Wednesday, December 20, 2006

The Iraq Study Group Report’s as close at it gets silver bullet

The Iraq Study Group Report’s perhaps most important yet least discussed recommendation is “redistributing a portion of oil revenues directly to the population on a per capita basis” as it has “the potential to give all Iraqi citizens a stake in the nation’s chief natural resource” which could only foster a national identity and help stimulate the search for normality. Besides, given that the price of gas in Iraq is so low that you can fill your tank with less than two dollars, which of course is the source of much corruption, the sharing in the additional revenues that a price increase of gas would generate provides the political support for such difficult but necessary action.

We were told not to expect any silver bullet from the Report but in my opinion this revenue sharing program is a close to one as it gets. Implementing such a program in a transparent way, with the help of the World Bank, could also have far-reaching consequences for fighting all the other oil curses around the world.

Monday, December 18, 2006

What is the financial world to do with Venezuela?

Sir, In Venezuela, as in most other countries, Congress is supposed to exercise control over the executive branch. For instance, its Constitution establishes that ‘No contract in the municipal, state or national public interest shall be entered into with foreign states or official entities, or with companies not domiciled in Venezuela, or transferred to any of the same, without the approval of the National Assembly.’

Now, even though Venezuela is currently known as a very polarized nation, the fact is that after the elections of December 4, 2005, its Congress includes 167 members who are in favor of and obedient to him who wishes to be called ‘Commander’, and 0 representation for those many who are not in the least in agreement with chávez´s confused ramblings of his vision of a twenty-first-century socialism. This indeed poses some serious questions about its legitimacy and therefore some serious challenges for those who issue opinions.

For instance, what are legal counselors or credit-rating agencies to do after they might receive a letter from a Venezuelan citizen (or perhaps even read this letter in FT) informing them that sooner or later the debts now contracted by Venezuela might be questioned as ‘odious debt’, as they are not duly approved by a legitimate congress (167-0), nor are they needed, as can be evidenced by the many donations Venezuela, with its own so many very poor, has recently made, among them, to the relatively few somewhat poor of Massachusetts.

Sir, if a company like Nike has to worry about the labor conditions in the factories to which they outsource their production, why should the financial world be allowed to ignore civil representation issues in those countries it helps to finance?

This is an extract from Voice and Noise, 2006, a book that I wrote after my experience as an Executive Director of the World Bank (2002-2004) and that now, after having duly marked the extract above, I give freely to any lawyer who might have to prepare a due diligence on Venezuela and to anyone from the credit rating agencies who has to rate Venezuela with the words... “and do not forget that a citizen from Venezuela, who has all the intentions of tomorrow, when given a chance, to protest all the odious debts and gifts told you so… I have not the faintest idea if I have a legal case… but are you really sure I don´t?”

Friday, December 15, 2006

What does recommendation number 28 really mean?

The Iraq Study Group Report suggests in recommendation number 2 to “Support the unity and territorial integrity of Iraq” which makes it somewhat difficult to understand the real meaning of number 28 when it says “Oil revenues should accrue to the central government and be shared on the basis of population”, since how do you share if there is only one central government? Now, if what they actually propose is that the oil income should be shared by the population directly on a per capita basis, this would indeed be a much welcomed proposition, given that we all know how impossible it is to construe a real democracy when oil revenues go directly to central government coffers and with it makes a mockery of any balance of power in the society. In the chaotic Iraq trusting the Iraqi people with their oil revenues is wiser than trusting any central government with it.

Sunday, December 10, 2006

The only thing left to do in Iraq

The recently published Iraq Study Group Report says “There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation’s chief natural resource”.

Since we all know that when oil revenues go directly to government coffers this makes it more difficult for society to reach a fair balance of powers among all its participants, these proposals also carried within them the best chances for construing an effective and lasting democracy.

Unfortunately some will seems to be lacking since the report also includes some really poor objections as “Oil revenues have been incorporated into state budget projections for the next several years. There is no institution in Iraq at present that could properly implement such a distribution system. It would take substantial time to establish, and would have to be based on a well-developed state census and income tax system, which Iraq currently lacks.”

In fact, compared with most of all the other challenges that faces Iraq today, to develop a fair and transparent per capita oil revenue sharing system, should be relatively easy and I believe that the World Bank has the required capabilities to successfully complete such mission.

And besides, after helping to free the Iraqi people from those who oppressed it, is not helping them to gain access to their own resources the only thing left to do?

Tuesday, December 05, 2006

A victory for Hugo Chavez?

Last Sunday’s presidential elections in Venezuela have been hailed as a victory for Hugo Chavez. Far from it!

In the previous election in 2000 all the votes of the opposition against Chavez added up to 2.5 million while in this election, certified by the Chavez influenced, the home based opposition against this self proclaimed world leader almost doubled as it came in with more than 4.3 million votes, and that does not include of course all those who did not manage to pass all the electoral obstacles.

Another fact that perhaps also should be reminded to the international Chavez adoring community, is that not one single of these 4.3 million voters is represented in Venezuela’s 167-loyal-to-Chavez-and-zero-against congress.