Cambodia's coming oil economy
Analysis: What might oil drilling do to a poor country, its people, and its government?
Patrick WinnMarch 18, 2009 07:46Updated May 30, 2010 12:47 Analysis: What might oil drilling do to a poor country, its people, and its government?
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Cambodian women on the Thai-Cambodian border Oct. 16, 2008. Cambodia's wealth of natural resources is attracting foreign investors. (Adrees Latif/Reuters)
The nation of 14 million people, sandwiched between Thailand and Vietnam, is flush with natural resources. Veins of iron and gold run beneath its soil. Natural forests offer a wealth of timber. Most promising of all are Cambodia’s deposits of oil and gas, believed to snake offshore all the way through the kingdom’s lush interior.
As Cambodia’s leaders begin to parlay these natural blessings into wealth, selling off drilling rights to firms across the globe, American oil companies are taking notice.
So, too, are the watchdogs.
Foreign aid, in large part from U.S. tax dollars, accounts for half of Cambodia’s national budget. Much of this is aimed at the more than one-third of Cambodians living on roughly 50 cents per day.
While Cambodia’s ruling party could use the coming resource wealth to wean the country off foreign aid — and potentially lift millions out of poverty — leaders already appear to be hording this money for themselves, watchdogs say.
According to Global Witness — the U.K.-based non-profit that helped expose the West African “blood diamonds” trade — the coming oil wealth will likely just entrench Cambodia’s ruling cabal in corruption.
“In a couple of years, the elites will be so wealthy it will be hard to rewind the tape,” said Global Witness Director Gavin Hayman during a business trip in Bangkok. The non-profit recently published an investigative report on Cambodia’s growing oil wealth.
(This map, prepared by U.K. nonprofit Global Witness, reveals the offshore Cambodian territory U.S. energy firm Chevron plans to drill for petroleum. Source: Global Witness)
Oil Economy to Knowledge Economy -
ReplyDeleteSustainable Growth - Oil Economy to Diversified Knowledge Economy
Global economic uncertainty make it imperative that GCC countries should develop competitive, diversified economies, concludes a new paper from the Carnegie Middle East Center.
In the report explains that the top priority for the Gulf Council Cooperation (GCC) countries should be improving economic governance.
Recommendations for GCC countries:
•Improve minimum wage standards and working conditions to attract more domestic employment and reduce dependence on immigrant labour
•Regionally concentrate on growth in non-oil sectors to avoid duplication in areas like finance and tourism.
•Encourage foreign direct investment through better economic and corporate regulation, including greater transparency in public spending and easier access to credit.
Estimated at an annual average of US$327 billion over the period 2002– 2006, the revenues more than doubled their average as compared with the preceding five years. Despite the great oil windfall, the GCC countries faced the same challenges as they had in previous periods. Efforts at diversifying their economies and reducing high oil dependency resulted in limited change despite the multitrack approach that these countries were pursuing. GCC countries pursued the same policies they had pursued in the previous period, without adapting to changed dynamics. They increased public spending in order to distribute the new oil windfalls, but this proved unsustainable in the long run given the oil price volatility.