The future of the EITI

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Nick Shaxson and I had an article in the FT on Saturday (or here) on the future of the Extractive Industries Transparency Initiative. I'm aware that not everyone can read the FT site. Equally, copyright issues prevent me from reproducing it all, even though I wrote it.

The core of the argument is this:

EITI is a good thing, and it should continue. It has improved transparency, and it has got people thinking seriously about it. But it is fundamentally flawed. Its audits ought to check not just what is paid, but what should have been paid, and they should delve into industry costs. We need mandatory transparency too, and, crucially, a cross-border perspective. We must open up tax havens to scrutiny, which will help citizens and democrats everywhere, not just in mineral-rich or poor countries. When three US senators recently said that tax havens have "declared economic war on honest US taxpayers," they were right.

Eva Joly, the magistrate in Paris who broke open the Elf affair, said she felt like a sheriff in a spaghetti western, watching bandits celebrate across the Rio Grande. "They taunt us - and there is nothing we can do." In March, she said that tackling tax havens should be "phase two" in the global corruption debate. She is also right.

Nobody claims the next steps will be easy. There is a focused goal to aim for right now: when the G8 countries meet in the next few days, they should agree to reform International Financial Reporting Standards so that companies' data is unpicked on a country-by-country basis. That alone would lead to a healthy explosion of transparency, and not just in Africa's oil zones.

Put bluntly, we need mandatory disclosure of who is doing what, where. That's the core of transparent accountability in the markets of the world. That level of transparency will pay for shareholders, for tax authorities and for developing countries. Now is the time time to do it.