Beating the Curse

Kathryn McPhail and Francisco Paris argue that there’s a way out of the “oil curse” described by Moises Naim.

Moisés Naím’s interesting article ("The Devil’s Excrement," September/October 2009) reiterates the well-known thesis of the "resource curse" — that resource wealth does more ill than good in poor countries. Naím concludes that though some countries have successfully managed to avoid this "curse," nobody has explained to date how to do this. But this is not entirely true.

The International Council on Mining and Metals (ICMM), together with the U.N. Conference on Trade and Development and the World Bank Group, has been doing research into this question since 2004. Fieldwork in four countries has documented that mining can provide a potential development prize. It also indicates that this contribution can be further enhanced if companies, governments, local communities, and development agencies work more collaboratively together.

ICMM has gone on to pilot such partnerships in Ghana, Peru, and Tanzania and is keen to support these alternative outcomes.

Kathryn McPhail

Senior Program Director

International Council on Mining and Metals

London, England

I read Moisés Naím’s article with great interest. As a fellow Venezuelan, I have firsthand experience of what being resource-cursed means. Although much has yet to be done, there are many of us struggling daily to ensure that revenues from mineral wealth find their way to productive uses, and enormous progress has been made.

There have been a number of interesting recent developments in the United States. Sen. Richard Lugar has been a pioneer in Congress by sponsoring legislation to require full disclosure of payments to resource-rich countries, and Barack Obama’s administration is looking at this subject as well.

Thirty other countries have signed on to the Extractive Industries Transparency Initiative (EITI), a globally developed standard for transparent resource use. Although this is certainly a sign of progress, it is a daily struggle to ensure that these countries live up to their obligations under the EITI and that the OECD countries funding the initiative are setting a proper example themselves.

This fight is a long one indeed, and articles like this one are critical to pushing the agenda forward.

Francisco Paris

Regional Director

The Extractive Industries Transparency Initiative

Oslo, Norway

Moisés Naím replies:

Kathryn McPhail and Francisco Paris describe the laudable efforts that their respective organizations are making to mitigate the effects of the resource curse. But the central point of my article was to stress the "autoimmune" nature of this political and economic malady.

One of the consequences of the resource curse is that it creates powerful incentives not to cure it. We all know what governments should do to fight the curse. What no one has figured out is how to overcome the reluctance of these governments and other important players — the military, the private sector, and other powerful stakeholders — to fight it.

Take, for example, McPhail’s observation that the "contribution [of the mining industry] can be further enhanced if companies, governments, local communities, and development agencies work more collaboratively together." That is a big if. The fact is that this simple-sounding and obvious goal has been elusive, and the examples she gives are rather limited in scope and tend to be exceptions. One of the symptoms of the resource curse is that it turns policies and behaviors that should be standard and obvious into rare and exceptional ones.

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