Dear Editor,
On Feb 3, 2017 President Trump signed the executive order ‘Core Principles for Regulating the United States’ Financial System,’ which is his way of ‘doing a big number’ on the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 2010 legislation that followed the 2008 financial crisis and ‘great recession.’ Section 1 (d) of that order enunciated the principle that “American companies … be competitive with foreign firms in domestic and foreign markets.”
Former CEO of ExxonMobil, Secretary of State Rex Tillerson, took public issue with Section 1504 (the so-called Cardin-Lugar amendment) of the Dodd-Frank Bill, citing in particular the competitive disadvantage that American oil companies would face if they had to make project-level disclosures to the Securities and Exchange Commission (SEC) of all the payments they make to foreign governments. The natural question is whether Mr Tillerson would use the excellent opportunity he now has to push for the repeal of Section 1504, even though both the EU and Canada have since enacted similar legislation, thereby ensuring that most non-American oil companies (including Russian ones) now have to make similar disclosures.
Fuelling local expectations of an oil economy in the near future, officials of the US Embassy in Georgetown have not hesitated to comment publicly on oil-related issues here, so any reticence on their part would be considered, at least by me, to be a calculated and deliberate attempt to reassure ExxonMobil that American oil-related interests are first in its list of priorities when dealing with the Government of Guyana. It would however be useful to know if Energy Governance and Capacity Initiative (EGCI) support for the Extractive Industry Transparency Initiative (EITI) would be affected by the new executive order signed by President Trump. The EU and Canadian officials here may now want to reassure Guyana that they see the risks posed by the said executive order, and are ready to do what is necessary to strengthen the EITI process in Guyana ‒ not that this will be of much help as the EITI is a voluntary mechanism that doesn’t place any legal obligations on any party in the oil and gas sector.
Oil companies and host governments can cooperate to achieve any desired objective, the EITI notwithstanding. Foreign oil companies have been known to make payments that have been used to finance the escalation of conflict in Africa and maybe elsewhere. Where there is oil, there is often conflict, even if the potential for conflict was low before the oil revenues began to flow. Section 1504 of the Dodd-Frank Act was passed in part because of an explicit recognition of this phenomenon, which is part of the so-called Resource Curse.
Even if there is silence from other quarters, however, the Ministry of Natural Resources would no doubt assure us that it is following closely the implications of President Trump’s order for Section 1504; and that the local EITI process will compensate for any ensuing legislative changes. As always, however, it will be a matter of trust, not official statements.
Yours faithfully,
Thomas B Singh
Senior Lecturer
Dept of Economics UG
