Transparency in Extractive Industry Deals?

A deal among EU states, apparently overcoming strong opposition from the oil industry.

This is very good news for two reasons.

It’s no secret that proceeds from the sale of oil, timber, etc, often wind up in the pockets (and offshore bank accounts) of public officials around the world. It would be hard to add up the damage this does – depriving states of revenue they need, undermining the accountability of states to their citizens, exacerbating income inequality, and encouraging officials to countenance environmental costs such as deforestation. The deal could be an important step to bringing those problems under control. For resources on this, see the Tax Justice Network, Econ4, and Publish What You Pay.

The deal is also another indication that governments may be beginning to face up to re-regulating international financial transactions – a host of problems including not only the corrupt relationships over cross-border investments in extractive resources, but also profit-shifting to avoid tax, individual tax evasion, money laundering, and the stability of the banking system. These may seem very different problems, but they are all part of one: the liberalization deregulation of international capital markets over recent decades. This process has coincided with the deregulation of many national financial systems, and has been driven by the same blind belief (this is being kind: it is often an eyes-open self interested belief) that free markets will regulate themselves for the benefit of all. Financial markets, domestic and international, were in many cases regulated reasonably well in the fifties and sixties, and can be regulated again.

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