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The great rush to find oil

19 August 2013 03:46 am - 0     - {{hitsCtrl.values.hits}}

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Two years ago, there was a sudden adrenalin rush about finding oil in Sri  Lankan waters, just as there was back in the 1970s. That rush ended as soon as it had begun. So has this one, it seems, since no oil has been found after two years and no politician cares to mention it nowadays.

Personally, I am glad. If there were any howls of protest, or voices of indignation raised about my attitude, I’m going to explain why.

Oil revenue would have brought in some benefits, undoubtedly. But, given this government’s fixation on two areas – infrastructure development and military spending – it isn’t hard to see where much of the money would  go after a sizeable proportion had been sucked into private bank accounts abroad.

As if the number of elites we already have wasn’t enough, our own oil industry would lead to a local oil elite and oligarchy. Imagine the amount of political infighting, intrigue and backstabbing that would happen to get hold of the lucrative petroleum and related portfolios (but it isn’t hard to guess in whose hands that’s going to remain).

There will be new roads, new bridges, more ports and international airports. The former is direly needed and the rest superfluous unless there’s a great leap forward in human development, learning, and the ability to produce professionalism in industry, agriculture and adminstration.



There is a crying need for more hospitals and schools and one is likely to see such services being expanded. But it’s utopian to believe that the regime’s priority goals are likely to change and its outlook become more benign and humanitarian with oil money rolling in. If anything, it could only get worse. Instead of investing the money in qualitative changes in education and jobs, merely buying ultra-modern equipment and building roads and airports will be counter-productive.

It’s airports, ports, stadiums and the like, which signify national status in most developing countries, not schools, hospitals or universities. This regime has given priority to a new airport and harbour. The other priority is the military. The hawks are going to clamour for a stronger army, navy and air force with oil revenue. They will demand that Sri Lanka should not suffer again the humiliation of 1987, with unauthorised Indian air drops and the peace accord. We could end up buying huge amounts of expensive military hardware, including high tech armour, SAM missile and radar systems, several squadrons of supersonic interceptors and a ‘blue water navy,’ so that we could stand up to India militarily.

" It’s airports, ports, stadiums and the like, which signify national status in most developing countries, not schools, hospitals or universities. This regime has given priority to a new airport and harbour. The other priority is the military "
It’s amazing how quickly your oil billions could vanish once you get into that mindset. There will be really very little left for schools, universities and hospitals. This government’s choice, as the Minister of Education reflects, its attitude towards education, and that’s not going to change just because we have oil money.
In this context, it’s eye-opening to look at some of the  oil-producing countries, old as well as new. The Middle East, while not part of the third world economically, remains so in terms of human and industrial development despite being a dominant force in the petroleum market since 1973. It still depends heavily on migrant labour (at all levels). Iraq and Iran (Shah Pehlavi’s) remain good examples of how military megalomania can ruin even a wealthy country. All the best literature, art and music of the Middle East have come from non-oil producing countries such as Egypt, Syria and Jordan (pre-US invasion Iraq can be included in this list but that culture was an old product, and did not come out of Saddam Hussein’s oil money). Iran, not being an Arab country, should be discussed in another context.

What about newcomers to the scene? In Asia, traditional producer Indonesia remains poor (again, two military dictatorships must take the blame) while newcomer Cambodia has a better record. While most Cambodians are still very poor and corruption is endemic, the country on the whole has better used its oil revenues than many of its oil rivals. Venezuela, dependant on oil for 80% of its GNP, is a classic example of a country failing to exploit its oil revenue smartly and falling deeper and deeper into a trap.

In Africa, Chad discovered oil quite recently. The Chad oil project was launched in 2003 with World Bank support, with poverty reduction and social development as major goals. A country with a per capita income of 271 US dollars in 2000 was suddenly earning 10 billion dollars from oil exports.

It’s paramount that Chad uses this money wisely, because the oil project has only a 30-year life span. There will be no more oil by 2030. The country’s literacy is just 30%,   its under five mortality rate is 169 per 1000 live births, it ranks 184th out of 187 in the UN human development index, and suffers from a chronic shortage of skilled professionals. The whole country has only a few hundred midwives, for example.

But the government of President Idriss Deby is focused on rapid, extravagant infrastructure development. With a chronic shortage of schools and teachers, he has ordered a university built in a small town (it lacks benches and has an empty library with no books). New highways span the country, and new building projects are underway, such as a 25,000-seat sports stadium.

Quite possibly, by 2030, the mass of Chadians will still be poor and uneducated, still ruled by a smug oligarchical elite with fat bank accounts abroad. One could argue that Sri Lanka would handle such oil revenue more wisely, especially with its more impressive literacy, health care and other statistics.  I’m afraid that’s wishful thinking. Those shining literacy levels are not reflected in our  politics, administration and governance. We are ruled by a rapacious oligarchy, and it doesn’t take a prophet to see where the money’s going to end up.

If used wisely, such a windfall could be vital in bringing about an improvment the quality, and not just the quantity, in our professional sectors. There is a shortage of skilled professionals in vital areas, including health and education. For example, there is a grave shortage of English teachers. We need to cure the fundamental reasons behind our brain drain. Statistics are one thing, realities another. The creation of a first-class university,  along with a total overhaul of the education system (along with the political system) with emphasis on developing art and culture should be a priority goal, along with a serious bid to break away from a plantation-agriculture economy (replacing that with 95% dependence on oil money won’t be the solution) by investing in manufacturing industries and industrial research.
But it’s illusory to believe that oil billions will invest our politicians with such wisdom. We could actually be much worse off with oil, another faux paradise with rapacious elites, fun parks, impressive buildings and shining armour but no think tanks worthy of the name.
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See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.