Big energy sector equals big corruption
Wednesday, February 20 2013
THE EDITOR: The PP Government took the reins of power nearly three years ago from a hopelessly hubristic and corrupt PNM administration.
One of the coalition partners had long campaigned on the theme of new, open and transparent politics. However, what is the reality? Much of the same.
How did this happen? Well, some of the world’s most prominent think tanks will tell you that as an energy dependent economy T T’s society and Government are very likely to be very corrupt at all times.
Basically, energy dependent nations always become the most economically troubled, the most authoritarian and the most conflict riddle. Energy is the world’s most capital-intensive industry so it creates few jobs. Worse, it obliterates jobs all across the economy. Why? Because the export of energy inflates the exchange rate, so whatever else a country manufactures are less competitive abroad.
Having a big energy sector concentrates a nation’s economy around the state. Instead of putting resources into making value added products and selling them, many ambitious people in an energy rich state spend much of their time curry favouring or simply bribing the politicians and Government officials who control the energy money. The concentration of wealth, along with the opacity which energy can be managed, creates corruption.
The list of the world’s worst governed countries today features many that are dependent on energy- Nigeria, Angola, Chad, Venezuela, Libya and Equatorial Guinea.
Of course, Norway is the big exception. Now, how do we get out of this trap? The only plausible way to minimise the damage a concentration of energy wealth does to an economy is to put a minimum of one quarter of all energy revenue into a Heritage and Stabilization fund and resist raiding the fund like Uncle Hughgo next door who has decimated his energy fund in the past decade from six billion down to three million during a time to record high energy prices.