From Lagos To Calgary The Resource Curse Condemns Nations To Corruption And Autocracy

In 2016, Prince Mohammed bin Salman announced, “We person developed a lawsuit of lipid addiction successful Saudi Arabia.” This was an understatement; nan modern authorities was created solely by oil, its system financed by oil. Prince Mohammed’s announcement came aft lipid prices dropped successful 2014, resulting successful a Saudi shortage of almost US$100 cardinal nan pursuing year. Oil accounted for 90 percent of nan country’s exports and 45 percent of its GDP.

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The prince’s “Vision 2030” scheme was an eager remaking of some Saudi nine and its economy; women would participate nan workforce, a tourism manufacture would beryllium developed, nan authorities would go much secular, billions would beryllium invested successful renewable energy, and a caller $500 cardinal smart city—Neom—was planned.

The Saudi addiction to lipid was glorious while it lasted. In 1973, nan state had a organization of 7 million, a mini kingdom half a world distant from North America, yet it exerted tremendous power. It was nan starring proponent of nan lipid embargo that year, whose reverberations echoed astir nan world and are still being felt, grounds of oil’s world sway. In nan US, nan lengthy lineups for state were a staple of nan evening news. The automobile still held an constituent of romance successful nan 1970s, still represented a peculiar benignant of state that was now being curtailed, nan world’s astir powerful federation held hostage by a mini godforsaken tribe.

With lipid came power, and addictions tin beryllium difficult to kick.

In 2022, OPEC, led by Saudi Arabia, sharply trim lipid production, driving up gasoline prices weeks earlier midterm elections successful nan US. President Joe Biden was outraged and threatened to prohibition limb income to Saudi Arabia, and discussed initiating a suit against OPEC for collusion. In response, nan Saudis threatened to dump US indebtedness (it holds $119 billion), which would upset financial markets.

Upon taking agency successful 2021 Biden had promised to make Saudi Arabia “a pariah” for its quality authorities record, which included nan dismembering of Saudi journalist Jamal Khashoggi 2 years earlier. Months later, Biden was successful Saudi Arabia fist-bumping Mohammed bin Salman, nan relationship renewed. For 50 years, nan US-Saudi narration has been for illustration that of an aged joined mates who fundamentally loathe 1 different but can’t spend to divorce. Despite now being nan world’s largest exporter of oil, nan US still imports almost 500,000 barrels a time from Saudi Arabia, portion of nan analyzable financial and refining web that dictates world lipid shipments.

Saudi reserves person an estimated lifespan of sixty years, truthful location is simply a title successful Saudi Arabia to diversify. Oil still accounts for 80 percent of Saudi exports and 40 percent of its GDP, making it nan 3rd astir oil-reliant state successful nan world, down Kuwait and Libya. But it is aggressively building star and upwind capacity, pinch nan purpose of getting 50 percent of its energy from renewables by 2030. Fellow OPEC members Qatar, Bahrain, and nan United Arab Emirates are besides embarking connected mammoth diversification schemes (UAE Vision 2021, Abu Dhabi 2030), expanding tourism, investing successful world acquisition and renewable resources, arsenic good arsenic poaching shot stars and marquee golfers and securing a scandal-plagued World Cup successful Dubai.

Saudi Arabia is nan elite embodiment of what has been termed “the assets curse,” defined arsenic “a paradoxical business successful which a state underperforms economically, contempt being location to valuable earthy resources.” It tin beryllium nan consequence of putting excessively overmuch labour and superior into 1 assets that is susceptible to value fluctuations, leaving a state economically exposed. It tin besides beryllium nan consequence of authoritarian rulers keeping nan new-found wealthiness for themselves while nan country’s citizens unrecorded successful poverty.

Oil has been a boon to Saudi Arabia, but it has created nan inequality that is nan hallmark of nan assets curse. The Saudi royal family is nan richest connected earth, pinch $1.4 trillion successful assets, while 20 percent of nan state lives successful poverty. Now it is moving distant from a feudal exemplary wherever everything is funded by oil, introducing taxation while astatine nan aforesaid clip providing little societal infrastructure.

With lipid came power, and addictions tin beryllium difficult to kick. But contempt their outsized power, nan Saudis were wholly limited connected overseas gross successful a azygous market. With Vision 2030, they will person little powerfulness but much freedom. Other countries defined by nan assets curse aren’t arsenic lucky.

The poster kid for nan assets curse is Equatorial Guinea, a mini state of 1.7 cardinal group dispersed complete 28,000 quadrate kilometers connected nan westbound seashore of Africa, wedged betwixt Cameroon and Gabon. It was a Spanish colony until 1968, erstwhile Spain, still nether nan power of dictator Francisco Franco, handed nan state complete to Francisco Macías Nguema, who declared himself “The Sole Miracle of Equatorial Guinea.” One of his first miracles was to execution aliases exile a 3rd of nan population. As Peter Maass reports successful his book Crude World: The Violent Twilight of Oil, immoderate were crucified, others rounded up successful a shot stadium and changeable while a subject set played nan Mary Hopkin opus “Those Were nan Days.”

Macías’s nephew, Teodoro Obiang Nguema Mbasogo, was caput of security, and successful 1979 he staged a coup, deposing his psychotic uncle. Macías’s proceedings was held successful a movie theatre successful Malabo pinch nan accused suspended successful a cage hung from nan ceiling. He was recovered blameworthy and executed by a firing squad, leaving Obiang arsenic nan caller ruler.

In 1995, lipid was discovered successful nan Gulf of Guinea, an estimated 35 cardinal barrels, and Equatorial Guinea quickly became nan third-largest sub-Saharan lipid country, aft Nigeria and Angola. Yet nan state saw fewer benefits. The magnitude that overseas lipid companies salary countries depends successful portion connected really blase and/or corrupt nan country’s activity is. Oil companies salary a interest for nan correct to research for oil, past royalties are paid connected immoderate lipid that is discovered and taken retired of nan ground. Equatorial Guinea received comparatively small connected some counts because, according to nan International Monetary Fund, Obiang either didn’t understand really overmuch he was giving up aliases didn’t care.

One of nan reasons he wouldn’t attraction is that nan money wasn’t being paid to his state but to him directly. So nan millions connected connection were sufficient. Oil royalties were deposited into accounts successful Obiang’s sanction successful nan Riggs Bank successful Washington, DC, yet reaching a full of $700 million. A Riggs worker went to nan Equatorial Guinea embassy connected 2 occasions and picked up suitcases that contained $3 cardinal successful hundred-dollar bills to deposit. Eventually, this came to nan attraction of US Senate investigators, who released a study successful 2004 titled “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of nan Patriot Act, Case Study Involving Riggs Bank.” Essentially, lipid companies and an American slope were helping Obiang bargain his country’s money. The Senate investigation stated that “oil companies operating successful Equatorial Guinea whitethorn person contributed to corrupt practices successful that state by making important payments to, aliases entering into business ventures with, individual E.G. officials, their family members, aliases entities they control, pinch minimal nationalist disclosure of their actions.”

The logic location was minimal nationalist disclosure was that neither nan US nor Equatorial Guinea had laws requiring it. American lipid companies paid much than $4 cardinal for tuition truthful students from Equatorial Guinea could study abroad, though it turned retired that these students were “children aliases relatives of able aliases powerful E.G. officials,” according to nan Senate report. The country’s ain acquisition strategy was among nan worst successful nan world; 42 percent of children didn’t spell to school, and only 25 percent sewage arsenic acold arsenic mediate school.

Despite lipid companies spending billions to build offshore drilling platforms and a refinery for liquid earthy gas, very small of that money entered nan section economy. Construction materials were brought in, and almost each nan workers—in nan plant, connected nan lipid rigs—were foreign, mostly from India and nan Philippines. Chinese lipid companies brought successful Chinese laborers and managers. They lived successful imported prefab trailers and ate imported food.

By 2017, Obiang was nan longest-serving president successful nan world, and 1 of nan richest men successful Africa. He owned a twenty-seven-meter yacht and a Boeing 737 pinch gold-plated bath fixtures. A Human Rights Watch study titled “Manna from Heaven?: How Health and Education Pay nan Price for Self-Dealing successful Equatorial Guinea” noted that nan country’s wellness and acquisition systems were chronically underfunded and Equatorial Guinea was successful usurpation of its quality authorities obligations. “Ordinary group person paid nan value for nan ruling elite’s corruption,” 1 of nan paper’s authors said. And by this time, its lipid reserves were dwindling. The travel of superior was diminishing and would soon end.

Between 2000 and 2013, Equatorial Guinea took successful astir US$45 cardinal successful lipid revenues. Yet it is, according to nan Gini Coefficient, which measures income and wealthiness inequality, nan azygous astir unequal state connected earth. In 2019, it had nan highest GDP per capita successful Africa (US$36,270) and a poorness complaint of 77 percent. Half nan organization didn’t person entree to safe drinking water, vaccination rates had declined, and wellness attraction was primitive and sporadic. The president’s eldest son, Teodorín, managed to make $300 cardinal arsenic curate of agriculture, much than nan mixed budgets for wellness and education. The US brought a corruption lawsuit against him, and Teodorín had to forfeit $30 cardinal successful US assets, pinch $25.6 cardinal returned to nan state successful nan shape of COVID-19 vaccines that went retired to 600,000 citizens. The French authorities convicted him of embezzlement, blameworthy of transferring €110 cardinal from nan nationalist treasury into his account, astir of which went toward a €175 cardinal shopping spree connected a mansion, cars, and designer goods. The French authorities confiscated €150 cardinal worthy of his assets. Switzerland’s investigation resulted successful nan seizure of eleven luxury cars and a €100 cardinal yacht. The cars and yacht were sold and proceeds went straight to a societal programme successful Equatorial Guinea. What societal programs beryllium successful Equatorial Guinea person mostly been mandated by overseas powers. As reward for these transgressions, Teodorín was made vice-president of Equatorial Guinea.

A batch of nan lipid money was invested successful ample infrastructure projects. There are caller roads, sports stadiums, and a palace that occupies 12 quadrate blocks. There is simply a caller airport, five-star hotels, title play courses, and a caller metropolis being carved retired of nan rainforest. Very fewer locals were progressive astatine immoderate level successful these projects. Because of nan abysmal acquisition system, location isn’t nan expertise for method and guidance jobs, but moreover nan manual labour was imported. The authorities owns nan employment agencies, and prospective workers request to beryllium to Obiang’s governmental party, and successful immoderate cases tithe immoderate of their net to nan government, successful bid to get a job. The various money laundering investigations that nan US, France, and Switzerland conducted revealed that elder authorities officials make millions connected contracts fixed to companies they own. Obiang and his family ain stakes successful nan country’s largest building firms. There is nary bidding process for projects.

American lipid and state companies that bribe officials aliases lend to a overseas country’s corruption don’t look immoderate existent consequences. In 2017, President Trump struck down an anticorruption norm that would require US lipid and state companies to disclose really overmuch they salary overseas governments. The norm was designed specifically to combat nan assets curse, to forestall autocratic leaders from taking payments for themselves alternatively than nan nationalist treasury, though successful nan lawsuit of Equatorial Guinea location was small quality betwixt nan two. American lipid companies based on that nan norm would put them astatine a disadvantage; different overseas companies weren’t compelled to disclose payments. This wasn’t true; some Canadian and European firms person to disclose that information. In 2016, Exxon, past led by Rex Tillerson, who was now caput of state, was being investigated by Nigeria’s economical and financial crimes committee regarding lipid authorities secured by Exxon successful 2009, contempt a bid that was $2.25 cardinal little than a Chinese competitor’s. Nigeria routinely makes nan database of astir corrupt countries connected earth, a state that knows corruption erstwhile it sees it.

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Equatorial Guinea had small successful nan measurement of biology regulations. As a result, spills connected offshore rigs were common, but, because nan state is disconnected nan world radar, they went mostly unreported. In 2021, French researchers studied 10 years of images from nan Envisat outer and concluded location had been 18,063 lipid slicks successful nan Gulf of Guinea betwixt 2002 and 2012. Some of these were earthy seepages from lipid adjacent nan surface, but nan immense mostly were nan consequence of shipping aliases accumulation spills. The measurement of lipid was greater than nan Deepwater Horizon spill, which leaked 4.9 cardinal barrels into nan Gulf of Mexico successful 2010. In 2008, lipid spills covered almost a 1000 quadrate kilometers successful nan Gulf of Guinea.

In nan end, we are each cursed, cursed by oil’s ease, seduced by its possibilities. It gave america freedom, warmth, hope, and ruin.

In 2022, ExxonMobil, 1 of nan awesome companies successful Equatorial Guinea, announced it would time off nan state erstwhile its licence expires successful 2026. Its output peaked successful 2014, erstwhile it was pumping 300,000 bpd. By 2022, it was down to 15,000 bpd. Total accumulation for nan state was down to 95,000 bpd, its reserves projected to tally retired successful 2035; pinch nan quiet exit of awesome lipid companies, gross will autumn steeply agelong earlier that.

There will apt beryllium small request for nan play courses and five-star hotels. When nan statement ends, location will beryllium little rainforest, much biology degradation, and nan mocking reminder of abandoned drilling platforms. The system could beryllium gutted. In 1968, nan twelvemonth of its independence, cacao exports accounted for 75 percent of GDP, but only 8 percent of nan country’s onshore is now utilized for agriculture. Fishing was decimated by serial lipid spills. This is 1 of nan hallmarks of nan assets curse: The nine concentrates connected a azygous assets and different industries wither. When nan assets is exhausted, location is small to switch it. In a decade, Obiang’s infrastructure, nan monuments he built to himself, whitethorn lucifer those chromatic heads connected Easter Island.

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To nan north, Nigeria sits arsenic nan erstwhile poster kid for nan assets curse. Foreign lipid companies are leaving Nigeria arsenic well. Exxon, Shell, Chevron, Norway’s Equinor, and Italy’s Eni person retreated, trading their assets to section companies, owed successful portion to precocious levels of lipid theft. According to nan Nigerian National Petroleum Corporation, they were losing 437,000 bpd. This is almost half Nigeria’s production, which is astir a cardinal bpd, down from 2.5 cardinal successful 2011. Pipelines are blown up, fires started, tanker ships filled pinch lipid group connected fire. The United Nations reported that cleaning up nan Niger Delta unsocial would return 30 years and much than $12 billion, which mightiness beryllium an optimistic figure. Nigeria has US$87 cardinal successful debt, and 40 percent of its 235 cardinal citizens unrecorded beneath nan nationalist poorness line. Oil accounts for 90 percent of its exports.

At nan adjacent of COP28, Nigeria’s situation minister, Ishaq Salako, said, “Asking Nigeria, aliases indeed, asking Africa, to shape retired fossil fuels is for illustration asking america to extremity breathing without life support. It is not acceptable, and it is not possible.”

It is instructive that this was coming from nan situation minister. Certainly, immoderate displacement distant from lipid will coming challenges, though location was thing legally binding successful nan COP28 solution to shape retired fossil fuels. But Salako’s declaration was disingenuous. Eighty-five percent of Nigeria’s lipid wealthiness went to 1 percent of nan population. Before lipid was discovered, Nigeria had a robust and diversified economy. Currently, 56 percent of Nigerians—133 cardinal of its 235 cardinal citizens—live connected little than 2 dollars per time and are defined arsenic “multi dimensionally poor,” meaning they deficiency entree to cleanable h2o and sanitation, wellness care, cleanable energy, and housing. Oil curtailed Nigeria’s nascent democracy, killed captious parts of its economy, and promoted inequality. Pivoting from lipid whitethorn yet use its citizens.

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An OECD insubstantial connected nan assets curse analyzed twenty-four lipid exporting countries (including Canada) and recovered “a 10-percentage constituent summation successful nan lipid export stock is associated pinch a 7% little GDP per capita successful nan agelong run.” The agelong tally is nan rumor here; will location beryllium one, and really agelong will it be? In nan end, we are each cursed, cursed by oil’s ease, seduced by its possibilities. It gave america freedom, warmth, hope, and ruin.

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From On Oil by Don Gillmor. Copyright © Don Gillmor, 2025. Reprinted pinch support from Biblioasis.