Wednesday

28th Sep 2022

Sarkozy, Barroso back greater transparency for extractive industry

French President Nicolas Sarkozy has called on the European Commission to come forward quickly with legislation to regulate the commodities and raw materials sectors, warning that high prices are threatening global economic growth.

Paris has placed the subject high on the agenda of the group of twenty nations (G20) which it currently chairs, with Sarkozy keen to see movement from other regions before a leaders' meeting in Cannes this November.

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  • Commission proposals this October will force oil companies and others to publish more financial data (Photo: Paul Lowry)

Economists first became aware of the dangers of higher commodity prices almost forty years ago during the first oil shock, Sarkozy told delegates at a commission-organised conference in Brussels on Tuesday (14 June).

"Today, that threat has become reality," added the French president who is hoping G20 success will boost his chances of re-election next May.

Greater production levels, increased transparency of markets and tighter rules surrounding commodity derivatives are among the issues being pushed for by the Elysee Palace, in order to tackle the high prices currently seen for oil, food and key metals such as copper.

Many of the subjects were addressed in a commission strategy paper published in February, but Paris is impatient to see legislative proposals put on the table.

Several delegates at Tuesday's meeting warned however that placing an excessive strait-jacket on commodity markets could exacerbate price volatility rather than reduce it, with European Commission President Jose Manuel Barroso aware that not all EU governments share Paris' viewpoint on the subject.

Barroso said the commission will publish new rules this autumn that will force European companies in the extractive industry to disclose greater amounts of financial information, including the amount of money paid to governments where they do business.

NGOs say this country-by-country financial reporting would help resource-rich African countries increase their take home taxes, for example, and enable citizens to hold governments to account for the drilling or mining royalties they receive.

"The commission will publish proposals in October, including the obligation on companies to publish information on their activities," Barroso told the conference.

"That is essential to fight the corruption which is seen in some trades. I would appeal to all partners to follow the same approach. Only co-ordinated global action will produce a real solution."

European companies are known to be scrambling to prepare a common position ahead of the commission's publication, with a group likely to support plans for a voluntary code - the Extractive Industries Transparency Initiative (EITI) - to be made mandatory.

Anti-poverty advocacy group ONE is among those who argue such a move does not go far enough.

"Today's strong speeches from Presidents Barroso and Sarkozy outline how fundamental transparency has become to the debate," said ONE's Brussels office director, Eloise Todd. "The murky deals between extractive companies and despots must become a thing of the past.

Euro-deputies warn however that much will be decided by the nature of the commission's publication this October.

In a letter to EU internal market commissioner Michel Barnier last week, Green MEPs Philippe Lamberts, Sven Giegold and Pascal Canfin backed a review of the EU's accountancy directive.

"This would ensure equal treatment between listed and unlisted companies, the latter not being subject to the [EU] transparency directive," reads the letter.

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The DRC's Virunga National Park is teaming with wildlife but also sits atop huge oil deposits, traditionally a magnet for corruption in parts of Africa. New EU legislation covering the extractive industry may help.

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