THE BLOG

Canada Under Pressure at G8 on Mining Transparency

Jun 12, 2013 | Updated Aug 12, 2013

OTTAWA, CANADA -- When one agenda issue comes up at this year's G8 summit in Northern Ireland, all eyes will be on Canada: mandatory reporting of payments to governments by mining, oil and gas companies. As home to most of the world's mining companies, Canada is viewed as the key to G8 unity on this anti-corruption measure. The United States and Europe are on board; Canada has so far stonewalled.

During past summits Canada showcased its laudable contributions to address global disease or hunger. In 2010, when hosting the G8 in Huntsville, Canada championed an initiative on maternal and child health and put up most of the money. In other years, Canada did the same for the G8's food security endeavors.

Given the sorry state of aid budgets today (Canada's was just slashed 8 percent over 3 years), this G8 will not be a pledging conference. Instead, the UK hosts propose a series of transparency measures on land deals, tax avoidance and company reporting that could make it easier for the poorest countries to raise revenue domestically and so ease the demand for assistance.

Africa is experiencing solid economic growth primarily due to a natural resource boom, yet the vast sums the mining, oil and gas industries generate seem to vanish into thin air. The problem is what Uruguayan writer Eduardo Galeano famously dubbed "the curse of wealth." Instead of providing steady revenue for governments to invest in human development, abundant deposits of natural resources seem to incentivize get-rich-quick schemes, which fatally corrupt the politics of poor countries.

In Nigeria, for example, $300 billion in oil revenues has disappeared since the 1960s, leaving little tangible impact on a nation virtually devoid of paved roads, in which 60 percent of the population live on less than $1.25 a day. Global Witness calculates that Africa as a whole loses $148 billion per year to such corruption, far more than it receives in aid.

When coupled with the liberal use of tax havens to avoid if not evade taxes, the numbers skyrocket further, robbing the poorest people of schools, clean water, health care - the essentials for them to work their way out of poverty.

Such corruption is not inevitable. It is encouraged by secrecy and can be discouraged by open information so that citizens can hold governments and companies to account. Thus, the G8 initiative on mandatory reporting.

There is global momentum on this issue, thanks in no small part to the efforts of a national citizens' coalitions known as Publish What You Pay. Ghana and Liberia recently moved to require extractive companies to report all payments to government. In the United States, the Dodd-Frank financial reforms made country-by-country and project-by-project reporting compulsory. The European Union just followed suit, with regulation due to come into effect shortly.

Transparency in extractive industries should be a natural for Canada, given the preponderant weight of Canadian companies in the industry and especially in Africa and Latin America. The government of Prime Minister Stephen Harper has tied Canada's reputation in developing countries to Canadian mining companies, giving over a sizable portion of the aid budget to programs intended to enhance the development impact of their operations. Two weeks ago, for example, Harper announced $53 million for Peru to help target royalties from mining operations to mining communities.

In the domestic debate, the two biggest mining industry groups (Mining Association of Canada and Prospectors & Developers Association of Canada) surprised observers by strongly endorsing mandatory disclosure. Many of their member companies need to report under Dodd-Frank anyway, and the more far-sighted among them understand that transparency helps buy them a social license to operate. Oil and gas companies, however, remain less than enthusiastic.

As do government officials. They argue that Canada's federal system impedes action, since provinces, not the federal government, regulate corporations. Campaigners counter that the provinces only move in concert when the federal government leads.

G8 decisions often reflect the personal attitudes of the individuals at the helm. Prime Minister Harper has a reputation for control and secrecy, and he may find the notion of compulsory transparency unpalatable.

They also reflect the moment: Mr. Harper may fear the mention of secret payments to governments abroad would remind voters of widely publicized bribery allegations against one Canadian mining company and a flagship Canadian engineering firm - not to mention the secret payment his chief of staff made last month to evade scrutiny of petty corruption by a Harper appointee.

Such scandals have riveted the attention of Canadians all spring. The PM may well prefer the distraction of a simple photo op with Barack Obama and David Cameron.

Canadian diplomats, their arms sore from US and UK twisting, say an announcement on extractive transparency at the summit is likely. It's rather late for Canada to demonstrate leadership. But by following the footsteps of his allies and committing to work with the provinces to achieve compulsory transparency, at the G8 Mr. Harper can make a real difference in the fight against poverty.

UPDATE: On June 12, ahead of the G8, Prime Minister Stephen Harper announced Canada would require mandatory disclosure of payments to governments for mining, oil and gas companies. This post explains why this is a welcome move for the poorest countries.

This post is part of a series produced by The Huffington Post and the NGO alliance InterAction around the G8 summit being held in Northern Ireland, June 17-18. For the next eight days, we will be featuring one post from an NGO based in each of the G8 countries -- this piece is from Canada -- and then one blog from the vantage point of the developing world. To see all the posts in the series, click here. For more information on InterAction, click here. And follow the conversation on Twitter with hashtag #DearG8.