Co-Chair Nadhim Zahawi asks Clare Short to take action over missing Kurdistan Report

Clare Short
Chair, Extractive Industries Transparency Initiative

6 April 2013

Dear Clare

I am writing on behalf of the APPG on the Kurdistan Region to ask you to take action in relation to the oddly censored section on the Kurdistan Region that should have appeared in the recently released EITI report, which you helped launch in Baghdad.

The decision, in 2008, by the then federal deputy prime minister, Barham Salih, that Iraq wished to comply with the EITI to embrace transparency concerning the flows of oil and money was a major breakthrough, as I am sure you will agree.

You will also recognise that commitment to the goals and principles of EITI is enshrined in the Kurdistan Region’s Oil & Gas Law of 2007.
Sadly, the first annual EITI report on Iraq in 2011, covering revenues for 2009, excluded production and export revenues generated in the Kurdistan Region, including oil exported via the state-owned oil marketing outfit, Somo.

I understand that with the support of the World Bank and the international EITI secretariat, the KRG agreed to work with the EITI Iraq branch (IEITI) to produce a report covering revenues for 2010 that reflected the legal, fiscal and structural realities of the oil, gas and mining sectors in Iraq.

It was agreed with EITI by all parties (including representatives of the federal Ministry of Oil and Somo) that a separate chapter on the KRG would be included in the main Iraq report.
The reporting team led by the Ministry of Natural Resources and the KRG Office for Government Integrity became fully engaged, and despite the lack of EITI guidance or training — and working under severe time constraints — it produced a comprehensive chapter covering the activities of the Kurdistan oil and gas sector in 2010. It was the first time such a report had been produced.

The KRG’s contribution to this transparency process was vital to the EITI Board’s designation of Iraq as EITI Compliant on 12 December 2012. Eddie Rich, EITI’s deputy head and regional director of Southern and Eastern Africa and Middle East, wrote to the KRG praising its contribution to the 2010 report. “The commitment of the KRG to publish and participate was very important in this decision. You too are to be congratulated. I hope the 2010 report will give the fuller picture.”

In its decision, the EITI Board, comprising members from governments, companies and civil society, reminded IEITI that: “In accordance with the EITI Rules, Iraq is required to include all material revenue payments in their EITI reporting… To this end, the Board requires the inclusion of oil and gas production in the Kurdistan Region and sales revenue to the Kurdish Regional Government to be addressed in the 2010 EITI report.”

In addition, the KRG made a strong but unsuccessful recommendation for the report to include details of Iraq’s domestic refining and fuel consumption.
However, at the launch of the report in Baghdad yesterday (to which neither the KRG nor the senior supervising World Bank official was invited) the IEITI council presented a document from which the figures on the Kurdistan Region had been unilaterally removed.

I agree with the KRG in arguing that this underhand tactic has set back the cause of transparency for the Iraqi people. It has also damaged the reputation of EITI for not ensuring impartiality in the revenue reporting process.

Regrettably, it appears that a process supposed to promote transparency has been lost in the fog of political manipulation by some officials in Baghdad.

The KRG tells me that it remains committed to the goals and principles of EITI and in the cause of full transparency has decided to publish the deleted chapter on its website.

The KRG believes the issues surrounding transparency in Iraq’s petroleum and mining sector are too important to be left in the hands of politically motivated individuals.

I am pleased that the KRG has decided, to ensure no such repetition of this unfortunate incident occurs, that it will seek to engage a reputable third-party organization to engage with stakeholders in Kurdistan Region and oversee the production of a full and uncensored KRG oil and gas transparency report that will bear scrutiny under the guiding principles of EITI.

In the meantime, I would be very grateful if you could explain how the EITI has allowed this to happen and to urge you to take action to ensure that it is not repeated.

Yours sincerely

Nadhim Zahawi MP
Co-Chair APPG Kurdistan Region

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