May 30, 2001
The Honorable Richard Cheney
Vice President of the United States
The White House
Washington, DC 20501
Dear Mr. Vice President:
Human Rights Watch is seriously concerned about the implications the Administration's recently released energy strategy may have for the protection of human rights in energy producing nations.
Appropriately, the report of the National Energy Policy Development Group analyzes the impact of energy development on the environment. Remarkably, the report's 170 pages and 105 recommendations do not once acknowledge the impact energy development may have on human rights.
The world needs to hear that when it comes to advancing human rights, the United States will not give oil and gas producing countries a pass.
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On the contrary, the report suggests making energy security an even greater priority in U.S. relations with some of the worst violators of human rights around the world, while proposing no strategy to keep necessary oil investment from perpetuating dictatorships or fueling conflicts, as it has in countries such as Angola, Nigeria, Sudan and Iraq.
The omission of human rights considerations from a global U.S. energy strategy might have been understandable a few decades ago. Today, given the repression and violence that has so long been evident in so many energy-producing nations - in some cases aggravated by oil and gas discoveries -- the omission is troubling. We hope the President will take steps to correct it. The world needs to hear that when it comes to advancing human rights, the United States will not give oil and gas producing countries a pass.
Let me summarize our specific areas of concern, as well as our recommendations.
Misuse of Oil Revenues
The misuse of energy revenues by abusive governments is a problem that plagues this industry globally. Undemocratic and abusive governments have little incentive to use the wealth that energy development generates to become more democratic, transparent, or accountable. Rather, the wealth created by energy reserves yields an enormous incentive to consolidate power and drain public funds for personal gain.
For this reason, we commend the energy strategy for recognizing the need for "more transparent, accountable, and responsible use of oil resources" in Africa. We are troubled, however, that this statement in the report applies only to Africa, and only in the context of enhancing "the security and stability of investment." This approach suggests that corruption is not an issue in other parts of the world, and ignores the detrimental impact it also can have on human rights and democratic development - something for which there is ample evidence in the State Department's own annual Human Rights Report.
The autocracy of Azerbaijan, for example, which is positively featured in the energy report, is among the five most corrupt nations in the world, according to Transparency International. The Azerbaijani leadership has maintained its grip on power - and control over energy revenues - by stifling dissent and rigging elections. Kazakhstan, also highlighted in the report, is another prime example of the connections between energy development, corruption, and political repression. On June 12, 2000, the United States Department of Justice wrote to Swiss Authorities requesting information regarding the "alleged use of U.S. banks to funnel funds belonging to certain oil companies through Swiss bank accounts and shell companies in Switzerland and the British Virgin Islands for ultimate transfer to present and former high-ranking officials of Kazakhstan." At the of time these alleged transactions, President Nursultan Nazarbayev was consolidating his authoritarian control over Kazakhstan's political and economic life, undermining freedom of speech, assembly, and association, and granting himself lifetime powers and immunity from prosecution.
The question is not whether energy companies should do business in these countries, but whether their engagement yields repression or progress for ordinary citizens. At the least, basic standards of transparency and respect for human rights should be an important condition for any financing for energy development that the U.S. government approves or supports through the U.S. Export-Import Bank, the Overseas Private Investment Corporation, the World Bank or regional development banks. The energy strategy should also insist that the U.S. Foreign Corrupt Practices Act be rigorously enforced. It should support audits of opaque oil-rich states by the International Monetary Fund. It should urge governments to make their revenues, budgets and expenditures publicly known. And it should endorse the use of human rights impact assessments for future energy projects.
Corporate Responsibility
It is regrettable that so many of the world's energy reserves are found in repressive societies. That is all the more reason to insist that corporations adhere to the highest human rights standards when doing business in such societies. Yet the energy strategy does not acknowledge this. Indeed, it even neglects to mention existing U.S. initiatives to promote corporate responsibility in the energy sector, including the Voluntary Principles on Security and Human Rights, which the governments of the U.S. and U.K. developed last year along with several multinational energy and mining companies and non-governmental organizations.
Does the Administration remain committed to these principles? Will it promote their observance by U.S. companies in areas of new energy development, such as Equatorial Guinea and the Caspian region? Will it make Export-Import Bank and OPIC financing contingent on adherence to such standards, so public funds do not subsidize complicity in human rights abuses? Will it insist that public security forces guarding company employees and energy infrastructure respect human rights while providing protection? Will it encourage other nations to insist on similar standards for their energy companies, so that responsible U.S. firms are not undercut by laggards elsewhere? If the answer to these questions is yes, the Administration should make that clear. Otherwise, it risks sending a signal that corporate complicity in human rights violations is an acceptable consequence of accelerated energy production.
Sanctions
Human Rights Watch does not believe that economic sanctions are always the appropriate response to human rights violations around the world, and we do not object to a review that evaluates the likely effectiveness of current U.S. sanctions in achieving their goals. We would, however, object to an approach that requires the United States to weigh profit against principle each time it decides whether to sanction egregious violators of human rights.
When the Administration proposes giving greater weight to energy security in a comprehensive review of all U.S. sanctions, does that mean it will give less weight to human rights in deciding policy toward countries such as Sudan, where energy revenues help an abusive regime to remain in power, or Burma, where forced labor is used on a massive scale to build the infrastructure for foreign investment? The energy report is not explicit on this point, but it offers no reassurance. Absent clarification, we fear that is the conclusion others - including these regimes themselves - may draw. As currently drafted, a strategy designed to reduce U.S. dependence on foreign oil instead risks increasing U.S. deference to foreign despots.
Such an approach would be wrong, particularly with respect to energy producing nations, because energy revenues (unlike broader trade revenues) typically accrue directly to governments -- and because some nations have committed serious human rights violations to protect energy infrastructure or to suppress criticism of energy companies. Ironically, it would not even take the long-term interests of energy investors fully into account. For oil and gas extraction and transportation projects usually entail large initial capital expenditures, requiring companies to make a multi-year commitment to realize returns on their investment. Over the long term, human rights violations often make societies less stable, exposing energy companies to controversy, their employees to violence, and their shareholders to risk.
We hope that the initial recommendations of the strategy and the administration's final policies will be revised to accommodate these concerns. Consumption in the U.S. should not be satisfied at the expense of suffering abroad. Issues of good governance, corporate responsibility, and human rights should be a cornerstone of any global energy strategy.
Sincerely,
Kenneth Roth Executive Director
