Libya: The Resource Curse Strikes Again

[tabatha]

The civil war in Libya, and the consequent spike in world oil prices, has cast a bright light on three important truths about global energy: first, Europe and the United States are increasingly dependent on oil imports from unstable regions; second, in many oil-rich countries, corruption and mismanagement of petroleum revenues can leave the population impoverished, as is so evident in the pictures from Libya; and third, oil revenues can embolden despots and lead to instability, which directly affects the national interests and economic growth of oil importing countries.

In recent years poor, unstable countries have become a major source of minerals and energy for the developed and developing worlds alike. Sub-Saharan African oil exports, for instance, have grown by 40 percent since 2000, and Europe now gets more than 20 percent of its imported oil from Africa. The U.S. imports more oil from Africa than it does from the entire Persian Gulf.

This has spurred strong economic growth in some developing nations, but often the growth has been uneven, with many resource-rich countries succumbing to corruption and political instability. Too often, oil money intended for a nation's poor ends up lining the pockets of the rich or is squandered on showcase projects instead of productive investments.

This phenomenon, known as the "resource curse," affects the consuming as well as producing countries. It exacerbates poverty which can be a seedbed for terrorism. It empowers autocrats and dictators like Gaddafi, and, as we are painfully experiencing now, it can roil world petroleum markets. Increasingly, the economic and energy security of Europe and the United States is tied to stability and sustainable growth in developing regions.

http://www.huffingtonpost.com/sen-dick-lugar/libya-the-resource-curse-_b_851672.html