From poverty to power - Oxfam-Québec

FROM POVERTY TO POWERTHE CURSE OF WEALTHA fundamental factor contributing to grand corruption is a country’sreliance on natural resources. The great Uruguayan writer EduardoGaleano termed it the ‘curse of wealth’. Abundant deposits of oil, gas,or minerals act as poison in the bloodstream of politics, creatingincentives for get-rich-quick power-mongering, rather than the longterminvestment and hard slog that has underlain the success ofresource-poor countries such as South Korea or Taiwan whose onlyeconomic asset was their people. In Nigeria, by contrast, $300bn in oilrevenues has ‘disappeared’ since the 1960s, 120 leaving little tangibleimpact on a nation virtually devoid of paved roads, in which over 70per cent of the population live on less than $1 a day. 121Natural resources can sever the ‘social contract’ between state andcitizen. When a government can rely on royalties from oil, it neednot tax citizens to raise revenue, and so need not cultivate publiclegitimacy but instead retains power through bribery. In such circumstances,democracy can be a double-edged sword. A study by PaulCollier of Oxford University found that, where countries have bothcompetitive elections and ‘checks and balances’ in the form of freemedia and an independent judiciary, natural resources generallybenefit the economy, because governments are forced to be moreaccountable and effective. However, take away the institutional checksand balances, and competitive elections seem to unleash even worsecorruption and chaos, as parties jostle to get their hands on the wealth.In such countries, economic growth is even lower than under authoritarianregimes. The implications for the future of Iraq are sombre. 122Natural resources are not a developmental death sentence, however.The way Botswana has managed its diamond wealth stands in starkcontrast with the devastation wrought by ‘blood diamonds’in Angola,Sierra Leone, and the DRC, while Malaysia has graduated from tin andrubber production to microwaves and mobile phones. What mattersis having, or creating, sufficiently strong and accountable institutionsto cope with the money coming out of the ground.Effective states can resist the lure of spoils politics and build longtermdevelopment based on revenue from natural resource windfalls.Norway charges an estimated 75 per cent tax rate on its oil and has88