Law Making or Patronage Politics? Lessons from Cardin-Lugar Provision
The now famous Cardin-Lugar Energy Security through transparency (ESTT) provision was authored by Senator Benjamin Cardin, a democrat from Maryland and Senator Richard Lugar, a republican from Indiana. It requires both US and internationally based companies registered with the US Securities and Exchange Commission (SEC) to publish what they pay to governments for the commercial development oil, gas and minerals. It was passed on the 15th of July 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Senator Cardin argued that confidentiality clauses in contracts should cease to exist in the extractive industry. He made a solid case for complete and mandatory disclosure of all so called “sensitive” information as this does not put any extractive industry company into a competitive disadvantage. Rather, he argued that such disclosure will provide a level playing field for healthy competition. He called for comprehensive good governance approach to business and global affairs, hinging on the fact that “secrecy fosters instability, corruption and greater risk for investors, regulators and citizens.”
As I sat enrapt in the wonder of his speech, I began to think about Africa in general and Nigeria my country of birth. Experts say that Africa holds an estimated 10 percent of global oil reserves, 40 percent of Gold, 80-90 percent of chromium and Platinum group of metals. The McKinsey report indicates that by 2015, 13 percent of global oil production will take place in Africa and 19 countries including Nigeria will become more significant producers and players with new deep water discoveries - yet many African countries are submerged in poverty, under development and conflict. We have unfortunately become a poster for the so called “resource curse.”
Senator Cardin came across as someone who speaks from conviction, deep understanding of the issues, experience, foresight and patriotism. I saw in him the reason why the United States plays an increasingly conspicuous role in global affairs. Here, partisanship is put behind for cooperation in many matters of policy especially foreign policy. Parliamentarians close rank across party lines and place long term national interest beyond political party, individual, corporate or any interest for that matter.
It further signifies how a vigilant civil society can collaborate with willing and committed parliamentarians. Many revenue transparency activists within the United States worked closely with Senators Cardin and Lugar on this legislation which, according to Isabel Munilla, Director of Publish What You Pay US “sheds light on billions of payments between oil and mineral companies and governments and provides a powerful tool to scrutinize the levels of public expenditure on economic development.”
As I perused the media on events around the passage of the Dodd Frank Act, I learned that many oil companies and the American Petroleum Institute lobbied against the bill, albeit ineffectively. But if it were in Africa and particularly in Nigeria, things would obviously be different. For instance, despite the lip service support by multi-national and indigenous oil companies to the Extractive Industries Transparency Initiative (EITI), section 14 (a) of the NEITI Act was watered down in between our parliamentary sessions.
Another relevant issue that came to my mind at the New York conference was the new Petroleum Industry Bill (PIB). The Nigerian parliamentarians are currently considering this landmark reform legislation that will potentially improve the Nigerian petroleum sector. I wondered how many months have passed since our late former President Yar Ardua submitted the draft for consideration. Many Nigerians are anxious due to the past performances of our national assembly and are looking at how for instance the NEITI Bill undertook the same journey and came out a mutilated Act in 2007.
Many other reasons increase our anxiety.Weak capacity is a preponderant quality of many of our legislators, a quality shared by their aides and consultants. These parliamentary support persons are mostly drawn from their friends and cronies for personal reasons rather than added value, professionalism or expertise. Worse still, as 2011 elections approach, many parliamentarians are in dire need for a financial war chest for the election battle ahead. Rigorous scrutiny of any bill can never be and indeed has never been in our national parliamentary agenda.
So, as Nigerians await the passage of the PIB, the timing can lead us to hazard a guess of what a most likely outcome will be! Sadly, this is an industry that provides more than ninety percent of our foreign exchange earnings. But who cares by the way?
By Uche Igwe
Uche Igwe is an Africa Public Policy Scholar at the Woodrow Wilson Center and Visiting Scholar at the Africa Studies Program, Paul H. Nitze School of Advanced International Studies Johns Hopkins University USA.