19 February, 2016

Oil, the Devil’s Excrement, the curse continues.

In the seventies, Juan Pablo Pérez Alfonzo, Venezuela’s oil minister and one of the founders of OPEC famously said that oil was not black gold but that it was the devil’s excrement and brought a curse to those countries that had oil reserves.

 Pérez Alfonzo’s insight has been rigorously tested over the last forty years and economists, environmentalists and political scientists have confirmed that he was correct in saying that oil did not bring all the benefits that governments, and people, expected. Studies have shown that the economies of resource-rich countries grew at a slower rate than those that do not have abundant minerals or raw materials to export and, even if the natural resources fuelled growth, it was rarely accompanied by the expected full social benefits. It could be said that a surplus in wealth from natural resources has had a negative effect on the development of other sources of wealth such as agriculture, manufacturing and a country’s human resources. Those countries that proved to be an exception, e.g. Norway and Malaysia, used the bonus of oil resources wisely. Desert countries e.g. Gulf States and Libya, had no significant agriculture or industry prior to the discovery of oil and the riches that the Americans and Europeans extracted from under their feet brought wealth beyond their dreams, while wealthier countries such as Iraq, Iran, Nigeria and Venezuala, that already had other resources and industry, oil was a bonus. However the bonus still carried the curse and, over time, it has not proved to be a ‘God given’ gift. 

The recent drastic fall in the price of oil has had a devastating effect in Venezuela where the country’s economy is now heavily reliant on oil. In 2014, oil brought in $75 billion to the economy of this oil rich country where Pérez Alfonzo served as Minister of Oil, but today the value of a barrel of oil is less than a third of its 2014 price. The result is a shrinking economy and rising inflation accompanied by a food crisis that is hitting every Venezuelan. The country had become reliant on its income from oil to provide food for its growing population but now the government cannot pay for the imports of flour, milk, eggs and other basic staples that the population depends upon and many supermarkets, especially those that are state subsidised, have empty shelves. Inflation is estimated to be 700%, (The Times, London, 12.02.2016), there are long queues outside any shop that has food supplies while crime rates are rising. The country has also been hit by drought which is being blamed for the drop in hydro-electric power and the enforced daily power cuts. Now the Venezuelan government is urging everyone to do their bit towards seeing their country through the current emergency.

 This year, President Maduro of Venezuela announced the formation of a new Ministry for Urban Agriculture. Emma Ortega, the Minister for Urban Agriculture, recently said “people have to solve the current emergency by cultivating in any available space. We just need sun, water and earth. Currently our cities are just food consumers and parasites.”
 President Madura has said that by growing their own food people can survive the economic collapse and that he and his wife were keeping 50 backyard chickens in their effort towards food security. “It’s time to develop a new culture of production”, he said. While the government is urging its people to return to agriculture the country’s health services are breaking down as doctors try to stop the rapid spread of the zika virus, in the absence of the drugs they need but have no means of obtaining. It is a sorry state of affairs for this oil rich country.

What has brought Venezuela down is the result of its successive governments believing that the oil revenues would always be sufficient for the country’s needs and little emphasis was placed on the development of other avenues of income while wealth always attracts the dishonest and the corrupt who seek to line their pockets. Corruption can be found in any country but sadly the combination of oil wealth and developing countries results in corruption and nepotism on an excessive scale.

I was a student in Britain when the Ba’athists turned their attention on my family and, after obtaining my doctorate, I was able to get employment in Tripoli University Libya followed, a few years later, by work with the Food and Agriculture Organisation (FAO) of the U.N. When I retired from FAO my work had involved livestock and agriculture development programs in all the countries of the Middle East and North Africa yet the opportunity for  work in Iraq only came when Saddam was overthrown and I had reached the UN retirement age. Six years ago I was asked to take up the post of adviser in food security and agriculture to the KRG’s Prime Minister I readily took the opportunity to play a role in the development of Iraqi Kurdistan. I believed that I would be contributing to the redevelopment of farming communities destroyed by Saddam’s troops, improving agriculture and developing food security for the benefit of Kurdish people in Iraq.

I had not been in Erbil for long when I realised that sadly this was nothing but a pipe dream and that, unfortunately, the fatal miscalculations made in Venezuela were being repeated in KRG and Iraq.

The reality was that all the ideas, recommendations, advice, observations and reports that I made were simply ignored. It did not matter if it involved increasing poultry production, improving slaughterhouse facilities and meat inspection, control of livestock imports, silos and wheat production, vaccination programs or safeguarding water and agricultural lands – no one was interested. The first Prime Minister I was asked to advise took one report I offered him and threw it onto his desk saying “We do not need this, we have oil!”, I was never called to meet his successor. By chance I attended international discussions held by the Blue Peace Organisation on water supplies in the Region and I was appalled to discover how Turkey were damming the Tigris and Euphrates rivers and reducing the waters flowing into Kurdistan and Iraq. It was made perfectly clear by the Turks that they regarded water as a commodity and they used the phrase ‘Water for oil.’  No one in the KRG government, including President, Prime Minister and Speaker of Parliament, expressed concern and Turkey’s exports were welcome in the markets to be sold in direct competition with any locally produced goods.

 It seemed that agriculture and food production was regarded as being unimportant when the bright, new petrodollars could buy everything they wanted. Instead of being used to develop our agriculture and industries the oil revenue was used to buy cars, food, freezers, electronic goods or clothes or to build anything from cement plants to tourist villages or invisible factories on prime agricultural land. As long as there was enough oil money available to maintain imports, pay salaries and pensions everything was fine. Or was it? The sad truth was that the entire government was being run by ruling parties that took power in turn and allocated ministerial posts to the requisite number of party members irrespective of ability while nepotism was rife. It is a sorry state of affairs when only one of the seventeen Ministers of Agriculture that have served the KRG was an agriculturist and sadly the same can be said of the central government in Baghdad. For thousands of years the lands of Kurdistan and Iraq were referred to as the birthplace of agriculture and civilisation yet since the discovery of oil the entire area has been blighted by the greed of men who ignored the value of fertile land and water and saw only the money that oil produced.

Kurdistan, like Venezuela, is now on the brink of an economic crisis caused by the drastic reduction in the values of the petrodollar, the squandering of agricultural land, failure to rejuvenate villages and communities, to safeguard water supplies and the development of a society that is entirely dependent on imports.

I wrote ‘we cannot drink oil’ in the article I doubt if any government official read it!


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