As a Venezuelan who has lived through three oil booms since 1974, I have
witnessed first-hand how democracy and institutions take a real beating
whenever high oil revenues are channeled through a central government or into
the pockets of the sole autocrat who has hit the jackpot, making it or him
independently wealthy without citizen oversight.
In my efforts to raise awareness about this problem in Venezuela, I suggested
an oil revenue-sharing mechanism to give at least part of the oil revenues to
the citizens. These efforts came to no avail, since the forces with access to
the oil checkbook were always stronger and more cohesive than the voices of a
few concerned citizens.
In 1991, looking for ways to reduce some of the price volatility that hurts
both oil extractors and oil consumers, I proposed that the
United States sign a long-term take-up contract with Venezuela for many
millions of barrels of oil. In order to give the contract sufficient
credibility and sustainability, I also pushed for inclusion of a clause
establishing that "30% of Venezuela's gross oil revenues should be directly
distributed in equal amounts to each Venezuelan". Distribution could be in the
form of cash or vouchers for health and education services.
From 2002 to 2004, I was one of the 24 executive directors at the World Bank,
and these ideas were received as mostly noise in that venue as well. Imagine,
then, my enthusiasm when, in 2006, in the report prepared by the bipartisan
Iraq Study Group established by the US Congress, I read the following: "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."
Although I had never favored the Iraq invasion, here was at last an opportunity
to set up an example that all oil-cursed nations of the world could follow. Not
only could it help unite Iraq, motivating peace among Sunnis, Shi'ites, and
Kurds, but it would also fulfill an absolute precondition for any democracy to
stand a chance anywhere, namely that of avoiding the excessive concentration of
power that makes a mockery of checks and balances. If such an outcome could
emerge from all the suffering in Iraq, it would at least serve as some
consolation.
Despite being a hardened veteran of this issue, my enthusiasm was soon dampened
when I read some of the difficulties listed in the Iraq Study Group report:
"Oil revenues have been incorporated into state budget projections for the next
several years. 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."
Compared to all the other challenges that Iraq faces today, developing a fair
and transparent per capita oil revenue sharing system should be relatively
easy, and I believe that the World Bank has the required capabilities to
successfully complete such a project. For starters, they could look to the
Alaska Permanent Fund Corporation, which draws on state mineral revenues to
disburse an annual dividend to eligible residents.
Five years into the war, oil revenue sharing and empowerment of democracies has
taken a backseat to discussions of withdrawal, permanent bases, and legal
immunity for the forces. It is sad that at the tail end of the conflict the
ratio of pragmatism to ambition is worse than at the debut.
When exiting Iraq, there is a rock-bottom responsibility to minimize the
likelihood of anyone aspiring to be the next Saddam Hussein. Guaranteeing that
oil resources will never finance another deranged ego is the best way to ensure
that outcome.
Beyond the empowerment of a fledgling democracy, basic social justice is also
at stake. For example, at US$80 per barrel and 2.5 million barrels extracted
per day, each one of Venezuela's 27 million citizens could be awarded $225 per
month. Visit Venezuela and see for yourself whether, under a government that
markets itself all over the world as socialism for the 21st century, the poor
of Venezuela are getting anything remotely close to that.
Per Kurowski is chairman of Petropolitan, a Venezuelan NGO that fights
for the Venezuelan oil belonging to the Venezuelan people.
(Published with permission of the Global Policy Innovations program at the
Carnegie Council for Ethics in International Affairs.
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