The Other Resource Curse

Moving away from fossil fuels could be devastating for some of the world's poorest countries.

For as long as people have talked about moving beyond fossil fuels, another tantalizing prospect has hovered over the horizon: the decline of resource-rich authoritarian countries and the rogue nonstate actors that depend on them. A world of reduced demand for coal, oil, and gas is a world in which Iran, Russia, and various al Qaeda supporters are significantly weakened. That would certainly qualify as good news.

But visiting Mozambique last week, I was reminded that not all of the losers from lower fossil-fuel demand will be the traditional bad guys. Mozambique's economy has tripled in size in the decade since the end of the country's 15-year-long civil war, but GDP per capita remains barely over $1,000 a head -- and highly concentrated among relatively wealthy elites. Leaders in Maputo, the capital, relied on international aid for 40 percent of the national budget last year.

But an end is in sight: Massive coal deposits and offshore natural gas are poised to end Mozambique's aid dependence and rapidly increase economic output. The most bullish projections are far from assured -- Mozambique suffers from a lack of skilled labor, regulatory capacity, and essential infrastructure. But perhaps the biggest unknown is demand for what the country hopes to sell. If the world were to sharply reduce its dependence on fossil fuels, appetite for Mozambique's exports would decline or vanish, likely leaving the country in considerably worse shape.

Mozambique is hardly the only country that would face this predicament. Africa in particular is packed with countries for which resource extraction appears to be the only viable first rung on the road to economic growth. Others in Central and Southeast Asia, Latin America, and the South Pacific confront similar prospects. Some plan to sell oil, gas, or coal. Others foresee extracting minerals like iron ore and bauxite, the processing of which requires massive amounts of fossil fuels. In a carbon-constrained world, however, consumers would need to cut back on their use of these minerals.

Resource wealth is, of course, far from a guarantee of prosperity. Indeed, it can often bring the opposite: corruption, violence, and economic distortions that crowd out manufacturing and other industries, often deepening inequality in the process. But save for a few lucky countries like Costa Rica that have become favorite tourist destinations, there are few alternatives to resource extraction for many of the poorest developing countries. Development economist Paul Collier argues this point well in his powerful 2010 book, The Plundered Planet. The best alternative to suffering the resource curse, he explains, isn't necessarily forgoing resource development. It's harnessing revenues from resource extraction more effectively for broad and sustainable social and economic good.

But while a great deal of effort has been expended looking at how low-carbon development could work in resource-consuming developing countries, very little time has been spent considering what it would look like for resource-rich developing countries. Entire careers are spent devising ideas for how China could power its economy using nuclear energy and renewable fuels, or how India could boost its resource efficiency. Not so when it comes to the travails of resource-rich countries. Many rightly mock demands for compensation from of the likes of Saudi Arabia, which would be hurt by reduced oil exports, but few stop to think about others that would suffer.

There are exceptions to this pattern. Ecuador is attempting to solicit payments in exchange for not developing oil in its Yasuni National Park, though it has only raised $300 million out of the total of $3.6 billion it is seeking. Considerably more thought has gone into a closely related area of low-carbon development for the resource-rich: charting alternative paths for highly forested countries that don't involve cutting down all their trees. In 2008, the consultancy McKinsey & Co. worked with Guyana to devise an economic plan that would leave its forests intact, provided wealthy donors (or carbon credit buyers) paid compensation. The plan got off the ground a year later, when Norway stepped up with cash, though it is far from fully funded.

Moreover, some countries -- those rich in rare earth elements, lithium, and other ingredients for advanced energy technologies -- might actually benefit from resource extraction in a carbon-constrained world. Natural gas producers could benefit in the near term if countries decide to reduce carbon emissions by shifting to gas from coal. And if technologies are developed to capture and store carbon dioxide emissions -- eliminating the need to avoid them entirely -- countries rich in coal (and perhaps natural gas) could benefit.

But these are possibilities, not guarantees, and in any case they would still leave many countries behind. No one has seriously argued that the schemes being peddled by Guyana and Ecuador can be scaled up to the massive level that would be necessary to avoid serious harm to poor but resource-rich countries, should demand for fossil fuels plummet. And few alternatives have been proposed. Efforts by Britain's Department for International Development to set out a low-carbon development path for Mozambique are telling: it investigated ways to lower emissions from agriculture, but ignored potential revenue pitfalls from depressed natural gas and coal prices.

Don't get me wrong: This is not an argument against taking action to combat climate change. While I was in Mozambique, large swaths of the country were paralyzed by intense flooding, a problem that will only get worse as climate change intensifies. Mozambique's agricultural potential -- the country ranks sixth in the world in fertile but uncultivated land -- would also be put at risk from rising temperatures and more volatile weather. But it is cold comfort for poor countries that serious climate action will spare them future horrors when their daily existence remains mired in severe poverty.

Of course, demand for the developing world's resources is unlikely to evaporate overnight; the planet has proved spectacularly incapable of combating greenhouse gas emissions. As we step up efforts to change that, a vision for poor but resource-rich countries should be part of the plan.



Israelis Love to Argue...

And four other tips for Barack Obama’s first presidential visit to Israel.

President Barack Obama's announced trip to Israel, Jordan, and the West Bank in March appears at once premature and long overdue. Premature because the tangible goals of this trip seem, as yet, unclear. Overdue because -- as many critics have suggested -- his failure to visit Israel and the Palestinian Authority in his first term contributed to a sense, among Israelis in particular, of a presidential cold shoulder.

Of the two big items on the president's Israel plate -- dealing with Iran's nuclear program and the Israeli-Palestinian peace process -- the former appears paused, awaiting a diplomatic move by the international community, while the latter is in deep freeze and beset by pessimism on all sides. Unsurprisingly, Obama does not plan to announce a major new peace initiative on this trip, and he is unlikely to bring about a breakthrough on Iran now. Rather than seeking to extract specific policy concessions from any of the parties, the president should approach this with the broader aim of restarting his engagement with Israelis and Palestinians, while setting the stage for dealings with Iran and the peace process over the next four years. But even an unambitious trip to the Middle East is full of political minefields. Here, then, are five suggestions for Obama's first presidential journey to the Holy Land.

Don't promise the moon.

Many things are lost in translation between the political cultures of the Middle East and United States, but few contrasts are as sharp as the gap in cynicism. Israelis, Palestinians, and their neighbors are cynical to a degree that often astounds Americans, and with the endless unmet promises of peace and of "process," the attitude is not completely unwarranted. As Obama knows all too well, to have tried and failed in Middle East peace is sometimes worse than not to have tried at all. Today, after so many failures, the fanfare of the 1990s peace process is best replaced by sober -- though vigorous -- negotiations more reminiscent of the mid-1970s, when Henry Kissinger's shuttle diplomacy set the stage for the subsequent grand gestures of Egyptian-Israeli peace.

But in the halls of Washington these days, there is speculation that Secretary of State John Kerry could back a new full-scale push for comprehensive peace. The motivation is understandable, even laudable, and the goal of achieving a two-state solution is vitally important. But the peace process of old is over; the trust between the parties that was to be wrought through interim steps is long gone, to the degree that it ever existed.

A push for peace now should not assume that the process has merely stalled; its old form is likely dead. The repeated failures to achieve final status agreements from the second Camp David summit in 2000 onward and the new realities of the Middle East -- with turmoil in Egypt, Syria, and potentially among other neighbors of Israel -- have redefined the nature of the process at its core. Right now, quiet talks over practical steps, with peace as the ultimate goal, are far better than grand promises that few believe will be fulfilled.

But don't give up on reaching for the moon.

The myriad difficulties of resolving the Israeli-Palestinian conflict do not lessen the vital need to halt backsliding on the ground in the West Bank and Gaza Strip and the need to advance toward an eventual resolution. The untenable nature of the status quo is no less true because of the difficulties of achieving the goal.

In this respect, there's a silver lining for Obama in the grim cloud of the Israeli-Palestinian conflict. Though seemingly dead in the water, the peace process did leave both parties and the international community with a relatively clear view of what resolution would eventually look like. Obama can therefore focus on articulating U.S. interests -- as he has done in the past -- rather than dealing with the intricate details of negotiation (something his predecessor, Bill Clinton, may have done too often).

The irony is that the very same polls that show Israeli and Palestinian skepticism of the prospects for peace also show their fundamental agreement with the terms required to achieve it (even among right-wing Israelis, there is willingness for real compromise). Stopping the backsliding on the ground -- the erosion of the Palestinian Authority and the moderates, on one side; the construction of Israeli settlement outposts, on the other -- while building Palestinian independence and ensuring long-term Israeli security remains in everyone's interest. On these points, the president should not shy away from articulating the long-term U.S. vision, whether his hosts agree with every detail or not.

Talk to ordinary Israelis.

Israelis may seem tough and argumentative, but at times it seems that they just want to be understood. While Israelis don't "deserve" Obama's undying love, the trust of ordinary Israelis can be a useful tool for a president facing several dramatic crises in the Middle East -- not least of which involving Iran's nuclear program -- and a prime minister with whom he's not on particularly good terms. In this regard, he could stand to learn a thing or two from Bill Clinton on how to capture the hearts of Israelis: mention Israel's right to exist, acknowledge the horrors of the Holocaust, and reaffirm the ancient Jewish attachment to the Holy Land. Quote from the Old Testament (not the New). Psalms worked well for Clinton.

Here's something to avoid: don't repeat that part of the 2009 Cairo speech which seemed (to Israeli ears) to suggest that Israel was born of the Holocaust. In fact, the state was founded mostly by the Jews who already lived there, and modern Zionism predates World War II by many decades. This matters to Israelis.

But, of course, there's more than sympathy and understanding. Ordinary Israelis want to hear (yet again) the president's resolve to prevent an Iranian nuclear weapon -- a commitment that is underappreciated both in Israel and among Obama's opponents in Washington. The clearer the public alignment of goals is on Iran (despite important differences in nuance), the less likely it is that Israel will launch a unilateral strike. Both ordinary Israeli citizens and the nation's elite are already deeply divided over the wisdom of an Israeli strike, and the best antidote to rash decisions is Obama's firm, stated leadership.

Don't read too much into the Israeli election results.

The news of Obama's visit has already stirred speculation in Israel that the White House is trying to meddle in domestic politics and intervene in the ongoing coalition-formation process. Clearly, the precise makeup of Benjamin Netanyahu's next coalition (which could easily change again in the future) is not what motivates the first presidential visit since George W. Bush, but there is a longstanding temptation to overplay the U.S. hand in Israeli politics.

Obama faces a dilemma here: the United States is an influential actor in Israeli political life, and swaying the population can have an effect. But Washington is not adept at meddling in the details of Israeli party politics (as it tried to do, unsuccessfully, in 1996) and it shouldn't bother, for both practical and principled reasons. 

Nor should Obama read too much into the purportedly moderate results of the Israeli elections. Netanyahu won, as widely expected (albeit more narrowly than most predicted) -- and while the makeup of his new coalition will have important ramifications for his foreign policy, it will not be altogether more centrist than, for example, Netanyahu's short-lived grand coalition in the summer of 2012. In truth, on the Palestinian question, Israeli politics has moved much less than is often claimed, whether to the right or to the center. Yes, there is a real rise of radical politicians on the right, but the strength of the overall blocs -- right, religious, center, left, and Arab-Israeli -- is remarkably stable.

Don't underestimate how much Israelis like to argue.

With 120 members in the Knesset, there are, at the very least, 120 opinions on anything. Argument is not merely tolerated among Israelis; it's the national pastime. And Israelis respect someone who does it well. Gaining their trust does not mean obscuring U.S. priorities or papering over disagreements. Appreciating Israel's difficult neighborhood and the complexity of its position does not mean Obama has to agree with Benjamin Netanyahu. Many Israelis disagree with their leader -- and those who don't often pretend to.

In other words, so long as Israelis are sure that the United States is still on their team, disagreement is just a fact of life. Moreover, Obama will realize that Israelis might actually listen to him -- not something they usually do -- and at times even hear him.  

* * *

Obama's upcoming visit carries particular weight because it is so long-awaited. Clinton, though brilliant in capturing the hearts and minds of Israelis, also spoiled them. He visited the country four times and made both Israelis and Palestinians expect that he would be intimately involved in detailed negotiations. But that's not the president's role.

Obama faces a complex task, to say the least. But while his goals should be broad, his aim should be narrow. He needs to restate clearly his vision of peace and re-energize the efforts to prevent backsliding without appearing naïve or, conversely, creating unrealistic expectations. He needs to impress upon Israelis his proven commitment to the U.S.-Israeli alliance while remaining true to U.S. interests. And he needs to capture the hearts of cynical publics -- Israeli and Palestinian -- without losing sight of the grim and volatile realities of the contemporary Middle East. Despite the potential pitfalls and the formidable challenges, the president should be commended for re-engaging the region. True, it's never easy to win friends and influence enemies in the Middle East, but at least it's warm and the food is fantastic. Good luck, Mr. President.