Guest Opinions

Guest Opinion: Implementing Dodd-Frank provision would aid developing countries

Have you ever wondered why the people of developing countries that are rich in natural resources are often poor and live in turmoil? This condition has a name: the “resource curse.” The wealth generated by the natural resources is siphoned off by the powerful elite while the people suffer the consequences of extraction — displacement and pollution.

I recently attended a conference sponsored by Oxfam America, an international relief and development organization, where I met women such as Hannah Owusu-Koranteng, a community leader from Ghana. Hannah and other speakers described the effect of the “resource curse.” Imagine a village where for centuries women walk every morning along the same path to fill jugs with fresh, clean water. One day, oil is discovered and a company builds a refinery near the village on the path to the water. Now the women must walk miles farther for water that is no longer clean.

The village needs roads, plumbing, schools and hospitals, but instead of life improving because of the oil discovery, it is devastated. The refinery owners and their political allies promise development that is never delivered. This happens over and over in developing nations throughout Africa, South America and Asia.

There is something that can help prevent this: implementation of Section 1504 of the Dodd-Frank Act.

That’s right. A landmark bipartisan law designed by Congress to create transparency in American business can be used to improve the quality of life of people in poor and developing nations. Last month marked the fifth anniversary of passage of Dodd-Frank, yet the Securities Exchange Commission (SEC) has still not written regulations to implement Section 1504 that pass muster with the courts.

This section requires extraction industries to report the payments they make to countries for the right to explore or extract. We know that businesses pay hundreds of billions of dollars annually for these rights, but because of corruption, secrecy and weak institutions, the money is vulnerable to theft and mismanagement. The stolen or mismanaged money is not only spent on personally enriching the corrupt, but also on arms used against political foes, and on illegal enterprises and for other destabilizing, violent purposes.

Such transparency will give those organizing for fairness an important tool to hold their political leaders accountable, to make sure the money is used to build the plumbing so the women no longer have to walk miles for bad water. And to make sure there is infrastructure so the village benefits from the wealth created by its natural resources. I know from my time in the Idaho Legislature that citizens demand transparency. Governments should respond no matter where they are located.

Moreover, such transparency is vital to U.S. interests. Improving transparency and reducing corruption in resource-producing countries will help stabilize energy markets and commodity prices. Poor countries that are high in corruption are breeding grounds for terrorists and extremists, so this is important for our national security. Investors in U.S. companies need to be able to evaluate their risks and know their investments are protected.

Finally, U.S. aid dollars go to these countries, but in order for developing countries to graduate off of U.S. aid, they need to be able to access and capitalize on their own domestic resources and wealth.

It is time the Securities and Exchange Commission acted. Implementation of Section 1504 would help the African women I heard at the conference and would help all of us. That is why I am contacting Idaho Sens. Jim Risch and Mike Crapo to contact the SEC and urge action. I hope you will, too.

Betsy Dunklin is a former Idaho state senator. She is an Oxfam America Sisters on the Planet ambassador.