The Norwegian government is trying to develop a sustainable investment strategy for expected oil revenues off-shore from Madagascar. Norsk Hydro has developed a case study of diversified energy investing. The investment in Business Schools in Kazakhstan is an attempt to create a high priority for developing the international capital market skills of those managing the next generation of petro-capital.
The link between environmental strategies, global sustainable prosperity and the management of international capital markets has never been more apparent and urgent. A recent exchange in the Financial Times drew attention to this issue once more in the context of Madagascar and Norwegian initiatives. An excellent letter written by Diarmid O’Sullivan and Gavin Hayman of Global Witness describes the Norwegian initiative as “a bona fide attempt to make the extraction of oil and gas more transparent and accountable to the citizens of producer countries”.
The next stage of economic development and the management of transparent globalization in the aim of sustainable prosperity require a serious attempt to invent new financial instruments for the management of revenues from oil and gas production. The “Dutch curse” or the longstanding impact of petrodollars on corruption is well-understood by decision-makers in public policy areas and by boards of major energy providers. The challenge is for public policy-makers to invent a new revenue system for the development of efficient capital markets in the newly-onstream oil producer countries. A democratic post-OPEC building on models proposed before for an EBRD-style African fund capitalized by resource revenues and targeted at entrepreneurial development and the provision of pension-plan style distributive income policy instruments is needed more than ever.
In the last few months a Gulf Venture Capital Association has development with Malaysian participation. The African Bank for Reconstruction and Development can include Malaysia , Kazak, Turkish, Indian and Indonesia participation. The project for the next decade is to build by Transparency International standards the investment banking skills required to ensure that this round of oil development (in Central Asia, the Gulf of Guinea and Indian Ocean) does not produce the complexities with which the global community is dealing today and to ensure that the benefits of commercializing natural resources creates the means for sustainable prosperity in Angola, Madagascar, Kazakhstan and Equatorial Guinea. This is a foreign policy priority in which Canada as a global resource economy with the opportunity to become an energy superpower has a chance to take a leadership role. Energy strategists and oil company boards would welcome a formula for ensuring that the resource rents in Gulf of Guinea were reinvested in sustainable prosperity initiatives. Right now, there is no political leadership for developing that formula. In this G8, there is an opportunity to establish this as a Canadian strategy for Africa and Central Asia . Complex as this is in the current foreign policy mix where Chinese energy realpolitik has to be integrated into this mix (which is still another argument for China , India , South Africa , Malaysia , Brazil and Indonesia becoming the G-14); there are incremental steps that can be taken:
Without these frameworks in place, the preconditions for sustainable prosperity will not be created and we will have another cycle of kleptocracy and market distortions resulting from the way petrocapital is used. It is this intersection between international political economy, global capital markets, international development and geopolitical security issues which requires a new approach to political science and the work being done in global B-Schools. I hope that Canadian universities take the lead on this in the next year as part of the attempt by this next generation of Canadians to make Canada ’s position as a global energy superpower a launch pad for the next generation of thinking about how Canadians positively influence global society.
Chip Cummins work in the Wall Street Journal especially his April 10th, 2006 piece As Oil Supplies Are Stretched, Rebels, Terrorists Get New Clout follow the connections between oil and global politics with particular astuteness.