By George Soros

DebtChannel

All over the world, countries that should be rich remain poor. Though blessed with valuable minerals such as oil, diamonds and gold, the ordinary people of Angola, Nigeria, Kazakhstan and elsewhere are mired in poverty while corrupt officials prosper. Money that could be used to reduce poverty and jump-start economic growth is stolen instead.

Oil and mining companies play an important role in many developing countries. Often they are the main source of budget revenues and foreign currency earnings. In Angola, for example, oil accounts for an estimated 90 percent of the $3 billion to $5 billion state budget. At least $1 billion this revenue goes missing every year.

There is a close connection between the exploitation of natural resources and the prevalence of corrupt and oppressive regimes. A secure revenue stream allows such regimes to maintain power, and controlling vast flows of money gives dictators a powerful incentive to cling to power. Without the need for broader public support, these regimes can oppress their citizens and ignore basic needs such as healthcare and education.

The problem is particularly acute in Africa, where the natural resource sector accounts for about three-quarters of the continent's trade. Angola, Sierra Leone, Chad, Congo-Brazzaville, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, Nigeria and Sudan are all countries where natural resources provide a big portion of state revenues, and corruption is rampant. Many have been devastated by civil wars motivated by the control of natural resources. As a general rule, people in resource-rich and resource-poor African countries are equally poor but the resource-rich countries have worse governments and greater civil strife.

Central Asia faces similar prospects. In the coming years, countries such as Kazakhstan, Uzbekistan and Azerbaijan can expect greatly increased revenues from the sale and transport of oil and gas. Will these funds foster development or repression?

Multinational corporations involved in extraction industries argue that the misappropriation of state revenues is beyond their control. Nevertheless, they cannot escape responsibility for what happens in the countries in which they operate.

Unsurprisingly, activists have often singled out oil and mining companies for blame. In recent years, lobby and pressure groups have launched campaigns against Royal Dutch/Shell in Nigeria, Unocal and TotalFinaElf in Burma, ExxonMobil in Aceh, British Petroleum and Occidental Petroleum in Colombia, ChevronTexaco in Angola, Talisman in Sudan, Freeport MacMoRan in Papua, Indonesia, and ExxonMobil and partners in Equatorial Guinea.

But this does not have to be the case. It is in the enlightened self-interest of these companies to ensure that their payments are not misappropriated. In association with a broad consortium of human rights, environmental, development, and anti-corruption groups, I am endorsing a proposal that would require oil and natural resource companies to make public how much they pay to national governments.

The proposal, known as "Publish What You Pay", would be a useful step in forcing corrupt governments to open up to scrutiny from their own people. The idea is to require natural resource companies to make public disclosure of taxes, fees, royalties and other payments to governments as a condition of being listed on leading stock exchanges. I am not talking about releasing commercially confidential data, but simply the basic figures that companies are already required to disclose in many developed countries.

I recognize that oil and mining companies do not control how their payments are spent, or misspent. But if they are to be good corporate citizens in this age of globalization, they do have a responsibility to disclose these payments so the people of the countries concerned can hold their governments to account.

No individual company wants to start disclosing data before its competitors do. That is why voluntary disclosure will not work. But all companies would benefit from a level playing field if disclosure were required. They would not be violating the terms of their agreements if the requirement to "Publish What You Pay" were imposed on them.

What we are proposing is only a first step. Africa is high on the agenda of this month's Group of Eight summit. The New Partnership for African Development, Nepad, an African initiative that will be discussed at the summit, emphasizes the need to eliminate corruption. Our proposal fits right into this agenda.

If revenues generated by the extraction industry were channeled to promote development, poverty could be dramatically reduced. Coupled with the Millennium Challenge Account recently announced by the US and other improvements in international assistance, they could go a long way towards making the United Nation's widely supported millennium goals a reality.