Liberia’s Efforts to Avoid the Resource Curse

 

 

 

by

Tara Conklin

Earlier this month, Robert Sirleaf, son of Liberian President Ellen Sirleaf, came forward to defend his appointment as head of Liberia’s nascent oil industry. Admonishing critics for their charges of nepotism and corruption, Robert declared that he has the competence and experience necessary for him to serve as Chairman of the National Oil Company of Liberia (NOCAL), adding, “I owe Liberia me.”

If it seems suspect to you that President Sirleaf could find no other competent, experienced individual to serve as NOCAL Chairman, (perhaps someone less related to her?) you are not alone. The appointment of her son has raised eyebrows in Liberia and throughout the international community. She no doubt exacerbated the situation by appointing to another top NOCAL spot someone currently being prosecuted for fraudulent transactions of $2.5 million USD.

These recent appointments are just the tip of the iceberg. Liberia’s oil industry has been plagued by charges of bribery, corruption, and fraud since its inception, with companies paying off legislators and their staff for votes on oil contracts. Since these allegations were brought by Liberia’s main auditing and watchdog organization, the General Auditing Commision (GAC), no one has been prosecuted, no bribes were returned, and the deals that the GAC recommended be invalidated have remained in place. (Read details about the allegations here.) Just last month, amidst the appointment of a controversial new Auditor General, NOCAL has become embroiled in a scandal at GAC, where massive layoffs have just taken place. Allegedly, NOCAL played an instrumental role in the dismissal of GAC staff in an attempt to thwart the ongoing audit of the oil sector.

While these reports are disconcerting, it is important to note that the Sirleaf administration has been ostensibly dedicated to fighting corruption and improving accountability, vowing to improve life in the country currently ranked 182 out of 187 by increasing greater transparency. By some accounts, the administration’s anti-corruption policy stance has been widely successful. This apparent contradiction hints at the complex history of Liberia, and begs the question: how did things get this way? Perhaps more importantly, what are the steps to making the oil industry translate to development in Liberia?

Liberian citizens and officials are well aware of the “resource curse”, the paradox through which countries with an abundance of natural resources tend to do worse economically and developmentally than countries without natural resources. Discussions on how to avoid becoming the “next Nigeria”, where oil has caused conflict and stagnated development, take place often in government circles. However, it is immensely difficult to overcome a past history of corruption, resource dependence, and conflict. With natural resources including iron ore, gold, diamonds rubber, and timber, Liberia’s economy is already lacking diversification and is too heavily reliant on these resources, none of which have led to development. Under the presidency of William V.S. Tubman (1944-1971), the iron ore industry propelled Liberia to being one of the fastest growing economies in the world. This growth, rivaled at the time only by Japan, was purported to be a miracle, but in reality it did little for the vast majority of Liberian citizens. In fact, this growth without development set the stage for continued political and social instability, contributing to a bloody 14-year civil war that ended in 2003.(1) The timber trade is said to have helped finance Charles Taylor’s regime, and in recent months, renewed reports of corruption and mismanagement with the country’s timber industry have sparked environmental, economic, and governmental concerns.

With pervasive corruption, an institutionalized culture of wealth grabs, and an economy overly reliant on natural resources, it is high time to ensure that the oil industry not follow in the footsteps of the timber and iron ore industries. Entrenched politicians and powerful private interests are key players in the future of the country’s oil business, so strong political will from the top is necessary to curb “business as usual”. President Sirleaf must fulfill her campaign promises and live up to her reputation as a recent Nobel Prize winner by getting tough on corruption. To do this, watchdog organizations like the GAC and the Anti-Corruption Commission must be fully funded and fully staffed. Abuses discovered must be followed up and prosecuted by the judicial branch. The culture of impunity for elected officials must become a thing of the past. Prosecution and conviction of government officials found guilty of corruption would send a powerful message. In addition, a code of conduct for elected officials must be passed into law delineating job descriptions and methods of performance assessment.

Though Liberia is already part of the Extractive Industries Transparency Initiative (EITI), reporting is delayed and spotty. Independent audits should be conducted to ensure accountability and revenues from the resource should be put into dedicated funds, perhaps a sovereign wealth fund (like Botswana’s Pula Fund, or perhaps more ideally, Norway’s SWF) to reinvest in other industries in Liberia and encourage diversification in the country’s economy. In addition, Liberia should utilize good judgment when deciding which companies to grant oil concessions. Companies with a reputation of transparency and based in countries that will hold them accountable back home with strong foreign anti-corruption laws are good choices.

Some measures are currently being undertaken. In November, NOCAL put forth a competitive tender for general audit of its operations, seeking a “reputable international firm”, with bids from Deloitte & Touche, Ernest & Young, and Pricewaterhouse Coopers being reported. Dr. Paul Collier, expert on the resource curse and its contribution to a country getting stuck in the “Bottom Billion”, was in Liberia in September, where he observed some promising aspects of Liberia’s oil industry. These rays of hope provide a path for Liberia to break the cycle of corruption, move past its troubled history, and dodge the “resource curse”. The administration and legislature, private sector, and watchdog groups in civil society must remain vigilant if they want Liberia’s oil wealth to make a positive change for the country. There is a way, but it will require political will that we have yet to see. Here’s hoping for a transparent, accountable, and prosperous 2013 in Liberia.

Tara Conklin is a graduate student in International Relations at the University of Massachusetts Boston.

2 Comments

  1. In this situation it’s worth to think about increasing competence of EUROPOL, maybe even raise is to the rank of Institution of EU, and allowing it to make the decisions (but obviously not the controversial or crucial ones) that would be binding for national EUROPOL agencies (except of course of agencies of EUROPOL from states that are not members of EU). Such a solution would make EU’s policy towards crime more flexible, and therefore more effective.

  2. one illment that always suffer us as a nation we do not the value of our vote fairly enough a nation will become what it vote for, but thing for sure the present generation of liberian are determine to fight with their intelligent not violence. scripture say one officer will defend another officer interest for me it is very clear that the ellen regime had failed the liberian people an my country hijack by gangs of well organized criminal who are still promise the liberian liberty while they themselves are servant of corruption, god is watching a man will be judge for whatever he dose under the sun. thanks

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