Openness is just a placebo when lifting a real resource-curse

Sir, whenever a government receives in net resource revenues more than 5% of GDP, 15% of its exports, or 25% of all tax revenues received from the citizens, the balance of power has been fundamentally altered and real democracy cannot breath. In these cases the transparency of which George Soros speaks of in “Openness can help lift the curse of resources” March 4, is just a placebo. In fact transparency there amounts to little more than allowing the tortured seeing the pliers that is to be used to extract his fingernails.

That Extractive Industries Transparency Initiative, EITI, and that Soros speaks so highly of is without any doubt well-intentioned, but they have no idea of what the real oil-curse is all about. Anyone who did would not, as EITI does, proclaim the 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.”

That principle supports keeping on concentrating oil-wealth in hands like Gaddafi’s, while the only means of breaking an oil-curse of that size is handing over the oil revenues directly to the citizens. But what would a George Soros or an EITI know about that? … at the end of the day they are not really oil-cursed citizens.

PS. I’m from Venezuela. There the government, by means of oil revenues, has come to receive 97 percent of all national export revenues. In such cases you do not live in a nation, you live in somebody else’s business.

When democracy dies in the cradle

Sir, Arvind Subramanian is absolutely correct arguing that democratic forces stand no chance against the economic rents of a State, “Arab spring will not see an economic bloom”, February 22.

As an oil-cursed citizen (Venezuela) and therefore an expert on the issue let me assure you that societies where citizens are not paying directly for most of their government expenses, and are mostly positioned as receivers of government favors, there is absolutely no chance to develop a functional democracy. The most one can do is to hope for an illuminated oil-dictator, in the sad certainty that sooner or later one will have to suffer a truly dysfunctional one.

If for instance in Iraq oil revenues were shared out directly in cash to citizens the political dynamics there would have been different, and real democracy could have had a chance to be empowered. As is they are just waiting for the next petro-autocrat, and who could then perhaps even count on an oil production that doubles the highest under Sadam Hussein´s regime.

By the way even taxes can produce a tax-curse, if these are not transparent enough. Currently the UK taxman perceives through taxes on petrol consumption more per barrel of oil than those who give up that non-renewable for ever… and few UK motorists are really aware of how much they pay in these taxes.