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Jeremy Weate: EITI to increase confidence in Armenia

 Thursday 24 November 2016
Jeremy Weate
Jeremy Weate
Photo: Mediamax

Jeremy Weate

Photo: Mediamax

Extractive Industries Transparency Initiative (EITI) is a coalition of the government, private mining organizations and civil society, aimed at improving open and accountable management of the revenue from natural resources.  

The Armenian government expressed the commitment to sign up for EITI in 2015. Nevertheless, to become EITI country, Armenia needs to become a candidate first, then compliant country and then only EITI member.

Leading expert at Adam Smith International consulting company Jeremy Weate has recently been on a visit to Yerevan, financed by Embassy of the United Kingdom of Great Britain and Northern Ireland in Armenia. He provides consulting support for a number of representatives from public and private sectors, as well as civil society (multi-stakeholder group) with the aim of helping them present a relevant application for becoming EITI member state. Mediamax talked to Jeremy Weate.

-What will Armenia benefit from EITI ?

- EITI is a global initiative, which currently involves more than 50 states. The EITI was created on the initiative of former Prime Minister of UK Tony Blair in 2002 within the frames of Summit on Sustainable Development in Johannesburg.

EITI is an international standard, aimed at improving transparency and accountability of revenues from natural resources, while highlighting the government’s revenues and tax payment of organizations in gas, oil and mining industries.   

The Armenian government announced in 2015 Armenia’s determination to join EITI. Nevertheless, to become EITI state, Armenia needs to become a candidate first, then a compliant country and then only EITI member. Candidate status means EITI is in the phase of implementation, yet not all requirements are satisfied. According to the experts, investment attractiveness of Armenian mining industry can significantly improve even with its candidacy. The international body will consider in March, 2017 Armenia’s application on becoming a member state, after which the country will have 18 months to prepare its first report. This report is necessary to become EITI compliant state.

The initiative will help increase the confidence of investors and financial structures in Armenia, while showing that the government is open and transparent. I would like to single out several more advantages: the initiative helps the government advance anti-corruption programs, reveal unpaid taxes, get a more thorough understanding of mining industry and think about new opportunities.  

- You have been training multi-stakeholder groups these days. Who is involved in a group and what goal does it pursue?

- The most important precondition for Armenia to become EITI member is establishing the coalition of the government, private mining organizations and civil society, as well as their joint operation.

The group will work on the annual report, which will reveal tax payments by mining companies and other financial flows. This information will allow it to show the amount of the government’s revenue from natural resources and the direction, in which those means where spent, as well as other core issues, relating the sphere.

The group will elaborate work plan and relevant application for becoming EITI candidate country, based on the successful experience of a number of other states. The program will basically contribute to Armenia’s EITI Candidature.

- Which is the role of society in the EITI process?

-While EITI membership offers investments and credit funds for the government and private sector, a number of social layers may speak fundamentally against EITI processes, unless the improvements are implemented in the given sector.

The society is an eligible entity in this case; the multi-stakeholder group cannot make any decision without the approval of representatives from civil society. If the society finds that its position is not taken into account or does not get due attention during approval or implementation of the work plan, it can as well suspend its participation in EITI processes or simply refuse to approve the work plan. The process will be failed anyway. Investment and credit funds, which the government might gain owing to the membership, will also be suspended in this case. In a word, the society’s positions within the frames of this initiative are quite strong.

If there is corruption in the sphere, EITI gives the opportunity to reveal it and minimize similar risks. Nevertheless, it is up to the country how to deal with corruption disposure cases. EITI uncovers corruption, but it is not officially an anti-corruption initiative. The country is also free to determine the adaptation level and format of the initiative.   

Narine Daneghyan talked to Jeremy Weate

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