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Importance of Good Governance to Comprehensive Security

Remarks to the 2014 OSCE Japan Conference on Sharing Experiences and Lessons Learned between the OSCE and Asian Partners for Cooperation in Order to Create a Safer, More Interconnected and Fairer World in the Face of Emerging Challenges

Thank you, Mr. Ambassador, for your kind introduction. It’s a pleasure to be here today. I’d also like to thank our Japanese hosts for their very gracious arrangements for this important conference. I am here on behalf of U.S. Senator Ben Cardin, the Chairman of the Commission on Security and Cooperation in Europe, also known as the U.S. Helsinki Commission. The Helsinki Commission is unique in that the U.S. is the only OSCE participating State to create a distinct governmental agency to monitor member state compliance with OSCE commitments.

One of the key priorities for our Commission is promoting good governance and combatting corruption, and we were pleased to see the tremendous progress achieved in this area in 2012 with the adoption of the Declaration on Strengthening Good Governance and Combatting Corruption, Money-Laundering and the Financing of Terrorism at the Dublin Ministerial. The Good Governance Declaration is comprehensive, laying out a strategy for the OSCE to combat corruption, strengthen civil society development and enforce accountability measures in the public and private sectors. 

The declaration has given some new tools to the Economic and Environmental Coordinator’s office, which plays a critical role in strengthening stability and security in the OSCE region. And last year, the OSCE worked to promote sustainable energy solutions, advocate transparency and accountability, and to build capacity at all levels of society – government, private sector, and its citizens.  These achievements represent a foundation for further enhancing the 2nd Dimension.

The U.S. and the EU have recently enacted laws that address the problem of transparency and accountability in the resource sector. In the United States, these laws were authored by the Chairman of the U.S. Helsinki Commission, Senator Ben Cardin. The laws require companies to publicly report payments they make to governments for oil, gas and mining extraction. The concept is that by injecting transparency into a traditionally opaque business environment, the ability of citizens to better understand the money flows allows them to then hold their governments accountable.

The laws are meant to innovate the way business is done in this extremely important sector by breaking the cycle of instability and poverty in countries suffering from what is often called the “resource curse”. This innovation can help ensure that energy supplies are not disrupted, it gives citizens a tool to fight corruption, and it levels the playing field for companies.

Now that the U.S. and the European Union are implementing these transparency rules, other markets with large resource extraction companies such as Australia and Canada are exploring similar requirements. And we expect that as these rules come online we will see other stock exchanges around the world follow suit.

Corruption and lack of transparency in the extractive industries can fuel instability and even conflict, so it’s not hard to see why this type of transparency is catching on. The news is full of headlines on instability created by resource competition or corruption. And resource rich countries are consistently rated as some of the most difficult places to do business. In almost every case you can trace the root cause to the intractable corruption in that country.

These transparency laws are the game changers that will help tilt the balance of power away from corrupt leaders. Transparency and accountability are going to make the job of extractive companies easier. They will work on a level playing field, they will work with more stable governments, and they will operate in more stable communities.

And the OSCE has a role to play here as well. With the acknowledgment of the importance of combatting corruption in the Good Governance Declaration, the OSCE’s Economic and Environmental Dimension can serve as a valuable platform for increasing stability and security on energy related issues and, in particular, highlighting the link between security, energy, and the environment. As we look toward the Basel Ministerial and the Helsinki+40 process, we must build upon this work and examine how the 2nd Dimension can be further strengthened to advance solutions that build good governance.

One of the ways that we can do this is to more actively engage civil society in the 2nd Dimension. We need to welcome multi-stakeholder groups, business groups and civil society leaders to the Economic and Environmental Forum and the Economic and Environmental Implementation meeting in order to generate greater awareness of good governance initiatives, develop new projects, and assess the effectiveness of participating States in implementing these commitments. 

  Let me close with a comment on Ukraine. I was there two weeks ago to observe the election. Despite the daily reports of violence, what we saw in the conduct of the election makes me hopeful that the newly elected government will be able to move the country forward. But what is painfully clear is that the corruption surrounding Ukraine’s energy sector was a key factor in fueling the protests that eventually led to the downfall of the government. Ukraine is not a big oil and gas producer itself, but it plays a major role as a transit country between Russia and Western Europe. Ukraine has started work on its candidacy for EITI but still has a long way to go so we are encouraging the new government to place a priority on getting that in place.

The broader lesson from Ukraine is that secret deals lead to corruption. Corruption leads to economic stagnation.  Economic stagnation leads to political instability.  Political instability leads to violence and human rights abuses, and even opportunistic violations of sovereignty and territorial integrity.

This is why we need to innovate the way we do business. This is why we need to focus on transparency and good governance. And this is why we need to empower civil society and media to hold their governments accountable. These are all areas where the OSCE has expertise and where the Asian Partners can provide assistance and experience.

Thank you.

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