Letters

Beating the Curse

Kathryn McPhail and Francisco Paris argue that there’s a way out of the “oil curse” described by Moises Naim.

Moisés Naím's interesting article ("The Devil's Excrement," September/October 2009) reiterates the well-known thesis of the "resource curse" -- that resource wealth does more ill than good in poor countries. Naím concludes that though some countries have successfully managed to avoid this "curse," nobody has explained to date how to do this. But this is not entirely true.

The International Council on Mining and Metals (ICMM), together with the U.N. Conference on Trade and Development and the World Bank Group, has been doing research into this question since 2004. Fieldwork in four countries has documented that mining can provide a potential development prize. It also indicates that this contribution can be further enhanced if companies, governments, local communities, and development agencies work more collaboratively together.

ICMM has gone on to pilot such partnerships in Ghana, Peru, and Tanzania and is keen to support these alternative outcomes.

Kathryn McPhail

Senior Program Director

International Council on Mining and Metals

London, England

I read Moisés Naím's article with great interest. As a fellow Venezuelan, I have firsthand experience of what being resource-cursed means. Although much has yet to be done, there are many of us struggling daily to ensure that revenues from mineral wealth find their way to productive uses, and enormous progress has been made.

There have been a number of interesting recent developments in the United States. Sen. Richard Lugar has been a pioneer in Congress by sponsoring legislation to require full disclosure of payments to resource-rich countries, and Barack Obama's administration is looking at this subject as well.

Thirty other countries have signed on to the Extractive Industries Transparency Initiative (EITI), a globally developed standard for transparent resource use. Although this is certainly a sign of progress, it is a daily struggle to ensure that these countries live up to their obligations under the EITI and that the OECD countries funding the initiative are setting a proper example themselves.

This fight is a long one indeed, and articles like this one are critical to pushing the agenda forward.

Francisco Paris

Regional Director

The Extractive Industries Transparency Initiative

Oslo, Norway

Moisés Naím replies:

Kathryn McPhail and Francisco Paris describe the laudable efforts that their respective organizations are making to mitigate the effects of the resource curse. But the central point of my article was to stress the "autoimmune" nature of this political and economic malady.

One of the consequences of the resource curse is that it creates powerful incentives not to cure it. We all know what governments should do to fight the curse. What no one has figured out is how to overcome the reluctance of these governments and other important players -- the military, the private sector, and other powerful stakeholders -- to fight it.

Take, for example, McPhail's observation that the "contribution [of the mining industry] can be further enhanced if companies, governments, local communities, and development agencies work more collaboratively together." That is a big if. The fact is that this simple-sounding and obvious goal has been elusive, and the examples she gives are rather limited in scope and tend to be exceptions. One of the symptoms of the resource curse is that it turns policies and behaviors that should be standard and obvious into rare and exceptional ones.

Letters

Is Oil a Blessing?

Energy analyst Michael Lynch wonders why Peter Maass’s examination of oil and society focuses on the negative.

The stories told by Peter Maass ("Scenes from the Violent Twilight of Oil," September/October 2009) are, as a collection, illuminating. But the overall theme suffers from a certain lack of context. That areas with oil production suffer pollution is hardly debatable, particularly when discussing decades-old drilling practices, but similar arguments can be made about agriculture, which isn't thought to be in its "twilight" years. The curse of black gold is a familiar one, but little mention is made of the universities and hospitals built with oil money. Nor are countries without oil somehow free of corruption.

All too often, writers focus on oil to explain existing problems, without thinking about whether those problems would exist without oil, or whether the trade-offs make it worthwhile. Oil has provided humanity with many benefits, including cheap energy to reduce our workloads and improve our mobility, as well as reducing emissions from coal and ending the need for hunting whales.

Because oil is such an important and visible part of our daily lives, and because it is exceptionally prone to political disruptions, it often receives inordinate amounts of attention. This is especially true whenever its price increases sharply and instant experts pop up to diagnose the cause and consequences.

The future of oil is not that much different from its past. Oil production and consumption will become cleaner and more efficient, prices will continue to be volatile, and the industry will continue to be blamed for conflicts, corruption, and pollution. And for all the talk of the end of the oil age, it will probably be as robust as it is now, nearly a century after the first warnings about soaring consumption and limited resources.

Michael C. Lynch

President

Strategic Energy & Economic Research

Amherst, Mass.

 

Peter Maass replies:

I give Michael C. Lynch high marks for imagination. But how can oil, which in Nigeria and many other countries provides little income and few jobs to the masses of people who live atop it, be compared with agriculture, which yields employment and food for people who till the land?

As Lynch notes, universities and hospitals have been built with oil money, but not, for the most part, in areas from which oil comes. This is the problem I write about: the diversion of oil money to people other than the ones who inhabit the lands and fish the waters where the substance is found. As for corruption existing in countries without oil -- well, of course. That doesn't take away from the fact that oil, in most countries, does contribute to corruption.

Lastly, oil has indeed provided consumers in the developed world with great benefits, though warmer winters would not be in the category of "good things petroleum has done." I'm not so sure the people who supply us with the stuff would agree that the trade-off has been worthwhile for them.