This is a very strange statement

Experience shows that developing countries who strike oil invariably stay poor.

I agree that many countries who have struck oil have remained poor. But invariably is much too strong.

By the standards of today the US in 1859, when the Pennsylvania oil fields were found, was a developing country. Heck, we could make the argument that the UK or Norway in the 1950s were, by today\’s standards, developing countries.

Dubai?

It\’s also not true that the resource curse (which is what he means) invariably means remaining in poverty even if we use the more modern meaning of \”developing country\”. Botswana has done very well indeed out of its diamond fields.

Rather than bringing wealth to many, it enriches a few, fosters corruption, encourages dictatorships and distorts the economies of nearly every poor country it has been found in. The story has been repeated from Nigeria to Sudan, Equatorial Guinea to Gabon and Angola to Venezuela.

That is more a list of countries which have remained poor while having natural resources than a proof that natural resources keep a country poor.

Oh, and the basic argument is that we should all chip in to pay Ecuador to leave the oil underground. How does foreign money flowing in for free, rather than drilling for oil, reduce the corruption, distortions or tendency towards dictatorship? Or, indeed, the resource curse of Dutch Disease?

15 thoughts on “This is a very strange statement”

  1. I think that what he really means is “striking oil in developing countries ruled by a tribal kleptocracy leaves the masses poor whilst providing obscene amounts of wealth for the kleptocrats”… But, as that seems generally to apply to Africa, he can’t say that, it’s “racist”.

  2. You don’t need ‘tribal’ in there for Pogo’s statement to be true. See: Russia. So we can successfully formulate a variant which is both true and non-racist. Hurrah!

    A country whose government is being paid by The West to leave the oil in the ground *will* give less of the money to dictators & crooks than a government being paid by China to drill it, because we give a fuck whether or not the aid is stolen, whereas China couldn’t care less whether all the money ends up in the chief dictator’s pocket and everyone else starves.

    Obviously, this fact doesn’t mean that outbidding the price China would pay for oil in exchange for the receipt of *absolutely nothing* is anything other than an insane, stupid idea.

  3. If by “the country” they mean the population, then yes. If they mean “the government”, specifically those individuals in and close to it, then no.

  4. And we give shed loads of foreign aid to India for example, who have nuclear weapons…

    So suggesting we actually give a fuck about how our foreign aid is spent is just silly.

  5. Tim/Piers: since the end of the Cold War.

    For example, we don’t give any aid money to the Indian government. We give aid money to programmes organised by NGOs in India, to do things that the Indian government would rather spend money on nukes and rockets to the moon than do. Like vaccines and basic healthcare (very fucking basic, like one step above a witchdoctor, but one with antiseptics and vitamins) for the poor.

    You could argue that in the absence of British aid, the Indian government would stop spending money on rockets and spend it on these services. But nearly all the people I know in India (even and deliberately *excluding* the people who work for either the government or NGOs) say that it wouldn’t, but would keep on building rockets and nukes and letting more poor people die.

    This is how British aid in general works now. We give money to programmes in poor countries that are independently administered and audited. We don’t (like we did in the 1960s when the only important thing was that General Western Baby-Eater beat General Communist Baby-Eater – and I’m not even being sarky about that, winning the Cold War without it becoming nuclear was the best achievement of 1950-1990 governments in aggregate), give the money to their corrupt rulers to send to Switzerland.

  6. Seriously, no offence, but fuck off. No point discussing any of this with you, after seeing your monotously blinkered posts here, I just can’t be bothered.

    All the best.

  7. Erm, you realise that if you counter a logically coherent and evidence-based argument with nothing but personal abuse and the suggestion that you ‘can’t be bothered’, you’ve lost, right? Amateur.

  8. Pogo – your description doesn’t apply to Botswana, which is in Africa, last time I checked.

    John B – I’m not sure about the China oil/Western aid example. With oil, some people actually need to be doing the work of extracting the oil, and even if they’re all foreign experts, they’ll need to be in the country, getting from the international airport to the oil fields, eating food, drinking water, occupying shelter, hiring the local bandits (or warlords or whatever the current terminology is) to protect the oilfields and workers’ homes from said bandits and also further-afield bandits, and they’ll probably also be wanting things like healthcare, alcohol, someone to clean their houses, nicer shelter, some entertainment while out drinking, etc, etc. All of which involves people in the country itself. It may be not as good as sending every citizen a cheque for their share of the royalties, but a situation where “it all ends up the chief dictator’s pocket and everyone starves” is not going to happen.
    As I understand it, the most plausible causal link between “discover oil” and “economy falls apart” is that the government is less dependent on tax revenue from its citizens’ economic activity, so has less interest in doing things to keep the economy functioning (like roads, good business law, etc). This is also a problem with aid. It’s one thing to keep the nasty dictators from sending the money off to Swiss bank accounts, it’s another thing to make them as eager about supporting economic activity as if that was the way to get their money.

  9. Tracey – definitely agreed to a point. It’s unusual for a venture not to create a whole bunch of local jobs, particularly when organised by a western company.

    In the context of Chinese investment in particular, though, there is a strong tendency for Chinese companies that invest in Africa not only to send Chinese engineers/geologists/specialists, but also Chinese labourers, security guards and cooks. Levels of African involvement, aside from protection bribes to local tribes, are low.

    (Tim N may have more frontline experience, or at least direct colleagues with more frontline experience, of this kind of thing – I’m relying on press, African aid types and some mining veterans I’ve Met In Pubs for my take on this one).

  10. John B – interesting then. Where do they get the food from to feed the labourers, security guards and cooks?

  11. Where do they get the food from to feed the labourers, security guards and cooks

    Wearing my cynical hat, I’d say they probably buy it from the government’s UN Food Programme grain stores…

  12. Correct, national content rules seem to go out of the window when the Chinese come aboard in Nigeria. I expect this is because the Chinese merely pay off those who make it an issue (indeed, this is probably why they are making it an issue: to get a pay off to shut up), but I think even this is changing. The Chinese are far from popular in Africa. The locals haven’t got ’round to concluding that whitey is the better the devil they know, but they’re not far off.

Leave a Reply

Your email address will not be published. Required fields are marked *