Caspian Oil Windfalls: Who Will Benefit?
The Open Society Institute has released a report calling for
accountability, transparency, and public oversight in the oil and natural gas industries
of Azerbaijan and Kazakhstan.
The report, “Caspian Oil Windfalls: Who Will Benefit?” urges
foreign oil companies, their home governments, and international financial institutions to
promote good governance and democracy in Azerbaijan and Kazakhstan to ensure that
petroleum revenues generate social prosperity and stable governments.
As the United States and its allies prepare to help shape the post-war
Iraqi oil regime, we are reminded that security of energy supply has always been a
priority of United States national security policy.
Oil booms in the Caspian Basin are expected to make Azerbaijan and
Kazakhstan important new energy suppliers for the United States. But the report warns that
the lack of good governance and democracy in the two countries could make them less
reliable partners.
Without systemic reforms in the management of oil revenues, the report
says, the money beginning to flow into the countries will not result in healthy, long-term
economic growth, higher living standards, and more freedom for the countries' people.
Instead, it likely risks being squandered on pet projects or domestic enterprises that do
not lead to growth while the majority of citizens remain poor and powerless.
"There is no issue of greater importance than ensuring the
long-run prosperity and stability of resource-rich countries by developing ways to use
these resources and the wealth they generate well," Joseph E. Stiglitz, Nobel Prize
winner in economics, writes in his foreword to the report.
According to the report, foreign oil and natural gas companies benefit
from disclosing their payments to governments so that citizens can monitor the use of
these revenues. Without disclosure, companies leave themselves open to accusations that
they have underpaid the state and are to blame for continued poverty. "It is in the
enlightened self-interest of these companies to ensure that their payments are not
misappropriated," says George Soros, founder of the Open Society Institute.
The governments of Azerbaijan and Kazakhstan should consider creating
citizens' advisory councils such as the ones set up in Alaska after the Exxon Valdez oil
spill. The councils would monitor the oil industry and the government budget, and provide
information to the public, giving citizens a voice in hydrocarbon development.
Caspian Oil Windfalls analyzes the systems Azerbaijan and Kazakhstan
use to manage their oil wealth. It offers recommendations to the governments of Azerbaijan
and Kazakhstan, multinational oil companies, international financial institutions, and
foreign governments for promoting accountability, transparency, and public oversight in
the management of oil and natural gas revenues. The report includes 10 case studies on
natural resource funds in other countries as well as models of citizen oversight.
The report was written by Svetlana Tsalik, director of the Caspian
Revenue Watch, a program of the Open Society Institute's Central Eurasia Project.
http://www.eurasianet.org/caspian.oil.windfalls/index1.shtml
EurasiaNet, May 13, 2003 |
