A GJ Advances article.

Abstract

It is now well accepted that far from being a positive, possessing an oil industry generally has a negative effect on developing countries. ‘Resource curse’, ‘paradox of plenty’ and ‘Dutch Curse’ are related theories explaining oils pernicious effect on economic development. The consensus has emerged that transparency is a key requirement for sterilizing oils propensity to harm developing countries. Momentum to introduce transparency into the international oil industry has increased over the last two years, starting with the signing of the Extractive Industry Transparency Initiative (EITI) in July 2002; this is an agreement among state parties to 'work together voluntarily to develop a framework to promote transparency of payments and revenues'. Other recent developments include the EU amending the 'Transparency Obligations Directive', and introduction into the US senate of two bills to tackle the problem of corruption in oil producing developing states. This convergence of thinking raises the possibility that a new international legal orthodoxy regarding the responsibility to transparency may be evolving.

However, while there is a consensus on the necessity of transparency, a pluralistic contest between a ‘Publish What You Pay’ civil society movement wanting EITI to be mandatory, and the international oil TNCs, which wants industry self regulation, is still being waged. Oil TNCs maintain that modality problems over contract sanctity and the inability of international economic law to provide for a globally level playing field preclude a mandatory approach. The oil TNC’s arguments’ also stem from a fear of an international liability being created if EITI was to morph into international hard law. This seeming impasse is illustrative of an imbalance in the dichotomy of international economic law, as TNCs gain increasing rights without incurring any of the reciprocal responsibilities that constitute a legal system. However, insiders in the international oil industry also admit that 'larger forces at work' are driving the introduction of transparency into the international resource industries. In this essay I will utilize interactional legal theory to both explain these ‘larger forces’ and to analyze the efforts of the PWYP coalition in terms of ‘norm articulation’ and legal regime creation. The essay will also look at the symmetries of interactional legal theory and the institutional economics of Terry Lynn Karl’s ‘Paradox of Plenty’ thesis. Finally the essay will offer a potential treaty solution, combining mandatory and voluntary measures, and examine if the nascent conditions for a customary international law regarding transparency are forming.

Originally published in Global Jurist Advances.

Recommended Citation

Schumacher, Joseph Anthony (2004) "Introducing Transparency into the Oil Industry . The Quest for EITI," Global Jurist Advances: Vol. 4 : Iss. 3, Article 2.
Available at: http://www.bepress.com/gj/advances/vol4/iss3/art2