São Tomé Set to Vote on Unprecedented Oil Revenue Laws
Earth Institute helped African island nation set up legal and governance framework to avoid "resource curse"
August 12, 2004--With its parliament set to vote in the next few weeks on tough new anti-corruption laws, São Tomé and Príncipe could avoid the “resource curse” that plagues many low-income oil exporters, whose newfound wealth often triggers corruption and social conflict.
São Tomé’s new laws, requiring companies exploiting the country’s oil to deposit all payments in secure accounts open to public scrutiny, and requiring that withdrawals from the fund be used for sustainable economic development, were drafted in consultation with a team led by Jeffrey Sachs, director of the Earth Institute at Columbia University. The Sachs team contributed top lawyers and academic analysts to a project funded by George Soros’ Open Society Institute. The new law is already being cited as an example for other poor oil exporting countries to follow.
The goal of Sachs’ advisory project is to help São Tomé and Príncipe withstand the enormous pressures for fraud and abuse associated with oil revenues. “Partly because they are new to oil, São Tomeans don’t have the entrenched interests that can perpetuate corruption,” says William Masters, who managed the project as head of the Center on Globalization and Sustainable Development. “They have been remarkably open, courageous, and thoughtful about setting up the kinds of institutions they need to keep it that way.”
Joseph Bell of Hogan & Hartson, the leader of the legal team, notes that the law takes advantage of new technology to create stronger checks and balances. "The law adopts innovative mechanisms for transparency,” says Bell. “For instance, there will be web access for everyone to the national oil account and all payments into and out of the account. This is the first time that such mechanisms have been employed anywhere. "
In addition to legal advice, the project helped design and run an unprecedented set of town-hall meetings known as the National Forum, through which the country’s often-illiterate citizens could learn about and debate the possible uses of oil revenue. The Forum, which was funded separately by the United Nations Development Programme, can provide another useful precedent for democratic governance in many oil-rich countries.
The project’s strongest international linkage from São Tomé and Príncipe is with Nigeria, as the two countries share the offshore Joint Development Zone where oil exporation is to occur. Last month, the leaders of the two countries pledged a high level of transparency and accountability in the management of the zone, committing themselves to the publication of revenues from each individual exploration contract.
The Center on Globalization and Sustainable Development recently posted a comprehensive website documenting their work in São Tomé and Príncipe, at http://www.earthinstitute.columbia.edu/cgsd/STP.
The Earth Institute at Columbia University is the world’s leading academic center for the integrated study of Earth, its environment, and society. The Earth Institute builds upon excellence in the core disciplines –earth sciences, biological sciences, engineering sciences, social sciences and health sciences –and stresses cross-disciplinary approaches to complex problems. Through its research, training and global partnerships, it mobilizes science and technology to advance sustainable development, while placing special emphasis on the needs of the world’s poor.