by Saipira Furstenberg , Marie Curie Fellow at the Research Centre for East European Studies, University of Bremen
Executive summary
The paper evaluates the functioning of global standards arrangements in autocratic contexts. Through the case of an international governance initiative the Extractive Industries Transparency Initiative (EITI), the paper investigates how the standardised practices of global governance arrangements are implemented in post-Soviet state autocratic state of Kazakhstan. In doing so the present paper analysis the transnational character of the initiative and how it operates within the recipient country. The findings of the EITI in Kazakhstan illustrate, that domestic context and regime type influence the operationalisation of the initiative. The paper argues that the adoption of EITI standardised requirements follow a specific internal logic that disconnects from its initial purpose. The paper as such urges scholars and policy advisers to further investigate on how global governance arrangements transcend at domestic levels this particularly within autocratic regimes. The paper draws its analytical findings from interviews and survey analysis conducted in Kazakhstan in 2015.
Introduction
The EITI is the leading global standard on revenue management transparency in the extractive sector which has for objective to combat corruption and promote transparency and accountability standards in the sector of extractive industries, in particular within resource cursed countries. Formulated as a voluntary public private partnership, the initiative brings state, civil society, donor organisations and extractive industries under its institutional umbrella.
Among the countries that have implemented the initiative, a large part are resource cursed and greatly lack transparency. Extensive research has been carried out about EITI and its capacities to promote transparency in the extractive sector (Aaronson, 2011; Oge, 2014; Sovacool and Andrews, 2015). Rather than focusing on EITI transparency and its effects on curbing the resource curse, the present paper analyses the transnational character of the initiative and how it operates within the recipient country. Through the case of Kazakhstan the paper examines how domestic conditions shape the functioning of the initiative.
This study draws its analytical insights from a series of semi-structured elite interviews conducted with members of the EITI in Kazakhstan. The interviews were conducted in the cities of Astana and Almaty in May and June 2015. In Kazakhstan 12 interviews were taken, among them 11 were tape recorded and one was not. Elite interviews were conducted with members of the civil society, donor agencies, state officials, and members of the extractive industry. In addition many unofficial discussions were held with key stakeholders involved in the EITI coalition. The research also used opinion poll survey analysis. The survey was conducted in October 2016 in the 14 provinces of Kazakhstan and the cities of Astana and Almaty. The sample of the survey consisted of people over 18 years of age from 2000 households. The margin of error was ±1,99%. However, it is important to note that, because the author was not able to administer the survey himself, the responses of the survey should be handled carefully. The survey is largely used as an indicative tool to corroborate interview findings.
Kazakhstan at a glance
In the last decades the growth of the country’s GDP has been primarily fuelled by the petroleum sector. In the year 2015, oil and gas sector formed 30% of Gross Domestic Product (GDP), 70% of exports and 20% of budget revenues (UK Government, 2016). The role played by the natural resource sector in Kazakhstan is trivial as it not only insures the well-functioning of economy but also guarantees the survival of the regime in place. The presidential family and its circle are the major actors dictating the politics of the natural resource sector. In this regard, the relationship between the petroleum industrial sector of Kazakhstan and the political sphere are very tightly intertwined in state-society relation. High levels of corruption and weak system of state resource management that profits a narrow circle of government officials suppressed the sharing of the resource rents with wider population discourage the development of such enterprises. In this context, the development of the Extractive Industries Transparency can be seen as an important step towards improving transparency and resource sharing with the wider segments of the population.
The implementation of EITI in Kazakhstan
In line with the requirements of the EITI initiative, Kazakhstan has created a multi-stakeholder group (MSG) composed of government officials, industry representatives and non-governmental organizations. The country submitted national reports to EITI since 2005, with the most recent covering 2014. At present, the EITI implementation in Kazakhstan is coordinated by the Ministry of Investment and Development under the Committee of Geology and Subsoil Use. It is further overseen by a Supervisory Board and the National Stakeholders Council (NSC), an EITI MSG whose membership is represented by civil society, state, and extractive industries. In addition the EITI NSC in Kazakhstan also includes members of the national parliament.
The current framing of the EITI as multi-stakeholder group reflects a tightly controlled state-build design that embeds crystallisation of different strata of the population and social hierarchies. Clearly the EITI platform is symbolically used to legitimise state interests and consolidate authoritarian practices of the regime. As such, although in practice and formally EITI is designed as an MSG, in reality its functioning is highly centralised within the state apparatus.
EITI MSG Organisation in Kazakhstan
The present format of the MSG demonstrates that the each unit of actors’ degree of autonomy is limited as their decisions and activity are performed under the watch of the “invisible” centralised authority of the state. In Kazakhstan, parliamentarians are key players in the EITI multi-stakeholder group. The parliamentary body is responsible for monitoring the implementation of the EITI with national legislations. However, since the MSG is appointed by the government, the representation of the EITI MSG runs the risk not to be based on broader national interest, but rather on the interests of the narrow elite, leaving the population aside. Such conditions further compel us to question what role (if any) EITI non-state actors play?
Civil society in EITI Kazakhstan is represented through Civic Alliance of Kazakhstan, civil society members from the coalition on “Oil Revenues under the Public Oversight”, Society of young professionals of Kazakhstan, Union of civil society from the Southern oblasts of Kazakhstan, Independent confederation of Unions from the Aktobe oblast. Civil society such as Civic Alliance of Kazakhstan are largely pro-government and hence their role is largely contained within the government framing. Such associations can become an ‘iconic partnership’ or an alternative way to expand the government’s voice.
Interviews with the members of the EITI coalition and independent experts indicate that civil society within the EITI lacks of technical expertise and knowledge to understand the companies’ financial reporting even at an essential level[1]. Moreover, population is largely marginal to the EITI process. Such issues raise further questions on how civil society represents the demands and concerns of the population for effective resource sharing. Until 2014, information was not available on paper nor on online platforms and was only present in major cities and hardly reachable in rural areas[2].
Moreover the EITI field work observations demonstrate that the tightening up of the authoritarian practices in Kazakhstan has ultimately affected the behaviour of the donor agencies. Donor agencies are more cautious on their collaboration with civil society as this also impacts their interaction with the state and their activities in the country. Their role as agents for the promotion of democracy in Kazakhstan has been replaced by social partnership, state collaboration, and capacity building discourse. External actors such as donors can play an important role in further promoting accountability of the government. However, donor’s cautious approach risks to legitimise the current autocratic practices of the regime and further undermines the value of the EITI objectives. In concentrating efforts on technical sides and shying away from their advocacy goals, donors indirectly contribute to consolidate authoritarian practices and shield autocratic leaders from accountability.
Companies in the EITI are represented through KazEnergyAssociation. KazEnergy Association unites more than 50 large oil-gas and energy companies operating in Kazakhstan. The chairman of the KazEnergyAssociation is Timur A. Kulibayev who is also the son-in-law of Nazarbayev. At the same time Timur A. Kulibayev is also a member of the Board of Directors of the National Welfare fund “Samruk-Kazyna”.
Within the EITI coalition the status of KazEnergyAssociation raises potential for conflicts of interests as 1) being government’s authority; 2) representing body of all the companies involved in the EITI and 3) representing the interest of the national oil fund Samruk-Kazyna and state-owned company KazMunayGas. As such one can clearly see that rather than representing the interests of the companies, it represents the interests of the state. By appointing family members and members of the state-run company to the board of KazEnergyAssociation, Nazarbayev’s regime maintains a full control over energy operations in the country. As a consequence, this leaves little room for the international companies as their operations are significantly tied up to the state demands in order to continue their business in the country.
Implications
The analysis of Kazakhstan further shows that while global governance imposes and provides a standardised template, it does not stop its recipients to reinterpret and recreate their own agendas within the framework of provided global governance. Domestic institutional structures of the regime subvert the effective functioning of the initiative and in doing so enable the autocratic leader of Kazakhstan to bypass international transparency requirements laid down in the EITI. Clearly local context such as domestic regime type, level of economic development and configuration of domestic intuitions constitute an important determinant in the functioning of the global governance initiative. In this regard, the study demonstrates that processes and effects from global to local nation states are not unidirectional but they are rather shaped and remodeled by the recipient nation-states. In doing so this study depicts a mismatch between the international global governance rule setters and the recipient states as rule followers. In light of these observations, the paper urges scholars and policy practitioners to more thoroughly take into account the context in which global governance takes place. Clearly as the analysis of EITI in Kazakhstan demonstrates, the adoption of the Initiative does not mean norm compliance in practice. Further research is needed to examine what global governance aims can be achieved in particular in oppressive contexts, and how its success or its failure can be defined.
Sources :
Aaronson, S. A. (2011) ‘Limited Partnership: Business, Government, Civil Society, and the Public in the Extractive Industries Transparency Initiative (EITI)’, Public Administration and Development, 31, 1, pp. 50–63
Oge , K. (2014). “The Limits of Transparency Promotion in Azerbaijan: External Remedies to ‘Reverse the Curse’” . Europe-Asia Studies, 66(9), 1482-1500
Sovacool B. and Andrews, N. (2015). “Does transparency matter? Evaluating the governance impacts of the Extractive Industries Transparency Initiative (EITI) in Azerbaijan and Liberia”. Resources Policy, Vol. 45, pp.183-192.
UK Government (2016). Department for International Trade. Doing business in Kazakhstan: Kazakhstan trade and export guide. [Online]. Available at: https://www.gov.uk/government/publications/exporting-to-kazakhstan/exporting-to-kazakhstan [Accessed: 12 August, 2016]
Interview notes in Kazakhstan
Author informal interview with an employee of BG Group Kazakhstan, 4 June 4, 2015, Astana.
Author informal interview with the employee of the Friedrich Eberti Foundation, 2 June 2, 2015, Almaty.
Author informal interviews with the employee of KazTransOil, 15 June 15, 2015, Astana.
Author informal not recorded interview with EITI NSC Secretariat, Astana, 10th of June 2015.
Author interview with a World Bank official, 29th of June, 2016, Skype meeting Brussels.
Author interview with Managing Partner of Parlink Consulting /Oil and Gas, 29 April 29, 2015, Paris.
Author interview with Soros employee, Almaty, 2 June, 2015.
Author interviews with a member of the EITI coalition of the Company North Caspian operating company, 5 June 5, 2015, Astana.
Author’s interviews with a member of the EITI coalition KazEnergy Association, 5 June 2015, Astana.
Author Skype interview with member of the EITI civil society coalition, 15th June, Astana.
Author Skype interview with representative of Soros Foundation, 17 June 17th, 2015 Astana.