Posts by AmritNaresh:
South Sudan is surviving without oil
January 8th, 2013Posted by Amrit Naresh.
About a month ago, President Salva Kiir said South Sudan’s oil production would restart in a week. Famous last words, it turns out – not a drop of crude has come through the pipeline since.
It’s not that there’s no urgency: at the time of the shut-down in January, the government relied on oil for 98% of its revenues. But the delayed restart is a symptom of a complex matrix of social, political and economic tensions the government is struggling to deal with, foremost of which are its fraught relations with the Sudanese government in Khartoum.
I popped up to Juba from Kampala last week for a conference and I was curious to see how a country can survive when its government is deprived of nearly all its revenue. I found that this country’s situation can’t be analyzed like that of any other. To an outsider like me, it’s bewildering. Other countries’ politics are colored by tribal and ethnic issues of course, and relations between neighbors are often tense. But South Sudan combines each of these in their extreme with an institutional incapacity and a society so conditioned by war that, measured on these terms, it’s frustrating but hardly surprising that the oil has yet to flow.
Without oil the government’s hands are tied, but from what I saw most people don’t rely on the government for much anyway, and probably didn’t count on it before oil production was shut down.
Juba is booming – it’s probably the fastest-growing city in the world, with new hotels regularly sprouting up next to vast slums that are also growing – because the new airport and nearly all the other construction work in Juba is coming from international aid through the private sector. The United States alone pours $500 million into South Sudan annually and the bulk of it is going to private partners who can guarantee service delivery; not the government.
In terms of service delivery many South Sudanese seem not to expect much from the government anyway. During a visit to the University of Juba I asked a room of twenty students how many of them had homes with electricity and running water. Four hands went up. But there was little sense of outrage or desperation; this is what they are used to, and these are university students, the country’s homegrown elite. There is so little faith that if production restarted today, some said they would expect no more from the government than they receive now.
If oil flowed today it would probably rake in more like 85% of the government’s revenue rather than 98%. Filling the gap is income gleaned from customs fees levied on imported products, mainly, along with international aid. (An aside on imports – South Sudan has the most cattle per capita in the world but, since cows are currency, it imports most of its food from outside: hence the customs revenue. But protein deficiency is common and food insecurity is rising with less than 5% of arable land being used to grow food.)
Perhaps the biggest potential risk of the oil shutdown – other than non-delivery of services and over-reliance on international aid – is the government’s bloated salary roll and resentment among employees who are not being paid by their cash-strapped employer.
The government allocates a huge portion of its expenditures (by some estimates over 50%) to security – fighters from the Sudan Peoples’ Liberation Army (SPLA) who made their name and gained hero status fighting the war against Sudan, which officially ended in 2005. After 2005, apart from occasional bouts in disputed border areas, these fighters didn’t actually fight much but were still getting paid. Now oil has shut down and the government is broke and can’t pay them. It seems to want to galvanize some of this workforce into productive labor, and has offered some of them menial but useful jobs building things like roads. But as a friend of mine living in Juba pointed out, a South Sudanese soldier’s identity is as a fighter – and he is unlikely to acquiesce to backbreaking work on a road when he’s used to getting paid for doing not much of anything with a Kalashnikov rifle.
So the government risks alienating a cadre of trained soldiers who are already itching for a fight. An American official I spoke with said there were whispers within the government of a possible coup. Maybe that’s gossip but it’s true that there are plenty of armed, angry and unemployed young men who could pose a threat if equally angry and unemployed but better-armed military defects join their ranks. The Dinka president’s ruling coalition is powerful but not invulnerable. There are many other ethnic groups who resent the Dinkas’ grip on power.
There are psychological barriers, too. At the conference there was a local government official talking with some new media types from across Africa, Europe and the US who want to apply open source technologies to help the government become less secretive and more accountable. The official was sold on the ‘open government’ principle; he wants to publish budgets and development plans and was saying all the right things. But the others insisted on talking about the technology needed to get things done until the official threw his hands up and said “Look, I want open government. I don’t know anything about new fancy technology; this is for you people to talk about.” There were two parallel conversations that never quite intersected – both sides wanted the same thing but came from opposite ends and seemed unable to meet halfway.
This is as symptomatic with international visitors flying in to offer their well-meaning notions of development as it is among different sectors within South Sudanese society: government and citizens, Dinka and Nuer, urban and rural. And perhaps between Sudan and South Sudan themselves. It’s a brand-new country, and many people have never been governed or forced to work together in a functional sense. So there are enough domestic contradictions to keep the government in Juba preoccupied while its border disputes with Khartoum fester.
The two governments began another meeting in Addis Ababa this weekend to try to get oil flowing again. Both countries need it. When production restarts, South Sudan will be greeted by a range of competing development needs to tackle – and it will have one less excuse not to begin addressing them.
If Dodd-Frank took so long … is US EITI in trouble?
September 4th, 2012By Amrit Naresh.
The U.S. Securities and Exchange Commission (SEC) has finally voted on the implementation of oil and mining transparency rules in the Dodd-Frank financial regulatory reform bill, more than a year after the original deadline came and went. Good news, to be sure, since tough financial disclosure rules are better late than never.
But the delay is troubling, not only because of the bill’s possible watering-down thanks to stalling lobbying by the American Petroleum Institute, whose membership reads like a who’s who of Big Oil. But also because of what the delay says about the prospects of other initiatives, like theExtractive Industries Transparency Initiative (EITI).
EITI, unlike Dodd-Frank, is not a law; it’s a voluntary financial transparency initiative to which countries sign up, like the U.S. EITI isn’t backed by a sprawling institutional framework like Congress or the SEC; and it doesn’t garner the same media scrutiny or public interest as provisions wedged into superstar bills like Dodd-Frank.
So if Dodd-Frank Sections 1502 and 1504 – the two dealing mainly with oil and mining transparency – take this long to be implemented; if their provisions can be diluted by special interest lobbies, how does this bode for the timely, rigorous implementation of EITI in the U.S.? If Dodd-Frank is flawed despite the attention it has received, how can a relative unknown like EITI pass snuff?
EITI implementation always takes years; we know that. It takes a long time to build the multi-stakeholder group (MSG), the tense coalition of delegates from civil society, industry and government which manages implementation, and publish the reports that reconcile oil, gas and mining company payments with government receipts.
But no matter the time needed, a voluntary rather than legally binding initiative like this needs genuine public involvement to have maximum impact. In other words: for EITI to be effective, people need to know about it. As my colleagues at OpenOil have related, this has not happened in other implementing countries, like Colombia and Azerbaijan; and I know from my own experience that similarly few people know about EITI in the U.S. ‘American exceptionalism’ in other areas, maybe, but not here.
Allow me to illustrate how the Department of Interior (DOI), the agency charged with engaging the public on EITI and building the MSG, has not fulfilled its mandate so far.
I attended an EITI ‘public listening’ session organized by DOI in my home town of New Orleans this summer, whose purpose was to get the input of ordinary citizens at the outset of implementation. Contrary to what the session brochures would have you think, the session was hardly in New Orleans – it was actually halfway between the airport and the swamps, sandwiched in the suburban jungle between an old cinema and rows of decaying strip malls. As I noted: not the best venue for positive public engagement.
I was also disappointed – though not altogether surprised – to recognize most of the ‘public’ in the room. The reason being that the previous day, together with friends at Revenue Watch and Publish What You Pay, OpenOil had hosted a pre-DOI session discussion with about twenty local civil society activists, academics and others. Those who had attended our discussion on Monday made up a healthy chunk of those attending Tuesday’s DOI session.
Almost no one in the room at our Monday discussion had heard about the DOI session to take place the following day. A few had a bare-bones idea of EITI, but many others had never heard of it – and these were people who had dedicated their lives to working in communities affected by oil and gas activity, who would be some of the main beneficiaries of the transparency EITI may help bring about.
DOI showed minimal effort in getting the word out about the listening session in New Orleans, which was also the case for summer sessions in Anchorage, Pittsburgh and Washington, D.C. The session was announced in an obscure notice in the Federal Register in May, but, when in New Orleans, I saw no ads in the local paper, The Times-Picayune, and nothing on television or in the mail. No one was talking about it and no one was writing about it; but it’s not like no one cared – when we told people about it, they jumped on it, as their attendance of the DOI session demonstrated.
Being somewhat new to the transparency game, it was a wake-up call to see how slowly the wheels on initiatives like this can turn. I’ve seen how, in even the most well-oiled operations, the pace of the process can make you grit your teeth.
But what gets to me as regards EITI is the seeming lost opportunity for DOI to get the public involved. Unlike Dodd-Frank, EITI in the U.S. doesn’t have legions of beady-eyed media and watchdog groups tracking its every move, agitating decision-makers to get the thing done right. A rigorous, broad-based implementation of EITI in the U.S. needs a committed DOI spreading the word, even if external engagement has never been the reclusive agency’s strong suit. If DOI doesn’t move, it seems others, like Revenue Watch and Publish What You Pay, will have to do it for them.
EITI will be slow-moving and imperfect in the US even without more participation from the public. But implementation will drag on longer than it needs to – certainly, much longer than the implementation of Dodd-Frank – and be less effective than it might otherwise be if the public is not adequately informed and involved.
The SEC seemingly tried but couldn’t hide from the prying eyes of Congress and the media, and eventually, finally, voted on Dodd-Frank. DOI shouldn’t be hiding the process of EITI implementation from the affected public, either.
Amrit Naresh is a research associate at OpenOil, a Berlin-based energy consultancy and publishing house. Check out the original blog post here.