Kazakh NGO coalition letter to Parliamentarians in Kazakhstan urging support for EITI

Deputies of Majilis and Senate
of the Parliament of the Republic of Kazakhstan

Dear deputies!

I am appealing to you on behalf of the Coalition “Oil revenues – under public oversight!” that incorporates over 40 non-governmental organizations united by anxiety for the future of our Motherland.

Many countries of the world experience consequences of the so-called «resource curse», when colossal profits received from development of minerals actually hinder economic and social development, facilitate rapid spread of corruption, lead to political instability and, in some cases, military confrontations.

Revenues from operations of oil, gas and mining companies in a form of taxes, licence and royalty payments, premiums and other payments can become an important instrument in ensuring economic growth and social development. However, lack or proper reporting and insufficient transparency of these revenues, as a rule, aggravate ineffective management and facilitate spread of corruption, onset of conflicts and deepening of poverty.

We are confident: «resource curse» must not affect Kazakhstan. To avoid “the curse”, the Government of our country needs to demonstrate adherence to principles of transparency, democracy, competent management of resource wealth and create favorable conditions for development of other sectors of economy, as well as improvement of quality of healthcare, education, and social protection of population.

Transparency of information about volume of generated revenues would allow the Parliament of the Republic of Kazakhstan, as well as to all citizens and organizations, to keep the Government accountable. Civil control would not only complicate abuse and misappropriation of received funds for purposes unrelated to sustainable development but would also facilitate more effective development due to improved economic environment and more intensive attraction of foreign direct investments. Based on international experience, extractive companies would only benefit from greater transparency due to creation of equal and predictable economic relations.

In September 2002, at the Sustainable Development Summit in Johannesburg Tony Blair, Prime Minister of Great Britain, announced the Extracting Industries Transparency Initiative (EITI) and called upon the governments of all resource-rich countries to join this Initiative voluntarily. The purpose of this Initiative is to publish information about payments made by extracting companies to the budget, as well as revenues received by governments of resource-rich countries. Within the framework of this Initiative, extracting companies must disclose information concerning volumes of their tax and non-tax payments to the governments and state companies in countries of their operation, and the governments of these countries must publish reports about received profits.

Many countries joined this Initiative or decided to support it: Azerbaijan, Kyrgyzstan, Belgium, France, Germany, Norway, Great Britain, United States of America, Japan, Democratic Republic of Congo, Equatorial Guinea, Ghana, Indonesia, Mozambique, Netherlands, Nigeria, Sierra Leone, East Timor, Trinidad and Tobago.

Headquarters of leading oil companies, such as BG Group, BP, Chevron Texaco, ConocoPhillips, ExxonMobil, NNPC, RioTinto, Shell, SOCAR, Statoil, Total, etc. officially expressed their readiness to cooperate with governments in countries that will decide to join the Extracting Industry Transparency Initiative.

Respected international organizations and international financial institutions, such as the World Bank, International Monetary Fund, European Bank for Reconstruction and Development, United Nations play an important role in preparation of initiative using their experience in areas of organization of reporting in their operations in various countries.

We are confident that failure of Kazakhstan to participate in this Initiative will be a big blow to the image of our country on the international scene. If Kazakhstan joins this Initiative this would send a clear signal to the global community that the Government of our country adheres to the principles of transparency, accountability, and public control in oil sector. Considering deserved prestige enjoyed by Kazakhstan in the Caspian region, our country could have taken a role of promoter of these basic principles of democratic management of natural wealth in other countries. Undoubtedly, this would have significantly strengthened international respect of and confidence in our country.

Moreover, transparency in extracting industry would allow every citizen of Kazakhstan, regardless of age, profession, nationality or social status, to feel real participation in the management of our common national wealth.

In this regard, we appeal to you as elected representatives of people who are worried about the future of Kazakhstan with a request to ensure that Kazakhstan joins the Extracting Industries Transparency Initiative, as well as fulfills all obligations related thereto.
We sincerely rely on it that you share our belief in principle and practice of accountability of the government to its people with regard to issues of management of financial flows and budgetary expenses and hope that our appeal will get your positive reaction. By facilitating adoption of the Extracting Industries Transparency Initiative by our government, the Parliament of the Republic of Kazakhstan could make a deserved and ponderable contribution towards achievement of a long-term prosperity based on principles of transparency, accountability, and rational management of natural wealth.

Sincerely yours,

Pavel Lobachev
Coordinator of the Coalition