A case study of the Nigerian resource curse and it\'s underlying causes with the aim of evaluating the effectiveness of the Extractive Industries Transparency Initiative

1.
School
of
Social
and
Political
Sciences
The
University
of
Melbourne
POLS40011
Political
Science
Thesis
Transparency
as
Cure
for
the
Resource
Curse?
A
Nigerian
Case
Study
Sebastian
Hancock
134922

3.
Oil
creates
an
illusion
of
a
completely
changed
life,
life
without
work,
life
for
free…The
concept
of
oil
expresses
perfectly
the
eternal
human
dream
of
wealth
achieved
through
lucky
accident…In
this
sense
oil
is
a
fairy
tale
and
like
every
fairy
tale
a
bit
of
a
lie.
Ryzard
Kapuscinki1
1
Quoted
in
Michael
Watts,
‘Resource
Curse?
Governmentality,
Oil
and
Power
in
the
Niger
Delta,
Nigeria’,
Geopolitics,
Vol.
9,
No.
1,
2004,
p.
51.
1

4.
2

5.
Contents
Acknowledgements
5
List
of
Abbreviations
7
Chapter
1:
Introduction
9
Chapter
2:
The
Resource
Curse
and
the
EITI
16
Chapter
3:
The
Slide
into
the
Resource
Curse
34
Chapter
4:
Social
and
Political
Causes
59
Chapter
5:
Transparency
as
Cure?
69
Chapter
6:
Analysis
and
Conclusions
73
Bibliography
77
3

6.
4

7.
This
thesis
is
dedicated
to
the
loving
memory
of
Ruth
Hanley,
and
to
the
strength
of
the
Hanley
family.
Acknowledgements
I
am
heavily
indebted
to
my
thesis
supervisor,
Dr.
Tom
Davis,
whose
input,
advice,
encouragement,
and
above
all
patience,
have
been
invaluable
during
the
past
year.
I
would
also
like
to
thank
Susan
Allen,
Simon
Lands,
and
George
Hancock
for
reading
all
or
sections
of
this
thesis
at
various
stages
of
its
production,
and
providing
useful
suggestions
and
corrections.
Thanks
are
also
due
to
the
University
of
Melbourne,
and
to
the
School
of
Social
and
Political
Sciences
in
particular,
for
providing
both
the
opportunity
to
complete
this
thesis,
and
the
resources
to
do
so.
Lastly,
I
would
like
to
thank
Clare
Hanley,
not
only
for
taking
the
time
to
comment
on
this
work,
but
for
all
her
love
and
support
throughout
a
difficult
year
for
us
both,
without
which
none
of
this
would
have
been
possible.
Sebastian
Hancock
5

8.
6

9.
List
of
Abbreviations
CCB
Code
of
Conduct
Bureau
CCT
Code
of
Conduct
Tribunal
CPI
Corruption
Perception
Index
EITI
Extractive
Industries
Transparency
Initiative
EFCC
Economic
and
Financial
Crimes
Commission
GDP
Gross
Domestic
Product
G8
Group
of
Eight
HDI
Human
Development
Index
ICPC
Independent
Corrupt
Practices
and
Other
Related
Offences
Commission
IMF
International
Monetary
Fund
NEITI
Nigerian
Extractive
Industries
Transparency
Initiative
NGOs
Non-­‐Governmental
Organizations
NNPC
Nigerian
National
Petroleum
Corporation
NPC
Northern
People’s
Congress
NPN
National
Party
of
Nigeria
OPEC
Organization
of
Petroleum
Exporting
Countries
TI
Transparency
International
UN
United
Nations
WB
World
Bank
7

10.
8

11.
Chapter
1:
Introduction
Sub-­‐Saharan
Africa,
home
to
13
percent
of
the
world’s
population,
currently
contributes
only
3.3
percent
of
global
Gross
Domestic
Product
(GDP).
Growth
and
development
have,
moreover,
been
sluggish
at
best.
As
a
result,
in
the
only
region
in
the
world
where
poverty
has
increased
in
the
past
25
years,
up
to
60
percent
of
the
population
live
on
less
than
US$1.25
per
day.2
This
is
despite
the
fact
that
sub-­‐Saharan
Africa
holds
seven
percent
of
the
world’s
oil
reserves,
not
to
mention
large
deposits
of
other
valuable
primary
commodities
such
as
gold,
diamonds,
and
minerals.
Yet
in
spite
of
this
apparent
wealth,
of
the
177
countries
contained
within
the
United
Nations
(UN)
Human
Development
Index
(HDI),
sub-­‐Saharan
African
countries
are
consistently
ranked
lowest.3
The
inability
to
achieve
significant
social
and
economic
development
amidst
enormous
resource
wealth
is
a
phenomenon
widely
known
as
the
‘resource
curse’.4
Though
it
extends
to
resource-­‐rich
developing
countries
across
the
globe,
it
is
generally
accepted
that
sub-­‐Saharan
African
countries
have
fared
the
worst
from
this
‘disease’.
The
resource
curse
manifests
itself
in
2
Hazel
M.
McFerson,
'Extractive
Industries
and
African
Democracy:
Can
the
"Resource
Curse"
be
Exorcised?’,
in
International
Studies
Perspectives,
Vol.
11,
2010,
p.
335.
3
Ibid,
p.
336.
4
Richard
Auty
first
coined
the
term
‘resource
curse’
in
1993.
Richard
M.
Auty,
Sustaining
Development
in
Mineral
Economies:
The
Resource
Curse
Thesis,
London,
Routledge,
1993,
pp.
1-­‐6.
The
relationship
is
also
commonly
described
as
the
‘paradox
of
the
plenty’,
a
reference
to
the
title
of
Terry
Lynn
Karl’s
seminal
work.
Terry
Lynn
Karl,
The
Paradox
of
Plenty:
Oil
Booms
and
Petro-­‐States,
Berkeley,
University
of
California
Press,
1997.
The
term
resource
curse
will
be
used
for
the
remainder
of
this
study.
9

12. economic
stagnation,
political
instability,
conflict,
corruption,
institutional
and
societal
failure,
and
ultimately
underdevelopment.5
Nowhere
has
its
effects
been
more
virulent
than
in
Nigeria,
where
enormous
oil
wealth
exists
alongside
internal
conflict,
economic
collapse,
extreme
poverty,
endemic
corruption,
instability,
and
long
periods
of
authoritarian
and
predatory
rule.6
Currently,
Nigeria’s
UN
HDI
rating
of
0.423
(with
1
being
the
highest
score)
ranks
it
well
below
other
oil
producing
states
such
as
Saudi
Arabia
(0.800)
and
Indonesia
(0.697).7
The
current
global
response
to
the
resource
curse,
including
its
manifestation
in
Nigeria,
is
centred
on
the
energy
governance
framework
known
as
the
Extractive
Industries
Transparency
Initiative
(EITI).
Launched
by
Tony
Blair
in
2002
at
the
World
Summit
on
Sustainable
Development
in
Johannesburg,
the
EITI
seeks
oil-­‐sector
transparency
via
the
voluntary
publishing
of
government
revenues
originating
from
resource
extraction
companies.
Under
the
EITI
framework,
countries
firstly
obtain
‘candidate’
status
by
successfully
meeting
benchmarks
for
four
signup
indicators.
Once
completed,
the
country
can
secure
‘compliant’
status
by
producing
regular
validation
reports
showing
the
aforementioned
flows
of
revenue.8
By
undergoing
this
process
it
is
felt
that
5
See
for
example,
Helen
M.
McFerson,
‘Governance
and
Hyper-­‐Corruption
in
Resource-­‐
Rich
African
Countries’,
Third
World
Quarterly,
Vol.
30,
No.
8,
2009,
p.1529-­‐1545.
6
Ibid,
pp.
1540-­‐1542.
7
When
adjusted
for
income
inequality
this
figure
plummets
to
0.246.
This
ranking
puts
Nigeria
at
142
out
of
169
countries
measured.
Saudi
Arabia
and
Indonesia
are
ranked
at
55
and
108
respectively.
Nigerian’s
currently
have
a
life
expectancy
of
just
48.4
years.
United
Nations
Development
Programme,
International
Human
Development
Indicators,
retrieved
16
March
2011,
available
from
<http://hdrstats.undp.org/en/
countries/profiles/NGA.html.
8
EITI
signup
indicators
–
‘1.
The
government
must
issue
an
unequivocal
public
statement
of
its
intention
to
implement
EITI.
2.
The
government
must
commit
to
work
10

13. civil
society
organizations
in
compliant
countries
will
be
able
to
use
the
release
of
revenue
information
to
hold
their
governments
to
account,
thereby
reducing
corruption
and
institutional
failure,
and
helping
to
cure
the
resource
curse.9
Nigeria
is
often
presented
as
a
test
case
for
the
effectiveness
of
the
EITI
framework.
Over
80
percent
of
Nigeria’s
oil
revenue
has
historically
gone
to
only
one
percent
of
the
population,
largely
due
to
systematic
corruption
and
graft.10
The
cumulative
effect
of
this
enrichment
has
been
the
loss
of
resources
that
could
have
been
invested
in
social,
economic
and
cultural
development.11
After
returning
to
democratic
governance
in
1999
following
prolonged
periods
of
military
rule,
the
incumbent
government
signed
up
to
the
EITI
framework,
completing
the
process
by
achieving
compliant
status
on
2
March
2011.12
Although
significant
progress
has
been
made
towards
oil-­‐sector
transparency,
the
entrenched
nature
of
systematic
corruption
and
the
failure
of
weak
civil
society
organizations
in
Nigeria
to
respond
purposefully
to
the
publishing
of
with
civil
society
and
companies
on
EITI
implementation.
3.
The
government
must
appoint
a
senior
individual
to
lead
on
EITI
implementation.
4.
The
government
must
publish
and
make
widely
available
a
fully
costed
Work
Plan
containing
measurable
targets,
a
timetable
for
implementation
and
an
assessment
of
capacity
constraints.’
Extractive
Industries
Transparency
Initiative,
Signup,
retrieved
8
March
2011,
available
from
<http://eiti.org/eiti/
implementation/signup>.
For
candidate
status
requirements
see
Extractive
Industries
Transparency
Initiative,
Country
Implementation,
retrieved
8
March
2011,
available
from
<http://eiti.org/eiti/implementation>.
9
Daniel
M.
Firger,
'Tranparency
and
the
Natural
Resource
Curse:
Examining
the
New
Extraterritorial
Information
Forcing
Rules
in
the
Dodd-­‐Frank
Wall
Street
Reform
Act
of
2010’,
Georgetown
Journal
of
International
Law,
Vol.
41,
2010,
pp.
1064-­‐1067.
10
Adekunle
Amuwo,
‘Towards
a
New
Political
Economy
of
the
Niger
Delta
Question
in
Nigeria’,
Politikon,
Vol.
36,
No.
2,
2009,
p.
241.
11
S.O.
Osoba,
‘Corruption
in
Nigeria:
Historical
Perspectives’,
Review
of
African
Political
Economy,
Vol.
23,
No.
69,
1996,
p.
383.
12
Extractive
Industries
Transparency
Initiative,
Press
Release:
Six
More
Countries
Compliant
with
Transparency
and
Accountability
Standard,
2
March
2011,
p.
1,
retrieved
16
March
2011,
available
from
<http://eiti.org/news-­‐events/press-­‐release-­‐six-­‐more-­‐
countries-­‐compliant-­‐transparency-­‐and-­‐accountability-­‐standard>.
11

14. information
under
this
framework
raises
doubts
about
the
EITI’s
ability
to
cure
the
resource
curse
in
this
country.13
This
study
will
address
the
question
of
how
effective
the
EITI
as
a
global
governance
mechanism
can
be
in
‘curing’
the
resource
curse.
It
will
attempt
to
answer
this
question
through
an
inductive
case
study
method
focusing
on
Nigeria.
It
will
ask:
To
what
degree
has
the
historical
weight
of
specific
social
and
political
factors
in
Nigeria
entrenched
its
distinct
manifestation
of
the
resource
curse
within
its
socio-­‐political
structures?
It
will
analyse
the
historical
interplay
of
ethnic
division,
endemic
and
systematic
corruption,
and
violent
competition
for
the
state
in
Nigeria
in
order
to
uncover
root
causes
for
developmental
failure
and
the
resource
curse.
Given
the
results
of
this
analysis,
this
study
will
ask
whether
the
voluntary
EITI
framework
is
indeed
wholly
inadequate,
and
whether
deep
structural
and
cultural
change
is
in
fact
required
in
order
for
resource
abundance
to
be
turned
into
positive
developmental
outcomes.
Nigeria
has
been
selected
as
the
subject
of
this
case
study
as
it
meets
the
criterion
of
‘typicality’
required
for
assessing
the
general
effectiveness
of
the
EITI.
The
presence
of
extensive
oil
reserves,
along
with
the
country’s
status
as
one
of
the
most
corrupt
in
the
world,14
has
made
Nigeria
both
a
typical
case
of
the
13
Ayo
Obe,
‘The
Challenging
Case
of
Nigeria’,
in
Ann
Florini
(ed.),
The
Right
to
Know:
Transparency
for
an
Open
World,
New
York,
Columbia
University
Press,
2007,
p.
147.
14
As
at
2010,
Nigeria
was
134th
out
of
178
countries
listed
under
Transparency
International’s
Corruption
Perception
Index.
Transparency
International,
Corruption
Perceptions
Index
2010,
Berlin,
Transparency
International,
2010,
p.
13,
retrieved
16
March
2011,
available
from
<http://www.transparency.org/policy_research/
surveys_indices/cpi
/2010/in_detail>.
12

15. resource
curse,
and
a
test
case
for
the
capacity
of
the
EITI
framework
to
alleviate
the
disease.15
Nigeria
therefore
satisfies
John
Gerring’s
requirement
that
the
typical
case
be
representative
of
a
broader
set,
allowing
for
insight
into
some
broader
phenomenon.16
The
use
of
case
study
methodologies
within
the
scholarly
literature
on
the
resource
curse
is
severely
lacking.
Instead,
the
vast
majority
of
research
has
taken
the
form
of
cross-­‐country
correlation
analysis.
Yet
the
sole
use
of
the
latter
methodology
can
be
inadequate
due
to
its
inherent
limitations.
For
instance,
the
uncovering
of
correlations
in
datasets
does
not
necessarily
aid
in
the
formation
of
causal
models,
nor
in
dealing
with
complexity.17
It
is
these
very
limitations
that
correspond
to
the
advantages
of
case
study
research.
For
whereas
statistical
analysis
is
the
process
through
which
conclusions
are
drawn
about
the
existence
of
characteristics
in
a
population
through
study
of
a
sample,
logical
inference
from
case
study
data
is
the
process
whereby
conclusions
regarding
the
essential
linkage
between
those
characteristics
are
made
in
terms
of
a
‘systematic
explanatory
schema’
or
theory.18
The
two
methodologies
can
therefore
be
thought
of
as
complementary,
adding
to
a
deeper
understanding
of
social
forces
through
concurrent
usage.
15
Alexandra
Gillies,
'Obasanjo,
the
Donor
Community
and
Reform
Implementation
in
Nigeria’,
Round
Table,
Vol.
96,
No.
392,
2007,
pp.
570-­‐572.
16
John
Gerring,
Case
Study
Research:
Principles
and
Practices,
Cambridge,
Cambridge
University
Press,
2007,
p.
91.
17
Ibid,
pp.
3-­‐4.
18
J.
Clyde
Mitchell,
'Case
and
Situation
Analysis’,
in
Matthew
David
(ed.),
Case
Study
Research:
Volume
II,
London,
SAGE,
2006,
p.
72.
13

16. This
is
not
to
say
that
case
study
research
has
no
limitations
of
its
own.
There
can
be
no
doubt,
for
example,
that
the
interpretation
of
case
study
data
lacks
the
level
of
objectivity
obtainable
in
statistical
analysis.
Yet,
the
possibility
of
‘noisy,
fallible,
and
biased’
results
does
not
necessarily
preclude
the
attainment
of
knowledge;
rather,
it
requires
a
critical
reading
with
bias
in
mind.19
In
order
to
address
the
issues
described
above,
this
study
has
been
separated
into
sections.
In
chapter
two
I
will
discuss
the
status
of
the
literature
surrounding
the
resource
curse
and
its
relationship
to
the
EITI
framework,
while
identifying
areas
in
which
I
feel
the
literature
is
lacking.
In
chapter
three
I
will
provide
an
overview
of
the
ongoing
historical
process
in
Nigeria,
and
the
effect
the
entry
of
oil
had
on
that
process.
This
overview
will
draw
upon
the
available
primary
and
secondary
sources,
the
former
largely
being
documents
related
the
to
the
EITI
and
its
Nigerian
counterpart,
the
Nigerian
Extractive
Industries
Transparency
Initiative
(NEITI),
and
the
latter
consisting
of
works
on
Nigerian
social
and
political
history,
regional
case
studies,
and
analyses
of
particular
aspects
of
the
Nigerian
socio-­‐political
system.
In
chapter
four,
I
will
analyse
the
specific
social
and
political
factors
drawn
out
of
that
overview,
and
the
effect
they
have
had
on
the
specific
manifestation
of
the
resource
curse
in
Nigeria.
From
the
results
of
this
analysis
I
will
assess,
in
chapter
five,
the
suitability
of
the
EITI
framework
as
a
cure
for
the
resource
curse.
In
the
final
chapter,
I
will
draw
19
Campbell,
Donald
T.,
'"Degrees
of
Freedom"
and
the
Case
Study’,
in
Matthew
David
(ed.),
Case
Study
Research:
Volume
III,
London,
SAGE,
2006,
p.
138.
14

17. some
conclusions
from
this
study
in
relation
to
the
questions
outlined
above,
and
to
the
status
of
the
literature
on
the
resource
curse
and
the
EITI.
15

18.
Chapter
2:
The
Resource
Curse
and
the
EITI
Over
the
last
two
decades,
a
significant
body
of
literature
has
emerged
which
seeks
to
explain
the
seemingly
contradictory
relationship
between
natural
resource
abundance
and
poor
development
outcomes,
often
referred
to
as
the
resource
curse.
Within
this
body
of
literature,
three
separate
sub-­‐literatures
can
be
identified:
natural
resources
and
economic
stagnation;
natural
resources
and
civil
war;
and
natural
resources
and
governance
failure.
While
this
thesis
sits
within
the
latter
of
the
three,
it
is
important
first
to
address
the
development
of
the
resource
curse
theory.
From
Consensus
to
Curse
During
the
1950s
and
1960s,
prominent
development
economists
had
argued
that
developing
countries
were
suffering
from
an
imbalance
in
the
factors
of
production,
caused
by
an
oversupply
of
labour,
and
a
shortage
of
capital.
As
such,
countries
with
abundant
natural
resources
were
in
an
advantageous
position;
through
exploitation
of
these
resources,
Walter
Rostow
and
others
argued,
their
economies
would
‘take-­‐off’
thanks
to
the
capacity
of
primary
exports
to
raise
capital
and
attract
foreign
investment.20
While
there
were
a
20
For
an
example
of
this
argument
see
Walter
Rostow,
The
Stages
of
Economic
Growth:
A
non-­‐Communist
Manifesto,
Cambridge,
Cambridge
University
Press,
1960,
p.
39;
see
also
W.
Arthur
Lewis,
The
Theory
of
Economic
Growth,
London,
Allen
and
Unwin,
1955,
p.
52,
where
he
argues
that
not
only
did
natural
resources
lead
to
better
development
16

19. number
of
radical
economists
who
challenged
this
view,
their
underrepresentation
in
global
development
bodies
negated
their
ability
to
alter
the
overriding
consensus.21
On
the
contrary,
the
oil
boom
years
of
the
1970s,
which
led
to
soaring
prices
and
a
glut
of
capital
in
oil
exporting
countries,
solidified
natural
resources
as
a
‘blessing’
within
the
emerging
neoliberal
mainstream.22
With
the
collapse
of
oil
prices
in
the
early
1980s
and
the
economic
stagnation
amongst
exporters
that
followed
it,
this
‘blessing’
began
to
be
seriously
questioned.
Indeed,
the
majority
of
resource-­‐rich
developing
countries,
with
the
notable
exception
of
the
East
Asian
economies,
had
not
experienced
accelerated
growth
on
the
back
of
resource
booms.
Moreover,
having
geared
their
economies
towards
primary
exports,
many
were
left
heavily
dependent
upon
volatile
global
markets
for
national
income.23
At
the
same
time,
conflict
outcomes,
but
‘[m]uch
of
the
world’s
economic
history
can
be
written
very
simply
in
those
terms.’
21
For
example
see
H.
W.
Singer,
'The
Distribution
of
Gains
between
Investing
and
Borrowing
Countries’,
American
Economic
Review,
Vol.
40,
No.
2,
1950,
pp.
482-­‐483,
and
Raúl
Prebisch,
The
Economic
Development
of
Latin
America
and
its
Principal
Problems,
New
York,
United
Nations
Department
of
Economics,
1950,
pp.
8-­‐14,
who
argued
that
exporters
would
suffer
from
declining
terms
of
trade
in
the
long
term.
See
also
Jonathan
V.
Levin,
The
Export
Economies:
Their
Pattern
of
Development
in
Historical
Perspective,
Cambridge,
Harvard
University
Press,
1960,
pp.
186-­‐202,
who
argued
that
due
to
the
boom
and
bust
nature
of
resource
markets,
and
correspondingly
sharp
price
fluctuations,
resource
exporters
would
be
left
with
volatile
domestic
economies,
leading
to
unreliable
foreign
exchange
supplies
and
a
poor
investment
climate.
22
Andrew
Rosser,
The
Political
Economy
of
the
Resource
Curse:
A
Literature
Review,
Brighton,
Institute
of
Development
Studies,
University
of
Sussex,
2006,
p.
9.
For
an
example
of
neoliberal
arguments
on
natural
resource
backed
‘take-­‐off’
see
Bela
Balassa,
The
Process
of
Industrial
Development
and
Alternative
Development
Strategies,
Princeton,
Princeton
University
Press,
1981,
pp.
2-­‐4,
and
P.J.
Drake,
'Natural
Resources
Versus
Foreign
Borrowing
in
Economic
Development’,
Economic
Journal,
Vol.
82,
No.
327,
1972,
pp.
951-­‐952.
23
As
Isham
et
al.
have
shown,
since
1980
developing
countries
dependent
upon
natural
resource
exports
suffered
significant
and
ongoing
slowdowns
in
economic
growth,
while
manufacture
exporters
have
experienced
no
such
slowdown.
Jonathan
Isham
et
al.
'The
17

20. and
political
instability
were
rife,
signalling
a
general
malaise,
especially
in
the
case
of
sub-­‐Saharan
Africa.24
This
failure
to
produce
positive
development
outcomes
initiated
renewed
debate
on
the
concept
of
‘take-­‐off’,
and
sparked
the
emergence
of
resource
curse
theory.
Numerous
empirical
studies
have
since
been
undertaken
by
economists
in
an
effort
to
confirm
the
existence
of
the
resource
curse.
These
studies
have
largely
taken
the
form
of
cross-­‐country
statistical
analysis
in
an
effort
to
uncover
significant
correlations
between
natural
resource
abundance
and
a
variety
of
indicators
for
poor
economic,
political,
and
social
outcomes.
The
most
influential
of
these
studies,
Jeffrey
Sachs’
and
Andrew
Warner’s
seminal
1995
work
Natural
Resource
Abundance
and
Economic
Growth,
found
that
a
one
standard
deviation
increase
in
the
ratio
of
natural
resource
exports
to
GDP
in
developing
countries
is
associated
with
a
decrease
of
just
less
than
one
percent
in
annual
per
capita
growth.25
In
the
years
following,
several
other
studies
appeared
which
produced
similar
results,
albeit
with
variations
in
datasets
and
measurements.26
While
Varieties
of
Resource
Experience:
Natural
Resource
Export
Structures
and
the
Political
Economy
of
Economic
Growth’,
World
Bank
Economic
Review,
Vol.
19,
No.
2,
2005,
p.
143.
24
Karl,
The
Paradox
of
Plenty,
p.
1-­‐2.
25
Jeffrey
D.
Sachs
and
Andrew
M.
Warner,
Natural
Resource
Abundance
and
Economic
Growth,
National
Bureau
of
Economic
Research
Working
Paper
5398,
Cambridge,
National
Bureau
of
Economic
Research,
1995,
p.
8.
Specifically,
Sachs
and
Warner
found
a
one
standard
deviation
increase
led
to
a
0.93
percent
per
annum
reduction.
26
See
for
example
Alan
H.
Gelb,
Oil
Windfalls:
Blessing
or
Curse?,
New
York,
Oxford
University
Press,
1988,
pp.
221-­‐223,
who
found
a
statistically
significant
relationship
between
the
size
of
natural
resource
endowments
and
growth
of
output;
Richard
M.
Auty,
'Introduction
and
Overview’,
in
Richard
M.
Auty
(ed.),
Resource
Abundance
and
Economic
Development,
Oxford,
Oxford
University
Press,
2001,
p.
3,
who
found
that
per
capita
incomes
in
resource-­‐poor
countries
grew
between
two
and
three
times
faster
than
resource-­‐rich
countries
between
1960
and
1990;
and
Carlos
Leite
and
Jens
Weidmann,
Does
Mother
Nature
Corrupt?
Natural
Resources,
Corruption
and
Economic
Growth,
Washington,
International
Monetary
Fund,
1999,
p.
29,
who
focused
on
oil
18

21. these
findings
have
certainly
generated
controversy,27
Sachs
and
Warner,
in
reviewing
the
evidence
for
the
research
curse
in
2001,
asserted
that
while
not
‘bulletproof’,
empirical
support
for
its
existence
is
nonetheless
‘quite
strong’.28
With
its
existence
largely
confirmed,
attention
has
concentrated
on
the
causal
mechanisms
of
the
resource
curse,
leading
to
the
creation
of
three
sub-­‐
literatures.
Sub-­‐Literature
1:
Economic
Structure
The
first
sub-­‐literature
focused
on
observed
economic
stagnation,
and
suggested
structural
deficiencies
as
the
explanatory
variable.
The
most
prominent
model
put
forward
was
the
‘Dutch
Disease’,
which
describes
the
negative
effect
resource
booms
can
have
on
the
growth
of
non-­‐resource
sectors
of
the
economy
(manufacturing
and
agriculture
for
example)
and
refers
to
the
experience
of
The
Netherlands
following
the
discovery
of
natural
gas
in
the
late
exporters,
and
concluded
that
a
one
standard
deviation
increase
in
Sachs’
and
Warner’s
ratio
led
to
a
0.6
percent
decrease
in
output
growth.
27
See
for
example
Daniel
Lederman
and
William
F.
Maloney,
'Neither
Curse
Nor
Destiny:
Introduction
to
Natural
Resources
and
Development’,
in
Daniel
Lederman
and
William
F.
Maloney
(eds.),
Natural
Resources:
Neither
Curse
nor
Destiny,
Palo
Alto,
Standford
University
Press,
2007,
p.
3,
who
found
that
natural
resources
in
fact
stimulate
growth,
if
measurements
for
natural
resource
abundance,
other
than
Sachs’
and
Warner’s,
are
used;
Christa
N.
Brunnschweiler,
'Cursing
the
Blessings?
Natural
Resource
Abundance,
Institutions,
and
Economic
Growth’,
World
Development,
Vol.
36,
No.
3,
2008,
pp.
412-­‐
413,
who
used
natural
resource
allocation
per
capita
and
found
that
between
1970
and
2000
there
was
a
positive
and
direct
effect
on
real
GDP
growth;
and
Graham
Davis
'Learning
to
Love
the
Dutch
Disease:
Evidence
from
the
Mineral
Economies’,
World
Development,
Vol.
23,
No.
10,
1995,
pp.
1774-­‐1777,
who
found
that
by
some
measures
such
as
infant
mortality,
life
expectancy,
and
the
UN’s
HDI,
they
have
actually
outperformed
non-­‐mineral
economies.
28
Jeffrey
D.
Sachs
and
Andrew
M.
Warner,
'The
Curse
of
Natural
Resources’,
European
Economic
Review,
Vol.
45,
No.
4,
2001,
p.
828.
19

22. 1950s.29
Yet
as
Michael
Ross
argues,
structural
economic
mechanisms
such
as
the
Dutch
Disease
tend
to
ignore
the
positive
effect
corrective
government
policy
could
have,
and
fail
to
explain
why
such
action
is
not
undertaken.30
For
as
Paul
Collier
and
Anke
Hoeffler
have
pointed
out,
natural
resources
have
led
to
accelerated
development
in
Malaysia
and
Botswana,
not
to
mention
Norway
and
Australia,
rather
than
to
manifestations
of
the
resource
curse.31
In
response
to
such
criticisms,
two
further
sub-­‐literatures
emerged
which
attempted
to
identify
broader
causal
mechanisms
underlying
the
merely
economic
and
structural.32
Sub-­‐Literature
2:
Curse
and
Conflict
The
second
sub-­‐literature
on
the
resource
curse
focuses
on
natural
resource
abundance
and
the
occurrence
and
duration
of
civil
wars
in
resource-­‐
rich
countries.
Several
studies
have
sought
to
establish
a
positive
correlation
between
the
two
using
cross-­‐country
analysis.
For
instance,
Collier
and
Hoeffler,
in
a
1998
study
of
98
countries
and
27
civil
wars,
found
this
relationship
to
be
29
Specifically,
due
to
booms
in
the
resource
sector,
productive
resources
are
drawn
away
from
other
tradeable
sectors
of
the
economy
towards
‘non-­‐tradable’
sectors
such
as
services,
thereby
shrinking
productive
output.
Michael
Burno
and
Jeffrey
D.
Sachs,
'Energy
and
Resources
Allocation:
A
Dynamic
Model
of
the
"Dutch
Disease"’,
Review
of
Economic
Studies,
Vol.
XLIX,
1982,
pp.
845-­‐846.
See
also
W.
Max
Corden
and
J.
Peter
Neary,
'Booming
Sector
and
De-­‐Industrialisation
in
a
Small
Open
Economy’,
Economic
Journal,
Vol.
92,
No.
368,
1982,
pp.
825-­‐842;
and
Peter
J.
Neary
and
Sweder
van
Wijnbergen,
'Natural
Resources
and
the
Macroeconomy:
A
Theoretical
Framework’,
in
J.
Peter
Neary
and
Sweder
van
Wijnbergen
(eds.),
Natural
Resources
and
the
Macroeconomy,
Oxford,
Basil
Blackwell,
1986,
pp.
13-­‐45.
30
See
Michael
L.
Ross,
'What
Do
We
Know
About
Natural
Resources
and
Civil
War?’,
Journal
of
Peace
Research,
Vol.
41,
No.
3,
2004,
pp.
306-­‐307.
31
Paul
Collier
and
Anke
Hoeffler,
'Rents,
Governance,
and
Conflict’,
Journal
of
Conflict
Resolution,
Vol.
49,
No.
4,
2005,
p.
627.
For
a
good
examination
of
the
case
of
Botswana
see
Daron
Acemoglu
et
al.,
An
African
Success
Story:
Botswana,
CEPR
Discussion
Paper
3219,
London,
Centre
for
Economic
Policy
Research,
2002.
32
Michael
L.
Ross,
'Review:
The
Political
Economy
of
the
Resource
Curse’,
World
Politics,
Vol.
51,
No.
2,
1999,
p.
303-­‐308.
20

23. positive,
which
they
would
confirm
in
two
subsequent
studies
of
2004
and
2009.33
Mary
Kaldor,
Terry
Lynn
Karl
and
Yahia
Said,
who
examined
oil
specifically,
argued
that
these
civil
wars
should
be
thought
of
as
‘new
oil
wars’,
for
unlike
those
of
the
20th
century
in
which
oil
was
seen
as
a
strategic
resource,
requiring
territorial
control
or
at
the
very
least
influence
over
host
governments,
these
new
wars
are
essentially
fought
over
access
to
resource
rents.
According
to
the
authors,
conflict
arises
due
to
different
groups
within
countries
seeking
control
over
the
economic
gains
generated
from
oil
exploitation.
This
rent-­‐
seeking
behaviour,
and
the
conflict
that
ensues,
negatively
affects
economic
growth,
leads
to
institutional
failure,
a
predatory
political
culture,
and
ultimately
the
resource
curse.34
Sub-­‐Literature
3:
The
Curse
of
Political
Structures
The
third
sub-­‐literature
on
the
resource
curse,
and
the
one
in
which
this
study
is
broadly
located,
focuses
on
what
Karl
terms
the
‘political/institutional
phenomenon’
of
the
resource
curse.35
As
it
became
increasingly
clear
that
economic
mechanisms
alone
failed
to
explain
the
existence
of
a
resource
curse,
the
literature
has
since
the
mid-­‐1990s
progressively
shifted
toward
explanations
focused
on
governance
failures.
These
explanations
emphasize
abundance
as
the
33
Paul
Collier
and
Anke
Hoeffler,
‘On
Economic
Causes
of
Civil
War’,
Oxford
Economic
Papers,
Vol.
50,
No.
4,
1998,
p.
571.
In
their
two
subsequent
studies
the
data
sets
were
greatly
expanded,
with
their
results
holding
regardless.
See
Paul
Collier
and
Anke
Hoeffler,
'Greed
and
Grievance
in
Civil
War’,
Oxford
Economic
Papers,
Vol.
56,
No.
4,
2004,
pp.
563-­‐588;
and
Paul
Collier
and
Anke
Hoeffler,
Beyond
Greed
and
Grievance:
Feasibility
and
Civil
War’,
Oxford
Economic
Papers,
Vol.
61,
No.
1,
2009,
pp.
13-­‐24.
34
Mary
Kaldor
et
al.,
'Introduction’,
in
Mary
Kaldor
et
al.
(eds.),
Oil
Wars,
London,
Pluto
Press,
2007,
pp.
2-­‐26.
35
Karl,
The
Paradox
of
Plenty,
p.
257.
21

24. root
cause
of
institutional
collapse,
corrupt
government
practices,
and
rent-­‐
seeking
behaviour,
which
in
turn
act
as
both
cause
and
effect
of
the
resource
curse.
Resource
wealth,
moreover,
allows
political
elites
to
maintain
control
of
corrupt
and
inefficient
systems
through
excessive
spending
on
military
and
internal
security
capacities,
as
well
as
political
support.36
For
these
theorists,
natural
resource
abundance
is
associated
with
low
levels
of
democracy
and
democratic
values,
which
helps
to
preclude
development
for
the
majority.37
A
number
of
studies
have
found
a
correlation
between
natural
resource
abundance,
particularly
in
the
case
of
point-­‐source
resources
such
as
oil,
and
low
levels
of
democracy.
In
a
study
of
113
countries
from
1971-­‐1997,
Ross
found
that
the
presence
of
extensive
oil
reserves
in
particular
has
a
detrimental
effect
on
democracy
in
developing
countries.38
Nathan
Jensen
and
Leonard
Wantchekon,
who
conducted
a
survey
of
46
sub-­‐Saharan
countries
between
1970
and
1995,
also
found
that
countries
with
higher
levels
of
resource
dependency
tended
to
be
authoritarian
compared
with
those
less
reliant
on
natural
resource
endowments.
Further,
following
the
‘third
wave’
of
democratization
in
the
region,
those
resource-­‐rich
countries
tended
to
revert
to
authoritarian
rule
over
time.39
These
and
other
studies
confirmed
a
positive
36
Gavin
Hilson
and
Roy
Maconachie,
'"Good
Governance"
and
the
Extractive
Industries
in
Sub-­‐Saharan
Africa’,
Mineral
Processing
&
Extractive
Metallurgy
Review,
Vol.
30,
2009,
pp.
61-­‐62.
Rosser,
The
Political
Economy
of
the
Resource
Curse,
p.
20-­‐22.
37
See
for
example,
Karl,
The
Paradox
of
Plenty,
pp.
14-­‐18;
Hazem
Beblawi,
'The
Rentier
State
in
the
Arab
World’,
in
Hazem
Beblawi
and
Giacomo
Luciani
(eds.),
The
Rentier
State,
New
York,
Croom
Helm,
1987,
pp.
49-­‐62
in
relation
to
the
Middle
East;
and
Nathan
Jensen
and
Leonard
Wantchekon,
'Resource
Wealth
and
Political
Regimes
in
Africa’,
Comparative
Political
Studies,
Vol.
37,
No.
7,
2004,
pp.
834-­‐836
in
relation
to
Africa.
38
Michael
L.
Ross,
'What
Do
We
Know
About
Natural
Resources
and
Civil
War?’,
Journal
of
Peace
Research,
Vol.
41,
No.
3,
2004,
p.
342.
39
Jensen
and
Wantchekon,
‘Resource
Wealth
and
Political
Regimes’,
p.
836.
22

25. correlation
between
natural
resource
abundance
and
non-­‐democratic
governance.40
Explanations
for
this
correlation
have
focused
on
the
detrimental
effects
of
economic
rents
associated
with
resource
extraction,
and
the
subsequent
establishment
of
‘rentier
states’.
While
rent
in
the
broadest
sense
of
income
derived
from
ownership
of
natural
endowments
is
present
in
all
economies,
the
‘rentier
state’
is
a
more
detrimental
phenomenon.
Hossein
Mahdavy,
the
first
to
develop
the
concept,
defined
the
‘rentier
state’
as
one
in
which
a
significant
proportion
of
national
income
is
derived
from
external
economic
rents.41
Hazem
Beblawi,
observing
the
phenomenon
across
the
oil-­‐producing
Arab
states,
expanded
upon
this
concept,
arguing
that
‘rentier
states’
are
not
only
characterized
by
the
reliance
upon
such
rents,
but
that
the
gains
derived
are
produced
for
the
benefit
of
a
relatively
small
proportion
of
the
population,
who
are
coalesced
around
the
state.
The
remainder
of
the
population,
being
excluded
from
the
generation
of
wealth,
are
engaged
only
in
its
‘distribution
and
utilisation’.42
Various
mechanisms
through
which
the
rentier
state
gives
rise
to
the
resource
curse
have
been
advanced.
This
thesis
can
be
located
amongst
those
deemed
‘state-­‐centric’,
though
others
have
also
done
important
work
on
40
For
an
overview
of
many
to
the
studies
not
mentioned
here,
see
Rosser,
The
Political
Economy
of
the
Resource
Curse,
p.
20.
41
Mahdavy
developed
the
concept
in
relation
to
pre-­‐revolutionary
Iran.
Hossein
Mahdavy,
‘Patterns
and
Problems
of
Economic
Development
in
Rentier
States:
The
Case
of
Iran’,
in
M.
A.
Cook
(ed.),
Studies
in
Economic
History
of
the
Middle
East:
From
the
Rise
of
Islam
to
the
Present
Day,
Oxford,
Oxford
University
Press,
1970,
p.
428-­‐429.
42
Beblawi,
‘The
Rentier
Sate
in
the
Arab
World’,
pp.
50-­‐52.
23

26. cognitive
and
societal
mediation.43
A
prominent
example
of
the
state-­‐centric
approach
is
Karl’s
Paradox
of
the
Plenty.
In
it
she
argues
that
the
origin
of
state
revenue
determines
all
levels
of
governance,
and
hence
the
ability
of
the
state
to
foster
economic
growth.
As
decision-­‐making
and
governance
in
the
rentier
state
are
based
upon
linkages
between
power
and
abundance,
accumulation
and
rent
seeking
become
the
mainstay
of
political
activity,
and
define
the
nature
of
the
state
itself.
Special
interests,
social
classes,
and
negative
patterns
of
action
form
around
oil
rents,
and
competition
for
control
of
the
state
becomes
paramount.44
For
Karl,
the
particular
characteristics
of
oil,
including
its
enclave
nature,
high
capital
requirements,
and
strategic
value,
produces
an
extreme
form
of
the
rentier
state’s
institutional
setting,
which
she
terms
the
‘petro-­‐state’.45
As
indicated
above,
once
a
rentier
or
petro-­‐state
has
been
established,
state-­‐centric
approaches
argue
that
the
tendency
will
be
towards
authoritarian
forms
of
rule.
For
Ross,
three
causal
mechanisms
mediate
this
relationship
–
the
rentier
effect
(the
combined
use
of
rent
distribution
and
low
taxes
in
order
to
impede
democratization),
the
repression
effect
(the
use
of
resource
rent
wealth
to
build
up
internal
security
apparatuses)
and
the
modernization
effect
(the
absence
of
social
and
cultural
changes
towards
democracy
brought
about
by
sustained
economic
development).46
It
is
this
‘executive
discretion’
over
the
distribution
of
rents
that
helps
to
bring
down
democracies
and
sustain
authoritarian
rule.
Competition
for
the
state
can
be
contained
only
by
(resource
43
See
Ross,
‘Review:
The
Political
Economy
of
the
Resource
Curse’,
pp.
309-­‐312.
44
Karl,
The
Paradox
of
Plenty,
pp.
14-­‐15.
45
Ibid,
p.
15-­‐17.
46
Michael
L.
Ross,
'Does
Oil
Hinder
Democracy?’,
World
Politics,
Vol.
53,
No.
3,
2001,
pp.
332-­‐337.
24

27. rent
financed)
authoritarian
and
military
repression.47
This
argument
is
consistent
with
the
findings
of
Benjamin
Smith,
who
found
that
countries
abundant
in
oil
wealth
tend
to
exhibit
fewer
instances
of
civil
war
and
anti-­‐state
protest
alongside
high
regime
stability,
as
a
result
of
the
presence
of
rents.48
At
the
heart
of
these
approaches,
therefore,
is
the
corrupting
influence
of
rents
derived
from
natural
resource
abundance,
and
the
negative
effect
this
influence
has
on
the
nature
of
the
state,
and
on
development
generally.
Little
attention
is
given
to
the
ways
in
which
external
power
forces
related
to
geo-­‐
political
and
geo-­‐economic
environments
help
shape
the
resource
curse
in
producing
countries.49
Neglecting
the
Subject
Two
key
points
can
be
made
regarding
the
above
literature
for
the
purposes
of
the
current
study.
Firstly,
at
the
heart
of
the
majority
of
work
on
the
resource
curse
sub-­‐literature
lie
the
relative
size
of
a
country’s
resource
endowment,
and
the
rents
it
generates,
as
the
explanatory
variables.
As
a
result
there
is
a
tendency
to
ignore
the
specific
social
and
political
context
into
which
resource
extraction
penetrates.50
This
is
not
to
say
that
impediments
to
development
that
can
arise
in
specific
contexts,
such
as
ethnic
division
and
instability
for
example,
are
not
acknowledged
as
an
important
mediator
in
the
47
Jensen
and
Wantchekon,
‘Resource
Wealth
and
Political
Regimes’,
pp.
834-­‐836.
48
Benjamin
Smith,
‘Oil
Wealth
and
Regime
Survival
in
the
Developing
World,
1960-­‐
1999’,
American
Journal
of
Political
Science,
Vol.
48,
No.
2,
2004,
pp.
235-­‐243.
49
Rosser,
The
Political
Economy
of
the
Resource
Curse,
p.
22
50
Ibid,
p.
23;
Watts,
'Resource
Curse?’,
p.
75.
25

28. relationship
between
natural
resource
abundance
and
the
nature
of
governance
in
these
countries.
But
too
often
they
are
seen
as
being
determined
by
the
resource
base,
rather
than
having
historical
roots
specific
to
each
country.51
In
order
to
understand
better
the
discrepancy
between
the
results
of
oil
exploitation
in
different
countries,
the
effects
of
oil
on
specific
social
and
political
factors
needs
to
be
explored.
Secondly,
the
shift
in
the
resource
curse
debate
towards
the
role
of
host
country
governance
has
left
the
literature
relatively
silent
on
issues
external
to
those
countries.52
One
such
issue,
which
will
also
be
focused
on
here,
is
the
role
of
global
energy
governance
in
precipitating,
extenuating,
and
perhaps
curing
the
resource
curse.
This
issue
will
be
addressed
in
the
following
section.
As
will
be
shown,
it
is
on
the
findings
of
the
resource
curse
literature,
at
least
in
part,
that
global
responses
have
been
based.
The
EITI
framework
is
the
current
global
governance
response
to
poor
development
outcomes
amongst
the
resource-­‐rich,
and
it
is
to
this
issue
and
its
associated
literature
that
we
now
turn.
51
Rosser,
The
Political
Economy
of
the
Resource
Curse,
p.
10.
There
are
a
few
exceptions
to
this
neglect.
See
Gwenn
Okruhlik,
'Rentier
Wealth,
Unruly
Law,
and
the
Rise
of
Opposition:
The
Political
Economy
of
Oil
States’,
Comparative
Politics,
31,
3,
1999,
p.
309,
who
points
out
that
the
character
of
state
institutions
are
mainly
shaped
prior
to
the
imposition
of
oil;
Watts,
‘Resource
Curse?’,
pp.
53-­‐4,
who
argues
that
‘petro-­‐capitalism’
produces
new
forms
of
rule
and
political
authority
as
it
interacts
with
pre-­‐existing
social
and
political
factors;
and
Kiren
Aziz
Chaudhry,
‘Economic
Liberalization
and
the
Lineages
of
the
Rentier
State’,
Comparative
Politics,
Vol.
27,
No.
1,
1994,
p.
21,
who
argues
through
a
case
study
of
Saudi
and
Iraqi
reform
efforts
that
widely
different
results
will
be
experienced
in
similar
situations
due
to
local
characteristics.
52
Hilson
and
Maconachie,
‘”Good
Governance”’,
p.
62.
26

29.
Governance,
Transparency,
and
the
EITI
Global
energy
flows
have
historically
been
governed
by
a
patchwork
of
institutions
whose
overlapping
authority
and
jurisdiction
make
for
complicated
analysis.
Included
in
this
institutional
architecture
are
a
myriad
of
bilateral
agreements;
bodies
such
as
the
International
Energy
Agency
(IEA)
and
the
Group
of
Eight
(G8),
in
which
energy
exporters
are
grossly
underrepresented;
financial
institutions
such
as
the
World
Bank
(WB)
and
the
International
Monetary
Fund
(IMF),
which
provide
technical
and
financial
assistance
to
developing
countries;
poorly
regulated
and
heavily
distorted
markets;
and
weak
and
nonbinding
rule
systems
which
emanate
from
the
above
sources.53
Prior
to
the
emergence
of
transparency
as
an
international
norm,
this
fragmented
institutional
framework
was
largely
directed
towards
the
correction
of
market
failures,
the
lowering
of
transaction
costs,
and
the
regulation
of
market
exchange.54
Of
importance
to
those
involved
were
value-­‐free
realpolitik
concerns
about
the
security
of
energy
supply
and
price
stability.55
Such
calculations
were
especially
significant
in
the
case
of
oil
–
it
is
the
foremost
strategic
good,
the
backbone
of
modern
industrial
53
It
is
beyond
the
purview
of
this
study
to
examine
these
institutions
in
full,
or
to
list
the
full
gamut
of
bodies
involved
in
global
energy
governance.
This
has
been
attempted
elsewhere
with
varying
success.
See
for
example
Ann
Florini
and
Benjamin
K.
Sovacool,
‘Who
Governs
Energy?
The
Challenges
Facing
Global
Energy
Governance’,
Energy
Policy,
Vol.
37,
No.
12,
2009,
pp.
5239-­‐5248.
54
Andreas
Goldthau
et
al.,
'Global
Energy
Governance:
The
Way
Forward’,
in
Andreas
Goldthau
and
Jan
Martin
Witte
(eds.),
Global
Energy
Governance:
The
New
Rules
of
the
Game,
Washington,
Brookings
Institution
Press,
2010,
p.
344.
55
Thorsten
Benner
and
Ricardo
Soares
de
Oliveira,
'The
Good/Bad
Nexus
in
Global
Energy
Governance’,
in
Andreas
Goldthau
and
Jan
Martin
Witte
(eds.),
Global
Energy
Governance:
The
New
Rules
of
the
Game,
Washington,
Brookings
Institution
Press,
2010,
p.
287.
27

30. economies,
and
hence
critical
to
the
maintenance
and
survival
of
the
state.56
Broader
issues
arising
from
energy
extraction
affecting
the
political,
social,
or
environmental
concerns
of
exporting
countries
were
treated
on
an
ad-­‐hoc
basis,
often
by
bodies
outside
of
the
energy
governance
framework.57
‘Good’
or
‘bad’
governance
within
this
framework
was
therefore
to
be
judged
primarily
in
economic
terms.58
This
narrow
geo-­‐political/geo-­‐economic
focus
of
global
energy
governance
has
been
reflected
in
the
literature
on
the
subject.
As
Ann
Florini
and
Benjamin
Sovacool
point
out,
insufficient
scholarly
attention
has
been
paid
to
the
patchwork
of
institutions
that
currently
make
up
the
global
energy
governance
framework,
or
to
the
conspicuous
institutional
gaps
that
exist
between
them.
Rather,
the
global
energy
governance
literature
is
focused
upon
either
the
‘technological
or
economic
aspects
of
systems,
markets,
and
policy
decisions’,59
or
on
energy
security
in
the
context
of
shifting
geo-­‐political
landscapes.60
According
to
Andreas
Goldthau,
this
concentration
on
essentially
zero-­‐sum
games
diverts
attention
from
the
institutional
architecture
that
underpins
global
energy
governance.61
56
Dries
Lesage
et
al.
Global
Energy
Governance
in
a
Mulitpolar
World,
Burlington,
Ashgate,
2010,
p.
183.
The
significance
of
maintaining
the
security
of
oil
supply
is
unlikely
to
diminish,
with
global
needs
to
rise
by
as
much
as
50%
by
2030,
assuming
no
drastic
changes
to
national
energy
policies.
Gillies,
‘Reputational
Concerns’,
p.
107.
57
Florini
and
Sovacool,
‘Who
Governs
Energy?’,
p.
5239.
58
Benner
and
Oliveira,
‘The
Good/Bad
Nexus’,
p.
287.
59
Florini
and
Sovacool,
‘Who
Governs
Energy?’,
p.
5240.
60
Included
here
are
China’s
“scramble
for
Africa”,
access
to
the
Caspian
Sea
gas
fields,
as
well
as
the
beginnings
of
the
race
for
the
Arctic.
See
Andreas
Goldthau
and
Jan
Martin
Witte,
'The
Role
of
Rules
and
Institutions
in
Global
Energy:
An
Introduction’,
in
Andreas
Goldthau
and
Jan
Martin
Witte
(eds.),
Global
Energy
Governance:
The
New
Rules
of
the
Game,
Washington,
Brookings
Institute
Press,
2010,
pp.
1-­‐2.
61
Ibid,
pp.
1-­‐2.
28

31.
During
the
preceding
two
decades
a
significant
normative
shift
has
occurred
at
the
global
level
towards
the
promotion
of
‘good
governance’
and
transparency.62
Thorsten
Benner
and
Ricardo
de
Oliveira
delineate
four
key
factors
contributing
to
this
normative
shift
as
it
relates
to
oil-­‐sector
transparency
and
the
resource
curse.
Firstly,
the
failure
of
the
Washington
Consensus
policies
to
promote
economic
development
through
value-­‐free
structural
adjustment,
led
donor
agencies
to
link
bad
governance
to
developing
country
malaise.63
Secondly,
studies
linking
poor
governance
and
corrupt
practices
with
the
onset
of
the
resource
curse,
and
underdevelopment
more
generally,
gained
influence
amongst
international
institutions
during
the
1990s.
In
response,
bodies
such
as
the
G8
and
the
WB
began
to
re-­‐examine
the
role
of
the
extractive
industries
in
national
governance
failure.
Thirdly,
corruption
emerged
as
a
key
global
concern,
in
part
due
to
pressure
exerted
on
the
international
community
by
Non-­‐
Governmental
Organizations
(NGOs)
such
as
Transparency
International
(TI).64
Lastly,
the
exploitive
behaviour
of
corporate
multinationals
in
developing
countries,
perceived
or
actual,
came
under
scrutiny,
and
led
to
calls
for
stricter
regulation
and
industry
governance.65
The
EITI,
with
its
underlying
normative
dimensions
of
transparency
and
‘good’
governance,
stands
at
the
confluence
of
62
Gillies,
‘Reputational
Concerns’,
p.
103-­‐105.
63
Though
rather
than
being
the
content
of
the
reforms
per
se,
it
was
felt
that
weak
and
corruptible
public
institutions
serve
to
block
real
structural
reform.
As
such
it
became
necessary
for
external
actors
to
promote
good
governance
in
domestic
settings.
Ibid,
p.
291.
64
Prior
to
the
1990s
corruption
was
barely
on
the
global
agenda,
and
indeed
bribes
were
tax
deductible
for
many
European
officials
who
operated
in
foreign
markets.
Ibid,
291.
For
an
examination
of
the
role
of
various
NGOs
in
bringing
the
eradication
of
corruption
to
the
forefront
of
the
global
agenda
see
Gillies,
‘Reputational
Concerns’,
pp.
109-­‐110.
65
Benner
and
Oliveira,
‘The
Good/Bad
Nexus’,
pp.
290-­‐292.
29

32. these
concerns,
and
has
become
the
key
policy
response
to
the
resource
curse
and
‘bad
governance’.66
A
fifth
and
arguably
critical
factor
may
be
added
to
this
list.
As
several
analysts
have
argued,
the
role
of
the
reputational
agendas
of
multinational
oil
companies,
international
financial
institutions,
and
many
Western
governments
were
decisive
in
the
emergence
of
oil-­‐sector
transparency
as
an
international
norm
for
the
extractive
industries.67
For
the
emergence
of
the
EITI
deflected
attention
and
scrutiny
away
from
these
bodies
at
the
very
time
their
responsibility
for
the
resource
curse
was
being
questioned,
and
towards
the
host
governments
as
the
source
of
economic
mismanagement
and
corruption.68
The
multinationals,
for
their
part,
supported
the
EITI’s
entrance
in
forums
such
as
the
G8
and,
as
Nicholas
Shaxson
has
argued,
‘love
the
EITI
–
it
takes
pressure
off
them
and
puts
it
onto
African
governments
to
disclose.’69
The
EITI
was
thus
attractive
to
multinationals,
international
institutions
and
Western
governments
alike,
and
received
support
for
its
usefulness
in
protecting
their
public
images.70
Supporters
of
the
EITI,
including
international
institutions
and
various
NGOs,
argue
that
it
has
been
a
great
success.
Peter
Eigen,
the
body’s
inaugural
chairman,
points
to
its
global
acceptance
rate,
which
as
of
2009
included
twenty-­‐
three
candidate
countries
in
Africa,
Asia
and
Latin
America,
as
well
as
the
66
Virginia
Haufler,
'Disclosure
as
Governance:
The
Extractive
Industries
Transparency
Initiative
and
Resource
Management
in
the
Developing
World’,
Global
Environmental
Politics,
Vol.
10,
No.
3,
2010,
p.
54.
67
Gilles,
‘Reputational
Concerns’,
p.
115;
see
also
Hilson
and
Maconachie,
‘“Good
Governance”’,
pp.
55-­‐76.
68
Ibid,
p.
55.
69
Shaxson,
Poisoned
Wells,
p.
218.
70
Gillies,
‘Reputational
Concerns’,
p.
104.
30

33. endorsement
of
thirty-­‐seven
oil,
gas
and
mining
companies
worldwide,
and
numerous
NGOs.71
Proponents
argue
that,
within
countries
compliant
with
the
framework,
the
EITI
will
‘help
civil
society
groups
to
work
towards
a
democratic
debate
over
the
effective
use
and
allocation
of
resource
revenues
and
public
finance’
by
empowering
host
country
populations
through
knowledge
dissemination.72
Armed
with
information,
civil
society
will
force
greater
accountability,
reduced
corruption
and
mismanagement,
and
state/society
cooperation,
while
also
increasing
state
legitimacy
and
strengthening
public
institutions.73
Yet,
as
Mark
Fenster
rightly
points
out,
herein
lies
the
weakness
of
transparency
initiatives
such
as
the
EITI.
They
rely
on
a
‘simplistic
model
of
linear
communication
that
assumes
that
information,
once
set
free
from
the
state
that
creates
it,
will
produce
an
informed,
engaged
public
that
will
hold
officials
responsible.’74
As
many
critics
of
the
EITI
have
pointed
out,
the
citizenry
of
a
corruption-­‐rich
state
is
often
already
well
aware
of
the
corrupt
practices
of
state
actors
past
and
present.75
Moreover,
their
civil
society
organizations
are
often
severely
lacking
in
political
power.
For
this
reason,
the
recent
pressure
for
71
Peter
Eigen,
'A
Coalition
to
Combat
Corruption:
TI,
EITI,
and
Civil
Society’,
in
Robert
I.
Rotberg
(ed.),
Corruption,
Global
Security,
and
World
Order,
Washington,
D.C.,
Brookings
Institute
Press,
2009,
p.
426.
72
Quoted
in
Haufler,
‘Disclosure
as
Governance’,
p.
59.
73
Ibid,
p.
54.
74
Mark
Fenster,
'The
Opacity
of
Transparency’,
in
Iowa
Law
Review,
Vol.
91,
No.
3,
2006,
p.
885.
75
See
for
example,
Yinka
O.
Omorobge,
'Alternative
Regulation
and
Governance
Reform
in
Resource-­‐Rich
Developing
Countries
of
Africa’,
in
Barry
Barton
et
al.
(eds.),
Regulating
Energy
and
Natural
Resources,
New
York,
Oxford
University
Press,
2006,
p.
55;
Benner
and
Oliveira
‘The
Good/Bad
Nexus’,
p.
303;
and
Haufler,
‘Disclosure
as
Governance’,
pp.
55-­‐56.
31