What Is the Resource Curse?

What is the resource curse?

The resource curse refers to the mal-effects that arise out of a country’s possession or ownership of natural resources, namely gold, oil, minerals like copper and colt an, and even timber. Whereas superficially it may seem like an added advantage for a nation to possess these resources, it turns out that due to their presence in a country’s economy, a nation becomes lulled into a false sense of wealth and security. Eventually, such elements corrode a country’s institutions and other agencies that are responsible for sustainable economic growth and development as well as security (Ross 18).

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Consequently, it becomes a burden as opposed to an added advantage for a nation to posses these resources because managing them is a complex task that most nations are not adequately endowed to execute. What follows is an over emphasis on the production and manufacturing, assembling, or even processing of these natural resources at the expense of necessities such as public education and health.

About the Maslow’s hierarchy of needs, the effect of this disregard to necessary elements such as health and education is a revolt by the majority of the public, which suffers the deficiencies at the expense of a limited minority that enjoys the benefit of appropriating the benefits that accrue from such resources. An explanation of this paradigm imbalance is offered by the Karl Marx’s capitalism theory, whereby the bourgeoisie class, which is comprised mostly of harassed laborers, rise up to revolt against the proletariat, a minority elitist group.

An interesting observation by multiple the World Bank reports indicates that resource dependent economies are more susceptible to civil warfare than those that are poor in natural resources. This observation is a paradoxical phenomenon because it is a presumption taken by most governments that if they are rich in natural resources provided by nature, such as gold and other gemstones, they are marginally richer than those economies that rely on other sources of income (Ross 18).

However, a worrying trend is that in the economies, which are predominated by an abundance of natural resources, the governments tend to over-rely on these resources for their production and maintenance at the expense of other activities or needs such as the advancement of education or the securing of proper health services. As a result, factors like infant mortality rates suffer because they are increased, which raises dissatisfaction with the government, thus making it vulnerable to social conflict.

Another issue raised is the effect of resource dependence on governance, which has an adverse effect on the government in the form of corruption, lack of accountability of the government in question, and the inherent weakness of the government. Corruption comes due to the government being infiltrated with large amounts of revenue from non-acknowledged revenues from the mining segments (Ross 24).

Consequently, many sub groups, comprised of warlords and other control groups within the government, including government officials that have stakes in these avenues, cause a destabilization within the government in question. The government then passes policies that are favorable to this select few at the expense of the majority of the citizenry that cannot afford to bribe the government, thus creating an unstable state of affairs within the state.

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The result of this scenario is a weak government that is subject to the whims of a select few. The modern equivalent of a thoroughly capitalistic government is an optimal environment for rebellion by the working class that receives minimum wages and poor working conditions while the elitist minority breeds off the created revenue (Ross 25).

Finally, on the matter of governance, such governments receive the revenue accrued from the harvesting of such resources through questionable channels that cannot be easily tracked by the public. In most cases, the government officials involved often subscribe to nontransparent offshore accounts such as those in Switzerland that have no obligation to disclose the contents of their accounts to the host countries. Consequently, mistrust develops and causes instability.

The overall effect of all these mishaps is the reliance on the military in the quelling of whatever disputes that may arise and this aspect weighs heavily on the state of democracy because a government that uses the military to enforce policies that are not well received by the public is a dictatorial one. Additionally, the government spends lump sums in supporting such military operations, which raises further doubts in the citizenry’s minds, not to mention that such funding is often unaccounted for and even when accounted for, the citizens often feel that it is unwarranted.

This aspect, in turn, defeats the effective state bureaucracy that is necessary to support a government’s legality and effectively combat civil warfare that may arise in the nation. A possible solution to this issue of poor governance that results from resource dependency is the requirement of full disclosure on the part of transnational companies (Ross 26).

Secessionist movements

Some parts of a nation that has some sort of distinction from the rest of the nation become volatile region due to religion or ethnicity, especially when a resource is discovered and mining processes begin.

This scenario occurs due to several factors including the effects of harvesting such as a resource that may include environmental pollution, immigration of workers from other regions to exploit the resource, and an overwhelming population of military and police to control the locals (Ross 28). Consequently, the native inhabitants often end up feeling that they are being shortchanged in the deal because they suffer land appropriation and adverse effects of environmental shifts.

The central government inflicts revenue influxes and other oppressive policies upon citizens and they feel that they are better off on their own as the available resource provides them with an avenue of becoming self-reliant. Consequently, such an area is ripe for insurrectionist movements as the secessionists attempt to become an independent nation.

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On the other hand, this aspect destabilizes the central government, which is already trapped into the mentality that it needs the new resource to enhance the nation’s economic growth, which creates a volatile atmosphere in which a civil war may break out anytime. Therefore, to prevent this occurrence, preventive diplomacy has been suggested as a possible recourse.

The central government should be in a position to subdue such insurrections while they are still budding. Examples of nations in which this secessionist attitude has resulted in civil conflicts include Sudan and Indonesia. The Aceh province in Indonesia began secessionist movements in 1976. Unfortunately, the central government did not handle this unrest immediately and the result was unprecedented bloodshed. In Sudan, the conflict began in 1986 when oil was discovered in southern Sudan and the bane of the issue was the religious distinction that separated staunch Islam from Christianity between north and south Sudan (Ross 28).

Initially, when three foreign workers were killed and the oil project halted, the government responded harshly instead of democratically and to date, more than two million lives have been lost in that conflict. Timely response in a diplomatic manner would mean that, for instance, the extracting company engaging in social interactions with the local community in advance to prepare them psychologically for the anticipated project (Ross 29), which includes giving the local community preference in the appointment of workers to work at the site.

Also, they would have also involved them in policy considerations regarding anticipated financial burdens that will accrue due to the extraction processes and as much as possible sharing the resultant costs instead of letting the local communities bear the brunt of the discovery of the resource while outsiders capitulate on profits.

Rebel funding

Rebel groups cannot survive on their own dime and often look to a central and routine source of income to assemble and support their activities. Prior to the end of the Cold War in 1980, most of these groups depended on rival powers for support, but upon the curtailing of such support, they were left with no definite source of income (Ross 31). Consequently, most of them turned to resource firms and they extracted income through looting or threats. These resource firms were a viable choice for them for several reasons including the fact that they were permanently situated within the periphery of mining sites and they could not move to safer regions because of the situation of the resource. This scenario was unlike manufacturing firms that would be looted out of business or move camp to safer areas. Additionally, resource firms have a large income, which is large enough to regularly support these rebels and still make a profit for themselves.

These resource transactions can either take the form of direct looting, which occurs when the rebellious group has direct control of a segment of the resource area and thus they are capable of mining and selling the minerals. However, this scenario is not always the case because at times, weaker rebels have less bargaining power and they are too poor to support themselves thus making their defeat or surrender imminent.

In such cases, such rebels have resorted to sell a booty future, which means that they sell future exploitation rights to a more powerful nation or to a neighboring nation that in turn pays for their present support so that in future, when their rebellion pays off and they capture the intended region, the benefactor can reap. This move is dangerous because the result of these rebellions is never rigid and so it can easily give rise to a civil war or inadvertently lengthen one.

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The final option for rebels is to extort from resource firms and kidnap the workers in the resource sites and consequently blackmail their governments to pay the ransom, thus adding to their revenue (Ross 33). Possible solutions to this conundrum include the control of illicit flows of revenue such as the Kimberly Certification Process Scheme, which was launched in May 2000 to control the market flow of illicit diamonds.

However, an obvious shortcoming of such controls is that they are limited in their scope; for instance, the Kimberly scheme only handles diamonds, thus leaving out other precious stones and minerals such as colt an and timber that are just as easy to loot (Ross 35). Consequently, it is far better to impose restrictions on the revenue generated from illicit resources than on the resources themselves.

Country preference

As portrayed above, resources are a tricky source of revenue because whereas they may bring in stupendous profits, they are inherently a dangerous source of revenue due to the attached incentives for civil warfare that they harbor. Consequently, countries retain the discretion to choose whether to invest in them.

Some choose to exploit them without necessarily looking at the likely ramifications, meaning that they have a selective perspective, centering on the anticipated profits. However, others, after risk assessment, decide not to invest in this source of revenue because the gains shall not be worth the risk. This reflects that the choice is one that is fully determined by discretion, but ignorance or informed consent also plays a major role.

Conclusion

This paper has looked into the issue of the natural resource curse providing a comprehensive overview of this phenomenon from the perspectives of resource dependence and its effect on governance, economic prosperity, secessions, and rebel financing. What becomes apparent after this review is that resources are indeed a profitable enterprise for a nation to invest in; however, the mistake that most nations make is to stop the assessment at this discovery.

This assertion holds because as outlined above, numerous landmines collateral to the exploitation of natural resource exists with the potential of destroying an entire government if not handled appropriately. Nevertheless, for all possible landmines, a tentative solution is offered, and so it does not mean that nations should altogether dispense with the natural resources within their territories; however, they should put in place all the necessary risk buffers before they set up the site and begin to exploit the various resources.

Works Cited

Ross Michael. “The Natural Resource Curse: How Wealth Can Make You Poor.” Natural Resources and Violent Conflict: Options and Actions. Ed. Ian Bannon and Paul Collier.Washington, DC: The World Bank, 2003. 17-42. Print.

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