Notes of a meeting, Washington DC, 21 September 2011

Sponsor: Revenue Watch International

Panelists:Paul Collier (Professor, University of Oxford), Karin Lissakers (Executive Director, RWI )

In this session, Professor Collier will discuss the eight case studies documented in his new book, Plundered Nations? Successes and Failures in Natural Resource Extraction with Revenue Watch. He will provide unique insight on the political economy of the decision chain, revealing where these various resource-rich countries have met with success, or failed disastrously. The other panelists will join in the conversation on how different countries have handled their resource extraction and what methods need to be taken in the future.

Antoine Heuty

• Introductions
• Book tries to answer the question of the different successes and failures or resource rich countries
• What in Paul Collier’s view makes the difference?

Paul

• Its tempting to oversimplify
• Plundering is the looting of the public purse and the world has put its energy into stopping it. This is the right battle to fight first.
• What we try to show in plundered planet is that there is more to that. The reason success is so rare is that there is a chain of decisions that need to be made to harness natural assets successfully.
• What is important is that countries understand what this decision making chain is.
• Governments that have to take the decisions and citizens who have to hold their countries accountable need to be made aware of the appropriate decisions.
• The chain begins with the discovery process.
• Developing countries need to demonstrate that they have more resources by appropriate discovery methods.
• Dev countries can hire geologists to search for extractives before they contact the private sector.
• The government then needs to capture the rents through taxation in order to ensure equitable distribution of these rents.
• Predominant way society benefits is through capturing these rents.
• Then the government needs to appropriately invest the revenue either on the present or the future.
• If all revenues used for current consumption that’s punishing future generations.
• Therefore a respectable amount of the revenues need to be saved for future generations.
• A balance of the needs of the present and the future needs to be taken into account.
• Final link in chain is where you put savings.
• The current global model is Norway. This is the wrong model for developing countries.
• Norway has saturated capital investments internally so it makes sense for them to invest abroad. This is not the same for developing countries.
• Problem is dev countries don’t have capacity to make sound investments. That is why you need to suuport investing in investing.
• In a nutshel:
• Discover em
• Tax em
• Save
• Invest appropriately
• Malaysia is a good example.

Antoine

• Book stresses natural resource taxation.
• How can countries get a better deal?

Karin Lissakers

• Revenue watch provides technical advice to governments.
• Countries have made very bad deals and have very bad laws.
• By increasing capacity this can be dealt with.

Paul

• Building capacity within the public sector is quite practical
• Project design
• Project selection
• Project implementation
• Monitoring and evaluation
• All these things are now measured by the IMF
• Building private capacity
• Policy environment is important
• Doing business is a good example of how to rate country private sector investment
• Once you can benchmark you are golden

Karin

• Transparency is key
• Eiti reports have been of varying quality.
• New rules will allow for better quality data.
• Payment information has made enormous progress.
• Resource management requires effective data capture and standards.

Paul

• Natural resource charter covers a variety of different issues.
• Civil society initiative.
• Southern controlled group
• Used heavily in Africa.
• Need bright young people to take this out.