Citizen Participation, Politics and Power in the Extractive Sector - The Experience of a Global Civil Society Movement (David vs Goliath)
The word “politics” comes from the Greek word polis ("city-state"), which is associated with a range of meanings from "the rights of citizens" to a "form of government". Citizen participation in public life, civic mobilization, and mechanisms to hold decision makers to account are all at the heart of politics. They are also at the heart of good natural resource governance.
Since its inception in 2002, Publish What You Pay has engaged with an industrial sector that yields enormous political, financial, and economic clout around the world - the oil, gas and mining sector. As a coalition of grassroots civil society organisations, we have leveraged the power of collective civic action to hold this mighty player to account for the wealth it takes from underground, the dollars it generates and the devastating environmental and social impacts it leaves in its wake. As a truly global network of 1000 members we have used our ability to mobilize power across borders to great effect, with members collaborating to combat shady practices and deals in the countries where extractives companies operate as well as following the money to demand better from companies’ HQs and their investors.
The politics of state capture
Natural resources are public goods and in most countries the State is the legal owner of oil and gas reserves and mineral deposits. The State is expected to manage these resources for the benefit of its citizens, ensuring the best possible deal for current and future generations. Yet, in most if not all resource rich countries, oil, gas and mining companies have gained undue influence on public decision making processes to advance their own advantage, often through political donations, bribes and “revolving doors”. State capture is a type of systemic political corruption. As a result, official decisions are made in the commercial and political interest of a few (e.g. large profits for a company or a politician) at the expense of the majority of citizens (e.g. protection of livelihoods and compensation for the harm done by extraction). That includes decisions regarding whether or not to exploit a particular oil field or mineral deposit, and the terms and conditions that regulate that exploitation such as how much taxes will be paid, to whom and for what.
The fossil fuel industry has also spent billions of dollars over the past twenty years controlling the public narrative about climate change, and to deny scientific evidence that it is man-made. This has contributed to a dearth of legislation on carbon emissions around the world, and prevented governments from taking robust action to rapidly curb the burning of fossil fuels and to support a people-centered transition to a low carbon economy.
PWYP has been and continues to advocate for transparency in decision making processes related to extraction, and for the disclosure of revenues and of the beneficial owners throughout the extractives value chain as a way to expose the powerful and prevent corruption. To this day, more than $ 1 trillion in payments from extractive companies to 150 countries have been disclosed and countries such as Ukraine and Canada have adopted public registries on beneficial ownership. Our global #DiscloseTheDeal campaign advocates for more contracts, production sharing agreements and mining licences to be disclosed in order to allow public scrutiny and oversight of the deals that are being agreed between governments and extractive companies.
Transparency can alter the balance of power between the state, the extractive industry and citizens, but only if dissent is permitted and if the reputational and financial risks of engaging in corrupt behavior, environmental destruction and human right abuses are high enough. The largest penalty ever imposed for corruption in the extractive sector is $ 580 million[1] - which pales in comparison to the trillions made by the industry - and only one CEO of a large oil company has ever been sentenced to jail for corruption[2]. At the moment, the risks of being linked to corruption and other unscrupulous behaviour simply don’t outweigh the financial rewards of turning a blind eye. The role of civil society, governments and business seeking better practice must be to ensure there are serious financial, reputational and legal consequences for unscrupulous companies and individuals. One avenue to do this is to leverage the influence of institutional investors and to support shareholder activism in holding companies accountable to their ESG commitments and push for better ones.
The politics of civic dissent
Transparency is not an end in itself. It is a tool to expose or prevent these wrongdoings by powerful, vested interests. In order for transparency to lead to meaningful behavioral and normative change, societies must be open and supportive of citizen participation, dissent and public dialogue. Unsurprisingly, countries rich in natural resources - with all the problems outlined above - are more likely than others to have high levels of corruption, inequality, weak rule of law and authoritarian political regimes which stifle dissent. This is what is commonly referred to as the “resource curse”.
The COVID-19 pandemic has only accelerated worrying trends in closing civic space around the world and whether and how dissent can take place, as recently highlighted by the Institute for Development Studies, ICNL, CIVICUS and others. Restrictions on dissent have taken a range of forms, overt and covert, from formal legislation to mass surveillance, highly targeted harassment, divide-and-rule and delegitimization tactics - that have all greatly affected the ability of civil society to hold governments and extractive companies to account. But push back against anti-corruption activists predates the pandemic. Our own PWYP Board member from Niger has spent countless days in jail over the past few years after investigating alleged corruption cases and asking uncomfortable questions to the Niger government and French company Orano about the revenues generated by the extraction of uranium. PWYP activists from Congo, Gabon, Azerbaijan and many other resource rich countries share similar lived experiences and rely on the power of transnational mobilisation that PWYP can orchestrate in order to protect them.
By fostering national and transnational collective civic action to hold governments and companies to account for the costs and benefits of extracting natural resources, PWYP supports a counter-power and amplifies the voices of the politically disenfranchised - often those who are disproportionately harmed by extraction (pollution, poor health, insecure jobs, etc.) - so that they can claim their rights to the benefits of extraction and compensations for its negative impacts. This is not without challenges; as voices become more powerful and heard, so do the efforts to undermine and repress them. Our movement has constantly had to raise its game to counter the sophistication and volume of governments and companies’ PR machines with significantly more resources, and too often they win. There are glimmers of hope though; for example, recently, 71 Tanzanians won a case against the mining company Petra Diamonds for alleged human rights abuses, which led to the company paying a total of £4.3 million in a wide-ranging compensation package.
PWYP also engages with multi-stakeholder initiatives such as the Extractive Industries Transparency Initiative (EITI), in which civil society, extractive companies and governments have an equal say, to develop and implement a global standard of good governance for the extractive sector. In pluralistic societies, citizen groups are able to use the information produced by the EITI and other sources to inform evidence-based advocacy for people-centered policy and governance reforms. For instance, a recent PWYP research project using publicly available revenue data exposed how oil and gas production in Kazakhstan (an EITI implementing country) yielded few economic benefits to the country while at times impacting negatively on the environment, local communities and the personal security of industry critics. Immediately after the publication of the research report, two Kazakh PWYP member organisations were investigated by the Kazakh tax authorities and requested to pay a large sum in alleged tax arrears. We believe this was politically motivated.
The politics of inclusion
For citizen engagement to be meaningful, it must also be inclusive. Nearly 3.5 billion people live in countries rich in natural resources, yet very few of them get a say in how their natural resources are used. In 2018, total rents from oil, gas and minerals in developing countries were worth just over USD 290 billion. Yet the COVID-19 pandemic is laying bare the reality that economies reliant on resource extraction have not lived up to promises of equitable development. Lack of access to water and sanitation services, to health care and hospitals, and to emergency relief services are putting communities living in the shadows of extractive projects at tremendous risk. Women in particular are dealing with the fallout while they are rarely consulted on whether extractive projects should go ahead and under what conditions.
Since 2017, PWYP has advocated for a feminist approach to natural resource governance as a way to realise economic justice in resource rich countries. We have, together with women’s rights and other organisations, advanced a set of principles to ensure that women’s needs and priorities are fully integrated into decision making processes in the extractive sector. While there is much progress still to be made, there is now a deeper understanding within the sector on the importance of addressing gender inequality as a way to promote shared prosperity and political stability. We are also actively diversifying our movement to ensure that our activism is centred on the leadership and lived realities of women and other disenfranchised groups.
Civic participation in governance of natural resources is easy to pay lip service to, but it is far more complex in practice. There are vested interests seeking profits over the prosperity of people and the planet, and there is a narrowing environment in which citizens are able to safely demand a better future. And when voices are heard the most disenfranchised are overlooked. We need to work to understand and call out the different types of politics at play, and use the right levers of change to place people, not profit, at the centre of natural resource governance.
[1] Two oil field service companies KBR and Halliburton Co. were charged with bribing Nigerian government officials over a 10-year period, in violation of the US Foreign Corrupt Practices Act (FCPA), in order to obtain construction and oil contracts. They were charged $579 million in 2009. Total was charged a fine of nearly $400 million in 2013 for bribing officials in Iran.
[2] The CEO of the Braziian company Petrobras was charged with “passive corruption”, money laundering, criminal organization and obstruction of justice and sentenced to jail as a result of the carwash scandal in 2017
*Elisa Peter is an Executive Director at Publish What You Pay and Olena Pavlenko is Global Council Chair at Publish What You Pay.