Webdiary - Independent, Ethical, Accountable and Transparent
header_02 home about login header_06
header_07
search_bar_left
date_box_left
date_box_right.jpg
search_bar_right
sidebar-top content-top

Who Owns Bolivia's Oil and Gas?

Joseph StiglitzJoseph E Stiglitz, a Nobel laureate in economics, is Professor of Economics at Columbia University and was Chairman of the Council of Economic Advisers to President Clinton and Chief Economist and Senior Vice President at the World Bank.

by Joseph E Stiglitz

A few months ago, Evo Morales became Bolivia‘s first democratically elected indigenous head of state. Indigenous groups constitute 62% of Bolivia’s population, and those with mixed blood another 30%, but for 500 years Bolivians had been ruled by colonial powers and their descendants. Well into the twentieth century, indigenous groups were effectively deprived of a vote and a voice. Aymara and Quechua, their languages, were not even recognized for conducting public business. So Morales’ election was historic, and the excitement in Bolivia is palpable.

But Morales’ nationalization of Bolivia’s oil and gas fields sent shock waves through the international community. During his campaign, Morales made clear his intention to increase state control over national gas and oil. But he had made it equally clear that he did not intend to expropriate the property of energy firms – he wanted foreign investors to stay. (Nationalization does not, of course, necessarily mean expropriation without appropriate compensation.) Perhaps surprising for modern politicians, Morales took his words seriously. Genuinely concerned about raising the incomes of his desperately poor people, he recognized that Bolivia needs foreigners’ expertise to achieve growth, and that this entails paying fairly for their services. But are foreign owners getting more than a fair rate of return?

Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or “capitalizations”) under former President Gonzalo “Goni” Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion. While there has not yet been full disclosure of returns, or an audit of the true value of investments, it appears that investors would, at the old terms, have recouped all their money within just four years.

Bolivians also ask why foreigners reap all the benefits of today’s high prices for oil and gas? It costs no more to extract oil or gas today than it did when prices were one-third of their current level. Yet, the foreign oil companies get 82% of the increase – in the case of oil, this would amount to a windfall for them of $32 a barrel or more. No wonder that Bolivians thought they were being cheated and demanded a new deal. On May 2, Morales simply reversed the percentages, pending renegotiation of the contracts: the companies operating in the two largest fields would get 18% of the production for themselves. As part of this new deal, Bolivia should also get a larger share when prices increase. (Bolivia may, of course, not want to bear the risk of a fall in the price, so it may strike a deal to transfer some of the downside risk to foreign companies, giving them in exchange more of the upside potential.)

To most Bolivians, what is at stake is a matter of fairness: Should foreign oil and gas companies get a fair return on their capital, or a supernormal return? Should Bolivia be paid a fair value for its resources? And should Bolivia, or foreign companies, reap most of the windfall gains from increases in energy prices?

Moreover, many deals were apparently done in secret by previous governments – and apparently without the approval of Congress. Indeed, because Bolivia’s Constitution requires the approval of Congress for such sales, it isn’t clear that Morales is nationalizing anything: the assets were never properly sold. When a country is robbed of a national art treasure, we don’t call its return “re-nationalization,” because it belonged to the country all along.

As with many privatizations elsewhere, there are questions as to whether the foreign investors have kept their side of the bargain. Bolivia contributed to these joint enterprises not only with resources, but also with previous investments. The foreign companies’ contribution was supposed to be further investment. But did they fully live up to their commitments? Are accounting gimmicks being used to overstate the true value of foreign capital contributions? Bolivia’s government has, so far, simply raised questions, and set in motion a process for ascertaining the answer.

The problem in Bolivia is a lack of transparency, both when contracts are signed and afterwards. Without transparency, it is easy for citizens to feel that they are being cheated – and they often are. When foreign companies get a deal that is too good to be true, there is often something underhanded going on. Around the world, oil and gas companies have themselves to blame: too often, they have resisted calls for greater transparency. In the future, companies and countries should agree on a simple principle: there should be, to paraphrase President Woodrow Wilson’s memorable words, “open contracts, openly and transparently arrived at.”

If the Bolivians do not get fair value for their country’s natural wealth, their prospects are bleak. Even if they do, they will need assistance, not only to extract their resources, but also to improve the health and education of all Bolivians – to ensure long-term economic growth and social welfare.

For now, the world should celebrate the fact that Bolivia has a democratically elected leader attempting to represent the interests of the poor people of his country. It is a historic moment.

Joseph E. Stiglitz, a Nobel laureate in economics, is Professor of Economics at Columbia University and was Chairman of the Council of Economic Advisers to President Clinton and Chief Economist and Senior Vice President at the World Bank.

Copyright: Project Syndicate, 2006.
www.project-syndicate.org

left
right
spacer

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

On Populism


C. Parsons
...funnily enough, I've learnt quite a bit from populism (esp. its formative period in the late nineteenth century USA) - so, perhaps all of what they spout is not "gibberish"? The main lesson to be learnt there is that the disastrous anti-business divide that opened up in the left at that time (particularly due to Marx, although the anarchists were also in evidence) wasn't a given...it was the product of a specific period in history, and could easily be cured if the ex-Marxist left would wake up to the realities that the original Populists were alive to.

Because, some of the early proponents of US populism were actually very sensible. They wanted a political bloc which would unite small business & employees against policies that automatically favoured the then-emerging large corporations & financial community. They explicitly renounced racism - in the South, what's more - and wanted to see an economy which favoured bottom-up development, and delivered a decent living to all who worked for it...

Hardly "gibberish" to my mind.

Trouble was, this was seen as a threat - and the response, by the supposedly-"responsible" people, was to actively promote racism as a divisive measure, and impose the "Jim Crow" laws to forcibly remove the advances that the blacks had made since the Civil War. Hardly an edifying tale...and the role played by the political mainstream in this hardly allows us to dismiss the populists with contempt, at least at this stage. Later on, however, the sad remnants of this originally-interesting movement became a know-nothing parody of their earlier strengths, and (typically) that is the image of them which is fixed in the popular consciousness.

However, given this sort of history, it certainly doesn't strike me as impossible that a modern populist might not hit on the same basic approach as the best of the US originals...that is, to insist on capitalism as a given, strongly restrict the effects of market power, and seriously pursue bottom-up development. After all, in many ways that's EXACTLY how Taiwan became affluent - and, indeed, the KMT's panic-stricken reversion to the ideas of Sun Yat Sen was actually a populist move (and, deliberately so) to reduce the chances that the peasants'd welcome a mainland invasion.

And, so...populism is not (entirely) just a matter of "gibberish" and bad economics - which is why I'll be very interested to see if Morales can deliver what the people actually need. The weight of history may be against him but, if he listens to intelligent economists like Stiglitz, the very real possibility is there...

Endemic racism of left surpasses even its incompetence

mike lyvers: "Imagine if someone had referred to the Arab countries as "festering sores, murderous scabs on the Earth." How long would it take for cries of "racist!" to spew forth? But of course, Jews are always fair game."

Here's why...

"In every Muslim country surveyed, overwhelming or near unanimous majorities expressed negative views toward Jews. The figure reached 99 percent in Jordan, 98 percent in Egypt and 94 percent in Pakistan. Twenty-eight percent of Jordanians and 22 percent of Egyptians volunteered that "Jews" were to blame for bad relations between Muslims and the West, although Jews were not mentioned in the question."

As you know, the "look at me" psuedo-intellectual Left overwhelmingly opposes, cough, cough, "Zionism".

John Henry Calvinist: "Or, is it that you don't like the idea that it just might be possible (admittedly, the historical record is against it) that a Latin American populist government could conceivably get its act together economically?"

Actually, I had the impression that a number of Latin American economies seem to be going quite well by international standards, but you defininitely hit the nail on the head when you said the historical record is against a Latin American populist government ever being amongst them.

That's because the sort of gibberish populists speak has never been much of a substitute for good government or economic management - something else which the historical record bears out.

Interesting, C. Parsons,

that this attitude would appear to long predate the creation of modern Israel. For example, in the front of my Penguin Classics version of the Koran, there is a brief synopsis of the main events in the life of Muhammad, including:

626 The Jewish tribe of al-Nadir crushed and expelled

627 The Jewish tribe of Qurazah raided by Muhammad

629 The Jews of Kaybar put to the sword

So Islamic Judaeophobia appears to have very deep historical roots.

C Parsons...I explicitly


C Parsons
...I explicitly contrasted "a fair market price" with "an illegally awarded collusive one" - no mention, at all, of doctrines of "fair trade"...except, apparently, in your head.

Since value is (to a large degree) relative, I take it as best reckoned by market exchanges, albeit externalities should be factored in much more comprehensively than they are.

As for "defensive"...well, the pot can call the kettle what it likes - but I think that it's you that are showing signs of that attitude.

Fact is, you have been consistent here in complaining at length about something - "fair trade" doctrines - which are completely irrelevent to the column supposedly under discussion. Or, is it that you don't like the idea that it just might be possible (admittedly, the historical record is against it) that a Latin American populist government could conceivably get its act together economically?

Me...I'm willing to await events - something that I suggest you might do, instead of wasting your time penning furiously irrelevant diatribes, and misrepresenting those you argue with.

Silly and sillier

C. Parsons:  You write: "In its annual tally of the "Fortunes of Kings, Queens and Dictators", the US financial magazine [Forbes] estimated Castro's wealth at $US900 million ($A1.18 billion), up from last year's estimate of $US550 million ($A723 million)." ‘

For anyone who is even remotely interested in following up the truth behind these silly ‘Castro billions’ claims, the following account does to the Forbes report what anti-Castro terrorists allegedly did to a Cuban airliner in 1976: http://www.axisoflogic.com/artman/publish/article_21994.shtml

Wake Up And Read The Text

The mendacious mountebank strikes again!

Nowhere in the above article does one find the term "Fair Trade". There is talk of paying fairly for the services of foreign experts. There is also talk of foreign investors getting a fair return for their money and Bolivians a fair slice of the revenue from their resources. There is also talk of fairly written contracts. There is no talk of trade subsidies.

It seems that C Parsons is so consumed by a hatred of anybody remotely left of Rush Limbaugh that he feels obliged to find, or make up, any excuse to lambaste them. In this case we have the use of the word fair, which really means "fair trade", which really means "trade subsidies", which really means "they're trying to rip the money out my pockets and give it to those fuckin' Commie pinkoes".

So come on C P. Take a tablet and calm down. Otherwise, take some reading lessons and make an effort to understand what was actually written, as opposed to what your feverish brain thinks was written. Fair enough?

Wake up and smell the Fair Trade coffee

John Henry Calvinist: "C Parsons...I'm curious as to EXACTLY what your point is, amidst the tarring-by-association, etc? Just why shouldn't a legally-elected government act to annul government contracts which are, clearly, illegal as they have not been made in accord with that nation's constitution?"

My, aren't we defensive? Feeling nervous already?

There's no reason at all why a legally-elected government shouldn't act to annul contracts of they were made illegally or immorally.

In fact, the general principal is that it is illegal to contract for an immoral or illegal purpose.

Eg: the Australian Wheat Board.

It's the term "fair market price" that's the oxymoron in the woodpile.

Morales will get the market price for his oil. And will pay the market price for his venture capital.

Whether he thinks it's fair or not.

Because otherwise nobody will do business with him.

Because economics is a real world phenomenon and not the stuff of "fair trade" mumbo jumbo.

"Fair trade" outside the parameters of the market is called "charity".

And that's not how the international market for energy commodities operates. Or haven't you noticed?

And when that penny drops over there in Bolovia, they'll be looking for all sorts of excuses. Or else they'll just have to face up to reality.

And no amount of wacky cardigans or high-flown revolutionary bombast will alter the facts.

Capiche?

"Really-Existing Capitalism"?

C Parsons...I'm curious as to EXACTLY what your point is, amidst the tarring-by-association, etc? Just why shouldn't a legally-elected government act to annul government contracts which are, clearly, illegal as they have not been made in accord with that nation's constitution?

Leaving aside all asides on Morales abilities/intelligence - since I (and I suspect you) have very little firm evidence re this to date - your whole approach here strikes me as a blatant evasion of the key point of Stiglitz's article ... which was that, due to said illegality, Bolivians will now (hopefully) manage to get a fair market price (as opposed to an illegally-awarded, collusive one) for their assets.

Methinks this is where at least one neo-liberal ideologue has betrayed his principles ... in favour of simply boosting what we might (ironically) call "really-existing capitalism"? For shame ... you're beginning to sound like the leftist apology-mongers you so despise.

Delicious!

What an utterly delicious article! And brave, too; opening up to fair if not overdue public exposure, such a nefarious, swindling racket! No wonder a certain poster has used up 40% of his daily allowance in two, shall we risk 'over-hasty' (or simply injudicious) sprays? And so precious, to boot! Quote "Yeah, but what's in it for me?" Oh, how so very typical of the type!

I quote a good authority (yeah; me, and where 'it' may be any convenient distraction): "... it's 'competing' with lies, cheating, theft and murder, more specifically lies leading up to mass-murder for oil in Iraq, and the festering 58-year sore that Israel is, a truly murderous scab-on-the-Earth. [I feel that I have to include at least one 'murder for oil', it'll never 'go away' and I'll never 'move on'; as long as the US and Israel continue in their murderous, thieving ways, both deserve any and all condemnation they'll ever get - then a bit (no, much!) more.] The cheating comes in hugely from the US, see Perkins' "Hit Man", or the general mining rip-off of resource-rent, say. Resource-rent costs us, we the people, quite literally billions. Then there's the more 'normal' cheating of flogging off our family silver, the last 'shining' [now reverted to 'proposed'; but it'll probably come back] example of which being the Snowy. Boo! Hiss! Then there's Quaint-arse, the sheoples' bank, Sydder's airport and the insidious toll-roads, and/or PPPs, just don't get me going."

Well, this Stiglitz article couldn't have come sooner. It quantifies, for one specific case, exactly what I've been talking about (largely into 'thin air', it would seem) when ever I've mentioned 'resource-rent'. And, it's got me going, all right!

And the numbers are as ghastly as ever I imagined (vis. 82% vs. 18%), possibly even worse than here but get this: we (or at least, I) don't know (all about Aus' situation), and worse, I don't even know where to look. I did find, once, a reference to resource-rent in some budget papers; that put a figure of 40% on it (i.e. a resource-rent tax), being the rate of 'claw-back' into Cwlth hands, of the (filthy!) 'excess profits' being creamed off by the oil producing entity/ies on some domestic (i.e. Aus) oil production. Phew!

For any brave reader who has reached this point without quite understanding what I'm raving about, it's in the article; here's a sample: "...widely supported by Bolivians, who see the so-called privatizations (or 'capitalizations') under former President Gonzalo 'Goni' Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion."

There's two things, not just the one. The (bleedingly!) obvious one, is the loss to the people by the privatisation process itself; this couldn't be more painfully obvious: why would any sane investor purchase the Snowy, for example, if that investor didn't think he could make a goodly quid at it (as in: "Yeah, but what's in it for me?") - so just as that investor gets rich, the public gets poor. (Hence my Boo! Hiss!) Then there's the other; the one that stays almost perfectly hidden; but again in the article, a supernormal return? By which is meant (un-earned!) 'resource-rent', by any other measure (filthy! Obscene!) 'excess profits'. This is one glaringly obvious - but kept hidden - way, that the rich get ever filthy richer, at the direct expense of us, we the people. More later, perhaps...

phil kendall writes of

"the festering 58-year sore that Israel is, a truly murderous scab-on-the-Earth."

Imagine if someone had referred to the Arab countries as "festering sores, murderous scabs on the Earth." How long would it take for cries of "racist!" to spew forth? But of course, Jews are always fair game.

no arguments; ignorance is bliss

G'day mike lyvers; this post, whilst being far more than you'd possibly ever have bargained for, is certainly more than your 'racist' taunt deserves. The thread is 'Who Owns Bolivia's Oil and Gas?' which is validly generalised to 'Who Owns Xx's Yy and Zz?' For example, where Xx = pre-'48 Palestine, Yy and Zz are land and water; the subject was alluded to by mike: "Jews are always fair game." But of course, it's not any sort'a game; any chance of that stopped exactly at the first terrorist murders - King David Hotel bombing or Dresden or Hiroshima, anyone?

Truth vs. lies. As a first step, we must distinguish between truth and lies. One very good way is to look (with eyes wide open); I like to term this WYSIWYG and any truth so discovered is to be contrasted with the 'pushed paradigm' of varying degrees of lies coming to us through (and often directly from!) the MSM. Proof of the traitorous failure of the MSM abounds (also here in WD); those still not so convinced are probably not trying.

Democracy; yes or no? Apologists like mike (our very own Israel lobby?) often assert that Israel is 'the only democracy in the ME,' or some such. Now, I'd like to include the US and Aus, and set out at least three unavoidable prerequisites for a democracy: 1) 'free' voters, 2) 'full' information & 3) 'valid' choices.

1) 'free' voters: this would include at least one wo/man, one vote and one vote one value (others? Unconstrained choice would be assumed.) In the case of the US, see the ongoing counting failures, voter disenfranchisement & unaccountable electronic voting. In the case of Aus, see the mis-match in electorate size & border mangling, and the latest Howard electoral fiddles. In the case of Israel, there is massive vote fraud: the original inhabitants (Palestinians) were not asked then and cannot vote now. Fail, in all three countries.

2) 'full' information: see above about the 'pushed paradigm' of of lies coming to us through (and directly from!) the MSM, incl. big bits'a the AusBC (Boo! Hiss!) Fail on info; shame!

3) 'valid' choices: The Lib/Lab duopoly here is a toadal sham, as is the US with Repukes/Dummocrats, and any Israeli parties (except possibly any genuine 'peace' party), and worse: they are all pro-big-end-of-town (= anti-us, we the people) and (murderously!) pro-war. Fail, again and total.

Capitalist rip-off vs. social justice. Stiglitz's figures are astounding: "Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or "capitalizations") under former President Gonzalo "Goni" Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion."

Take some time to think about it, and generalise it. There is a concept called 'super-profit'; it is the difference between what it costs to dig something up (including a 'normal' profit - cost plus, say 10? 15? 20%?) and what is realised for the product 'at market'. This difference can be huge (in Iraq the cost of production of a barrel is in the region of $US1), and the 'super-profit' is often referred to as 'resource-rent' (when it's referred to at all, that is; another MSM 'sin', this time of omission.) Resource-rent occurs here in Aus on oil (and presumably across the entire minerals sector); the govt 'claws back' 40% of some 'super-profit' on some domestic oil. The talk is usually of 'royalties'; how much/little? (Silly question!) Details are scarce, but the Stiglitz article gives us some 'scale': 82% of $250 billion to the mining entities, 'for free!' This illustrates just one way the fat-to-the-point-of-obscene-cats, the rich-getting-ever-filthy-richer operate - to our direct disadvantage.

Then: 'Who owns this Earth / Country / individual citizen's paddock / mineral underlying this paddock'; if the answer is not 'the individual' then it's 'the whole country' or generalised perhaps, to 'the whole wide world'. The answer is definitely not the mining entities - yet that's who pockets the lions' share. Q: Just how fair is that? A: IMHO, not at all. It's taking from the rightful owners, without adequate recompense. Q: how does this differ from stealing? A: I can't see how. (As an amusing aside, I just got a spam: 'wake up to loot making!' - Indicative of how some sheople think?)

We can see (WYSIWYG!) what is happening with oil; the mainly US and a few UK oil majors are a, if not the major beneficiaries of the oil price inflation occurring since the illegal invasion of Iraq 'rolled'; their profits are (obscenely!) booming. Not really much to do with 'supply/demand' either, or have you noticed (WYSIWYG!) fuel queues anywhere (except, that is, actually in Iraq; how utterly perverse!) The massively obscene booming profits are coming (apart from self-inflicted war-costs) from 'super-profits' aka 'resource-rent' - QED.

US, UK & (to a lesser extent but not in criminality terms) Aus, plus the illegitimate US' sprog Israel riding on the US taxpayers' teat all benefit from the resource-rent rip-off plus other rip-offs detailed in Perkins' "Hit Man". These rip-offs amount to theft: aka criminality. Then, when the theft is at the point of a gun (cruise missile; air-to-ground in living areas) - and people are actually getting killed (lots!) - it's murderous theft; in Palestine/Israel it's the Israelis murdering for land and water, in Iraq it's the US murdering for oil.

-=*=-

The only thing 'democratic' occurring is the sheople being allowed to vote at some interval. They (the sheople) are neither truly free nor fully informed, and they are given no real or valid choices. In addition, the societies are based on lies, theft and murder, as illustrated in Israel/Palestine and Iraq, plus the many other crime-scenes scattered around the world. Either in a strictly legal or acceptable moral sense, we are 'led' by criminals and for criminals, with 'spruikers' on the behalf if these crimes making themselves accessories, and thus equally guilty.

This is an opinion forum; but to be a valid opinion it must rest on a factual base, and not in any way be perverse. Any person ignoring facts (WYSIWYG!) can mount no argument; ignorance for these must be bliss?

-=*=-

Epilogue: the time for arguing is gone; on the one hand we now know what sort of s**t-society we exist in, and on the other, the greenhouse is coming; we gotta do something! As for my 'Peace plan for Iraq' at the ne plus ultra[1] asymmetric 'weapon': F-I.W, we now need a similar action plan here. It seems that we have only one 'weapon' left for our own asymmetric struggle (recall Howard toadally disregarded the anti-war 'mob'), and that is a variation of F-I.W: stop all (discretionary) shopping. That'll learn 'em!

Slogans. Slogans. Get your red hot slogans now.

John Pratt: "This means that financial resources exist in Bolivia for improving the living conditions of the whole population. "

Then one would expect the regime to now capitalise the oil extraction and processing infrastructure needed to translate this windfall into a viable long term investment.

And actually, John. The oil reserves are not a financial resource.

It's a natural resource.

Whether Bolivia can raise the financial resources, and under what terms, will decide how the whole experiment works.

And that will depend on whether the investment is viable in an international market for petroleum products.

And whether the Morales government has the talent and energy sufficient to reach such a goal.

Not to mention financial resources.

Certainly Cuba will want to help them develop it.

But just trading doctors for oil, as Cuba does with Venezuala, won't be enough to capitalise the project.

Someone will either have to lend Morales the money.

Or will have to place sufficient resources at his diposal some other way.

My guess is the opportunity will be squandered and then the blame shifting will begin.

The "evil capitalists" or "Zionists" or "Greedy yanquis" or some other claptrap will be rolled out.

And elections will be post-poned for fear of a "US backed coup".

That sort of thing.

I hope I'm wrong.

But the signs aren't good that a doofus like Morales will have the smarts to pull it off.

[That's your 5 for today, Chris]

Oil revenue should go to the people

“The presence of oil and gas provides an objective condition that can permit the expansion of the national economy and the raising of the quality of life and work using our own Bolivian resources. Bolivia possesses a great wealth of petroleum and natural gas, but these resources do not currently benefit the Bolivian people. Despite the current situation, these deposits are important for the future economic viability of Bolivia.

The sheer value of the oil and gas is important to the future of the Bolivian economy. The 52.3 trillion cubic feet of gas reserves in Bolivia-reserves presently in the hands of foreign capitalists-are minimally worth $120 billion.1 This means that financial resources exist in Bolivia for improving the living conditions of the whole population. The resources exist for job creation, better salaries, and expanding free services.”

See here: http://www.counterpunch.org/olivera06102005.html

Australia has tried to cheat East Timor out of its oil and gas revenues. The natural resources of these two poor countries should be used to help them achieve economic viability. The multinational oil companies are far too powerful and the Australian and US governments should make sure that the wealth from these energy reserves flow to the people not to the multinationals.

“Australia cannot afford to have a “failed state” immediately to its north. After all, there are already many other countries in our region to worry about. Indeed, Australia is playing a very positive role restoring order in the Solomons.

Therefore, we need to ensure that East Timor flourishes. One way that it can flourish is to receive as much revenue from the oil and natural gas as possible. East Timor — unlike Australia — has very few other sources of revenue.

Australia’s greedy stubbornness is short sighted. If East Timor country falls into chaos, then Australia will be spending more money on its defence to go back into East Timor to restore order (or risk having the disorder flow south into Australia). Any benefit that is gained from being so greedy in the short-term will be lost in the long-term.

Meanwhile, Australia — for the first time in its history — has withdrawn from part of the work of the International Court of Justice. Australia has said that it will no longer consent to have the ICJ — the international umpire — decide on the dispute between itself and East Timor. Australia normally encourages other countries to make greater use of the ICJ — and yet here it is withdrawing from it, presumably in fear that it could lose a case brought by East Timor.

East Timor has an annual expenditure of about US$80 million and many of its people live on less than US$1 per day. It is being bullied by the economic super power of the South Pacific.

It is in Australia’s long-term interest to let East Timor have the oil and natural gas and so help it to become a flourishing, stable democracy.

See here: http://www.wesleymission.org.au/ministry/suter/040723.asp

Yeah, but what's in it for me?

Joseph E Stiglitz: "To most Bolivians, what is at stake is a matter of fairness: Should foreign oil and gas companies get a fair return on their capital, or a supernormal return?"

The rhetoric of "fair trade" as opposed to "free trade" is one of the trendiest forms of gibberish right now with the romantic psuedo-intellectual left.

Of course people should get a "fair deal", whatever that means.

But at the end of the day, economics is about practical choices being made in the real world by real people, usually bargaining from different positions and seeking different outcomes.

Charity usually begins at home. In Bolivia, say.

Not everyone will be interested in bailing out Evo Morales's political movement or giving a helping hand to the Bolivians.

Not even some of the Bolivians who will be looking out for numero uno with an eye on a nice beachside apartment in nearby Rio or perhaps somewhere cosy in Zurish.

The Chinese, who will be interested in Bolivian oil, for example, won't be interested in a "fair" price, whatever that could possibly mean.

They'll cosnider fair to mean "as much oil as I can get for my buck".

And why would paying a "fair"rice for Bolivian oil be any diffrent from any other charitable income transfer arrangement - like foreign aid?

Charity hasn't helped the USA in its relationship with North Korea - the largest recipient of American aid in Asia.

And it hasn't helped the stupid North Korean government much, either.

Appeals to charity, er "fair trade", won't help Morales either.

Morales seems like a nice fellow. A Roussean nit-wit, most likely.

But a nice fellow.

His particular form of romantic socialism will of course fail. And he will be certainly betrayed by his regional ideological allies, especially the thuggish Castro regime.

Because despite their waffle about "sharing", ultimately they are greedy too.

"In its annual tally of the "Fortunes of Kings, Queens and Dictators", the US financial magazine estimated Castro's wealth at $US900 million ($A1.18 billion), up from last year's estimate of $US550 million ($A723 million)."

Morales will fail. And then it will be everyone else's fault.

Talking about the "fair trade" waffle, did anyone see this?

"AT CERTAIN shops in London, a cup of "fair trade" coffee costs 25 cents more than an ordinary cup. But investigations reveal that, though the Guatemalan farmers supplying the coffee are paid almost double the market price, the quantity of beans used in a cup of coffee is so small that this extra cost works out at only 2.5 cents a cup. So 90 per cent of the higher price of fair trade coffee ends up in someone else's pocket."

Well, that didn't take long, did it? 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
© 2006 - 2008, Webdiary Pty Ltd
Disclaimer: This site is home to many debates, and the views expressed on this site are not necessarily those of Webdiary Pty Ltd.
Contributors submit comments on their own responsibility: if you believe that a comment is incorrect or offensive in any way,
please submit a comment to that effect and we will make corrections or deletions as necessary.

Margo Kingston

Margo Kingston Photo © Elaine Campaner

Advertisements