[Mb-civic] NYTimes.com Article: Poor Countries, Rich Resources

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Poor Countries, Rich Resources

August 1, 2004
 


 

The World Bank has helped finance exploitation of oil, gas,
coal and other minerals in the developing world, mainly
through its private sector lending arm, even though this
has rarely advanced the institution's mission of reducing
poverty. Indeed, it often makes poverty worse. 

Three years ago, the bank's president, James Wolfensohn,
commissioned a panel of experts to investigate how the bank
should deal with these extractive industries. The panel
concluded that the bank should stop financing oil projects
completely by 2008 and should immediately begin a policy of
supporting oil or gas extraction or mining only in
countries with a well-established rule of law and effective
regulation to ensure projects are well run. 

The bank's management has already rejected these
conclusions, instead promising it will take these issues
more seriously when making such investments. The bank's
board, which will make its final decision this week, is
likely to echo that position. But the management response
smacks of business as usual. While it would be unwise for
the bank to use the word never, it should embrace most of
the review's recommendations for ensuring that its projects
help the poor. 

Saying never to oil financing is counterproductive, though
it is understandable that some people should urge that out
of anger and frustration. It has become clear that plenty
of poorly governed nations, including Nigeria, Angola,
Ecuador and Venezuela, would probably have been better off
had they never discovered oil or other valuable minerals.
The discovery of these resources usually foments
corruption, prevents the development of a diversified
economy, props up dictators and fuels wars. 

But simply pretending those resources were never discovered
is no development strategy. The challenge for the World
Bank is to figure out how to help nations in the developing
world take advantage of their natural riches, while making
sure the poor benefit from them. 

Chad, one of the world's poorest nations, exemplifies why
the World Bank's presence is desirable in some cases, even
absent ironclad rule-of-law guarantees. As a partner in the
development of oil fields there, the bank has forced Chad's
dictator to accept a plan in which revenues are held in
escrow abroad and will be directly spent on health,
education and road programs. A revenue oversight committee
of citizens is monitoring the process. 

The early indications do not suggest all this will be
accomplished easily. The president spent part of the
signing bonus on arms and the revenue oversight committee
will include his brother-in-law as one of its members. But
at least the plan is a step in the direction of giving the
people of Chad a chance to benefit from their natural
resources. In other places, like Equatorial Guinea, oil
revenues go straight into the dictator's pockets. Countries
like Chad have so few opportunities to develop that it
seems prudent to leave open the possibility of bank
involvement in some cases. 

http://www.nytimes.com/2004/08/01/opinion/01sun2.html?ex=1092378902&ei=1&en=44603e885720e049


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