Can we end corruption in oil, gas, and mining?

Corruption in extractive industries is a barrier to good governance and sustainable development around the globe. In many resource-rich countries, systemic poverty is exacerbated by endemic corruption. The so-called “resource curse” suggests that some of these countries are actually worse off because of corruption and other consequences of natural resource extraction. But there is hope. Research and practice in recent years suggest that transparency, accountability, and participation (“TAP”) can be part of the answer. To explore that basket of solutions, in 2017, The Brookings Institution, with Results for Development and the Natural Resource Governance Institute, launched the Leveraging Transparency to Reduce Corruption (LTRC) project.

On July 1, Governance Studies at Brookings hosted a webinar exploring solutions to the challenges of corruption along the natural resource value chain globally. Brookings Senior Fellow Norm Eisen and Alexandra Gillies of the Natural Resource Governance Institute led a discussion with a panel of experts to discuss key takeaways from a new LTRC report, “The TAP-Plus approach to anti-corruption in the natural resource value chain,” which includes an analysis of the history, successes, and limitations of anti-corruption initiatives to date, and the introduction of a framework to guide future work. They also discussed corruption risks in natural resource governance in the era of COVID-19 and the implications of the pandemic on global anti-corruption action-research initiatives such as LTRC.

A FRAMEWORK FOR ANTI-CORRUPTION INITIATIVES IN RESOURCE-RICH COUNTRIES

LTRC seeks to increase knowledge and understanding of the most effective ways to tackle corruption risks along the natural resource value chain. Eisen explained that LTRC picked the extractives sector, one of the world’s most corruption-challenged industries, to test whether progress is possible. Anti-corruption initiatives and literature over the last few decades have coalesced around the remedies of transparency, accountability, and participation (“TAP”)—where civic participation and engagement are more effective at imposing accountability and curbing corruption than transparency (freedom of information laws, open data, etc.) alone. While TAP interventions can have some success, LTRC posits that TAP alone is often insufficient and proposes a new framework for anti-corruption initiatives.

What, then, is the “Plus” in TAP-Plus? First, interventions must address the implementation gap—that is, the disconnect between laws on the books and conditions on the ground.

For example, a government may mandate the disclosure of contracts but do so with extreme delays or by releasing data which is indecipherable to the general public. Second, interventions must consider contextual factors, especially those relating to institutional design, function, and legitimacy, which will impact the effectiveness and operation of anti-corruption efforts. LTRC has identified five contextual areas of interest—state capture; social trust, political trust, and conflict; civic space and media freedom; rule of law; and government effectiveness and capacity.

Finally, interventions must consider complementary measures and reforms that lie outside the TAP field but interact strongly with TAP interventions. LTRC focuses on reforms, policies, and legislation pertaining to state-owned enterprises, sovereign wealth funds, and disclosure of beneficial ownership of companies (i.e., the identities of the actual owners of extractive companies, who often hide behind a chain of corporate entities).

By considering the implementation gap, contextual factors, and complementary measures, LTRC advances TAP-Plus as a robust and comprehensive framework for designing and evaluating anti-corruption efforts, Eisen argued.

COVID-19 & RESOURCE-RICH COUNTRIES

The COVID-19 pandemic has hit resource-rich countries (RRCs) the hardest, noted Daniel Kaufmann, a Brookings nonresident senior fellow and the former president and CEO (now chief advisor) of the Natural Resource Governance Institute. Compared to other nations, RRCs have the lowest testing rates overall and are experiencing dramatic upticks in infection rates. A confluence of four factors, driven by COVID-19, pose a major threat to resource-rich countries: (1) the public health crisis itself, (2) the governance stresses it has unleashed, (3) a major drop in demand for hydrocarbons and minerals, and finally, (4) a broadscale socioeconomic crisis. One particular worry is that the COVID-19 crisis is exacerbating weak governance practices in RRCs and may accelerate the closing of civic space and breakdown of democratic institutions in those states. Elites have the opportunity to double down on state capture during this period of turmoil when the pandemic restrains counterbalancing voices and accountability. Kaufmann discussed how this devastating quartet drives the needs for a renewed and proactive emphasis on radical transparency in the space, and how we need improved tools to check or catch the corruption boom that might be coming. You can read more of his thoughts about these issues here.

HOW CAN ANTI-CORRUPTION INTERVENTIONS USE THE TAP-PLUS MODEL

When LTRC initially was conceptualizing the report featured in the webinar, it wanted to identify successful anti-corruption interventions and then determine how to replicate them. However, the team found that proof of successful initiatives was often inconclusive or weak. So, in the paper, LTRC went a step further to try to understand why interventions did not work (or did not work as expected) and from there to weave together the TAP-Plus model, which among other things could help design future interventions.

As part of the initiative, the LTRC team also has worked on developing three pilot programs to test TAP-Plus in Nigeria, Peru, and Mongolia. Its initial work involved constant interaction with stakeholders in the individual countries as a way of identifying the country-specific contextual factors the pilot programs needed to engage with. Asking and taking seriously what is inhibiting anti-corruption work and then learning from local residents and citizens how to design better interventions is central to the pilot studies, Erin Fletcher and Mario Picon of Results for Development explained.

The COVID-19 pandemic has necessitated first a triage mode and then a new set of efforts where the team began to integrate more digital elements and to support its local partners through the crisis. RRCs had many structural and long-standing governance problems before COVID-19 intensified them. For example, the squeeze on civil space is perennial, Eisen noted. Progress in that space can be very easily be taken away. Yet, one of the most surprising findings of the initiative was the resilience of civil society at the grassroots level, Picon said.

And Fletcher pointed out that while the contraction has seriously hurt citizens’ abilities to hold governments accountable, recent protests also have uniquely mobilized millions of people, so perhaps civic space can persist.