Sunday, April 6, 2014

Friends of Venezuela, here is what you could really do to help Venezuelans

In Venezuela the government, on top of all the government authority invested in it, and on top of all its ordinary taxing power, is currently receiving 98% of all the nation’s exports, and deciding over its use.
Tell the Venezuelans that is a system of which you cannot possibly expect sustainable decent economic results, and of which you cannot expect that the government, sooner or later, will not assume an arrogant besserwisser attitude, by with which it begins to abuse its powers.
And if that can happen to “civilized” and educated government, imagine what could happen in the case of a primitive government.
Tell the Venezuelans that if they want to live in a nation, and not just in somebody’s good business, they need, as they did in Alaska, to wrestle the oil revenues away from the government and share these out, among all citizens, in equal parts.
Just think about how you would feel, as citizens, if your government received 98 percent of all of your nation’s exports?
Thanks, your help is appreciated. You see that it is not easy for Venezuelans to break out of something they have learned to live with and adapt to, ever since they are born and until they die.
And please, whatever you do, don't feed the Venezuelans with that bullshit that all their problems from this excess of government powers, is fixable by just adding some transparency and electing the right kind of people.



Thursday, April 3, 2014

Creditors of Venezuela, read our Constitution!

In the same way there are international conventions that help foreign investors to collect what governments duly owe them, there should be agreements that help citizens not to be saddled with the payment of debts incurred by governments who violate their constitutions.
If the articles of incorporation of a company stated that it was not allowed to borrow more than 50 % of its assets, but its president is asking for loans that would take its debt to 100% ... it should be difficult to get a reputable law firm to issue a legal opinion stating that there will be no problem.
And, if constitutions are the statutes by which citizens defend themselves from the excesses of their governments; and if creditors expect citizens to sacrifice themselves honoring the debts of their country to which their governments have subscribed... I think citizens should be able to expect from potential creditors, to at least throw a glimpse at their constitutions, to see if these are met.
And it does not matter where the creditors come from, whether Wall Street, San Cristóbal or Cochinchina.
And it is not that I expect creditors to be aware of everything in our Constitution, such as if the expressed rights of indigenous people are complied with but, as a minimum minimorum, sophisticated financiers should be able to tell, detail, whether there is compliance of an Article 320 which states:
"The State shall promote and defend economic stability, prevent the vulnerability of the economy and ensure monetary and price stability, to ensure social welfare. The Ministry of Finance, and the Central Bank of Venezuela, will contribute to the harmonization of fiscal policy and monetary policy, facilitating the achievement of macroeconomic objectives. In exercising its functions, the Central Bank of Venezuela will not be subject to directives of the Executive and may not endorse or finance fiscal deficits."
And so! Can anyone who knows anything about finance, argue that our Constitution has been complied with? Of course not! And so, as a citizen, I here inform our creditors they better not come crying to me tomorrow looking for my support to get paid.
And all citizens of the world, messed up by their bad governments, should take the same attitude ... and we should show solidarity with them all.
And I'm not throwing out warnings after the fact... like would a bad payer. In "Odious Debt", March 2004, and "OdiousCredit", April 2004, I begged creditors to collaborate with citizens ...and nothing! And as salt in the wound Venezuela has paid them exorbitant interests. Well guess what? You can begin applying those high risk premiums to the principal owed... in order for us to at least confirm you your risk assessment.
And what fault of mine is it that the creditors did not read it? They should follow me on Twitter!
Having us Venezuela citizens recently been mocked by the OAS, that clubhouse of governments where constitutions are not even read, it is clear that we need the OCA, the Organization of American Citizens.
PS. There are many polls, but the one I would most like to see, is one that asks the participants of the 4F-1992 Hugo Chavez coup, whether what we now have in Venezuela is what they dreamed about.
PS. I am seeking a "democratic dictator" who would be willing to rip our oil revenues out of the hands of our Petro-state, and hand these over to the citizens. That would earn him a place in history, as the one who achieved the true independence of Venezuela.

Wednesday, May 15, 2013

Revenue Watch Institute, give some of us oil-cursed citizens the Resource Mis-Governance Index instead

Again, May 2013, the Revenue Watch Institute presents its “Resource Governance Index”, and again I have to sit there being sold the subliminal message that even in a country like mine, where the central government receives directly over 97 percent of all the countries exports, things could be fine and dandy in terms of “governance”. 
Do these experts really believe that they could have a chance for any good governance in their country if their government was receiving directly over 97 percent of all their countries exports? I guess the only way to do that is to be either a communists or a radical supporter of some absolute monarchy. 
The final composite score, which will make up the index that more than 99 percent will refer to, even adds up the different components without even weighing these with relation to how much the natural resource revenues means for each particular country. 
Why can’t they just make a cutoff and exclude all those countries where the governments receive directly over X amount of exports or of fiscal revenue from natural resources from participating in a Resource Governance Index? If they want to cover these countries let these participate in a Resource Mis-Governance Index instead. 
Do these experts not know they will be utilized by the illusionists? For instance in my country, Venezuela, it would not surprise me if the government now call upon us to celebrate the fact Venezuela has been placed, by experts, among the top third of all the countries in the world in terms of resource governance? 
Why do you make our goal as oil-cursed-citizens to reclaim directly some of the oil revenues, in cash, so as to level the playing field just a little? 
Don’t you understand that, as is, we citizen do not live in a nation, we live in somebody else’s good business? 
Or is it you want to have a piece of “somebody else’s good business”, as an assistant to the illusionist? I pray not.

Thursday, April 25, 2013

We oil-cursed citizens, we do not live in a nation, only in somebody else’s good business.

There I was explaining to some the impossibility of being a democracy when more than 97 percent of all the countries export revenues goes directly into the coffers of the government and as is the case of my Venezuela. 
And then Nakibuuka Maxensia Takirambule, a woman from a health sector NGO in Uganda observed: “Mr. I know exactly what you mean, we do not live in a nation but only in somebody else’s good business”. 
Boy how the truth hurts! 

Thursday, February 14, 2013

Wednesday, January 30, 2013

Comments on IMF’s Guide on Natural Resource Revenue Transparency

Specifically it asks: Should the Guide on Natural Resource Revenue Transparency be revised as part of this exercise? If so, what revisions should be made to the structure, format, and content of the Guide? 

Washington January 30, 2013 
Dear Sir, 
As an oil-cursed citizen I would hold that any information that is not easily and clearly understood by the citizens has nothing to do with real transparency, because the fundamental reason for any transparency is to extract real government accountability to the ordinary citizen and not to someone else, like a transparency “expert”. 
Therefore I would ask for the Guide on Natural Resource Revenue Transparency to be revised so as to include the following: 
1. For oil producing countries the most important data are: how many barrels of oil have been extracted, what were the costs incurred doing this, and how much net revenue the government received from oil, no matter how, on a monthly per citizen basis. And this should be reported in the major media on a monthly basis. 
2. If total oil revenues signify more than certain levels of the nation’s total export revenues, of its GDP, or of all Government tax revenues collected from citizens, then there must be an independent Ombudsman Office in charge of supervising and preparing the information. 
3. There should also be a monthly report that indicates the amount of subsidy or taxes, per liter or gallon of gasoline sold domestically, and calculated as if the gasoline could have been sold at international prices. 
4. I also urge the IMF, in the name of the same transparency, to report to the citizen of the oil-extracting countries how much fiscal revenue, per liter or gallon of gasoline is generated by all the taxes on its consumption in the oil-consuming countries. Quite often that amount surpasses all the gross revenues of the country that sacrifices the non-renewable resource forever and this even at current prices of oil. 
Thanks 
Per Kurowski 
President 
Petropolitan A.C. 
Venezuela 

Wednesday, August 22, 2012

SEC´s sunshine rules might signify more darkness.

The SEC, in accordance to what was requested in the Dodd-Frank Act, has now ordered US-listed companies to disclose the payments they make to the host governments.
That is absolutely great news… I mean of course for those countries where civil society is strong enough to matter... and where the governments have at least the intention of listening to it. 
But, in those countries where civil society is truly weak, as is most often the case of countries suffering the curse of abundant natural resources, those sunshine rules might only mean more darkness, as they could tend to exclude the sort of more reasonable or least unethical extractive industry corporations from participating, leaving the field open to the truly unreasonable and least ethical. 
Why do not invest instead all these well intentioned efforts in supporting the development of strong autonomous civil societies, independent of civil societies from other countries, and which can demand better results where it really matters, not in the corporate reports of companies listed in the stock-exchanges of developed countries, or in an annual report of a well intentioned NGO, but on their own oil-fields and mines? 
If the SEC would at least dare to follow up and approving a list of countries where a reasonable active participation of civil society existed, and in which therefore these sunshine rules must apply, and a list of those countries where these rules are impossible to apply, then that could be more helpful, not only for us oil cursed citizens, but perhaps even for SEC’s own listed natural resource companies.

Monday, April 23, 2012

Ngozi Okonjo-Iweala, for the EITI!

But now, when Ngozi Okonjo-Iweala was unfortunately not appointed as World Bank President, why do we not make the best out of it and launch her candidacy as the next Chairman of the Extractive Industry Transparency Initiative, EITI? 
I mean so that we oil-cursed citizens are represented there by an oil-extraction-cursed citizen and not an-oil-consuming-cursed citizen. 
I mean so that we oil-extraction-cursed citizens are not represented there by someone whose government, by means of taxes on gasoline-petrol consumption, gets more value out of a barrel of oil than what the oil-company and the oil-extracting country do together.
I mean there´s a slight difference between those who sell oil and those who buy it.
By the way, we know how the President of the World Bank gets elected, that is quite transparent, USA elects him, but how does the Chairman of the EITI get to be elected?

Thursday, April 7, 2011

Yasuní-ITT

Ecuador has been marketing for about three years a truly revolutionary proposal, Yasuní-ITT, consisting in asking the world for some of the resources it could obtain exploiting some important oil reserves so as not to have to exploit these, as they lie in a forest reserve that contains an extremely rich and valuable biodiversity. The proposal does not seem to be receiving as favorable response as it merits and I think I suspect some of reasons for that, besides that of having perhaps unnecessarily complicated the proposal with some technicalities.
During the 2009 UN conference on environment in Copenhagen I got upset seeing environmentalists from rich countries announcing that because the rich countries were the ones most to blame, they should and would assume the responsibility and pay for protecting the environment… which sounded just like global leftwing politicking, and effectively negated the poor the right to participate as human and equals in confronting something which from all perspectives would be a challenge to the human race.
In that respect it seems to me that the Yasuní-ITT proposal, because of its immense importance, should never have been presented as a government to government proposal, or one extended only to groups with environmental concerns, but should have been tabled as a proposal from the Ecuadorian citizens to all other indigenous people of the earth, meaning us, 1all other citizens. If the possible ecological damages of exploiting the oil in Yasuní-ITT are as serious as we are told, we cannot afford that the fight against these gets sequestered by other interests, agendas, or green Taliban.
Also, because the world needs oil and if not extracted in Yasuní-ITT it will do so elsewhere it would be good to have a study of the marginal environmental costs of exploiting oil in many different places. This would also be extremely important information if we later would like to replicate Yasuní-ITT.
The proposal was presented as having to select between a ferociously irresponsible oil extraction and a marvelous conservation of a habitat, and the truth is never that clear. It would be very important to know the cost and the significance of exploiting the oil in Yasuní-ITT in the most environmentally friendly way possible, so to also give the world the chance of accepting something that might sound more reasonable, or at least of knowing that this possibility has been analyzed. Since in Europe, the European taxman, by means of the taxes on its consumption derives more income from it than the country that gives up that resource for ever, it would seem quite reasonable that the European citizen could ask that at least a part of those taxes should go to help extract the oil in the best way possible. (Where is the oil company that specializes in green oil exploitation?)
But, more than anything, since no one likes to pay taxes to its own government much less would they like to pay a sort of an environmental tax to other governments, much less if these are rich in oil resources… the proposal should include that all funds, up to the last cent, should be given directly to the citizens of Ecuador… or in equal parts in cash, o through conditional cash transfer programs… for instance to all Ecuadorian children that go to school.
And I say this because as a Venezuelan I know very well that too much oil money in the hands of a government is bad… not only because it gets wasted, but mostly because, one way or another, involuntary or on purpose, that money ends up subjugating the citizens.
Translated from El Universal

Tuesday, April 5, 2011

Citizens of Libya

Give yourselves a fighting chance to become real citizens in your own country. Demand for the oil revenues to be paid out to you directly. If you so wish, you can then later hand it over to your government in taxes… but at least that way you make it clearer to your government that it works for you.

Tuesday, October 12, 2010

As an oil-cursed citizen I object the Revenue Watch Index 2010... They do recall cars, don't they?

The 2010 Revenue Watch Index on the transparency of governments in oil gas and mining industries prepared by Revenue Watch and Transparency International was released on October 2010.

And there I see that my country Venezuela ranked 14th among 41 countries with 63.0 points out of 100 possible. What does that mean? I have no idea except being absolutely sure it does not mean what it is supposed to mean.

The first and foremost reason is that there either is sufficient information for a citizen to have a reasonable understanding of what the government is up to, or there is not. What would happened if auditors could rank companies in terms of how much of the information they would need to complete an audit they receive?

I have insufficient knowledge of other countries but what is absolutely certain is that in Venezuela the citizen is not receiving the information he would require to even have a sketchy idea of what its oil industry is really up to and how it is doing. And so I absolutely object to the ranking and declare that the ranking itself is extremely little transparent.

Besides:

A fact such that the Venezuelan Government, even if it wants to market itself under the brand of 21st Century Socialism, gives away gas at the pumps for around US$ 5 cents per gallon and with that disappears a big chunk of Venezuela’s GDP, from those having nothing of nothing and gives it to the motorists, is not even reflected on the Index. Just that fact alone should have placed Venezuela among the last.

As an oil cursed citizen who knows that the absolute worst part of the oil-curse is the creation of an independently wealthy government for which the citizens are almost a nuisance, what I would like to see standing out in any applicable index, is how much of the oil revenues are turned over to the citizens in cash, no questions asked, no votes expected. This has not even been referred to in the Index.

Finally if you really want to be transparent on oil, you would have to complement this index with a report of how much the foreign taxman receives from taxing gasoline because that income often exceeds the whole oil income an oil extracting country receives for sacrificing its natural resources.

I truly understand and believe that Revenue Watch and Transparency International produce this index with their best intentions, and I thank them for that, but unfortunately, when you are an oil-cursed citizen all the best intentions of the world do not cut it.

I shiver to think how many oiligarchs and petrocrats can and will use the index to convince their poor oil-cursed citizens that they are doing a great job, comparable to what the other resource countries do, and, if off-track, this is only marginally so… as the figures indicate.

I respectfully request the Revenue Watch Index 2010 to be immediately recalled because of serious and dangerous malfunctioning! They do recall cars, don't they?

Ps. If further proof about the index being totally faulty is required, it suffices to mention that in the just published Corruption Perception Index 2010, published by Transparency International my country appears as number 164 among 178.

Ps. During the recent conference “Extractive Industries and sustainable Development” organized by the Vale Columbia Center on Sustainable International Investment I had the opportunity to make some of the observation against the 2010 Revenue Watch Index to Karin Lissakers, the Director of Revenue Watch Institute. She admitted they also had serious doubts about it. But if they had serious doubts, why did they then go ahead and publish it? Have they never heard of “do no harm”?



Saturday, August 28, 2010

Has the US Congress now sided with the petrocrats and the oiligarchs of the world?

The recently approved ‘‘Dodd-Frank Wall Street Reform and Consumer Protection Act’’… includes in SEC. 1504. Disclosure of Payments by Resource Extraction Issuers, a rule, sponsored by Senators Benjamin Cardin and Richard Lugar, which obliges US-listed companies engaged in oil, gas or minerals extraction anywhere in the world to report how much they pay to governments in their annual filing to the Securities and Exchange Commission. To be able to access the US capital market, companies - US and foreign - must publicly disclose all royalties, taxes, and other payments, project by project and country by country.
Since I am for transparency I see nothing wrong with that. In fact, as a citizen of an oil cursed country, Venezuela, I obtained the crucial information I needed on some of its investments only because its oil company, PDVSA, had to file that information with the SEC. (And that was even before the hugo chávez’ years).

BUT, according to this Act, those payments as determined by the Commission should be “consistent with the guidelines of the Extractive Industries Transparency Initiative (to the extent practicable)”, AND the Extractive Industries Transparency Initiative (EITI), for reasons that are unexplained, specifically states as its 2nd Principle the following:
“We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.”
Which, as I read it, means that the US Congress, though most of the oil in the US has been exploited by the private sector, and it adheres to free market principles, is lending credibility to an organization that is lending credibility to the notion that oil revenues should be managed by authoritarian petrocrats and oilygarchs like hugo chávez.
That does not make it easier for those who like me are fighting for the sharing of the oil net income directly with the citizens of a country, as the single most important factor that could help to diminish the negative consequences of the oil-curse.
Besides EITI is little by little becoming just another Basel Committee, monopolizing the rulemaking and the debate, without anyone outside comprehending sufficiently where their globally reaching authority really springs from.

Tuesday, June 29, 2010

Wednesday, June 16, 2010

The asymmetrical empowerment of the authorities is by far the worst part of the natural resource curse.

Today I assisted another conference arranged by Oxfam and where they presented a report titled “People, Power, and Pipelines: Lessons from Peru in the governance of gas production revenues” This report tried to analyze what had happened to the about $1.13 billion in revenues generated by the Camisea natural gas project that were transferred to local governments between 2004 and 2009.
It is a good report and it reaches many correct conclusions. Unfortunately, when it quite traditionally ends with recommending “building subnational governments (SNGs) capacity for extractive industry revenue management” it evidences that this NGO at least has not yet achieved sufficient understanding of the “resource curse”, probably because most of their member have never been resource-cursed themselves.
In the villages of the Amazon which were studied, before the SNGs received the resources, the villagers were most certainly very poor, but they were still an important part of society, and their collaboration must have been of great importance for their then similarly poor SNGs. But then me the natural resource revenues and empowered the SNGs, and since then the citizens are not any longer needed and are most often treated as mere nuisances who just expect favors. It is precisely this asymmetric empowerment of the authorities that causes the absolutely worst part of the resource curse.
And so if SNGs (or central authorities) have been asymmetrically empowered with excessive resources, then those we really need to empower with the capacity of managing the resource curse are the citizens.
The last thing we want to hear is those SNGs who are already in possession of the resource moneys, also telling the citizens: “We are the ones who have been capacitated to manage these by the World Bank and Oxfam (or any other in the list of willing capacity builders). Therefore, if you do not understand the hedging of our Muni-fund exposure to the yen, don’t worry, be happy, and remember that it is in your best interests to vote for us next time too, since frankly you would never even begin to understand the level of sophistication that is required and that we have achieved.”

What do I propose? For a starter, in order to increase accountability and place expectations in a more correct perspective, to give each citizen a receipt that indicates exactly what is their share of the natural resource revenues that has been received in their name by their SNG; followed up by giving them more and more of the revenues generated, in cash, for the same reason you are better off giving the citizens a fishing rod for them to learn how to fish, than giving them the fish you so carefully and so very lovingly selected for them. It is always better to have capable citizens than capable governments!
Friends in Oxfam, please follow up the current report with one that specifically analyzes how the natural resource empowered SNG’s behave when compared to those less “blessed”. It might be an eye-opener! It might help to capacitate you on the true meaning of the natural resource curse.

Saturday, May 8, 2010

A war with the neighbor is awful but less bad than a civil war

I just read a post in a blog that seemed to imply that Ghana and the Ivory Coast might fight over some border oil. No matter how sad that sounds it is nonetheless a thousand times better than the internal low intensity civil or uncivil wars for the oil revenues that will occur within the countries themselves… unless they can find an expedite and just way to distribute the oil revenues directly to the citizens.

Saturday, May 1, 2010

A partial objection to the S. 2971 ‘Energy Security Through Transparency Act' currently being discussed in the US senate:

The Act reads: "SEC. 408. SENSE OF CONGRESS RELATING TO TRANSPARENCY FOR EXTRACTIVE INDUSTRIES: (2) the United States Government should commit to global leadership of transparency in extractive industries by supporting-- (A) multilateral pro-transparency efforts, such as the Extractive Industries Transparency Initiative, in revenue collection, budgeting, expenditure, and wealth management"
Now the Extractive Industries Transparency Initiative has, as it 2nd Principle, “We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.”
Given that the oil in the US was and is exploited mainly by the private sector we do not understand how the US could lend support to such a principle.
And many of us oil-cursed citizens, though we certainly support and are appreciative of some of the initiatives of EITI, we do hope that the US will not support anything that has as a stated principle that oiligarchs, petrocrats or vulgar oil-thugs, and who feel themselves independently wealthy and consider most often us citizens as a nuisance, have to manage the natural resources in our interest.

EITI and Natural Resource Charter, I dare you to do a Full Monty on oil revenue transparency!

You, oil consumers of Europe wanting to solve our oil-curse with more transparency, why do you not dare to be real transparent about it and confess that you at your gas pumps are capturing much more of its value than what is received by the country who sacrifices its natural resource for ever… often only to end up depositing those lesser funds in the consuming countries banks.

You tell me… NGOs from Europe, why should I trust you good hearted oil curse fighters from consumer nations? Have you ever spoken out against your governments capturing too much of the value of the gasoline/petrol we give up for ever at your pumps?

What might be lost to corruption in the transaction between oil companies and the petrocrats, oligarchs or simple oil thugs of our governments, is but a fraction of what you collect in gasoline/petrol consumptions taxes at your pumps… often pouring salt in the injury arguing it is because you want to protect the environment, while at the same time subsidizing your dirty coal behind our backs.

Thursday, April 29, 2010

The little receipt!

During the recent World Bank meetings in Washington (spring 2010), there were again several conferences relating to the question of why abundant natural resource richness translates into such poor results for their respective countries.

And again I had to submit to the smirking smiles with which those who have not the faintest idea of what an oil curse really means try courteously to hide they think it has to do with us being third class citizens.

And again I had to hear the barrage of arrogant and wise solutions offered by those who have never lived an oil curse.

And again I felt the so Venezuelan conflict of knowing oneself so chévere (great) and by the day being able to show less and less evidence of that. Heck even our hydro-electrical dam Guri, recently a source of national pride has with the electricity crisis turned into another symbol of ineptitude. What are we left with? Our beautiful women and the Ibis Escarlata?

And the worst part was that all of the solutions offered, outside and inside Venezuela, all sound like all recipes for the cooking by a distant great aunt whose food we never liked but of which we became fed up of as children.

“You need to diversify the economy; more agriculture; more manufacturing industries; you have to increase tax collections form the non-natural resource sector, even if that makes it more difficult to develop the non-natural resource sector; you must reduce income volatility by setting up funds; you need to invest in education”. Yes, yes and yes!

Bankrupted iron steel and aluminum industries; industrial zones that seem like desert towns in the wild west; tremendous education programs that have our professors teaching in the best universities abroad; investment funds with no funds?... well no, no and no! We have to find something new to do about it.

And having written so much on the subject and even promoting a global alliance of oil-cursed citizens I feel I would be satisfied if only those who always manage and sow the oil in our name, because they are such great sowers and we’re not, would only give, each one of us Venezuelans, a little receipt.

Mrs. Juana Rivera. Shack # 17, Path The Miracle; Village The Hope, Municipality The Fortune, State of Barinas, Venezuela

Dear Mrs. Rivera: In the name of our glorious Venezuelan nation allow me to inform you that last year, as administrators, we received in your name, in income from that your non-renewable oil, the amount of 178.98 US dollars per month, free and clear of all costs.

In relation to the same we also include here five receipts exactly the same and which correspond to your five children. The receipt of your husband is kept in our archives, as we have not been able to locate him.

Respectfully and expressing again the gratefulness in the name of our glorious nation your generopus contribution we remain,

Your sincerely

Your oiligarch, petrocrat or oil thug in turn.

Saturday, March 6, 2010

What’s more important for a nation, good citizens or good governments?

Friends

March 3 and 4, 2010, I participated in a very interesting conference titled “Oil and Gas in Federal Systems” held at the World Bank in Washington D.C. organized by the World Bank and the Forum of Federations, with sponsorship from NORAD.

I believe all participants learned a lot about issues and facts related to how oil and gas revenues are and should be distributed to central governments, states and municipalities. I know I certainly did. Thank you all!


Unfortunately, the sharing of the oil and gas revenues directly with those citizens whom are always told that these resources belong to them was not considered, not even as a possibility.

I did my best to remind those present that if we were to heed the wise words of Amartya Sen telling us to look for the things we share instead of what separates us, we should remember that at the last count, we are all citizens. Sadly, this did not impress many of the aspiring government, state or municipalities’ consultants, or authorities present, and so I felt that, as an oil cursed-citizen, I needed to intervene more actively. I hope the organizers will still invite me the next time.

I spoke out along the following lines:

What is more important for the future of a country, good governments or good citizens? I have no doubts whatsoever that the right answer is “good citizens”. Therefore, in an oil rich country, it is more important that the citizens learn to manage the oil-richness than thyat their governments do. But how can the citizens learn when governments thinking them to be the experts and the responsible for us, insist on managing all those resources?

Only those who have lived as cursed citizens know what the oil-curse is really all about. Only they know what it is to have an independently wealthy government which often considers the citizens to be more of a nuisance standing in the way of their grandiose plans. Only they know how easy it is for the citizens to succumb to be simple observers holding immense expectations about what oil and gas revenues will bring them.

Constitutions are written in order to defend the citizens from the excessive powers of their government. Should therefore not any methodology of sharing oil revenues between central governments, states and municipalities have as its absolute first priority that of avoiding accumulating excessive powers anywhere?

Yes I am all for transparency but, let us be sincere, quite often we know perfectly well we are being taken for a ride without needing to know the details. On occasions I have held that for an oil-cursed citizen more transparency is sometimes like having the right of also seeing when ones nails are extracted by the torturer.

Having been an Executive Director at the World Bank (2003-2004) I am perfectly aware that the World Bank works directly for the governments and only indirectly for the citizens. That said I find no reason why the World Banks needs to be so accommodative to the governments so as to sign up on the 2nd principle of the Extractive Industry Review (EITI) which states “We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.”

The Iraq Study Group Report of May 2006 stated: “There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation’s chief natural resource, but it would take time to develop a fair distribution system.... There is no institution in Iraq at present that could properly implement such a distribution system. It would take substantial time to establish, and would have to be based on a well-developed state census and income tax system, which Iraq currently lacks.”

Is it not exactly for this type of challenges that we have in the World Bank a “knowledge bank”? We all know that if there was a real will, a system to do exactly that could be designed and put in place quite expeditiously.

Finally I spend some time voicing some “wise” bullets and thumb rules.

When accounting for the government’s share, you must include what they give away, like for instance the value of the 25 percent of Venezuelan oil production that at US$ 8 cents per gallon is just given away to those who drive cars.

Having been there, I cannot see one single new proposal related to have centralized governments make better use of oil and gas revenues that has not been tried and proven to fail before.

Having been there, as a manager in the initial stages of the Venezuelan Investment Fund 1974, I know about the total worthlessness of any oil and gas fund that the governments could influence in even the most minor way… so please do not sell false potions.

Would Norway be today's Norway had they found their oil when kings were kings?

Please do not let perfection become the enemy of the good by working on turning oil and gas revenues into a blessing. Most of us citizens would feel more than blessed were we able to avoid just the worst parts of the curse.

The best way for citizens to guarantee their freedom is paying for their governments. No central government, state or municipality should receive more than 10 percent of their revenues from any other source that is not direct tax payments by the citizens.

Never provide a ruler or a bureaucrat with income that he feels he cannot be contested or held really accountable for. If governments need the revenues let them pay the full per capita oil or gas revenue check to the citizens and then explicitly withhold the taxes on such payments.

Corruption is not acceptable whether centralized or decentralized and bullies are bullies, whether in the central government, states or municipalities.

Any government that receives more than four percent of GDP in fiscal resources that have not passed through a taxpayer’s pocket becomes de-facto a communist state.

The problem is not about producing the miracle of a government that puts centralized oil and gas revenues to good use for a country and its citizens… It is about being able to repeat that miracle over and over again.

Friends, I thank you in advance for listening to me and I appreciate immensely any echoing of my voice by resending this message to anyone who could be interested in it… and to many of those who are not but should be.

Best regards

Per Kurowski
Just another oil-cursed citizen

PS. I told the conference that two of my daughters had moved to Canada, one to Ontario and the other to Quebec and that, after reading about Alberta’s centralized oil revenues, I was thankful they had not moved into another future Venezuela. Someone replied that in Alberta they would not have to pay taxes. He did not really get my drift… paying taxes is the only way a citizen can have a government that works for him... and not the other way round.

Wednesday, November 25, 2009

EITI, please change your 2nd principle

I am an oil cursed citizen who has seen my homeland waste immense non-renewable natural resources for nothing and destroy all its social structures, all as a direct consequence of the oil revenues going directly to the state coffers making our governments independently wealthy and powerful.

And then the Extractive Industries Transparency Initiative (EITI) 2nd principle states:

“We affirm that management of natural resource wealth for the benefit of a country’s citizens is in the domain of sovereign governments to be exercised in the interests of their national development.”

To me any moment a government receives, for example, more than 4 percent of its GDP in fiscal income which does not proceed from the taxpayers, it is de-facto turned into a natural resource autocracy, a central planned economy and a communist state.

I cannot believe that the people supporting EITI are really aware about this, but if so, and they still agree with it, then we must fight against EITI, since it is clear that it will only serve as an instrument to create the illusions of change, to be used by the oil-autocrats to keep us citizen down.

The sum of many individual decisions on what to do each one with their part of the oil revenues is always going to be better long term that the central-planned decisions by some autocrats.

But if the oil revenues have to go to the government then, as a minimum, they have to take the route of first pass through the tax-payer’s pockets.

Most of the oil curse does not have its origin in the oil revenues per se but in their distribution. Distributing the oil revenues directly to the citizens will stop the citizens from becoming beggars of favours and the governments from becoming haughty grantors of favours.