Extracting Transparency

David L. Goldwyn

The construction of energy infrastructure in the developing world, from oil pipelines to power plants, is a lightning rod for international and domestic criticism. Critics fear that governments will steal natural resource wealth, disregard the environmental impact of pipelines or other extraction methods, destabilize neighbors with their new wealth, or stir domestic unrest over allocation of resource revenues.1 Although these problems are indeed real and recurrent, the true fault lies with bad governments and bad governance, not with the infrastructure itself. Nevertheless, the need to create wealth in the developing world and to deliver energy to the two billion people who lack access to electric power is greater than ever. Public policy should, therefore, be aimed at encouraging or obliging nations rich in non-renewable resources to commit to transparency in public finance.2 This would include publishing the sources and amounts of government revenue, disbursement, and borrowing practices.3

In this issue, our authors examine the impact of energy infrastructure on political stability. Aude Delescluse looks at the landmark Chad-Cameroon pipeline to assess whether the World Bank-monitored framework for channeling Chad's oil revenues into economic development can be a model for other nations. Toufiq Siddiqi examines the potential for new oil and gas pipelines across South Asia to forge integration in a region historically beset by deep distrust between neighbors. Fiona Hill looks to the Caspian region and the new oil and gas pipelines from Baku, Azerbaijan to Ceyhan, Turkey to assess whether new infrastructure built by Western companies will be a springboard for the development of these nations or a magnet for internal rivalry over the allocation of hydrocarbon revenues. Edward Chow examines Russia's rapid rise as an oil power and the evolving tensions between the government's monopoly on transportation infrastructure and the desire of Russian and international companies to ensure they can export the oil they produce.

In each case, new energy infrastructure is viewed as a potential financial cure for nations that need revenue to alleviate poverty. Yet, in each case, distrust of national governments or deep disagreements among the governed both challenge the ability of private actors to build and operate the infrastructure in question, and create potential for new wealth to become a source of conflict in itself. For any civil society to have informed views about the costs and benefits of energy infrastructure, and the wealth it can create, governments must be transparent about the wealth that can be obtained and how it will be spent. For this reason, this article addresses this fundamental concept of transparency.

David L. Goldwyn is President of Goldwyn International Strategies, LLC. He was Assistant Secretary of Energy for International Affairs in the second Clinton Administration.