Canary in the Coal Mine: Trump Administration Undermines a Global Anti-Corruption Initiative

This blog is designed to provoke thoughts and encourage debate about the function, effectiveness and role of MSIs. The views expressed here are the personal views of the author and are not the institutional positions or views of MSI Integrity. We welcome critiques and responses on the ideas below. If you would like to post a long-form response, or contribute your own piece, please contact us at: info@msi-integrity.org

The following was published on the online forum, Just Security, on April 13, 2017

Those nervously watching to see whether the United States will uphold its existing international commitments to protect human rights and address corruption have had their eyes trained on the positions typically in charge in this arena: U.S. Ambassador to the UN Nikki Haley, Secretary of State Rex Tillerson, and President Donald Trump himself (or, at least, his twitter account). But some of the most worrying signals are emanating largely unnoticed from staff at the Department of the Interior (DoI). Recent actions by DoI officials have caused speculation that the U.S. may soon be leaving a major global anti-corruption initiative, the Extractive Industries Transparency Initiative (EITI). This is just one example of dozens of little-known international “multi-stakeholder initiatives” that now appear to be under threat of being rolled back or neglected. These initiatives, most of which set standards for voluntarily participating countries or companies, have won favor amongst those wary of negotiating treaties or establishing binding corporate regulation to address corruption, insecurity or human rights. If the Trump administration continues taking steps to undermine these initiatives it will erode an already weak system of global oversight into corporate conduct and the flow of illicit dollars, thereby increasing the overall risk of human rights violations, violence and instability.

The U.S. joined EITI in 2011, a decade after it was started by then-Prime Minister Tony Blair in response to pressure from NGOs who were showing links between revenue generated by mining, oil drilling and similar extractive industries, and corruption, conflict and human rights abuses – a phenomenon that is now known as the “resource curse.” The initiative’s 50-plus member countries, largely from the Global South, have pledged to follow EITI’s requirements, which center on releasing annual reports that disclose payments between oil, gas and mining industries and the government. The cornerstone of the initiative’s operation is that the EITI process must be overseen in each member country by a multi-stakeholder group that includes both “fully, actively and effectively engaged” civil society and industry designees. This transparency is supposed to enable an informed national debate inside member nations that focuses on questions vital to fighting corruption and other ills of the resource curse: Where has all the money gone? Why did the country itself receive so little? How come those funds went directly into the Swiss bank account of that government minister?

Yet new actions taken by the Trump administration threaten the possible unraveling of this 15-year old global initiative in just a few months.

The U.S. released its first and only EITI report in late 2015. While that document contains tidbits of interesting information, it falls short of the transparency requirements set by EITI: The majority of participating American companies refused to voluntarily disclose their federal tax payments, and the report provides no breakdown of payments on a project-by-project basis – such as the money linked to a specific mine or oil field. This project-level reporting ordinarily has the most significant information and is of far greater interest to the public than national aggregates. That key failure was supposed to be remedied by a rule issued under Section 1504 of the Dodd-Frank Act, which required U.S.-listed companies to disclose payments made to both U.S. and foreign governments for the development of oil, gas or minerals. That rule, which was to come into effect next year, would have made great progress in the fight against global corruption by setting a mandatory rule that went even beyond the reach of EITI. Importantly, it would have helped the U.S. pass a scheduled audit by EITI in 2018.

The rule no longer exists. One of the first acts of Congress under the Trump administration was to repeal it, and whether a new rule will be approved is unclear. Anti-corruption activists were still reeling from that blow, when during one of the regular multi-stakeholder meetings held at the Department of the Interior, the microphone was cut off as a civil society representative began to ask questions as to whether the Trump administration was committed to EITI. This was a breach of one of EITI’s key operational principles: the ability for civil society to speak freely within EITI. Soon after, Outlook email invitations to all future EITI meetings were cancelled. Civil society representatives in the multi-stakeholder group scrambled to issue a collective public statement that these actions are tantamount to the U.S. voluntarily halting its own EITI process.

Last week, after an unscheduled meeting of the multi-stakeholder group’s co-chairs was called to clarify the situation, officials denied that a decision to withdraw had been made, although the path for how the group would proceed was unclear. The Department of Interior is in an embarrassing bind: If it does not withdraw from the organization, then the country risks publicly failing the EITI audit, which may ultimately result in it joining a group of suspended countries that includes Azerbaijan, the Central African Republic, Kyrgyzstan, and Yemen. If the U.S. voluntarily withdraws or “pauses” its involvement, it will not only signal that countries like Nigeria and Peru – which recently passed validation – are more transparent in this area, but a host of autocrats in repressive states may feel entitled to follow suit, thereby gutting the power of the 51-member initiative.

A tell-tale sign for dozens of similar initiatives?

EITI is just one of the many different “multi-stakeholder initiatives” (MSIs) that the U.S. government or major U.S. companies have joined over the last two decades. These initiatives, which proliferated in the late 1990s and early 2000s, are premised upon collaborating with civil society (or, far less frequently, with workers or affected communities) to fill the governance gaps that exist where states are unwilling or unable to provide basic rights for their citizens or otherwise uphold laws that regulate corporate behavior. They tend to emerge in response to high-profile campaigning or scandals about a particular industry or issue, although generally receive little public attention once they become operational.

For example, the exposés on the blood diamond trade led to the Kimberley Process, which brings in civil society and companies to certify diamonds as “conflict-free.” The execution Ken Saro-Wiwa and other Nigerian activists who had been vocally opposing the operation of Shell in the Niger Delta contributed to the development of the Voluntary Principles on Security and Human Rights, which provides operational and human rights guidance for extractive companies. The dependence on Blackwater and other private military companies in Afghanistan and Iraq prompted the eventual emergence of the International Code of Conduct for Code for Private Security Service Providers. There are countless other multi-stakeholder initiatives with similar self-explanatory names: the Alliance for Responsible Mining, the Fair Labor Association, the Open Government Partnership, to name just a few.

Given that all of these initiatives rely on the voluntary participation of companies or governments, they risk becoming a flimsy distraction from efforts to develop binding legal human rights obligations for companies. But they are a central part of the U.S.’s long-awaited response to a call from the UN for states to develop policy plans demonstrating how they are ensuring the protection of human rights against business-related harms. One of the few clear commitments made in the U.S.’s oft-criticized plan was a promise to collaborate with stakeholders such as civil society organizations, with the U.S.’s participation in EITI expressly cited as one of a handful of examples of the types of initiatives that the “U.S. government will continue to play a leadership role in.”

The ease with which the Trump administration took actions to undermine its participation and compliance with EITI indicates something deeply troubling may be emerging. That is: The Trump administration is prepared to ignore a centerpiece of the U.S.’s brand new framework aimed at curbing human global rights abuses related to business interests. The fragility of the voluntary patchwork of multi-stakeholder initiatives that was supposed to offer human rights protections and stem illegal transactions that contribute to instability, crime, terrorism and countless other security threats is now apparent, and the worst is likely yet to come.

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