A growing chorus of human rights and environmental activists continues to denounce petroleum development as a modern evil. A recent report by the British group Christian Aid claims, "Pumping oil has led to greater poverty, a high likelihood of war and massive corruption - rather than bringing peace, wealth and prosperity for poor people."
But will the "oil curse," as it is often called, frustrate plans for a free, prosperous Iraq? Not if Iraqis make a simple decision: Put oil revenues directly into the hands of the citizenry.
Seeing oil as a curse is understandable. Roughly 30 developing countries, including the 11 members of OPEC, rely heavily on oil exports for revenue. Since the oil crisis of the early 1970s, these countries have spent more than $4 trillion in oil revenues with little if any lasting benefit for ordinary people. In the worst cases, like Nigeria, Angola, Burma, and the Sudan, oil cash seems only to fuel civil wars and human rights abuses.
But the problem is mismanagement, not the money itself. Most oil exporting countries use an industry structure guaranteed to fail: Oil revenues are controlled by the state and a powerful national oil company manages the industry. Nationalization of the oil industry began in Mexico in 1938 and became part and parcel of the populist, anticolonial reaction that swept the third world during the '70s. The intent was to replace the major international companies like ExxonMobil, Shell, British Petroleum, and others with state institutions. OPEC is more than a cartel. It's a powerful statement of third-world socialism.
Like socialism in Cuba, North Korea, Vietnam, and the former Soviet Union, the OPEC model has utterly failed its citizens for several reasons.