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Dear Reader,
The idea for the Caspian
Revenue Watch germinated in 2001 out of concern that petroleum
development in the Caspian region could undermine rather than
promote the goals of the Open Society Institute: the establishment
of open societies that provide real opportunities and protections
to their citizens. The goal we set for the Caspian Revenue
Watch was to promote transparency and accountability in the
hydrocarbon sector in these countries and to give citizens
an opportunity to study and shape how revenues from this sector
would be used for their country's development. Subsequent
events, such as the Enron corporate accountability scandal,
investigations into oil deals that may have violated the Foreign
Corrupt Practices Act, and the invasion of Iraq and reconstruction
of its oil regime, have all demonstrated that much work remains
to be done in improving the transparency of revenues generated
by the extractive sector.
Through its research and other activities,
the Caspian Revenue Watch program aims to empower citizens
of Azerbaijan and Kazakhstan to hold their governments accountable
in how petroleum revenues are used. The research provided
in Caspian Oil Windfalls:
Who Will Benefit?, which
will also be available in Russian and Azeri, provides readers
in these countries with a basic understanding of the opportunities
and challenges in their country's management of petroleum
earnings. A related campaign supported by the Open Society
Institute, Publish
What You Pay, seeks a legal
framework to require energy companies to disclose all payments
made to host governments where they extract resources. Caspian
Revenue Watch will work with local groups to help them analyze
the information about payments that companies disclose.
Azerbaijan and Kazakhstan are in transformation.
Not only are they becoming increasingly dependent on petroleum
earnings, but they are also undergoing political and economic
change. As former Soviet republics, they now face the challenge
of building the needed infrastructure for operating a modern
democratic state and market economy. There is a danger that
petroleum earnings may dampen the countries' incentive to
implement needed reforms in their political and economic systems.
At the same time, the influx of foreign exchange from the
sale of oil and gas means that international donors will play
a smaller role in helping to encourage and shape the necessary
reforms. It is important that the international community
act now to ensure that oil windfalls are used for the benefit
of the public in Azerbaijan and Kazakhstan.
While the book focuses on Azerbaijan and
Kazakhstan, the lessons and recommendations it provides have
wider relevance. As the United States seeks to diversify energy
supplies, it is increasingly looking to suppliers in West
Africa, Latin America, and the former Soviet Union. Many of
the target countries are ones that suffer from poverty, corruption,
authoritarian rule, and a legacy of civil war. In order to
ensure that these countries can be reliable suppliers of oil,
it is important that they be able to translate oil wealth
into improved lives for their citizens. The recommendations
provided in Caspian Oil Windfalls provide a good start
in thinking about how to do this.
-Anthony Richter, Director, Central
Eurasia Project, Open Society Institute
May 2003
Go
to Caspian Oil Windfalls: Who Will Benefit? Book and
Overview
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