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Petroleum to the People | Foreign Affairs

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Petroleum to the People

Africas Coming Resource Curseand How to Avoid It
La r r y Dia m on d a n d Ja ck Mosba ch er Sept em ber /Oct ober 2 0 1 3 A r t i cl e Su m m a r y a n d A u t h or Bi ogr a ph y

A man walks away as crude oil spills from a pipeline in Dadabili, Niger state, April 2, 2011. (Afolabi Sotunde / Courtesy Reuters)

In October 201 1 , the U.S. Department of Justice filed a motion to seize a palatial cliff-top home in Malibu, California. The 1 6-acre property towers ov er its neighbors, with a palm-lined driv eway leading to a plaster-and-tile mansion. Situated in the heart of one of the United States most ex pensiv e neighborhoods, the $30 million estate includes a swimming pool, a tennis court, and a four-hole golf course. In its complaint, the Justice Department also set its sights on high-performance speedboats worth $2 million, ov er two dozen cars (including a $2 million Maserati and eight Ferraris), and $3.2 million in Michael Jackson memorabilia -- in total, assets equaling approx imately $7 1 million. What made these ex trav agant possessions all the more remarkable was that they belonged to a gov ernment worker from a small African country who was making an official salary of about $80,000 a y ear: Teodoro Nguema Obiang Mangue, the oldest son of and heir apparent to Teodoro Obiang Nguema Mbasogo, the longtime president of Equatorial Guinea. Home to ov er one billion barrels of oil reserv es, Equatorial Guinea has ex ported as many as 400,000 barrels of oil a day since 1 995, a bonanza that has made the country wealthier, in terms of GDP per capita, than France, Japan, and the United Kingdom. Little of this wealth, howev er, has helped the v ast majority of Equatorial Guineas 7 00,000 people: today , three out of ev ery four Equatorial Guineans liv e on less than $2 a day , and infant mortality rates in the country hav e barely budged since oil was first discov ered there. The presidents family members and other elites connected to the Obiang regime, meanwhile, hav e prospered. As a result, Equatorial Guinea has become a tex tbook ex ample of the so-called resource curse, a global phenomenon in which v ast natural resource wealth leads to rapacious corruption, decimated gov ernance, and chronic underdev elopment. Worse still, for the last three decades, the Obiang family was able to trade and trav el freely around the world, until the Justice Department finally mov ed to seize the y ounger Obiangs home and possessions on the charge that he had used his position and influence to acquire illicit wealth. The United States recent crackdown is laudable, but the family s ability to trav el and conduct business in the United States and around the world for so long highlights the gaps in the architecture of international accountability and justice. Equatorial Guineas story y ields many foreboding lessons, but none more obv ious than this: oil-rich dev eloping countries that want to av oid the

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resource curse cannot wait for the international sy stem to fight corruption for them. Equatorial Guineas ex ample will become increasingly relev ant ov er the nex t decade as a massiv e wav e of new oil and gas discov eries transforms Africas economic and political landscape. Ov er the nex t ten y ears, new technologies will allow oil producers to ex tract billions of barrels of ex portable oil from the East African Rift V alley and West Africas Gulf of Guinea. If current estimates are ev en close to accurate, trillions of dollars in oil rev enue will ultimately descend on a dozen African countries that hav e nev er before ex perienced such influx es. In East Africa, that list will likely include Ethiopia, Keny a, Malawi, Mauritius, Tanzania, and Uganda; in West Africa, it will probably include Gambia, Ghana, Liberia, So Tom and Prncipe, Senegal, and Sierra Leone. (Niger is another possibility , but giv en the lack of firm estimates of its oil reserv es, it is not included in the calculations here.) And this windfall would come on top of the enormous oil rev enues that some still-poor sub-Saharan African countries, such as Angola, Chad, Gabon, Nigeria, and Sudan (and South Sudan), hav e been earning for decades, as well as the new oil rev enues that Ghana is beginning to accrue. All told, within a decade, a third or more of African countries may deriv e the majority of their ex port earnings from oil and gas. Oil booms poison the prospects for dev elopment in

New sources of oil and gas could inject close to $3 trillion into the economies of some of Africas poorest and least developed nations.

poor countries. The surge of easy money fuels inflation, fans waste and massiv e corruption, distorts ex change rates, undermines the competitiv eness of traditional ex port sectors such as agriculture, and preempts the growth of manufacturing. Moreov er, as oil prices fluctuate on

world markets, oil-rich countries can suddenly become cash poor when booms go bust (since poor countries rarely sav e any of these rev enue windfalls). Oil booms are also bad news for democracy and the rule of law. In fact, not a single dev eloping country that deriv es the bulk of its ex port earnings from oil and gas is a democracy . Rather than fostering an entrepreneurial middle class, oil wealth, when controlled by the gov ernment, stifles the emergence of an independent business class and swells the power of the state v is--v is civ il society . In Africa, then, where one-party dominance or outright authoritarian rule prev ails, as in Ethiopia, Gambia, Tanzania, and Uganda, oil wealth will further entrench it. And where democracy is struggling to sink roots -- as in Keny a, Liberia, Malawi, Senegal, and Sierra Leone -- it could easily ov erwhelm weak state institutions. Ev en Ghana, the most liberal and stable democracy in West Africa, could fall v ictim to the problem of oil rev enues. The country now ex ports fewer than 1 00,000 barrels a day , but that figure is estimated to soar to as much as half a million barrels by 201 5. If used wisely , this influx of capital has the potential to fund pathbreaking improv ements in phy sical infrastructure and human well-being. But if state officials, enabled by the absence of meaningful institutions of transparency and accountability , manage to div ert the oil rev enues to themselv es, then the new wealth will serv e only to further consolidate the power and inflate the personal fortunes of the ruling elites. There is no reason to ex pect that newly rich oil producers in Africa will meet a fate much different from that of Angola, Equatorial Guinea, Nigeria, and Sudan, all of which rank in the worst fifth of all countries in terms of bribery and corruption. Unless, that is, African gov ernments embrace a radical policy approach: handing a large share of the new rev enues directly to the people as tax able income. The influx of funds from new oil discov eries will be so large that if properly managed, it could catapult dev eloping countries into genuine economic and social dev elopment. By taking control of these rev enues out of the hands of the political elite and restoring the link between citizens and their public officials, this oil to cash strategy offers the best hope for tomorrows oil-rich African nations to av oid the fate that has befallen so many of y esterday s.

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(Foreign Affairs)

THE CAUSE OF THE CURSE For a long time, those who studied economic dev elopment assumed that v aluable natural resources were a blessing -- that, as the scholar Norton Ginsburg wrote in 1 957 , the possession of a sizable and div ersified natural resource endowment is a major adv antage to any country embarking upon a period of rapid economic growth. Since the 1 980s, howev er, ex perts hav e come to the consensus that the opposite is true. In fact, the economies of resource-rich countries hav e performed far worse than those of their resource-poor neighbors, and increases in natural resource wealth are strongly correlated with greater corruption, authoritarianism, political and economic instability , and civ il war. The root cause of the curse is the div ergent effect that resource wealth has on the incentiv es of citizens and public officials. When unearned income -- or rents, as economists say -- replaces tax es as the main source of gov ernment funding, the social contract between a population and its gov ernment is sev ered. In well-functioning states (especially democracies), citizens consent to be tax ed in ex change for public serv ices and protection. Since the gov ernment relies on tax rev enues for its v ery ex istence, tax ation

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becomes the binding force of accountability between public officials and their constituents: public serv ants are incentiv ized to meet the publics ex pectations because the population at large is the most direct and important stakeholder in the gov ernments functions. As direct inv estors, citizens also hav e a powerful interest in seeing that their tax es are used properly and efficiently . It follows that the introduction of nontax rev enue -- from foreign aid or the sale of v aluable natural resources, for ex ample -- reduces a gov ernments reliance on rev enue from its people and thus weakens the incentiv e to serv e them. In the absence of the bonds of scrutiny and accountability that tax ation forges, the ex ternal rents that fall into state coffers are seen not as belonging to the people but as up for grabs by the luckiest, the best connected, or the most brazen. Corruption, patronage, and rent seeking flourish. Elites grow rich; ev ery one else grows dependent, cy nical, or detached. The result is that oil states generate not public goods for dev elopment but priv ate and political goods instead. When state rev enue seems to gush up from the ground as free money , and when resource rents displace tax ation as the main source of gov ernment rev enue, political elites hav e incentiv es to focus on the priv ate accumulation of wealth and limit distribution of it to their political support networks. They hav e little reason to use this public treasure to deliv er roads, schools, fertilizers, clinics, medicine, and so on. Meanwhile, the people hav e incentiv es to plead and compete for whatev er crumbs may fall from the political table. These political dy namics already tend to impede

It is time to try a new approach to beating the resource curse: the direct distribution of oil revenues to citizens.
soon ex perience. AFRICA'S COMING OIL BOOM

progress in all low-income countries. They become insurmountable traps in ones where the states rev enue is largely deriv ed from ex ternal rents, especially a massiv e flow of oil rev enues. Y et that is ex actly what many African countries will likely

In the nex t decade, thanks to innov ations in ex ploration and ex traction technologies, oil producers will be able to profitably tap areas in Africa where reserv es hav e long been suspected to lie. Twelv e African nations are likely to become new high-lev el oil ex porters. Although estimates of oil reserv es and ex porting capacity are notoriously v olatile, it is possible that more than 25 billion barrels of oil will become av ailable for ex port in Africa ov er the nex t decade -- enough to increase ex port earnings many times ov er in some countries and rev olutionize the social well-being of ov er one billion Africans. These new sources of oil are highly concentrated in two geographic areas: in West Africa, offshore in the Atlantic Ocean and the Gulf of Guinea, and in East Africa, in the Rift V alley , which runs through much of the region. Oil is not new to the Gulf of Guinea. With major long-term ex porters, such as Equatorial Guinea and Nigeria, the area has been ex porting as much as three million barrels of oil a day for ov er four decades. A period of unprecedented regional stability , howev er, has allowed for a new wav e of inv estment in the ex ploration and production of prev iously untapped deep-water oil sources. In the past fiv e y ears, commercial-quality oil sources hav e been found in or off the coasts of Senegal, Gambia, Sierra Leone, Liberia, Ghana, and So Tom and Prncipe. Although the estimates of recov erable oil reserv es v ary greatly by country (four billion barrels in So Tom and Prncipe, two billion in Ghana, 1 .5 billion each in Senegal and Liberia, and one billion in Gambia), and although these estimates v ary in their certainty , what is clear is that each country has enough ex portable oil to transform its politics and economy . In East Africa, tectonic plates hav e been splitting apart for millenia, creating a massiv e rift that runs for roughly 2,200 miles. As the plates hav e div erged, deep-seated plumes of magma hav e ex pelled oil into reserv oir sands. Recent technological adv ances, including ex tended-reach drilling and long-distance imaging technology , hav e made the ex traction of oil from these sands more economically efficient. Meanwhile, relativ e regional stability ov er the past decade has taken much of the financial risk out of long-term inv estment. As in West Africa, the estimates of reserv es here v ary . But the best ones av ailable suggest that roughly nine billion new barrels of recov erable oil and gas could be found in the Rift V alley within the nex t decade: 3.5 billion barrels in Uganda, up to three billion each in Keny a and Tanzania, and at least half a billion in Ethiopia. At current prices, the new sources of oil and gas could inject close to $3 trillion into the economies of some of Africas poorest and least dev eloped nations. Consider this: the total annual GDP of the 1 2 future ex porters in 201 1 was $1 81 billion. If $3 trillion flows to these countries from oil ov er a period of 30 to 50 y ears, then the total annual increase in economic output would amount to $60 billion to $1 00 billion

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-- an increase of ov er one-third (and much more if oil prices rise). These future African oil ex porters already rely heav ily on another rent in the dev eloping world: international assistance. Each of these gov ernments already deriv es at least a quarter of its operating rev enues from foreign aid; sev eral of them, including Ethiopia, Liberia, Malawi, Sierra Leone, and Uganda, deriv e ov er half their income from it. Giv en current rates of economic growth, it is possible that ev ery future African oil state (with the possible ex ception of Ghana) will deriv e more than half of its total rev enue from some form of nontax income, whether it be oil or foreign aid. Historically , aid has generally come without conditions, although that has changed somewhat in the last decade or two, as donors hav e begun demanding political and economic reforms. For African elites who want to use state rev enue as they wish, the beauty of new oil rev enues is that they come with no conditions at all. For ev ery $1 that the 1 2 future ex porters currently receiv e from tax ation, an additional $1 .50 is receiv ed from foreign aid. With the infusion of oil and gas into their economies, these countries will become much more dependent on ex ternal rents. The median ratio of ex ternal rents to domestic tax ation is ex pected to increase by a multiple of nearly fiv e, from just ov er one to one to nearly fiv e to one. Put differently , this will mean that the median new oil producer will be almost as dependent on oil and aid as the continents most famous v ictims of the resource curse: Angola, Chad, and Nigeria. Ex ternal rents often rav age a states incentiv e structure when they significantly outstrip tax ation -- say , by a factor of two or more. That is already the case in some heav ily aid-dependent countries, such as Liberia, Malawi, Sierra Leone, and Uganda. With the ex pected surge in oil income, these countries will see their rev enue structures distorted to degrees ev en bey ond those of Angola, Chad, and Nigeria. Ev en countries with more balanced rev enue structures, such as Ethiopia and Tanzania, will ex perience major swings, with their ratios of rents to tax es likely soaring to abov e two to one. Although sev eral countries in Africa hav e made great strides in improv ing gov ernance ov er the past decade, no continent has more obv iously display ed the sad drama of the resource curse: Africas oil-rich states hav e become strikingly more corrupt than their resource-poor neighbors. According to the Worldwide Gov ernance Indicators, compiled annually by the World Bank, Africas current oil ex porters rank in the bottom quintile globally in their relativ e ability to control corruption, formulate and implement effectiv e policies, regulate priv ate-sector dev elopment, and enforce the rule of law. Conv ersely , Africas future ex porters currently well outpace the regional av erage in these percentile rankings. Unless a new approach is tried, oil will drag the future ex porters down to the miserable gov ernance lev els of the current ex porters. To date, no African country has been able to keep oil money from being largely usurped and misused by the powerful. Ev ery one of the 1 2 current oil ex porters currently falls into the bottom half of the UNs Human Dev elopment Index . According to the World Bank, more than a tenth of all children born in oilrich African countries die before the age of fiv e, double the global av erage. If Africa is the worstgov erned continent in the world, its oil states are the worst of the worst. OIL TO CASH At the heart of the resource curse lie weak institutions that fail to prev ent public officials from ex ercising discretion ov er the rev enue from oil and other ex ternal rents. Ex perts hav e traditionally recommended solv ing that problem by focusing on instilling transparency and accountability . If only the people knew how much oil rev enue their gov ernment was receiv ing and how the money was being spent, the thinking went, they could hold their leaders accountable at the ballot box . And so the International Monetary Fund and the World Bank made increasing the transparency of resource rev enue a condition for multilateral aid. Global efforts such as Publish What Y ou Pay , a mov ement aimed at getting ex tractiv e industries to declare all the money they pay to gov ernments for the rights to natural resources, and the Ex tractiv e Industries Transparency Initiativ e, a public-priv ate partnership that sets global standards for transparency and accountability in resource-rich nations, hav e brought ex ternal pressure to bear on gov ernments receiv ing income from natural resources. These initiativ es are v ital to promoting good gov ernance in resource-rich dev eloping countries, and they should be ex tended to the new oil producers. But transparency initiativ es alone are not nearly adequate to the task. Resource flows are complex , with countless steps in the process from the time oil is discov ered, ex tracted from the ground, and sold on the international market to when it is transferred as rev enue to gov ernment accounts and spent by officials. Efforts to ex pose how rev enues are accrued and dispersed hav e not worked as well as ex pected because, as the scholar Todd Moss has written, they only shed light on one link in the long chain from oil in the ground to dev elopment outcomes. Although transparency is an integral piece of any country s pursuit of effectiv e and honest gov ernance,

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transparency alone fails to rev erse the underly ing incentiv es afflicting oil-rich countries. Giv en that reality , it is time to try a new policy approach, one that could drastically alter these incentiv es: the direct distribution of a portion of oil rev enues to citizens as tax able income. In practical terms, this scheme would work as follows: When a gov ernment receiv ed rev enue from oil and gas ex ports, a certain predetermined proportion of it (ideally , at least 50 percent) would immediately be distributed directly to the bank accounts of the country s citizens. Then, the gov ernment would treat those distributed rev enues as income and tax some of it back. Each country could adjust the rate of tax ation to transfer only that amount of cash that economists determined could be absorbed by the av erage poor family without fueling inflation or distorting incentiv es. This oil-to-cash sy stem should not be confused with those of oil-rich Arab states, such as Kuwait, Qatar, and Saudi Arabia, that lav ish on their citizens pay ments and cradle-to-grav e serv ices. These programs lack two key features. First, the money goes to the state and only then is distributed (often at its discretion), as financial pay ments, social serv ices, increases in public salaries, and so on. Second, citizens in these countries do not pay any income tax , so the crucial bond of accountability nev er materializes. Instead of increasing citizen participation and strengthening accountability , state-to-citizen distributions in these countries simply use oil rev enues to keep the people satiated while further entrenching the power of elites. In doing so, these pay ments serv e to increase citizens dependence on the state, rather than increasing their ownership of it. The oil-to-cash approach has been engineered by a team of scholars at the Center for Global Dev elopment (including Nancy Birdsall, Alan Gelb, Alex andra Gillies, Moss, and Arv ind Subramanian) who contend that it would attack the fundamental causes of the resource curse. Directly distributing oil rev enues as tax able income would create a broad and activ e constituency of citizens who were directly affected by the gov ernments management of their resources, in place of the often passiv e populations of corrupt, resource-cursed states. In a single step, it would build a broad domestic tax base -- a fundamental piece of any modern, well-gov erned state. Moreov er, immediately tax ing the income through ex plicit deductions from the transfers would make citizens aware of the fiscal relationship, strengthening the ties of accountability between the officials who control the state and the people whose money they are spending. Citizens would come to realize that it is indeed their money that the state is spending. To many , the concept of direct cash transfers of oil dollars seems like a well-intentioned but utterly infeasible option. For starters, one might ask, how can countries that lack modern banking sectors or ev en national identification sy stems be ex pected to implement cash-transfer programs? The answer is that many already hav e. As Moss has written, as of 2009, some 60 dev eloping countries, including Botswana, Brazil, India, Mex ico, and Panama, hav e made regular direct transfer pay ments to approx imately 1 7 0 million people. That success owes to recent adv ancements in affordable and reliable personal-identification technologies that use biometric identifiers such as fingerprints and facial and retinal recognition. Gelb estimates that as many as 450 million people in dev eloping countries hav e had their biometric data cataloged. Although gov ernments will need to inv est in sy stems that allow them to properly and transparently transfer money into citizens accounts, new technology in the area of electronic banking is making this process continuously cheaper and more logistically feasible. Africa has ex perienced ex plosiv e growth in cell-phone subscriptions, now estimated at ov er 800 million, which, ev en allowing for users with multiple dev ices, means that the majority of Africans now hav e access to cell phones. Moreov er, mobile-banking platforms, such as Keny as M-Pesa, are proliferating. Other skeptics might argue that it would be more efficient for states to spend their oil wealth on dev elopment projects than to put it into the hands of the poor and uneducated. But the argument that poor people dont understand their best interests as well as bureaucrats and public serv ants do is a paternalist my th. Indeed, ev idence from ex isting cash-transfer programs rev eals that the transfers are most often spent on food, education, health care, and business inv estments. Moreov er, most of the money is spent on local goods, stimulating community -lev el dev elopment. The greatest obstacle to oil-to-cash programs is, of course, political. Why , many wonder, would any politician ev er willingly giv e up control of oil money ? Indeed, in dev eloping countries, control ov er natural resource rev enues fuels the patrimonial ties and patronage networks that keep leaders in power. And it is true that an autocrat is v ery unlikely to giv e up this v ast opportunity to accumulate wealth and perpetuate his rule. But nine of the 1 2 future oil ex porters are democracies, and therein lies the hope for these rev enuedistribution sy stems. In these countries, competitiv e elections with uncertain outcomes determine who rules. In some of them, democracy may well ex pire in the fev er of sudden riches. But in others, a broad coalition of forces in civ il society and politics could compel rulers to implement some kind of oil-to-cash

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model, or else v ote into office an opposition party that has pledged to do so. It is hard to imagine a more compelling opposition platform than the distribution of at least some share of natural resource rev enues directly to the long-impov erished people who are the real legitimate owners of the country and its resources. Public opinion surv ey data from the research project Afrobarometer show that Africans are more aware of their rights and more demanding of democracy than social science theories hav e traditionally assumed about the poor in dev eloping countries. Moreov er, African civ il societies are becoming better organized and more assertiv e, and with the growth of new communications technologies (including community FM radio stations), a more v igorous public sphere is emerging. Once African publics understand the possibilities of oil-to-cash programs, they may seize on the idea. At that point, it will not be easy for elected leaders to insist that the state monopolize these rev enues, unless they rig elections and repress protests. Desecrating democracy to corner this wealth may be a tempting strategy , but it is one with huge risks, including being toppled from power and punished. Some democratically elected leaders could opt instead to become public (and international) heroes by embracing reform. Unfortunately , the prospects for preempting the oil curse are much worse in Africas authoritarian states, for they lack the political competition and civ ic pressure that could induce reform. But despite the dangers that go along with challenging autocrats, public demands for reform may rise as corruption and misrule deepen, ultimately leading the regime to make meaningful concessions. Such a scenario is not unthinkable, for ex ample, in Uganda, where, after nearly three decades of Y oweri Musev enis presidency , the signs of gov ernance rot are spreading, and the public is noticing. Embracing at least a limited oil-tocash reform would burnish any autocrats tarnished legitimacy . After all, if presidents and ruling parties gav e some of the new wealth to the people, that would still leav e quite a lot of state rev enue for them to manage. Ev en partial reform would begin to change the relationship between citizens and the state and create a new incentiv e for the public to monitor its rulers handling of oil wealth. A RADICAL APPROACH Nobody knows ex actly how much oil will be pulled from the ground of Africas new oil ex porters ov er the nex t decade. Current projections made by gov ernments and oil ex ploration companies might be ov erly optimistic, or perhaps the current period of relativ e political stability in Africa will end, scaring off inv estment in oil infrastructure. Regardless, oil will shape Africas future more than ev er, and some groups and indiv iduals will find themselv es much wealthier in the nex t decade. The choice that Africas gov ernments and people hav e to make is whether the winners will be, as before, well-connected elites or whether the pattern can be broken and a new premise can be embraced: that a country s natural resources belong not to the state but to its people. Admittedly , the oil-to-cash plan is an unwieldy and largely untested initiativ e. But in an area where ev ery conv entional approach has failed, only a radical departure is likely to succeed. The biggest mistake Africas new oil producers can make, one that sev eral are already making, is to assume that their countries are different: that through good leadership, better statecraft, or incremental improv ements in their legal sy stems, they can av oid the resource curse. The stakes are simply too high for any thing but a radical new approach.
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Petroleum to the People | Foreign Affairs

Un it ed St a t es. Cu r a a o a n d A r u ba -- t h e h u g h ex por t ba ses in t h e Du t ch W est In dies -- a r e 8 0 0 m iles n ea r er Lon don t h a n a r e t h e oil por t s of T ex a s. Rea d m em ber s ca m e dow n w it h "qu ick -m on ey fev er ." T h ey beca m e a ddict ed t o su pposedly lim it less oil r ev en u es ev en a s boom t u r n ed t o bu st . T h e Ca spia n st a t es, t oo, r isk g oin g fr om r ich es t o r a g s if t h ey do n ot r esist t h e t em pt a t ion s of pet r om a n ia . Rea d

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It was strange that in an article in Foreign Affairs on the challenges of oil exploration and exploitation the foreign affairs of the resource boom are omitted, because the fact of the matter is oil exploitation in Africa (read sub-Saharan) is going to be played out in the context of peak oil and hence in the context of oil wars. Multiply that tenfold as Africa is increasingly recognized as the resource basket of the world, with everything you can name from gold and diamonds to rare earths and uranium. Widening disparities in income are inevitable but unfortunately the R2P (right to protect) countries that should care will be complicit in this as they jockey to earn deals from the African 0.001 percent. Agriculture will be the biggest loser as exchange rates militate against local food production. Thats the story of Nigeria and Equatorial Guinea. I wrote about that quite a while ago in the context of oil discoveries in Uganda. Unfortunately agriculture stands to suffer even more directly as Africas abundant land is put up for sale by its leaders to land- and water-challenged countries. The leaders will be mouthing development but the benefits will elude the masses. African leaders despair of the peasants ever developing agriculture and are happy to rent out land to foreigners. Almost one-third of sub-Saharan Africas arable land has already been leased out (at a pittance) to Saudi Arabia, India and China. So on the one hand the resource bonanza renders African peasants workless by encouraging food imports, while on the other hand land grabs

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2 hours ago

A les s andra F

"Oil booms are also bad news for democracy and the rule of law. In fact, not a single developing country that derives the bulk of its export earnings from oil and gas is a democracy." This statement might need some refining. I would like to point to the developing country of Timor-Leste, where oil and gas currently make up 57% of total exports. While there is undeniably still a long way to go, the achievements of this young democracy in the management of oil revenues can serve as an interesting point of reference for the discussion on the resource curse and how it can be avoided.
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5 hours ago

Dean Jac k s on

The article reads, "New sources of oil and gas could inject close to $3 trillion into the economies of some of Africas poorest and least developed nations." Don't count on it. Moscow and allies, who co-opted Western political parties decades ago, have tasked the United States (and other Western nations) to ensure none of subSaharan Africa's oil reserves sees the light of day. The introduction of such oil reserves onto the global oil market would (1) critically affect the Russian economy (Russia is the #2 oil exporter of oil); and (2) stall to a snail's pace the massive modernization of Russia's military that is currently taking place.
www.foreignaffairs.com/articles/139647/larry-diamond-and-jack-mosbacher/petroleum-to-the-people?page=show 8/9

8/27/13

Petroleum to the People | Foreign Affairs

For those unfamiliar with this subject, the "collapse" of the USSR in 1991 was a strategic ruse under the Long-Range Policy" (LRP). What is the LRP, you ask? The LRP is the "new" strategy all Communist nations signed onto in 1960 to defeat the West with. The last major disinformation operation under the LRP was the "collapse" of the USSR in 1991. The next major disinformation operation under the LRP will be the fraudulent collapse of the Chinese Communist government. When that occurs, Taiwan will be stymied from not joining the mainland. The fraudulent "collapse" of the USSR (and East Bloc) couldn't have been pulled off until

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www.foreignaffairs.com/articles/139647/larry-diamond-and-jack-mosbacher/petroleum-to-the-people?page=show

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