Experts

Richard Dion: In promoting the EITI Kazakhstan plays a leading role at the region

Publised: Tuesday, July 5, 2016

The history of EITI implementation in Kazakhstan counts more than 10 years. Those, who evidenced its beginning, note that it was exciting and challenging process, however Kazakhstan managed to achieve significant results in extractive revenues management and the fundamental  work towards improvement of EITI reporting is seen and appreciated by other implementing States.In  2017  Kazakhstan has to confirm its EITI Compliant country status and pass the validation process. In anticipation of this event, Dinara Pogodina, the Transparency & Accountability Program Coordinator met with Richard Dion (former  Regional Director ,EITI International Secretariat), to discuss the most important issues of EITI

Dinara Pogodina (D.P.) What is your opinion of the evolution of EITI in Kazakhstan? How do you evaluate the progress of the initiative?

Richard Dion (R.D.) Kazakhstan has done quite well with the EITI in country and is definitely the lead in the region. It should however not sit on its laurels - it should take the process to another level, to make government work better and be more accountable to its people. That is EITI’s main purpose. It is not just transparency for transparency’s sake. It is about using transparent data to make government at the national, regional and local level more accountable. I feel that Kazakhstan joined EITI a decade ago because it felt that it needed to be seen to be addressing transparency challenges in the country. However, looking at the oil price drop, Kazakhstan needs to be much smarter where it spends its money and frankly, the population is demanding more accountable government. The country is very fortunate to have a small population - only 16 million people. Looking at revenue from 2012 and 2013 alone, the country made 60 billion US.  That is a potentially large development pay-off if the money is used properly.

D.P. The EITI Global Conference held on February 24-25  2016 in  Lima, Peru, was marked by number of remarkable events, one of which was the adoption of new 2016 EITI Standard. The Standard  significantly broadened the scope of reporting by implementing countries, the key changes touch upon the aspects of the Mainstreaming, Beneficial ownership, Commodity trading, Civic space (Civil, Society protocol), Open data (Open Data Policy).  In your opinion how the new standard requirements will influence the EITI implementation process in Kazakhstan? Will it open more opportunities and lead to more transparency or there would be more obstacles to deal with?

Open data and beneficial ownership are both key issues. However I wonder who is actually using the data in Kazakhstan. It is so complex that I doubt there are more than a handful of people in the entire country, who really understand the data. A programme on understanding how to use the data is equally important. Regarding beneficial ownership, the international delegations have raised beneficial ownership, but to my knowledge the government has not really moved its position. The population has a right to know who owns the companies, how money comes in, who has signing authority of it, whether bank accounts are in the country (or elsewhere) and how the money is spent. It is amazing to think that the Democratic Republic of the Congo has taken the lead and published its beneficial owners. No one would have thought that a decade ago.

D.P. The period of 2016-2017 is marked by significant milestone for Kazakhstan. In  2017  Kazakhstan has to confirm its EITI Compliant country status and pass the validation process. How do you assess the challengies Kazakhstan has to face in this regard and what would you recommend as a focal point for improvement, to pass this exam well?

R.D. One major aspect that many completely underestimate is the paper trail. Everything needs to be on paper - terms of reference, NSC meeting minutes, etc. If it doesn’t exist on paper, it doesn’t exist. That should be attitude of those preparing for Validation.

Secondly, lessons learned and recommendations from the previous validation and previous EITI Reports are not given as much attention in MSGs as they should be. In many instances, these recommendations are not used and so the process becomes a treadmill. Work is being carried out, but no progress is made.

The public debate here is also important. Unfortunately, not many people really read these reports. In face, almost no one does. The wider population does not understand them, which can defeat the exercise’s entire purpose. It’s one of the greatest challenges frankly; around how to communicate something that is so complex? Not many people would know how much money Kazakhstan earned from oil, gas and mining in any given year, let alone other more nuanced aspects of the industry and the correct questions that people should be asking to their officials.

It is also challenging to “rate” the public debate for a country which has just become compliant. Is producing an EITI Report, putting it on a website, or holding a conference enough? EITI will only succeed if there is a strategic approach to dissemination and a stakeholder management system that keeps in mind the so-called “special publics” in the country, but also takes into account generations, such as university students. It is they who should inherit Kazakhstan’s wealth. To speak to that point, there is no course in the country (to my knowledge) on the governance of natural resources. That is surprising, given that Kazakhstan’s past, present and future is wound up in the extractive industries.

D.P. Mainstreaming is one of the priority specified in the 2016 EITI standard. Most countries currently create standalone reports in order to disseminate the information required to be disclosed in EITI. The 2016 EITI Standard gives countries the flexibility to “mainstream” disclosures into government and company reporting systems. Stakeholders in a country will have to determine which elements of the EITI Standard are mainstreaming priorities, from improving government and company information systems on license allocations to social and economic spending. All disclosures will still be subject to the EITI requirements. It is supposed that Instead of focusing on producing EITI reports, stakeholders can focus on improving transparent government and company systems. And  Kazakhstan is one of the pilot countries to analyze and define the possibility to harmonize the existing reporting into EITI. According to the national Stakeholders Council decision the project will be launched in  Q2 2016. To your mind will this be beneficial to the implementing countries and whether the mainstreaming will strengthening the role of EITI?

R.D. If the transparency around extractive resources can be integrated into the Ministry of Finance and the Ministry of Energy, that would be a significant achievement. If the EITI exists as its own separate entity in the coming years, it will have failed. A well-functioning, purposeless “silo”, as we say in English, will exist. It will be carrying out activities, but it won’t be integrated into the “real” work of the ministries. You will have the problem of lack of sharing of EITI information across ministries, and also the disadvantage of not being integrated, which could mean less accountability. It depends largely on the players and on the actors involved. If a government does not want to do anything, it can simply sign up and not do anything, but I think that Kazakhstan is serious. When I look at the integration, there is a lot of discussion around doing things better and Kazakhstan does push itself in many other areas, notably local content. For all of its problems the Kazakh Government and the Kazakh Civil Service appears keen to improve the situation. Compared to the late 1990s when I worked here, the situation has improved dramatically, There is still considerable work left to do in the regions - I am thinking particularly of the benefits of social projects. The population does not really see much difference.

D.P. The ETI annual reports of Kazakhstan serve an example for other countries who are the “beginners”in EITI. And we are pioneers in introducing  of  the disaggregated reporting. The web tool ( egsu.kz) has made the process even more transparent and user friendly, besides this, the reports have been issued in  shortened version in infographics to be more visible. Could you please share your observations; what is one most interesting thing you have learned from reading EITI reports in Kazakhstan?

R.D. Two aspects come to mind. The role of state owned enterprises (SOEs) and transport. The schematic on KMG ownership or companies in Samruk tell a lot about the country’s major assets. Now you have to make whole numbers and figures more real. When you have all of these numbers, do they really mean anything? That is a big problem. So I’ve learnt a lot on the SOEs and I do think that, despite initial successes, there is still some work on transport, which is a big revenue stream for the country. If the Report could be just as specific on social projects (what about choosing the top 10 in value and carrying out an evaluation of them?), it would be an meaningful improvement, most important to those local communities who should be seeing the tangible difference in their region.

As for the work to be done in the report, it needs to be better communicated; It has improved over the last couple of years; but it needs to be better, to have a better understanding of design. I would argue that the design of reports is about one-third of the success of your public debate. As a colleague of mine who works in IT says, “people don’t read anymore, they browse.” Distilling the most important facts from dozens of pages of numbers/figures needs some work. 

D.P. Kazakhstan has achieved good results in promoting the EITI at the national level. However though the main purpose of EITI report is to popularize the EITI topic among the citizens, theirs is still a room for improvement and strong demand for public discussions.What could you advise to promote the EITI in the regions and please share any good examples from the other countries experience you are familiar with.

R.D. There is unfortunately no example. People understand this a great deal. The Reports need to have everything in there, however, if just a few people read the Report, then it will be, again, without purpose. To my knowledge, there is no guidance note on communicating the report from the International Secretariat in Oslo. Communicating nowadays is nearly scientific and should be treated seriously. Many civil society activists still do not understand how it sort of works. In my experience, for example in Congo, also in Mauritania and in other places; it is the same and that is an enormous challenge. And so this whole building up of understanding in civil society is quite important.

A baseline survey should be completed to understand “where Kazakhstan is” with regards to knowledge, not just of the EITI process, but also the industry. Surveys in several different regions could help to understand if people know little or nothing or feel empowered. Then based on that information, a targeted, medium-term strategy should be developed, using all potential tools: face-to-face meetings, A4 policy briefs, letter writing, , briefing the international community, understanding where people receive their information (newspaper, radio, etc.), the list goes on…..

However, I feel confident that with a very targeted approach, progress can be made. This is even more important in Kazakhstan because of its large geography. I am pleased to say that some of this work will be carried out in the future and I look much forward to seeing the preliminary results.