the initiative has achieved in terms of increasing the level of transparency and scrutiny of a sector that is highly vulnerable to corruption.
One of the key factors in the EITI’s ability to spread the norm of transparency was the fact that it had a wide membership which included some key players. The value of different types of new members has varied over the initiative’s life. At the beginning, it was critical to have some big oil-producing countries on board, and countries which were rated as ‘highly corrupt’ on indicators such as the TI Corruption Perceptions Index. Nigeria and Azerbaijan, as pilot countries, were a good choice to get things started. These were, in the terminology of Finnemore and Sikkink, ‘norm entrepreneurs’. Subsequent joiners were inspired partly by a desire to ‘keep up’ with their neighbours – there was a flurry of West African interest following the Nigerian role model.
After some years though, critics began to argue that the initiative was the rich global north imposing values on the poor global south. Few developed countries were implementing the standard themselves, attracting charges of hypocrisy. In response, at the G8 summit in 2013, all of the G8 countries made at least some form of commitment to move towards implementation. Transparency in the resource sector seemed to have reached the third stage in Finnemore and Sikkink’s life cycle – internalisation. It was even institutionalised in law in the United States (the Cardin-Lugar amendment to the Dodd-Frank Act) and in an EU directive, although the former ran up against legal challenges more or less immediately.
And that is why the US decision to leave is such a blow. The United States has said that it will continue to be involved at the international and board level. But it will be impossible to be constructive or serve as a role model when it has walked away from the initiative itself. Now, when trying to attract new members, the initiative will not be able to sell itself as a prestigious international club striving for universal values. Even the argument that greater transparency is inevitable – and hence it is better to earn reputational capital by getting ahead of the game – will flail. Indeed, the EITI is also in trouble in the UK, where a protracted crisis in the multi-stakeholder group has recently come to a head and the civil society network has walked out. It looks like the initiative’s reputational pull is diminishing fast.
More broadly, the US decision is a reminder that the diffusion of international norms is not a unidirectional or inexorable process. Sometimes things go into reverse.
Liz David-Barrett, University of Sussex