8, February, 2013

Brazil: No Easy Miracle – Increasing Transparency and Accountability in the Extractive Industries

The future of many resource-rich countries no longer rests mainly on foreign aid but on the extent and effective use of the country’s own resources and how they use them. For that to occur, a focused and concrete approach to improve governance and accountability is critical.

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Brazil’s consolidation as an emerging economy is not easily attributed to any political or economic miracle. Brazil has consciously adapted a large part of its commercial and financial strategy to changes in the global arena. As worldwide demand has grown for raw materials—especially for single-crop agriculture, oil and minerals—Brazil’s growing economy has become increasingly dependent on the export of commodities.

Mining and oil activities in Brazil are growing fast. Brazil is currently a major global player in the extractive industries, especially through Vale in mining and Petrobras in oil and gas. Rapid changes at the national level have not been accompanied by equally rapid policy developments to ensure access to public information, which would permit greater control over common resources and goods by the active global citizenry. New legislation for the mining and oil industries is being passed with little or no debate by Brazilian society.

As major companies such as Vale and Petrobras have strengthened Brazil’s position as one of the world’s leading oil and mineral exporters, there has been no forum for debate on the implications of this trend for health, environment, marine flora and fauna, employment, or impacts on life in affected communities. A debate on transparency and accountability is urgently needed in Brazil, together with the ability to imagine a different society, one that avoids the exclusion, marginalization and destruction of communities and nature.

Fortunately, there is an enormous network of social and political actors working on the issue: universities, NGOs, social movements and even agencies and institutes of government ministries. There is also a clear geographic focus for advocacy work: because Rio de Janeiro State and certain Amazonian states (Pará) have the largest volumes of oil and gas extraction, together they form a strategic area for work on extractive industries in Brazil. A strategy to increase transparency and accountability in Brazil’s extractive sector could begin with Petrobras and an international consortium of NGOs implementing the ISO 26000 international standard for social responsibility. This standard, together with the Social Balance Sheet developed by the Brazilian Institute of Social and Economic Analyses, could serve as the foundation for a binding law for the entire extractive industry.

Brazil would benefit from the creation of a multi-stakeholder group that included civil society and corporations that could produce national reports on the extractive industries and social responsibility. Civil society initiatives should be strengthened, especially by forming common networks that can contribute to the creation of an overall strategic vision, both within Brazil and internationally—especially in connection with Africa and Latin America.

It would be useful to promote a political entity through which the Brazilian government could formulate transparency and accountability policies, creating mandatory reports on all overseas payments and projects by companies whose stock is listed on the stock exchange. And since the legislative debate is currently focused on the collection of revenue, it would be strategic to introduce transparency and accountability criteria into the debate on the mining code and royalties from oil extraction.


Author: Carlos Aguilar Sánchez
Orginal publication date: 2012
Publisher: Revenue Watch InstituteThe Transparency and Accountability Initiative


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