U.S. Energy Security and Oil Revenue Transparency
On March 21, 2007, Global Witness and the Woodrow Wilson Center for Scholars hosted an event entitled, "U.S. Energy Security and Oil Revenue Transparency" to launch a Global Witness report of the same name. The timing of the event was opportune, as the importance of energy security has emerged as a central element of the U.S. foreign policy debate. The U.S. is forecasted to increase oil imports to 68% of its total supply over the next 25 years. Yet three-fifths of the U.S.' top ten oil importing countries rank at the bottom two-thirds of the world's most corrupt countries.
A diverse set of panelists addressed the challenges and opportunities presented by this interdependency. The first panel featured speakers from the non-profit, private and financial sectors discussing the links between U.S. energy security and oil revenue transparency. The second panel of non-profit and government experts expounded upon these linkages to discuss policy options for oil revenue transparency. Taken together, they presented a clear case of how the U.S. is impacted by its dependence on unstable, corrupt oil-producing countries and why policymakers should pursue mechanisms for greater transparency and push for greater accountability from oil-producing states and companies, as outlined below.
Panel I: Revenue Transparency and its Link to Energy Security
• The increased and growing dependency on oil supplies from fragile, unstable states is jeopardizing supply security and good governance is critical to stability in supplier states and transparency is a cornerstone of good governance.
• Oil revenue transparency will not only improve the standard of living in producing countries, but also spill over to benefit consuming countries. The U.S. government should require U.S. companies to publish what they pay to individual governments and actively protect civil society.
• The best and only cure for the "resource curse" is the empowerment of citizens to demand accountability from their authorities over the management of their resources once information has trickled down to their communities.
• The oil industry recognizes their role in resource revenue transparency because destabilization is costly not only in financial terms, but also in terms of lives, safety and security. From an industry perspective it is important to present broader definitions of both energy security and transparency that take into account multiple sources, impacts, and players.
Panel II: Policy Options on Oil Revenue Transparency
• The Administration should widen EITI by engaging other governments; deepen EITI by ensuring accountability from governments and countries alike; draw clear lines as to the credibility of governments' commitments; reinforce diplomatic efforts with bilateral assistance; influence the World Bank to ensure that mandatory disclosure requirements are enforced and implemented.
• Civil society participation must be recognized as the vital link in ensuring that EITI is successful and effective. Therefore the U.S. must incorporate it as part of its broader democracy and human rights agenda.
• It is critical to ensure that EITI is not just an empty initiative by supporting key implementing countries to become fully compliant and use diplomatic pressure to encourage other countries to join, particularly China, India and Russia.
• There must be a greater emphasis on creating space for civil society to hold their governments accountable as well as on developing a mechanism for mandatory disclosure for both oil companies and banks.
Drafted by Jayne Thomisee, Global Witness.
International Monetary Fund
Director, Revenue Watch Institute
Nick Welch //Manager, International Relations, Shell Oil Company