A French Cure for the Resource Curse

NEW YORK – The campaign to ensure that companies engaged in extractive activities disclose all of their payments in their host countries is gaining momentum – and France is leading the effort. President Nicolas Sarkozy should be applauded for supporting a new initiative promoting strict transparency standards for petroleum, gas, and mining companies listed on European stock exchanges.

France, at the heart of the European Union and President of both the G-8 and G-20 this year, is in an exceptional position to encourage such a regulatory move. With French leadership, 2011 offers a golden opportunity for the most important capital markets to adopt clear, precise rules requiring full financial disclosure by extractive-industry companies to governmental authorities.

Oil, gas, and mining generate billions of dollars per year for governments and companies. Moreover, these industries often play a central role in the economic development of resource-rich countries. Yet, despite great natural wealth, a majority of people in these countries lives in poverty.

The actual taxes and payments made by mining, oil, and other extractive-industry companies to governments are usually a well-kept secret, even though most of these governments claim to use the revenue for the public good. In reality, in far too many countries, ordinary citizens do not benefit from any of this money; in fact, they must bear the brunt of the environmental and social costs imposed by mining and drilling operations.