The mining champions of Mongolia, and yet another reminder of what makes our movement powerful

I recently travelled to Mongolia to see first-hand the hard work of PWYP members and their inspiring achievements.

There is a way to go for Mongolia’s mining sector to become truly accountable and benefit all its people. Nevertheless, what I saw on this trip was impressive indeed: a shining example of what committed, effective and organised civil society can do – and will keep doing.

The ninja miners of Nalaikh

Located about 35km from the capital, Ulaan Bataar, a visit to Nalaikh mine brings into focus the singular history of mining in Mongolia, and its critical importance to the country’s trajectory.

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Nalaikh is where Mongolia’s industrial mining was born in the early 1920s, and paved the way for the resource-based economy that accounts for much of Mongolia’s development to date. Coal from Nalaikh fed Mongolia’s (and mainly Ulan Bataar’s) industrialisation, until state-led mining was abandoned in the early 1990s, following the collapse of the Soviet Union. Amid the derelict mine’s increasingly crumbling structures, unemployed miners continued doing what they could to survive.

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These so-called ‘ninja’ miners descended the mine shafts to work with artisanal tools, and still do so today. That activity shows no sign of stopping: two-thirds of Nalaikh’s coal deposits remain, and the ninja miners work in unregulated, unprotected and dire conditions.

On average, 15 to 20 people die in its shafts every year.

PWYP members want mining to work for the many…

Today, artisanal gold mining is much more common than coal. It’s estimated that 80% of the gold purchased by Mongolia’s Central Bank is produced by such small scale mining. And besides supporting these livelihoods, the mining sector (including large-scale industrial mining, which dwarves the artisanal kind) accounted for 20% of Mongolia’s GDP, 18% of government revenue and a staggering 86% of exports in 2016.

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In other words, if Mongolia gets mining right, it could lift the entire population, boost its economy and raise development standards. In the meantime, for example, Mongolia’s health spending relies on international aid for about a third of its budget, and the image of clandestine miners risking their lives in Nalaikh every day stands as an unfortunate symbol of a sector which neglects its people.

Getting mining right, and doing right by the people of Mongolia – that’s exactly what the local Publish What You Pay (PWYP) coalition has been working towards for the past ten years.

And the results are clear to see. Thanks largely to civil society’s push, Mongolia was one of the first countries to commit to the Extractive Industries Transparency Initiative (EITI) in 2006. It is now doing the hard work of implementing the required financial, environmental and social disclosures required by EITI throughout its line ministries.

While the government has yet to take the essential step of making these disclosures mandatory by law, the amount of information generation by its EITI commitment is positive so far: the most recent EITI report covered 230 extractive companies operating in Mongolia, or 98% of the mining sector’s economic output for the country. Companies who fail to report are subject to a fine. This year, more than 20 companies paid the penalty.

…and there is still a way to go

A closer look at how mining contracts are licensed is a good way to understand the current battle lines in Mongolia’s continued struggle to get mining right.

To date, 240 mining contracts have been publicly disclosed – on paper, a promising indicator of transparency – but in practice the licensing process remains plagued with questionable transactions.

PWYP Mongolia actively monitors existing and new licences – these are available on an award-winning database – to identify wrongdoing. Recently, they won a few cases where the license laws were breached, leading to 40 mining license being revoked.

It is no small task to monitor the sale of licenses: there are over 3700 active mining licenses and many more ‘inactive’, making the mining sector highly fragmented and leaving lots of room for shady deals. For that reason, the PWYP coalition is also pushing for stronger legislation on ‘beneficial ownership’ – to gain greater clarity on who really owns, and profits from, mining concessions. Indeed, despite this constellation of licenses and names of companies that hold them, the sector is rumoured to be controlled by only a few dozen powerful families.

All eyes on EITI

Tellingly, civil society pushes for a public registry of beneficial owners have been met by a smear campaign in the elite-controlled media.

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There are even greater concerns on the horizon. In the Ulaanbadrakh region, nuclear power giants Areva are rumoured to be mining for uranium, but the local communities are largely in the dark about such a gigantic undertaking. As Ms. Bor, from the local NGO Bayansharga told me, “local people are already feeling the health impacts of uranium production but the authorities
deny that exploitation has started and there doesn’t seem to be any payments made. We don’t even know if an exploitation contract is being negotiated.”

So while civil society keeps pushing, they come up against the usual mix of economic ‘gold rush’ pressures and clear opponents to transparency, accountability and inclusiveness.

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As the next EITI board meeting begins, my thoughts are with colleagues – in Mongolia and elsewhere – who have so much to gain from its success: for the ninja miners of Nalaikh, for the people of Mongolia who could benefit so much more, and for the better world we could build with greater transparency in the extractive industries and the trillions of dollar it generates.

By their side, we keep pushing.

PWYP Eurasia members meet in Azerbaijan

26 – 27 September 2018, forty representatives of the Publish What You Pay (PWYP) coalitions in Eurasia met in Baku, Azerbaijan to attend the 14th PWYP Eurasia Annual Regional Meeting.

The objectives of the meeting:

  • Strengthen the effective trans-national coordination of PWYP coalitions across Eurasia
  • Discuss the PWYP draft Strategy for 2020-2025 including the Global Goals
  • Build the capacity of PWYP members on effective engagement of civil society in national EITI implementation; and on the governance and management of State Owned Enterprises (SOEs)
  • Foster experience sharing and collaboration opportunities among PWYP members

Azerbaijan last hosted the PWYP Eurasia Regional Meeting over 10 years ago and participants underlined the symbolic nature of demonstrating solidarity with the local civil society after country’s withdrawal from the EITI.

Participants from seven countries shared their achievements and challenges within national campaigns and discussed possibilities for cross-country cooperation on priority issues including contract transparency, beneficial ownership and EITI mainstreaming.

Participants discussed and provided feedback on the draft PWYP Strategy for 2020-2025.

Participants also committed to preparing for active participation in the upcoming PWYP Global Assembly which will take place from 29-31 January 2019 in Dakar, Senegal. Preparations required in the coming weeks include the nomination and selection of three delegates, to represent the coalition (including women and youth representatives); fundraising for participation; and nominating a candidate to represent PWYP Eurasia members on the PWYP Global Council.

Participants welcomed the opportunity to provide feedback on the initial research findings from a project coordinated by NRGI to explore the governance and management of National Oil Companies, and to provide recommendations for policy and reforms, in Ukraine, Kazakhstan, Russian and Azerbaijan.

Finally, participants expressed their concern regarding continuous efforts by governments to narrow civic space, harassment of civil society activists and decreasing funding for initiatives on transparency and accountability of the extractive sector in the Eurasia region.

The meeting participants resolved to continue their campaign for a world where all citizens, both current and future generations, benefit from their natural resources.

Baku, Azerbaijan
27 September, 2018

PWYP Azerbaijan

PWYP Kyrgyzstan

PWYP Mongolia

PWYP Tajikistan

PWYP Ukraine

Along with individual PWYP members from Kazakhstan and Albania.

Georgia

Georgia lies within the upper Kura Basin, a hydrocarbon basin it shares with neighbouring Azerbaijan. Three natural gas and 17 oil fields have been discovered in Georgia so far, with confirmed oil reserves of 8.3 million tons and further reserves expected. PWYP members in Georgia are working to ensure prudent management and investment so these resources can be successfully commercialised.

Little attention is currently paid to how the oil and mining sectors are administered. Globally accepted standards and reporting principles to improve transparency are overlooked. PWYP members are addressing this by promoting civil society involvement in EITI implementation. Their work focuses on establishing a relevant legal framework for EITI and promoting compliance by companies and the government with the EITI Standard. They work to create closer ties and better dialogue with the government and mining companies, coordinating civil society efforts to demand transparency and monitor state expenditure of extractive revenues to ensure it generates sustainable development. Members also work to raise public awareness of transparency initiatives in the extractive sectors.

Kazakhstan

Kazakhstan’s extractive sector plays an important role in the country’s development, with revenues constituting more than half the state budget. The country has the largest recoverable crude oil reserves in Central Asia. With much government revenue coming from the extractive sector, in 2005 Kazakhstan was among the first countries in the region to announce its commitment to the EITI. One of the biggest oil fields – Kashagan – started its oil production in 2016, after 16 years of development and more than US$50 billion of investment. Together with the Tengiz and Karachaganak oilfields, Kashagan is expected to be one of the main contributors to economic growth in Kazakhstan in coming years. In addition to oil, mining companies contribute about 35 per cent of state revenues.

Tax justice – an important agenda for Publish What You Pay in Eurasia

On 24 April 2018, Publish What You Pay (PWYP) hosted a webinar on tax and extractives as part of our ongoing engagement with PWYP members around the world to inform the PWYP 2020-2025 global strategy. Members of the movement and other civil society organisations from Azerbaijan, Kazakhstan, Kyrgyzstan, Mongolia and Tajikistan participated in the webinar.

Ingilab Ahmadov, (Director, Eurasia Extractive Industries Knowledge Hub), opened the discussion, presenting key ideas and his own vision. Nurlan Dzholdoshev (PWYP Coalition in Kyrgyzstan), Sobir Vazirov (PWYP Coalition in Tajikistan) and Tur-Od Lkhagvajav, Tserenjav Demberel (PWYP Coalition in Mongolia), then shared their views.

Tatiana Sedova, PWYP Global Initiatives and Impact Coordinator (EITI) and Emil Omarov, PWYP Regional Coordinator Eurasia, discuss the key points of the webinar, the importance of tax justice for this region and how these issues can be reflected in PWYP’s future strategy.

– – – – –
Tatiana: We know that the governments of countries receive the bulk of extractive revenues, particularly from tax receipts. In the case of resource-dependent countries, this comes primarily from taxes on the extractive industries. To what extent is the topic of taxation in the extractive industries important for members of our movement in Eurasia?

Emil: That is absolutely correct – tax revenues play the most important role in the development of each country. The topic of transparency and tax justice is nothing new for the members of PWYP – many of our members have been working on issues of fiscal transparency, beneficial rights, among others, for a long time. I assume that everyone would agree that PWYP should work on tax justice from the perspective of the extractive industries, in order to ensure that profits from extraction are used to reduce poverty and increase prosperity in our countries.

Tatiana: The principles of taxation were drafted for the first time by Adam Smith, and he specifically referenced the principle of justice: “every citizen should pay taxes according to their means.” And what does fair taxation mean in the context of the extractive industries? For us it includes citizens, companies and the state. As Ingilab noted: “taxation is a two-way street”. The state focuses on maximising budget revenues, whereas doing business should be attractive to the investor, and companies should generate reasonable profits so that they want to work in a specific country. Investors also frequently mention the importance of stability, predictability and simplicity of working conditions. In the absence of similar equal and transparent working conditions and due control by the state, companies start looking for loopholes to maximise their profits through different tax avoidance methods.

Emil: Recently, the release of Swissleak’s investigation and the publication of the Paradise Papers have demonstrated how the global offshore network works, and how the secrecy it guarantees provides opportunities for tax avoidance schemes to prosper, and undermines resource-rich countries’ opportunity to proactively use domestic revenue to stimulate their development. PWYP Canada’s report Many Ways to Lose a Billion analysed the risks and some of the schemes through which governments miss out on taxes owed, leading to significant loss of revenues from the extraction of natural resources. The report also offers some solutions on how civil society can participate in the process.

In general, the topic of tax justice has generated significant interest among our partners. As Tur-Od noted, taxes represent the main source of budget revenues. Most of the populations of our countries remain poor, while the elite (5-10%) is getting richer and richer. This is directly related to corruption. The statistics in Mongolia look as follows: there are 3,600 licences and 1,700 companies. However, 20 companies pay almost 90% of all the taxes. Is this a tax system fair for citizens or only for the government? How do you fight tax avoidance? These are the questions put forward by our members.

Tatiana: Incidentally, webinar participants noted that companies are “smarter and more creative” than governments are, and are able to find a number of tax avoidance methods – through an increase in their costs (showing lower profits), and through transfer pricing, and so-called thin capitalisation (the debt to equity ratio when arrears on a company’s debts are paid through its subsidiaries in our countries (Ukraine introduced this concept).

Emil: Yes, if we return to the example of Mongolia – Global Financial Integrity’s statistics show that Mongolia lost 148 million dollars each year from 2005-2012 – there is no information for the period since then. This is not only because of tax avoidance, but also because of other illicit financial flows. According to the NGO’s data, based on the Oyu Tolgoi mine, this project alone led the state to miss out on 230 million dollars, and this is only about withheld tax.

Tatiana: A vast amount of information became accessible through the reporting under the Extractive Industries Transparency Initiative (EITI). A number of countries where there are PWYP members are participating in the implementation of the initiative, including in Central Asia (these countries are Kazakhstan, Kyrgyzstan, Tajikistan, Mongolia and Ukraine). The EITI reports provide detailed information based on an overview of the sector and legislation, fiscal regimes, tax and non-tax payments of extractive companies, and data reconciliation. However, colleagues noted during the webinar that this isn’t enough: as a rule, the reports direct us to minor (more likely, technical) differences. The EITI data should also be reconciled with other sources – alternative reports, journalist investigations. Nurlan noted that we need to learn how to work with available information, how to analyse and apply it, proactively training local communities in the regions where extraction has an impact, thereby reducing social tension. Sobir proposed including the issue of tax system fairness in the EITI agenda, modifying reporting standards and drafting a roadmap on how to disclose this.

Emil: Yes, Sobir also noted that we mustn’t lose sight of the issues of justice, tax avoidance, transfer pricing, etc. At present, there is virtually no analysis on the effectiveness of the tax system. Not only should extractive companies pay everything that is required – it is important that the tax regime is effective both for the state and for companies. For example, a number of companies are trying to operate within the framework of Tajikistan’s existing tax regime of investment agreements – the issue is the extent to which such an agreement was needed, and the extent to which a company is responsible for and performs its obligations before the state. PWYP members should work more on “hidden pitfalls” and collaborate with each other, as the knowledge and experiences from other countries are very useful.

Tatiana: In fact, it is very important that we exchange experiences and build up analytical and expert knowledge. Nurlan touched on this and on the skills required to conduct analysis. This also concerns the potential of the state authorities to carry out tax modelling and calculation. Tax policies will otherwise seem unfair, both from the standpoint of companies, the state and the general public – there is not enough analysis and a shortfall of experts. Our movement is seen to have a role in increasing this kind of expertise.

Emil: There was a very interesting discussion on how PWYP can contribute to the global movement of tax justice, and on which specific issues PWYP coalitions believe it is important for PWYP to focus on. Webinar participants noted that PWYP should not only to continue work on tax justice issues, but needs to also champion them and make tax justice one of the strategic priorities for the global coalition. In terms of our work on the disclosure of contracts, investigative journalists could be good partners.

Tatiana: This was a very interesting discussion that we hope to continue with all PWYP coalitions. We welcome ideas and comments that can be shared in the next few weeks.

– – – – –

We would like to say thank you to the webinar participants for their questions and comments. The webinar was broadcast on the PWYP Facebook page.
You can find a recording of the webinar on our YouTube page.

Further reading:

Tax justice – an important agenda for Publish What You Pay in Eurasia

On 24 April 2018, Publish What You Pay (PWYP) hosted a webinar on tax and extractives as part of our ongoing engagement with PWYP members around the world to inform the PWYP 2020-2025 global strategy. Members of the movement and other civil society organisations from Azerbaijan, Kazakhstan, Kyrgyzstan, Mongolia and Tajikistan participated in the webinar.

Ingilab Ahmadov, (Director, Eurasia Extractive Industries Knowledge Hub), opened the discussion, presenting key ideas and his own vision. Nurlan Dzholdoshev (PWYP Coalition in Kyrgyzstan), Sobir Vazirov (PWYP Coalition in Tajikistan) and Tur-Od Lkhagvajav, Tserenjav Demberel (PWYP Coalition in Mongolia), then shared their views.

Tatiana Sedova, PWYP Global Initiatives and Impact Coordinator (EITI) and Emil Omarov, PWYP Regional Coordinator Eurasia, discuss the key points of the webinar, the importance of tax justice for this region and how these issues can be reflected in PWYP’s future strategy.

– – – – –
Tatiana: We know that the governments of countries receive the bulk of extractive revenues, particularly from tax receipts. In the case of resource-dependent countries, this comes primarily from taxes on the extractive industries. To what extent is the topic of taxation in the extractive industries important for members of our movement in Eurasia?

Emil: That is absolutely correct – tax revenues play the most important role in the development of each country. The topic of transparency and tax justice is nothing new for the members of PWYP – many of our members have been working on issues of fiscal transparency, beneficial rights, among others, for a long time. I assume that everyone would agree that PWYP should work on tax justice from the perspective of the extractive industries, in order to ensure that profits from extraction are used to reduce poverty and increase prosperity in our countries.

Tatiana: The principles of taxation were drafted for the first time by Adam Smith, and he specifically referenced the principle of justice: “every citizen should pay taxes according to their means.” And what does fair taxation mean in the context of the extractive industries? For us it includes citizens, companies and the state. As Ingilab noted: “taxation is a two-way street”. The state focuses on maximising budget revenues, whereas doing business should be attractive to the investor, and companies should generate reasonable profits so that they want to work in a specific country. Investors also frequently mention the importance of stability, predictability and simplicity of working conditions. In the absence of similar equal and transparent working conditions and due control by the state, companies start looking for loopholes to maximise their profits through different tax avoidance methods.

Emil: Recently, the release of Swissleak’s investigation and the publication of the Paradise Papers have demonstrated how the global offshore network works, and how the secrecy it guarantees provides opportunities for tax avoidance schemes to prosper, and undermines resource-rich countries’ opportunity to proactively use domestic revenue to stimulate their development. PWYP Canada’s report Many Ways to Lose a Billion analysed the risks and some of the schemes through which governments miss out on taxes owed, leading to significant loss of revenues from the extraction of natural resources. The report also offers some solutions on how civil society can participate in the process.

In general, the topic of tax justice has generated significant interest among our partners. As Tur-Od noted, taxes represent the main source of budget revenues. Most of the populations of our countries remain poor, while the elite (5-10%) is getting richer and richer. This is directly related to corruption. The statistics in Mongolia look as follows: there are 3,600 licences and 1,700 companies. However, 20 companies pay almost 90% of all the taxes. Is this a tax system fair for citizens or only for the government? How do you fight tax avoidance? These are the questions put forward by our members.

Tatiana: Incidentally, webinar participants noted that companies are “smarter and more creative” than governments are, and are able to find a number of tax avoidance methods – through an increase in their costs (showing lower profits), and through transfer pricing, and so-called thin capitalisation (the debt to equity ratio when arrears on a company’s debts are paid through its subsidiaries in our countries (Ukraine introduced this concept).

Emil: Yes, if we return to the example of Mongolia – Global Financial Integrity’s statistics show that Mongolia lost 148 million dollars each year from 2005-2012 – there is no information for the period since then. This is not only because of tax avoidance, but also because of other illicit financial flows. According to the NGO’s data, based on the Oyu Tolgoi mine, this project alone led the state to miss out on 230 million dollars, and this is only about withheld tax.

Tatiana: A vast amount of information became accessible through the reporting under the Extractive Industries Transparency Initiative (EITI). A number of countries where there are PWYP members are participating in the implementation of the initiative, including in Central Asia (these countries are Kazakhstan, Kyrgyzstan, Tajikistan, Mongolia and Ukraine). The EITI reports provide detailed information based on an overview of the sector and legislation, fiscal regimes, tax and non-tax payments of extractive companies, and data reconciliation. However, colleagues noted during the webinar that this isn’t enough: as a rule, the reports direct us to minor (more likely, technical) differences. The EITI data should also be reconciled with other sources – alternative reports, journalist investigations. Nurlan noted that we need to learn how to work with available information, how to analyse and apply it, proactively training local communities in the regions where extraction has an impact, thereby reducing social tension. Sobir proposed including the issue of tax system fairness in the EITI agenda, modifying reporting standards and drafting a roadmap on how to disclose this.

Emil: Yes, Sobir also noted that we mustn’t lose sight of the issues of justice, tax avoidance, transfer pricing, etc. At present, there is virtually no analysis on the effectiveness of the tax system. Not only should extractive companies pay everything that is required – it is important that the tax regime is effective both for the state and for companies. For example, a number of companies are trying to operate within the framework of Tajikistan’s existing tax regime of investment agreements – the issue is the extent to which such an agreement was needed, and the extent to which a company is responsible for and performs its obligations before the state. PWYP members should work more on “hidden pitfalls” and collaborate with each other, as the knowledge and experiences from other countries are very useful.

Tatiana: In fact, it is very important that we exchange experiences and build up analytical and expert knowledge. Nurlan touched on this and on the skills required to conduct analysis. This also concerns the potential of the state authorities to carry out tax modelling and calculation. Tax policies will otherwise seem unfair, both from the standpoint of companies, the state and the general public – there is not enough analysis and a shortfall of experts. Our movement is seen to have a role in increasing this kind of expertise.

Emil: There was a very interesting discussion on how PWYP can contribute to the global movement of tax justice, and on which specific issues PWYP coalitions believe it is important for PWYP to focus on. Webinar participants noted that PWYP should not only to continue work on tax justice issues, but needs to also champion them and make tax justice one of the strategic priorities for the global coalition. In terms of our work on the disclosure of contracts, investigative journalists could be good partners.

Tatiana: This was a very interesting discussion that we hope to continue with all PWYP coalitions. We welcome ideas and comments that can be shared in the next few weeks.

– – – – –

We would like to say thank you to the webinar participants for their questions and comments. The webinar was broadcast on the PWYP Facebook page.
You can find a recording of the webinar on our YouTube page.

Further reading:

Publish What You Pay Eurasia Communique 26 – 28 September 2017

26 – 28 September 2017, twenty-five representatives of the Publish What You Pay (PWYP)coalitions in Eurasia met in Aktau, Kazakhstan to attend the 13th PWYP Eurasia Regional Meeting.

The purpose of the meeting was:

  • to receive a progress report from the PWYP Secretariat on the work undertaken since the previous Eurasia meeting in September 2016;
  • to participate in development of PWYP Strategy for 2020-2025;
  • to discuss and endorse draft Protection strategy for PWYP members in Eurasia;
  • to build capacity on SOEs and quasi-fiscal activities.
  • Participants welcomed the re-engagement of civil society in Kazakhstan in the PWYP campaign.*

    Participants reviewed and endorsed the draft member protection strategy.

    Participants welcomed the opportunity to input to development of PWYP Strategy for 2020-2025.

    Participants discussed and supported the efforts of the PWYP Global Council to identify membership principles.

    Finally, participants expressed their concern regarding continuous efforts by governments to narrow civic space, harassment of civil society activists and decreasing funding for initiatives on transparency and accountability in different countries of Eurasia region.

    The meeting resolved to continue the campaign for a world where all citizens, both current and future generations, benefit from their natural resources.

    Aktau, Kazakhstan, 28 September, 2017

    PWYP coalition in Azerbaijan

    PWYP coalition in Ukraine

    PWYP coalition in Kyrgyzstan

    PWYP coalition in Tajikistan

    Along with civil society representatives from the following countries: Kazakhstan, Kosovo and Armenia.

    *25th September, 2017 – meeting was organized with representatives of civil society in Kazakhstan dedicated to their re-engagement in PWYP campaign.

    Why Azerbaijan must implement the OGP recommendations

    In 2014, the government of Azerbaijan introduced new legislation which has since made it impossible for many civil society organisations to do our job of representing the interests of our fellow citizens. For the past two and half years, myself, my colleagues at the Public Association for Assistance to Free Economy and countless other NGOs in Azerbaijan, have been unable to perform our duty of holding government bodies and state-owned companies to account. When it came into force, we put in our application for a registration certificate – as stipulated in the new legislation – it was rejected. We applied a further eight times, and we received eight more rejections. We applied to the court of appeal against the decision, and, again, we were met with rejection. Two and half years later, we have been left with no choice but to appeal to the European Court of Human Rights. As we wait for a decision, which could take up to five years, we remain unable to operate as a legal entity, to apply for grants or even open a bank account.

    Our organisation, the Public Association for Assistance to Free Economy, aims to bring more economic freedom and good governance to Azerbaijan. We call on the government to make reports and data on the state budget, public investment, law enforcement expenditure and procurement contracts public. As it stands, a vast amount of information on such activities is barely made available to members of parliament and, when it is, details are minimal. In addition there are currently no external audits on the reports which means there are no means of assessing the impact of the projects. And without information available on the business owners who undertake such projects, there is no way of knowing who to hold accountable if and when instances of corruption are identified.

    This work is not only our fundamental right, as civil society, but is also vital to ensure that Azerbaijan’s natural resource wealth is invested in alleviating its citizens out of poverty. These restrictions, coupled with constraints on our rights to freedom of expression, mean that my fellow citizens and I are increasingly without representatives to voice and defend our interests. And with less and less NGOs able to hold government and companies to account, the levels of corruption in our country, which are now being uncovered and reported internationally, are already getting worse.

    There are still opportunities to bring back openness and governance to our country. An initiative that can convince our government to repeal this legislation is the Open Government Partnership. In May 2016, as a result of the government’s failure to sufficiently address the concerns raised by a number of international civil society organisations including Article 19, Publish What You Pay and CIVICUS, in regards to the administrative and procedural obstacles which the new legislation created for NGOs, the OGP revoked its membership, designating it an inactive member. On June 28th 2017 the OGP Steering Committee decided to further extend Azerbaijan’s inactive membership status by twelve months.

    Currently, the OGP is calling for public commentary on its recommendations to the Azeri government and I would like to put forward the following recommendations.

    Firstly, I support the OGP’s recommendation to simplify the process for establishing and registering NGOs. Doing this would be a positive step towards creating a much needed enabling environment for civil society in Azerbaijan. Our government must remove the restrictions on registering and establishing NGOs. Equally as important for an enabling environment is the OGP’s recommendation to simplify the regulations to accessing funding.

    Secondly, the government of Azerbaijan must uphold our right to participate by first freeing the journalists and activists who are imprisoned for exercising their right to freedom of expression and participation. And by reinstating the independence of media by lifting bans on websites and other media outlets such as Radio Liberty and Meydan TV.

    Last but not least, we must rejoin the EITI. Without membership in the EITI, there are no transparency and accountability standards for our government and companies to adhere to. And there is no platform for civil society to interact meaningfully with government and extractive companies on the management of our collective natural resources. The main EITI supporting countries must strongly encourage financial institutes to push for Azerbaijan to rejoin the EITI.
    We must use this opportunity to restore civic space and participation in Azerbaijan.

    Azerbaijan: Transparency Group Delays Reinstatement

    Open Government Partnership Cites Restrictions on Independent Groups

    (London, June 30, 2017) –The Steering Committee of the Open Government Partnership (OGP) – a voluntary initiative promoting government transparency and accountability – decided on June 28, 2017 to extend Azerbaijan’s “inactive” status in the initiative for another year. Publish What You Pay (PWYP), ARTICLE 19, CIVICUS, and Human Rights Watch said the decision was a positive step and an indication of the OGP’s strong commitment to protecting civic space as an essential part of promoting open government.

    The OGP Steering Committee declared Azerbaijan’s membership inactive on May 4, 2016. It was the first time the committee had made a member country inactive.

    The OGP Steering Committee acknowledged that the Azerbaijani government had made limited progress in reducing some of the regulatory impediments preventing civil society organizations from operating freely. But the committee again highlighted the serious problems in the authorities’ treatment of civil society and called on the government of Azerbaijan to undertake meaningful and substantive reforms to regain full membership. The decision gives Azerbaijan 12 months to work with the OGP Steering Committee and its Support Unit, local civil society, and external partners to address fundamental legislative and practical obstacles to civil society organizations’ participation generally and influence in Azerbaijan’s OGP Action Plan.

    For years, Azerbaijan has systematically dismantled the country’s once vibrant civil society through the arrests and convictions of many activists, human rights defenders, and journalists on bogus politically motivated charges. As well as by adopting laws and regulations restricting the activities of independent groups and their ability to secure independent funding.

    Some of the restrictions the government imposes are noted in the OGP Steering Committee decision. For example, government regulations require groups to register grants, and authorities have discretion to arbitrarily deny grant registration. The regulations also require a positive assessment from the Finance Ministry for each grant from a foreign donor, and require foreign donors to get permission from the government to make a grant. The government has frozen bank accounts of several human rights groups.

    In addition, the authorities pursue politically motivated criminal prosecutions against activists. In recent weeks Azerbaijani authorities have also blocked websites of some media outlets critical of the government, including Radio Free Europe/Radio Liberty, Voice of America, and Meydan Tv.

    “We believe open government cannot be achieved without an active citizenry that is free to associate and has access to publicly available government data and information, the four organizations said. The OGP Steering Committee decision gives Azerbaijan a chance to renew its commitment to the principles of open and accountable government. Until and unless that happens, the OGP and the international community should continue to pressure Azerbaijan to release prisoners arrested on politically motivated charges, end the systematic harassment of government critics, and ensure that laws regulating civil society are brought in line with international standards.”

    The OGP Steering Committee decision to declare Azerbaijan inactive followed a process set in motion by a policy the OGP adopted in 2014 to deal with concerns about restrictions on civic space in participating countries. Together with CIVICUS, and Article 19, PWYP decided to invoke the policy and submitted the first letter of concern in March 2015 to call out the Azerbaijani government’s crackdown on civil society, which started with the adoption of restrictive legislation regulating nongovernmental organizations and their funding.

    The 2016 decision reflected the OGP Steering Committee’s recognition that government restrictions had seriously hampered Azerbaijani civil society from effectively promoting government transparency and accountability.

    The 2016 decision gave the Azerbaijani government one year to implement reforms to restore an enabling environment for civil society. During that year, it received continuous support from the OGP Steering Committee and Support Unit but was excluded from high level meetings. By prolonging this period of “inactivity,” the OGP Steering Committee is giving Azerbaijan another year to implement meaningful reforms that will improve the operating environment for civil society organizations. However, Azerbaijan could be re-instated as a full member much earlier if it decides to make headway on OGP recommendations that will be elaborated in the coming month. In April the Azerbaijani government decided to leave the Extractive Industries Transparency Initiative (EITI), after the organization’s board suspended Azerbaijan for failing to ensure an enabling environment for civil society and reform the laws shackling the country’s non-governmental groups.
    “We hope that OGP would remain a space for collaboration between civil society and the government” the groups said.

    Contact:

    In Copenhagen: Asmara Klein (Publish What You Pay), +4521228135 or aklein@publishwhatyoupay.org

    In London: Katie Morris (Article 19), +44 20 7324 2500 or katie@article19.org

    In Dublin: Cathal Gilbert (CIVICUS), +353838663212 or cathal.gilbert@civicus.org

    In Tbilissi: Giorgi Gogia (Human Rights Watch), +99577.421235 or gogiag@hrw.org

    ARTICLE 19 is an international non-governmental organization, working on freedom of expression and information at the international, regional and national levels.

    CIVICUS: World Alliance for Citizen Participation is an international alliance of civil society at the local, national, regional and international levels, dedicated to strengthening citizen action and civil society throughout the world.

    Publish What You Pay (PWYP) is a global network of civil society organizations that are united in their call for an open and accountable extractive industry that contributes to improving the lives of women, men and youth in resource-rich countries.

    Human Rights Watch is a global human rights organization that documents and exposes human rights abuses around the world.

    Extractive Industries Transparency Initiative (EITI) passes credibility test by placing accountability squarely at the heart of the initiative

    Publish What You Pay (PWYP) welcomes the EITI Board’s decision this week in Bogota, Colombia, to confirm the implementation of its requirement on project-by-project reporting and its decision to suspend Azerbaijan for failing to demonstrate sufficient progress to protect civil society. With these two decisions, the EITI shows leadership on transparency and accountability in the extractives sector.

    The EITI board has reaffirmed that project-level reporting is required in the EITI Standard and has set 2018 as the date by which project-level reporting will become mandatory. The EITI’s commitment to project-by-project reporting is an important step towards solidifying a global standard for payment reporting. Cielo Magno, Board member of the EITI, stated that “the Philippines are already disclosing project by project and will – as many other countries – continue to do so. This is an essential measure to ensure that local communities are able to hold governments and companies accountable for the revenues generated by extractive projects.” PWYP will work with its members around the world to help ensure swift implementation of this requirement in line with national laws and systems, as well as international norms.

    At the same meeting, the EITI Board decided to suspend Azerbaijan for failing civil society. By suspending the country from the global initiative, the EITI Board upholds the principles enshrined in its Civil Society Protocol and the need to protect free, meaningful and effective civil society engagement on issues related to natural resource governance in Azerbaijan.

    In October 2016, the EITI Board gave Azerbaijan a vote of confidence as it was encouraged by the country’s recent actions to comply with the EITI Standard. However, the EITI Board requested that the government of Azerbaijan address three specific pieces of legislation deemed to restrict freedom of association. In response, the government made a few amendments to reduce the administrative burden imposed on NGOs. But the EITI Board found that the repressive nature of the law remained unchanged, which prompted the decision to suspend the country until its next validation scheduled for July 2017.

    Elisa Peter, Executive Director of PWYP, said “The EITI Board’s decision to suspend Azerbaijan provides an opportunity for the government to reform and embrace a meaningful multi-stakeholder dialogue, including civil society, on the country’s governance of the extractive sector”.

    Publish What You Pay (PWYP) and other international bodies have repeatedly drawn attention to Azerbaijan’s shortcomings in protecting those who call out the country’s poor governance of its extractives sector. Protecting civic space is a cornerstone of the EITI. Our report ‘Against All Odds’, jointly produced with CIVICUS, has shed light of the growing backlash against activists around the world and the different types of threats they face.

    The EITI needs to be part of the solution to this increasing threat to natural resource activists, if we are to truly reverse the resource curse. Working on the principle that governments, CSOs and companies all have a seat at the EITI table, the initiative has shown today that it honours its multi-stakeholder nature.