Crude World (39 page)

Russia’s megarich:
See “Up in Smoke,”
Forbes
, March 30, 2009. The magazine reported that in the wake of the global recession, Moscow, which in 2008 had seventy-four billionaires to New York’s seventy-one, now had only twenty-seven to New York’s fifty-five.

A rash of street protests:
See “Thousands Protest Across Russia,” the BBC, January 31, 2009, posted at
www.news.bbc.co.uk/
2/hi/europe/7862370.stm
. The story noted, “Protests on such a large scale were unthinkable just a few months ago as the economy boomed with record high oil prices and as the Kremlin tightened its grip over almost all aspects of society, the BBC’s Richard Galpin in Moscow says. But now with the economy in deep trouble, there is real fear amongst ordinary people about what the future will hold.”

“The state has become”:
See Andrei Illarionov, “Russia Inc.,”
New York Times
, February 4, 2006.

10 Mirage

In the halls of American power:
Chávez made the speech on September 20, 2006.

“rich countries with poor people”:
See Joseph Stiglitz, “We Can Now Cure Dutch Disease,”
Guardian
, August 18, 2004.

But like the foreign companies:
See David Luhnow and Peter Millard, “As Global Demand Tightens, A Big Producer Has Own Agenda,”
Wall Street Journal
, August 1, 2006, and Natalie Obiko Pearson, “Chávez’s Largesse Puts Strain on Venezuela’s State Oil Company as Exports to U.S. Decline,” Associated Press, March 27, 2007.

Chávez proceeded to turn:
The statistics and rationale for Chávez’s move are explained by one of his top oil advisers, Bernard Mommer, in “Subversive Oil,” a chapter Mommer wrote for the book
Venezuelan Politics in the Chávez Era
, Steve Ellner and Daniel Hellinger, eds. (Lynne Rienner, 2004). A useful overview of Chávez’s place in Venezuela’s petrohistory is contained in Michael Shifter’s “In Search of Hugo Chávez,”
Foreign Affairs
, May/June 2006.

The subsequent contraction:
See my book
Love Thy Neighbor: A Story of War
(Knopf, 1996).

Under Chávez, output was more than:
There are contradictory statistics on Venezuela’s oil production. The government claims a daily production of 3.3 million barrels, but figures from OPEC and the International Energy Agency show output close to 2.4 million barrels a day. See “Venezuela’s Oil-Based Economy,” Council on Foreign Relations, June 27, 2008, copy posted at
http://www.cfr.org/publication/12089/
, and Rachel Jones, “Venezuela Seeks Investment from Big Oil,” Associated Press, January 15, 2009.

“To rescue and redistribute petroleum rent”:
“A National, Popular and Revolutionary Oil Policy for Venezuela,” a report to the National Assembly by Rafael Ramírez on June 9, 2005.

PDVSA’s fastest-growing subsidiary:
On Palmaven, see David Luhnow and Peter Millard, “As Global Demand Tightens, a Big Producer Has Own Agenda,”
Wall Street Journal
, August 1, 2006.

Chávez’s policies were born:
Ryszard Kapuscinski,
Shah of Shahs
, p. 34.

“Venezuela is warming up”:
The advertisement was published on December 7, 2005.

And not just there:
See Juan Forero, “Chavez, Seeking Foreign Allies, Spends Billions,”
New York Times
, April 4, 2006; Michael Shifter, “In Search of Hugo Chávez,”
Foreign Affairs
, May 2006; and “New President
Has Bolivia Marching to Chávez’s Beat,”
Wall Street Journal
, May 25, 2006.

Chávez made no secret:
See Jon Lee Anderson, “Fidel’s Heir,” in
The New Yorker, June
23, 2008. Anderson writes, “Venezuela outspends the United States in foreign aid to the rest of Latin America by a factor of at least five. Last year, U.S. aid amounted to $1.6 billion, a third of which went to Colombia, mainly to fund Plan Colombia, a drug-eradication program administered by the U.S. security contractor DynCorp. Chávez, meanwhile, pledged $8.8 billion for the region. This included subsidized oil for Cuba, Nicaragua, and Bolivia; the purchase of public debt in Argentina; and development projects in Haiti.”

Caracas had a booming business:
See Sacha Feinman, “Crime and Class in Caracas,”
Slate
, November 27, 2006.

A highway:
Brian Ellsworth, “A Closed Bridge Mirrors Venezuela’s Many Woes,”
New York Times
, January 22, 2006.

“magic performances, not miracles”:
Fernando Coronil,
The Magical State: Nature, Money, and Modernity in Venezuela
, p. 389.

For a hallucinatory period:
For a comparison of incomes, see Karl,
The Paradox of Plenty
, p. 120.

“Don’t study OPEC”:
See Karl,
The Paradox of Plenty
, pp. xv and 4.

Widespread rioting broke out:
For an overview of the Caracazo and Chávez’s career, see Jon Lee Anderson, “The Revolutionary,”
The New Yorker
, September 10, 2001.

El Country Club has horse stables:
See Simón Romero, “Caracas Mayor Lays Claim to Golf Links to House Poor,”
New York Times
, September 3, 2006.

PDVSA allotted more to its social projects:
See Obiko Pearson, “Chávez’s Largesse Puts Strain,” Associated Press, March 27, 2007.

Even during the boom years:
On price-control problems, see Peter Millard and Raúl Gallegos, “Price Caps Ail Venezuelan Economy,”
Wall Street Journal
, February 15, 2006.

Chávez’s policies:
In a critical
Foreign Affairs
article in March/April 2008, Francisco Rodríguez, formerly the chief economist of the Venezuelan National Assembly, argued that “most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated worryingly,
and official estimates indicate that income inequality has increased.”

Conclusion

“the moral equivalent of war”:
Carter made the remark in a speech on April 18, 1977.

Riggs Bank, which helped:
Equatorial Guinea’s oil revenues remain beyond the control or the regard of its citizens. According to a report published in March 2009 by Global Witness, “While the IMF has publicly reported that more than $2 billion of Equatorial Guinea’s oil money is held abroad in commercial banks, it has not identified these banks. Given the history of poor management of Equatorial Guinea’s oil funds, if the IMF knows where this money is, it should say so.” The report posed a number of questions, including the following: “What due diligence are these commercial banks, wherever they are, doing on payments from the accounts, in order to ensure that state funds are not continuing to be diverted? Who are the signatories on the accounts?” The report is posted at
www.globalwitness.org/media_library_
detail.php/735/en/undue_diligence
_how_banks_do_business_with_corrupt
.

The law is a weapon:
Siemens pleaded guilty in
2008
to violating the FCPA and agreed to pay record fines of $450 million to the Justice Department and $350 million to the Securities and Exchange Commission. Those fines were in addition to nearly 600 million euros paid to German authorities. The company had secretly made $1.4 billion in bribes across the world between 2001 and 2007. Although the American fines were record setting under the FCPA, they were not quite the result of prosecutorial zeal in America. According to a
New York Times
story on December 21, 2008 (“At Siemens, Bribery Was Just a Line Item”), German authorities began investigating Siemens in 2005 and informed American authorities a year later because Siemens shares were traded on the New York Stock Exchange. According to
Corporate Counsel
magazine, twenty-one of twenty-five new FCPA cases were self-reported in 2005-07, meaning the firms told authorities they broke the law. “Many voluntary disclosures came after violations were unearthed in the due diligence process for a merger or acquisition,” noted the story, published on July 16, 2007.

“There is no cure”:
Ida M. Tarbell,
The History of the Standard Oil Company
, p. 227. Shearman & Sterling, an international corporate law firm, issued a report in March 2009 that said the number of new bribery cases reached a record high in 2007, with a total of thirty-eight initiated by the Department of Justice and Securities and Exchange Commission. The figure slipped to twenty-five in 2008. The report, “FCPA Digest: Cases and Review Releases Relating to Bribes to Foreign Officials Under the Foreign Corrupt Practices Act of 1977,” is posted at
www.shearman.com/files/
upload/LT-030509-FCPA-Digest-Cases-and-
Review-Relating-to%20Bribes-to-Foreign-Officials-
under-the-Foreign-Corrupt-Practices-Act.pdf
. PBS’s
Frontline
program “Black Money,” which aired on April 7, 2009, has a website with extensive links to bribery-related documents from, among others, the BAE, Riggs, Halliburton and Siemens cases. See
http://www.pbs.org/wgbh/pages/frontline/
blackmoney/readings/
.

On the economic side:
On occasion, the World Bank has admitted its shortcomings. In an evaluation issued in
2007
(“World Bank Assistance to Agriculture in Sub-Saharan Africa”), the bank admitted that it should not have advised African governments to withdraw support from their farming sectors in the 1980s and 1990s. The bank wrongly expected that the private sector would provide necessary support; when that didn’t happen, farmers were devastated. “In most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew,” the bank admitted. NGOs have been even more critical. In a 2003 study, “Poverty Reduction or Poverty Exacerbation? World Bank Group Support for Extractive Industries in Africa,” a coalition of NGOs, including Oxfam America, Friends of the Earth-U.S. and Catholic Relief Services, noted, “The World Bank itself has produced little evidence to show that its extractive operations have contributed to poverty alleviation in sub-Saharan Africa.”

As I’ve said:
It is important to remember that dependence on a basket of natural resources or balancing resource exports with farming and industry can lead to positive outcomes, as happened in Canada, Australia and the United States. This book has focused, instead, on countries that depend to an unhealthy extent on just oil and gas.

“humanity already possesses”:
See Stephen Pacala and Robert Socolow, “Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current Technologies,”
Science Magazine
, August 13, 2004.

“a limited set of monumental tasks”:
Robert Socolow, in a keynote speech, “Stabilization Wedges: Mitigation Tools for the Next Half-Century,” at a climate-change symposium in Exeter, United Kingdom, Feburary 1-3, 2005.

The battalion had lost:
See Peter Maass, “Good Kills,”
New York Times Magazine
, April 20, 2003.

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———.
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———.
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