Petroleum economies and their discontents
As we contemplate the shift towards an oil economy in Guyana, we would do well to take note of petroleum’s impact on other countries and, perhaps, learn from their mistakes. In general extractivist economies have fared poorly during the last half-century. Repressive petro-kleptocracies in Africa and the Middle East and the current turmoil in Venezuela are vivid reminders of how often a “resource curse” seems to accompany the exploitation of oil. In many cases it overwhelms the society and ushers in corruption, reckless spending, and a political culture that squanders opportunities to build infrastructure. Hardly ever do governments use oil revenues to strengthen other sectors of the economy in preparation for a postpetroleum future.
Consider Angola. In 2007, President José Eduardo dos Santos visited the United Nations general assembly for a US-led AntiKleptocracy initiative. At the time, despite large mineral and petroleum resources, Angola was one of the most corrupt countries in the world. Between 1997 and 2002, Human Rights Watch estimated that US$4 billion of state oil revenue had been misappropriated. (Swiss banks later reported that at least US$600 million of the country’s oil revenues had been traced to accounts used to bribe high-ranking officials, shell companies, and middle men.) Meanwhile, 70 percent of the Angolan population earned less than US$4 a day and its infant mortality rate (184 deaths per thousand live births) remained the highest in the world.
Nearly ten years later, little had changed. In 2016 Angola scored 18 out of 100 on Transparency International’s Corruption Perceptions Index; Angolans had a life expectancy of 55 years, fewer than 0.17 doctors and 0.8 hospital beds per thousand people; the national literacy rate hovered around 70%. Income distribution was still badly skewed, and the country was ranked 152 worldwide in terms of per capita GDP. Reasons for the lack of development were not hard to find. Earlier this year, for example, Vice President, Manuel Vicente was charged in Portugal with corruption and money laundering – including a US$810,000 bribe to one former prosecutor. The charges stemmed from Vicente’s time as head of Sonangol, the national oil company, between 2009 and 2012 – a post currently occupied by Isabel dos Santos, the outgoing president’s daughter.
It could be argued that the complex legacy of a civil war complicated Angola’s oil economy,