The governance challenges of natural resource extraction are enormous. What can be done to improve natural resource governance? ECC’s Stephan Wolters talked to Peter Eigen, Founder of Transparency International and Chair of the Extractive Industries Transparency Initiative (EITI) from 2006-11. As a leading expert on the challenges of corruption, he provides exciting insights and evaluates success and failure of various approaches, including EITI.
"We found at Transparency International that natural resource development is particularly vulnerable to corruption, and this has a number of reasons. First of all, the so-called resource curse has a very strong macroeconomic component called 'Dutch disease': a pervasive mining or gas sector can impede development in other sectors of the economy. Apart from this, there is a tremendous temptation which comes from the immense sums involved for both investors and host governments. The temptation for decision makers in the host country to accept payments for themselves is huge, in particular in countries where you have relatively fragile governments. The investors, on the other hand, want to get an enabling environment with little interference by the government.
Extractive industries involve complex investments. Therefore, it is very hard for the people or even for the members of parliament in the country to fully understand what is a just and fair deal. These are exactly the elements that tend to lead to grand corruption. This is why we at Transparency International found very soon that if you want to make a difference there, you need some very special tools, so we developed them."
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