Like oil-cursed citizens

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 the natural resource revenues empowered unduly their 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.