A round-table on energy and natural resources in the Mediterranean opened on Wednesday, November 26, 2008, in Tunis with experts in the region's extractive industry in attendance. Held on the theme: "Energy and Natural Resources in the Mediterranean - Investing in Our Shared Future," the forum brought together participants from both the northern and southern parts of the Mediterranean region who focused on the positive impact of fiscal transparency and international cooperation on energy security and trade relations in the region.

Speaking during the event, African Development Bank (AfDB) Group President, Donald Kaberuka, said Southern and Northern Mediterranean partners had a common interest in securing energy supplies and in maintaining a lasting economic partnership that is geared towards growth. This, he said, was particularly true in times of volatile commodity prices within the context of the global financial crisis. He pointed out that oil prices had fallen from an all-time high to a three-year low in less than four months, with oil prices falling below US$50 per barrel last week.

He stressed that the past couple of years of unprecedented oil price increases had raised concerns about energy security, adding that there had been a scramble for secure access among a growing number of consumers. At the same time, he stressed that new awareness of global warming and climate change had created concerns about carbon-based fuels. While increasingly valuable, he stressed that they also constituted a menace. Yet more recently, the financial crisis had sharply reduced the price of oil and other commodities, and was profoundly changing attitudes towards markets and the balance of power. In light of this situation, Mr. Kaberuka recalled that "our roundtable discussion aims to enhance the dialogue between Mediterranean governments and companies on resource management, investment strategies, good governance, economic growth, trade relations, and secure energy supply."

Energy security, Mr. Kaberuka stressed, had become an important issue for trading partners across the Mediterranean, as demand for energy had gone up and prices had increased and have recently become highly volatile. The relationship between energy security, national security, economic security, and environmental security is intertwined, he emphasized.

Financial Crisis

Commenting on the prevailing global financial crisis, Mr. Kaberuka said the global financial crisis had had several distinct consequences for energy security. First, it had highlighted the cost of unregulated private behavior in global asset markets. As a result, he said, there was a new appreciation of the need for international coordination around standards. Second, the financial crisis had triggered a reduction in commodity prices. One implication, he pointed out, was the psychological shift that was being triggered by high oil prices, and its consequences on accelerated conservation and innovation might be reverted. Another implication of the peak-and-decline path of prices, he said was that it had emphasized the need to save revenues for future generations at a times of rising prices. Third, as there is uncertainty about the market, there is a need to rebuild trust among trading partners and vis-à-vis citizens.

International Coordination and Fiscal Transparency

Regarding fiscal transparency, Mr. Kaberuka said it was becoming a key feature in international commerce, adding that it enables investors to foresee and judge that their investments are secured and sustainable which, in turn, is beneficial for long-term economic growth. In addition, it ensures that trade relations can be built on trust between partners - a key prerequisite for energy security and lasting trade relations. He underscored that transparency was also the best tool for creation of a level playing field for business.

To achieve increased transparency, there is a need to strengthen dialogue between all the stakeholders (companies, governments, and civil society) and for building trust. This can lay the foundation for long-term economic growth with the lowest social cost and lowest price volatility which will, in turn, ensure the availability of energy supplies.

The financial crisis, he said, had considerably increased public recognition of the importance of international cooperation in the regulation of asset markets. Globally shared norms and standards could help underscore partnerships to make them last, he emphasized.

Within such a context, the Extractive Industries Transparency Initiative (EITI) is seen by an increasing number of stakeholder as a useful tool for providing these norms and standards. It is a key initiative in a larger global movement toward transparency in business and government. It has emerged as a global standard of good financial governance in the management of extractive resources. In our discussions today, we should reflect on the benefits of such an emerging global standard for resource-rich middle income countries that manage their natural resources efficiently, especially in terms of credibility and trust, but also creditworthiness.

Furthermore, international cooperation to manage extraction of natural resources with integrity and due regard for the future can help in several other ways.

AfDB's Role

The AfDB, Mr. Kaberuka said, was committed to supporting efforts by countries at efficiently managing their public resources in a transparent and accountable manner, including their natural resources. The overall aim of the Bank's Governance Strategic Directions and Action Plan (GAP 2008-2012), is to strengthen transparency and accountability in the management of public resources at the country, sector, and regional levels, including through the support of regional norms and standards of good financial governance.

He stressed that special attention was being paid to improving the governance of natural resources and, in particular, the extractive industries through Bank support for the EITI and other related initiatives.

He pointed to Bank efforts at setting up the African Legal Support Facility, whose aim is to provide technical and legal assistance to the institution's regional member countries in contract negotiations or fiscal regimes in the extractive industries sector.

The Bank is also assisting individual countries such as Uganda to build a consensus on how to manage their new-found oil resources to boost economic growth and reduce poverty.

The roundtable is expected to help senior government and company representatives from the Mediterranean region to discuss opportunities and challenges in natural resources trade across the Mediterranean. It is also expected to also enhance dialogue between Mediterranean governments and companies about resource management, investment strategies, economic growth, and secure energy supply. Participants have the opportunity for information-sharing about the EITI and its benefits with top EITI performer as well as the benefits that would accrue to the North Africa Region countries from their support to EITI.

Beyond Commodity Booms and the Road Ahead: A Case for Africa

Opening Remarks by AfDB President