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Oily misadventures: Africa & the Latin Americas


By: STEVE MADOJEMU

‘The Latin Americans, while conscious of their different historical experience, soon became aware that the practical issues for them were remarkably similar to those of the Africans and Asians’…..Gary MacEoin.
Just as in the case of Africa, the Latin American oil producing countries have had their fair share of oil related woes. It is about the best example outside of Africa where one can find similarly endemic oil related poverty.
Latin America is a region of extremes and in many ways similar to Africa, where great wealth and deplorable poverty cohabit. In spite of oil exports for many decades, the economy of the Latin Americas has been in dire states. Poverty is so widespread in these nations whose locals should ordinarily be faring very well.
Enter Venezuela and Ecuador. When they ventured into oil export, expectations were huge, with high hopes of economic success and prosperity. This never happened, as Oil exports never translated into real economic growth. With increases in oil exports, the overall economic situation worsened. Mexico also suffered similar failings, though they were less reliant on oil revenues.
Brazil, Mexico, Peru, Venezuela, Ecuador and Bolivia cannot be said to have fared well in the fields of economic growth and poverty reduction. Like their African compatriots, countries like Gabon, Nigeria, Chad and the Sudan supply the oil needs of many developed economies that are today doing well. Oil has been the power driving these economies success stories, but amazingly, the supplier nations wallow in poverty and stunted economies that has often threaten their very existence.
It is worth considering the 2003 Bolivian Gas crisis that truncated President Gonzalo Sanchez de Lozada’s tenure in office. The country suddenly found out that it had 600% more natural gas reserves than was reported. This fuelled the hopes of Bolivians, who began to envisage a prosperous future. When President Sanchez decided to enter agreements with US concerns, Pacific LNG and Sampra Energy, to export the gas to North America, the people smelled foul play and interpreted the action as corrupt. The people called the plan a ‘personal business deal.’
Whilst the Bolivian people expected this new-found resource to uplift their lives by its sale and use domestically, the rulers had other ideas. The government hoped to use export earnings to service the health and education sectors. The people were against exporting the gas and wanted the government to process the gas locally thereby boosting the local economy, increase revenue yield and also to aid local consumption. Thousands of Bolivians went on hunger strike and before long the National labour union marched against the gas agreement. Eventually, the President was forced to resign, thus the will of the people eventually won the gas war because they were fed up with age-old exploitation of their natural resources.
The ‘Dutch disease’ is sometimes blamed for non-performance of Latin American economies, that is, a situation where earnings from oil may be detrimental to other sectors, thereby crowding out development in other economic fields. True to an extent, but the key issues are far much deeper. In his memoirs, Gary MacEoin observed that ‘Thirty years later, Puerto Rico produces far less food than in 1950. A third of the best agricultural land is under concrete. The factories built on the island are not geared to its needs, are not owned by Puerto Ricans, leave little benefit in Puerto Rico. Many of them have already moved to the Dominican Republic or Taiwan to cheaper and more docile labor, leaving twisted remnants of their steel shells jutting from crumbling concrete. Effluvia from oil refineries and pharmaceutical plants have polluted much of the island’s water and adversely affected the remaining agricultural land. The coastal mangrove swamps, breeding grounds for the fish that are one of the major potential resources, are similarly polluted’’.
MacEoin sums up the travesty of poor Latinos and indeed the global poor by drawing a link between a catalog of the evils crying for remedy and its direct relationship to the causes of those evils, that is ‘the dependent internal oligarchies in each country, the overarching external power structures of international monopolies and the international imperialism of money on which the system rested, the fact of intolerable institutionalized violence’.
After over half a century of oil exploration, both continents remain in dire straits with little to show for the oil wealth. With their oil fast depleting, high unemployment population along with increases in oil militancy (locked within various immature political arrangements), the future looks very challenging indeed. This becomes more worrisome when one considers the fact that the ordinary people and indeed the local economy have not benefited from oil wealth dividends particularly because institutionalised and endemic corruption remain major issues. In spite of trillions of petro-dollar earnings over the decades, In Africa and the Latin America’s, poverty remains a common denominator.

28 November 2010   

 

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