September 30, 2009

INCREASING TRANSPARENCY IN THE EXTRACTIVE INDUSTRIES

I take this time to bring to the attention of my colleagues legislation that's been introduced by senator Lugar and myself, the Energy Security Through Transparency Act of 2009. Joining us as co-sponsors are Senator Schumer, Senator Wicker, and Senator Feingold.

Let me tell you about the problem this legislation is attempting to fix:  there are mineral-wealthy countries -- countries that have oil and gas -- and sometimes it's a curse for these countries because they often have horrible poverty, open war and very poor governance. And the reason in most cases is corruption.

Quite frankly, there are individuals, or groups and sometimes even leaders within these resource-rich nations that make their own deals with companies that extract these minerals and use it for their own purpose rather than sharing it or using it as they should for the people of the nation in which these resources are located. And this is happening in so many countries in the world. It's in the United States' interest to change the way that these nations deal with their resources and with their wealth.

It's also in our interest for many other reasons. There are American companies that would like to do business in these countries. They would like to help the economy of America by having business relationships with countries that have oil and gas and countries that have other mineral wealth. The problem is they can't do this because of the corruption in many of these countries, because it is against American law. It also creates an unstable business environment for these companies in a country that is corrupt and does not have the rule of law or doesn't have the protections necessary to make sure that their business relationship will be honored.

It is important for us that these nations deal with their mineral wealth for all these reasons. It's also in our interest in terms of energy security. And I hope we'll get into this debate in this congress on the floor of this body -- how we can become energy secure in America. Part of that is having a much more open relationship with those countries that have mineral wealth so that we know the arrangements, so we know that the gas and oil and other minerals are entering transparently into the international marketplace. We can have an open policy here in America to deal with our energy. It's important for our economy and it's important for our national security to get this done.

I might also add, it's also going to be important for our environment and we're going to have that debate, I hope, later this year in this body.

Now, the international community has understood this, and as a result of recognizing this problem, the international community came together with the Extractive Industries Transparency Initiative, known as EITI. This international effort is to try to bring transparency to what a company pays for mineral rights in a country. If you're a company and you're paying a royalty to a nation for extracting its minerals, you need to disclose that so that the citizens of your country have the basic, critical information to effectively monitor their own government -- information necessary to effectively monitor government stewardship of their natural resources. That's basically what the EITI initiative is.  It's all about transparency so that companies and governments can be held accountable.

And I would think we would all agree on that. 

I'm proud of the role that the U.S. Helsinki Commission has played on this issue. I have the honor of chairing that commission and we have made the EITI initiative a major priority of our work.  We know if we can get the mineral wealth to the people of that nation that so many of the issues that we are charged to deal with on human rights and the environment and the economy and on security could be dealt with.  If we could just get that wealth to the people of the nation. That's the reason the commission has placed a very high priority in getting more participation by countries around the world into the extractive industries transparency initiative.

That brings me to the Energy Security Through Transparency Act of 2009 that Senator Lugar and I have introduced. It would suggest that the United States should be an implementing country of the EITI.  We should subject ourselves to those provisions that we should lead by example, by showing the United States of America believes that there should be transparency in all the contracts we enter into for extraction of mineral wealth from America. Well, that would require the proper disclosure of payment from companies that use public lands on mineral extractions.

We should have been doing this all along. The public should know what's being paid and what companies get. This is America's wealth. It doesn't belong to any one of us and there should be transparency in it. It's the right thing to do.
          
Another part of this legislation would require companies that are listed on the U.S. Stock Exchange--that are regulated by the Securities and Exchange Commission--to disclose their payments to other countries for the extraction of mineral wealth. In other words, we use the leverage of participating in the U.S. Stock Exchange--the status of a listed security that Americans invest in--so investors will have the right to know what that company is doing in payments to other countries to extract mineral wealth. That at least gives us part of the disclosure necessary to find out what a country which is so poor in the way it treats its people is doing with the moneys that are being paid for the extraction of their mineral wealth. That would go a long way to helping us with transparency.

This legislation would urge the president to work with our partners in the G-8 and G-20 to promote similar efforts by the industrialized nations of the world, so that we can instill more credibility in the EITI. This should be a rite of passage for nations to earn respectability by joining the EITI and ensuring that the contracts that are entered into with that government are shown to the people of that nation.

The bottom line is the Energy Security Through Transparency Act of 2009 is asking the United States to take a leadership position in fighting corruption. Unfortunately, in too many of the developing countries of the world, there is corruption, and you've got to deal with that corruption if we're going to be able to develop the type of relationships we need to help that nation deal with the poverty of its own people and work with us on our international priorities. This will help developing countries.

We give significant financial resources today for humanitarian efforts in these nations. Well, these nations also should use their own natural resources to advance their growth. This is a humanitarian issue and a human rights issue. It will provide economic opportunities for the people in these countries so they can participate in an open way to help their nation solve its own economic problems.

This bill helps us with energy security globally. We can't afford to waste the world's resources, particularly as we consider international problems such as energy security and global climate change. And it certainly helps in removing conflicts in many parts of the world. It's in our national security interest to make the world safer because it's usually the United States that's called upon first to deal with these conflicts. For all these reasons, I urge my colleagues to take a look at the Energy Security Through Transparency Act of 2009 and to join us in moving this legislation forward because I believe it does present great hope for America to lead the world in helping these nations take advantage of their wealth in furthering U.S. international goals.