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U.S. withdrawal from energy transparency group called strategic

The United States withdrew from the Extractive Industries Transparency Initiative, where few other major producers are formal members, but advocates say it shows a lack of leadership.

By
Daniel J. Graeber
President Donald J. Trump (L) and Secretary of State Rex Tillerson were mentioned in the so-called Paradise Papers. File Photo by Chris Kleponis/UPI
President Donald J. Trump (L) and Secretary of State Rex Tillerson were mentioned in the so-called Paradise Papers. File Photo by Chris Kleponis/UPI | License Photo

Nov. 6 (UPI) -- Leaving a transparency initiative on fossil fuels was a mistake, advocates said, but Washington and a former Trump associate said the decision was strategic.

The U.S. Interior Department last week withdrew from the Extractive Industries Transparency Initiative, a body that seeks to find how revenue tied to the oil, gas and mineral resources sectors makes its way through member-state governments and economies.

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In its letter of withdrawal, the department said it supports transparency mechanisms in principle, but had its own reporting standards that were the "new global standard in revenue governance transparency." Because EITI standards do not account for the U.S. legal framework, it was leaving the organization as an implementing country.

The U.S. government endorsed the EITI in 2004 and committed to its standards in 2011. When the EITI boards approved the U.S. application in 2014, it became the first member of the Group of 8 industrialized nations to achieve candidacy.

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EITI Chairman Fredrik Reinfeldt said in a statement after the withdrawal notification that it was a step backward for the United States.

"Our work supports efforts to combat transnational crime and terrorist financing," he said. "It's important that resource-rich countries like the United States lead by example."

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U.S. momentum as an oil and gas producer accelerated under former President Barack Obama. President Donald Trump has put fossil fuels at the top of his energy policies. Though Obama ended a ban on crude oil exports, the amount of U.S. oil leaving domestic shores has accelerated exponentially since Trump took office.

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Republican leaders who support Trump's energy strategy have said steps taken since Ryan Zinke became the secretary of the Interior have positioned the United States as "an energy dominant superpower."

The four-week moving average for total U.S. oil production for the week ending Oct. 27 was 9.2 million barrels per day, up nearly 9 percent from the same period last year. U.S. crude oil exports for the same period are up 300 percent from last year.

U.S. crude oil is competitive in Asia with the type of oil exported by members of the Organization of Petroleum Exporting Countries. Natural gas, in the form of a super-cooled liquid form, and coal have made their way to the ports of former Soviet republics during the Trump administration, to the frustration of the Kremlin.

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Healy E. Baumgardner, a global fossil fuel adviser at The 45 Group, former Trump campaign spokeswoman and the former press secretary for the Energy Department under President George W. Bush, told UPI the candidacy to EITI was short-sighted.

"Fossil fuels are critical to national security and energy independence, and pulling out of EITI smartly supports their expansion, competitiveness and ability to foster job growth and U.S. energy dominance at home and abroad," she said.

Canada, the No. 1 oil exporter to the United States, is not an EITI member, nor are most major OPEC members.

The U.S. decision to leave EITI came two days before the release of the so-called Paradise Papers. The more than 13 million records, leaked by Bermuda-based law firm Appleby to German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, allege to expose ties between world leaders and corporate giants. For the United States, the documents appear to show links between Trump Cabinet officials, donors and advisers, and offshore interests ranging from the Kremlin to foreign oil.

The documents show Commerce Secretary Wilbur Ross retains an interest in a shipping company, Navigator Holdings, which has business ties to Sibur, a Russian energy firm controlled by Gennady Timchenko, a Russian oligarch subject to U.S. sanctions, Russian President Vladimir Putin's son-in-law, Kirill Shamalov, and other members of the Russian president's inner circle.

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U.S. Secretary of State Rex Tillerson, documents show, was tied to Yemeni oil and gas interests, which later became the subject of dispute in the international courts.

"The opacity of this administration goes beyond energy policy," Stefanie Ostfeld, the deputy head of the U.S. office of Global Witness, told UPI. "You can draw a direct line from the president and Secretary Tillerson refusing to release their tax returns to Exxon and Chevron refusing to declare their U.S. tax payments though EITI, which led the administration to pull out of a global anti-corruption program for oil and gas companies."

Andrew Holland, a senior fellow for energy and climate at the American Security Project, added that U.S. oil companies are some of the best in the world and shouldn't have to "bribe their way" toward contracts. The EITI move, as well as similar actions, sets the industry up to look corrupt, he said.

In its letter last week, the U.S. Interior Department said participating in EITI helped the government initiate open data on natural resources and their revenue streams. Despite leaving the initiative, the government said it was a strong supporter of good governance.

"While in concept preventing corruption in global fossil fuels is admirable, they are what determine power, politically and physically, across the globe," Baumgardner said.

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