In his book, Blood Oil: Tyrants, Violence, and the Rules that Run the World, Leif Wenar has a great riff on the parallels between oil and booze.

On average, Wenar explains, people who drink moderately have better health outcomes than people who drink either a lot or not at all. On average, moderate drinkers are usually happier, more satisfied with life and have lower mortality rates overall, though they do suffer increased risk of some illnesses.

But there’s a trick there, and it’s hidden in the two most harmless sounding words in that paragraph: on average.

Because when you start looking at individual cases, well, you find all kinds of strangeness. Some people drink titanic amounts and manage to keep it together nonetheless. Hell, some people seem to thrive because they’re always drunk.

Sir Winston Churchill is the paradigmatic example here: the guy worked through a famously prodigious amount of booze on his way to defeating Hitler, winning a Nobel Prize for literature and becoming Britain’s most celebrated leader in centuries. And plenty of people who drink no more than two glasses of wine, two or three times a week live miserably, accomplish nothing and die young.

So yeah, hard drinking is definitely bad for you on average. But we don’t live on average, we live one by one.

For Wenar, these lessons transfer beautifully when you look at nations’ relationships with mineral wealth. On average a little is better than none at all or than too much. On average countries that have too much oil wealth are basket-cases: autocratic, violent, misruled, corruption prone and indecent. But “on average” only gets you so far. “On average” doesn’t rule out the freaks and outliers. Not at all.

López and Baquero understand that the mechanism through which oil rents mess up the politics of a petrostate is by inverting the arrow of dependence in the relationship between the state and the people.

In this view, Norway is the Winston Churchill of Petrostates. It takes on oil wealth with the same kind of frenzied abandon with which Churchill guzzled champagne. By all rights, it should be a basket case…but it isn’t. It thrives. And it doesn’t thrive despite oil, it thrives because of it.

But you don’t need to go all Scandinavian to find a country that bucked the trend. Some countries make the most out of big oil revenues even when they start out poor and autocratic, even when they seem to have none of the prerequisites for “drinking responsibly.” For the whole long half century between 1925 and 1975, for instance, the best-performing economy in the planet lived almost entirely off of oil — transforming itself from a dictatorial, malaria-ridden backwater with hardly any of the trappings of modernity into a flourishing democracy with a fast-growing middle class, universal free education all through university level, fast social mobility and contested elections amid political stability.

It seems unimaginable now, but forty years ago before the Norwegians discovered oil in the North Sea, we were the Winston Churchills in this story.

The question is, can we get it back?

In their visionary new book, Venezuela Energética, Leopoldo López and Gustavo Baquero answer that with an emphatic yes. Mirroring Wenar, they concur that when we say a nation is addicted to oil what we really mean is that it’s addicted to oil rents: to the huge amounts of free money that come out of the ground in an oil economy. Like Wenar, they understand that the mechanism through which oil rents mess up the politics of a petrostate is by inverting the arrow of dependence in the relationship between the state and the people.

In a normal country, the state depends on the people. People produce wealth, through work, and the state captures part of the value they create by taxing them. If the people do badly, the state does badly. Whether he’s a democrat or a dictator, the ruler of such a country can’t afford to not care about the people. He has to care, because he has to tax them.

But in a petrostate gone wrong, that relationship is reversed: it’s the state that produces the wealth (by mining it) and the people seek to capture part of the value by cozying up to the rulers. Look around for the nearest line to get a carnet de la Patria if you need a graphic representation of how this works.

The Fondo Patrimonial de los Venezolanos they propose amounts to a distributed set of individual savings accounts made out to each Venezuelan over the age of 18 that they can tap to invest in human capital.

What López and Baquero propose to do about it is as radical as it’s simple. They want to reverse the direction of dependence, by shifting ownership over the bulk of the oil resource stream (royalties, some taxes and PDVSA dividends) directly to each adult citizen.

The Fondo Patrimonial de los Venezolanos they propose amounts to a distributed set of individual savings accounts made out to each Venezuelan over the age of 18 that they can tap to invest in human capital — that is, to pay for health insurance, education, a home or to fund a pension.

If the state wants in on that action, it can tax the income from that fund — but then  it has to do it the normal way, by putting its hands in people’s pockets in a way they will see, and they’ll get to vote on.

López and Baquero deserve plaudits for getting at the heart of the matter, and for putting a genuinely visionary proposal to address it front and center.

It is entirely clear, of course, that nothing like the Fondo Patrimonial de los Venezolanos stands the least chance of being implemented so long as the current lot stays in power. And the current lot’s relationship to oil wealth is as destructive as the most hopeless gutter drunk’s relationship to booze is.

But it doesn’t have to be like that, and it doesn’t have to last forever. And when it’s over, Venezuela will be in dire need for the kind of clear-eyed, far-seeing proposal López and Baquero have put forward.

For the next few days, we’ll be publishing pieces related to oil policy and details on the book which we hope can jump-start a much needed conversation.

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79 COMMENTS

  1. Alaska created a sovereign wealth fund in the 1970’s. A person that has collected dividends from the fund since inception will have received over $40,000 to date.
    The number one problem with Venezuela doing something similar is corruption. The Latin American culture seems to accept a level of corruption that other societies refuse to tolerate.
    As long as people believe that “they are getting their piece of the action”, they don’t seem to hold public officials accountable.
    An independent judiciary is critical to ensuring that the rule of law reins in the public corruption in Venezuela.
    Rebuilding the oil infrastructure and paying down debt is going to take years and consume any PDVSA profits for close to a generation.
    I doubt that on an inflation adjusted basis oil will ever hit $100 per barrel again, or at least not for a long time. Worldwide 2016 was the first time that more money was invested in renewable electricity generation than in fossil fuel generation. There is a worldwide race going on for the electric vehicle market.
    LNG trucks are gaining in popularity. As the price becomes more competitive, the popularity of these vehicles will increase. Lowering the demand for diesel for trucks will put a long term damper on oil demand. The high lift costs of Venezuelan oil may eventually exceed the costs of fracking as technology makes great strides in the fracking industry. The are fracking operations in the Permian Basin that are profitable at under $40 per barrel.
    The squandering of Venezuela’s oil wealth may be more like Paradise Lost.
    The amount of foreign investment that Venezuela needs to attract is enormous. Investors have many opportunities in developing countries. A stable democracy is a must in order to attract the investment that Venezuela requires.
    Every day that this regime is in power, increases the debt, allows for the infrastructure to further deteriorate and creates more brain drain.
    The turn around may never happen.

    • I entirely agree with your reply. The post mentions “free oil.” Nothing is free and it will take much longer to get to a profit position in Venezuela than even a first time discovery in another country thanks to the immense graft and the debt to be repaid not only for bonds but to the companies providing the technology and services required to repair, redevelop or develop and produce the oil.

    • LNG trucks are gaining in popularity.

      Alternate phrasing: demand for LNG trucks is exploding. 🙂

      It seems unimaginable now, but forty years ago before the Norwegians discovered oil in the North Sea, we were the Winston Churchills in this story.
      For example: according to the Maddison tables, Venezuela in 1970 had a per capita income of $10,672, compared with 12 Western Europe $10,853, US $15,030, and Norway $10,027 and Japan $9,714. (1990 dollars) This was shortly after North Sea oil began to be exploited in large quantities.

      This was with $3 oil and with the dreaded Yanquis- and Dutch companies running oil in Venezuela.

      • The price differential or gap between diesel fuel and natural gas is very large.
        Today’s Henry Hub natural gas price is $2.81 per mmbtu. That is the equivalent energy content of about 7 gallons of diesel.
        Obviously there are other costs. Adding 50% to the natural gas costs, works out to the equivalent of $.60 per gallon.
        The US has a glut of natural gas. Facilities that were originally designed to handle imported natural gas have been reworked to be export facilities.
        There is a long term evolution occurring in energy demand and electrical production. Natural gas is replacing coal and liquid fuels as a fuel for electrical production, vehicles and even as a feed stock for chemical production.
        A small drop in demand for oil will create a glut and drive down prices. Just as a small increase in demand or production shortage will drive prices up quickly. It isn’t as easy as turning a spigot to regulate production to match demand. Many wells will be permanently effected by reducing or stopping production.
        OPEC has been its own worst enemy. $100 oil was needed to make most fracking operations worthy of investment. The high oil prices encouraged the producers to invest heavily in fracking. Technology breakthroughs, (and there are many) have lowered the cost per well substantially and increased the recovery from existing wells. Many older wells that had reduced production have been reworked and are producing much more than the original estimates.
        OPEC produces less than 50% of the world oil supply and has lost much influence. Investments in Solar, wind and nuclear allow for long term cost planning without the fluctuations and supply disruptions of oil.
        Lockheed Martin claims that the concept has been proven on their compact fusion reactor. This is the ultimate game changer.

        https://www.lockheedmartin.com/us/products/compact-fusion.html

        All of the technological advances are directed at removing society from dependence on most fossil fuels. The fossil fuel with the brightest future is natural gas. No matter what Trump does regarding coal, companies will not invest in new coal plants that may be shuttered under a new administration.
        Royal Dutch Shell’s long term business plan is to derive more than 50% of revenue from Natural gas. BP is introducing the same long term vision. It won’t happen overnight. Within 5 years it is possible that demand for diesel and gasoline fuels begins to drop significantly.
        This is why I used the term paradise Lost regarding Venezuela. It is possible that the days of high priced oil are behind us permanently. Paying off the debt and rebuilding the oil infrastructure, may be impossible in the long term.

        • I took a truck into Jiffy Lube for an oil change last week and was informed by posters in the waiting room that the new lubricating oil going into my crank case was refined from natural gas.

          Another potential game-changer:

          http://terrapower.com

          Need a good laugh? Google up, “Peak Oil.”

        • Nearly all new power plants in the USA are natural gas. No nuclear facility has been brought online in over 30 years. Wind and Solar are a measly drop in the bucket by comparison. 4% is wind, less than 0.1% is solar. Coal/Gas/Nuclear makes up over 87% (of which Gas is almost exactly 1/3).

          The US has a “glut” of natural gas, but, it is getting used more and more.

          I suspect that VZ is in for more pain and suffering since they now have to buy/import light/sweet crude.

          https://oilprice.com/Energy/Crude-Oil/Struggling-Venezuela-Launches-Tender-To-Buy-US-Crude.html

          • Mitchell,
            The price differential is one of the reasons that there has been so much new investment in chemical production in the US.
            Some of these companies opposed the US government approval of LNG export facilities in a desire to maintain low NG prices for a long time.
            Europe foolishly became dependent on Russian Natural Gas and the export facilities have loosened Putin’s grip on the European energy supply while also allowing the US producers to get better prices for their product.
            I live in NY State. With delivery charges the gas coming into my home costs about $1 per therm. That same gas delivered to a home in Japan costs almost $6.
            Royal Dutch Shell has built a huge barge named the Shell Prelude. It is a completely contained LNG processing and export facility that will be anchored off of Australia for 25 years before it requires dry dock maintenance.
            Shell is looking toward Asia for most of the gas shipped from the Prelude.
            More of these facilities are under construction. The vast untapped deposits of the oceans have come within reach and are economically sound investments due to the technological advances of the last decade.
            There is so much happening in the energy industry, while Venezuela is stuck in the past and the oil infrastructure continues to deteriorate.
            The loss of Venezuelan production has not been a major influence on prices. IF and that is a big IF, Venezuelan ever returns to to the 3.5 million barrel per day production level, the only thing that will happen is price declines.
            An interesting dynamic to consider, that would require more knowledge than I have, is the relationship of Venezuelan production to domestic consumption.
            As the economy has tanked, less oil has been required for domestic consumption. The demand has been dropping rapidly. This has allowed the regime more oil to export. If the economy improves significantly, demand is sure to rise. This will give the regime less oil to export, resulting in less Dollars for imports and negatively affecting the economy.
            This has the appearance of being a trap that will continue to put pressure on the economy and make it very hard to grow GDP. The answer to the short term boost would be deficit spending financed by debt. The government can not issue any new debt if they can not find anyone to by the bonds. I don’t see Russia or China financing a long term recovery.
            Devaluing the currency to encourage foreign investment doesn’t hold much promise. 🙂
            The only lifeline left is IMF assistance. The IMF will never hand any significant amount of money to the regime. The US and The EU will never allow it.
            This is going to be a long slow process of suffering, death and infrastructure collapse, until this regime is overthrown and democracy is restored.

  2. Individual Savings accounts is a very interesting idea. It may work well for middle or upper class citizens. However, how practical or implementable is this idea in a county where a very large percentage of the population is low class poor and have no bank accounts or even basic education to deal with such a windfall?

  3. “The number one problem with Venezuela doing something similar is corruption.”

    Of course.

    And there are 2 fundamental engines behind Corruption: Lack of Real Education and Impunity.

    That’s why no plan like this could ever begin to work in Kleptozuela. For any country, especially with the temptation of natural riches, the only way to progress is through Education and tough Law enforcement. No Criollo “Muddy”, Tropical government could ever achieve that. No future “democracy”, like we had with AD/Copey for decades will ever come even close.

    Why?

    Simply because the vast majority of Venezuelan People – at all levels, everywhere – is tragically under-educated and highly corruptible, when not totally corrupt. No self-restraint, no moral values, no punishment, plus immense Ignorance. Dream on Leopoldo, dream on.

  4. Many, many questions.

    One, to start, from a talk with friends: the individual account would be funded by income from “royalties, some taxes and PDVSA dividends”.

    Does this not create an incentive for the account holders to pressure the government to increase royalties and taxes further and further (risking incentives for investment, among other problems)?

  5. This is remarkable:

    But in a petrostate gone wrong, that relationship is reversed: it’s the state that produces
    the wealth (by mining it) and the people seek to capture part of the value by cozying up
    to the rulers. Look around for the nearest line to get a carnet de la Patria if you need a
    graphic representation of how this works.

    Here is where the problem lies: the “state” is totally controlled by fanb-farc-cuba plus the donkey. And basically are the people who depend on them (because they seized the oil revenues).

    This is the scary part: the people are the main problem for them. When the nazis applied the “Endlösung” on the Jews, the reasoning was that the Jews were the main problem for them.

    Now the Endlösung is a modern one: Let people flee the land (the country), if new people were born deny them citizenship (no passports), if people remain inside the country, terrorized them (kidnaps, assaults, shootings, no public services, no medicine, no food) until they leave, and finally if they stay: kill them.

    P.S. That’s why is really sad when some “pundits” beg to the government to address the food crisis, epidemic crisis or medicine crisis as all of these were not part of the same plan: a modern Endlösung.

  6. Interesting proposal that may well be appropriate for Venezuela but it does have a flaw. Separation of power, critical for a sustainable democracy is often too narrowly defined as a constitutional mandate that distributes power among the executive, legislative and judicial branches. However, that description as well as this proposal fails to include the sharing or distribution of economic power. When the state controls the main economic drivere in this case oil, there is no competing economic power. Even with the propised citizen accounts, the government alone controls employment and the whole spending process of your oil monopoly. This makes it incredibly easy to use this enormous economic power to corrupt the political process. A better proposal, but perhaps politically impossible in Venezuela would be to retain the citizen accounts but break up in some fashion the state owned oil monopoly. Now, I will take cover while the socialists here denounce me but I am convinced that distributing economic power is important for democracy.

  7. I think they did something similar to this when they privatized the industries in the Soviet Union. I guess they issued stock and people lined up to sell their shares and that is how the famous Russian Oligarchs were born.

    I guess the idea here is similar to the Alaska Oil fund which pays every year, so the most one could squander is that years pay out. I can also imagine a scheme to buy and sell your future payouts in similar way that they do with life insurance.

  8. I don’t see anything new here. Juan Pablo Perez Alfonzo talked about more or less the same thing over and over again 30 years ago. I have not read the book but the current or past relationship with oil is not the main issue, it is the corruption and squandering of a wealth that is being liquidated day after day (remember oil is not renewable).

    You may have other kinds of income, being minerals, manufacturing, even drugs if you want..but if you burn the money through corruption, well guess what it won’t matter what the source of money is, it will only matter the amount of money to serve the corruption and your needs.

    Until the 50 years approach of corruption impunity is abandoned, there is not oil (or any economy) plan that would fix Venezuela.

    It doesn’t matter if you give your kids 5 bucks a day so you wont spend it on booze when the kids come back and steal your wallet while drunk.

    Once more our hopefuls are aiming wrong, this is not different than a carnet de la patria with Claps in the form “oil revenue share”.

    The only revelation is perhaps what Leopoldo Lopez has been doing in the last few months…and it seems a little bit of a waste.

    • “I haven’t read this book. Let me now demonstrate my ability to make an ass of myself as I debunk a fantasy version of it.”

      oy vey

      • Looking forward to see something else from you and your approach of equating successful drunkards with the mess Venezuela is in. I propose you a title to your next post:

        How the “Fondo Patrimonial de los Venezolanos” is different than the CLAPs.

        Alternative titles could be (following the subject of “success in spite of alcohol consumption”):

        After a 100 years of oil, we finally figure it out: It is too much money for drunkards!

        or

        A 1000 Marshal plans later, we are now a Communist Dictatorship, what went wrong and how to solve it: buy more beer! – we will give you the money for it.

        By the way, you forgot to mention that Winston Churchill was shareholder of Anglo-Persian Oil Company and one of the architects of both the exploitation Iranian oil and the move of the Royal fleet from coal to oil when he was the First Lord of the Admiralty (at the same time!). A firm supporter of the illegal coup d’ etat against the legally elected Mossadegh after the nationalization of Iranian oil in 1953 that ultimately brought Reza Pahlavi and the Ayatollahs to power. All that is forgiven because he was good for his people (the Britons) even when wasted.

        As you forgot to mention that it was not oil what brought Chavismo to our lives, it was the rotten corruption of the elites of the so called democratic governments. That hint of “the best-performing economy in the planet” was just a mirage that crashed and burned in February1983 and continues until now. I did not know that were in the fashion of historical revisionism.

        But you are right, I haven’t read the book.

        • What a great response Colomine. On point about Churchill/Iran.

          Talking about books and performing economies, I wonder if Toro ever read Los Doce Apostoles by Pedro Duno, he probably hasn’t. Otherwise he wouldn’t have such a selective memory (i.e. flourishing democracy bla bla bla).

          • Colomine
            “All that is forgiven because he was good for his people (the Britons) even when wasted.”
            Thats right he was Prime Minister during WW2 as we British stood alone for 4 years fighting world Fascism and defeating Nazism.
            What exactly have Venezuelans done except eat their own children.
            We the British drew most country lines throughout the Middle East from WW1 through WW2 and the peace dividend. We also through the Balfour declaration in 1917 formed the future state of Israel in Palestine.
            Now go back to eating your arepa, as you watch your country men devour themselves.
            Fucking children in a grown ups world.

          • Hey Crusader…

            Good defense on the arepa and the children reference for someone that do not have business here. I guess it is an obsolete(?) form of defense of an otherwise colonial power. No offense taken.

            By the way, the British division of the middle east is one of the reasons there still war +70 years after WWII. Remember Suez…

            “British stood alone for 4 years fighting world Fascism and defeating Nazism”. Last time I checked UK was heavily helped by the Americans and blessed by Stalin resolution to push the Germans in the East. Remember the second front?.

            Now, I do have a ton of respect for the Britons but if you are going to quote something, at least do the homework. Which is my issue to Mr. Toro bringing Churchill (god knows why) to illustrate the case for Venezuela.

            You are mixing too many things here little dude..but you can always hit the fish and chips at the pub, don’t forget the vinegar.

          • Colomine
            Having lived in Venezuela now for 10 years i think your first point is “an obsolete(?) form of defense” but bravo for trying.

            Secondly having lived and worked in the middle East for 7 years i can, from intimate experience, claim that the Muslim violence perpetrated primarily against other muslims in muslim lands has sod all to do with the British role in WW2, but bravo for trying.

            Thirdly as i said the United Kingdom were “fighting” from Sept 39 till April 42. The first ground action by the Americans was in the Bataan Peninsula April 1942.
            1939 – 1942 go figure as the yanks say, but bravo for trying.

            Fourthly with reference to my comment “Now go back to eating your arepa, as you watch your country men devour themselves.” is in relation to the fact that Venezuela has over 20 000 murders a year, as a British person i think that the 590 per year that the United Kingdom had was bad….and that is with twice the population of Venezuela. But then over 20 000 to 590 is a population devouring itself in a blood fest, and bravo for that!

            Finally with regards to fish and chips, an expert in all matters like you should know that the British have more Indian restaurants than Chip shops, as the most favoured food in the United Kingdom is actually Indian Curry.
            Now thats a reflection of the British Empire, so bravo for that.

            Keep calm and carry on little dude.

          • Hey Crusader, good reply and thanks for the 5 bravos. We can certainly continue our dissertation but I am afraid we are getting out of context here.

            However, there is plenty to discuss about the malarkey in in the middle east and how it started but that would require a couple of pints.

            Regarding the Indian food, I certainly recommend you Thali in South Kensington London, best ever…so far. Now for fish and chips there is nothing better than Aberdeen Scotland ups sorry UK.

            Now go back to sleep Crux, tomorrow is another day.

          • A salient point in WW II … a British pilot was shot down on D-day (unharmed). He was dressed in “pinks” (formal evening attire) under his flight suit. He shed his flight suit because it was too cumbersome, made his way up the cliffs, found an American crouched down behind some rocks, and standing on the rocks, hands on his hips in formal dinner attire, bullets, grenade and shell fragments flying around, the Brit said, “Excuse me, old fellow, do you know how I can get back to Britain? I have a date this evening and I shouldn’t want to disappoint her.”

            Germans were probably too amazed to even take aim, let alone shoot. I mean, talk about balls … Heck, I wouldn’t shoot a man like that, He deserves to live a long life!

  9. When Spain colonized us , being a weak, cash short state it was always short of money so to make ends meet it had to milk its colonies all it could , it was absolutely dependent on the silver and gold mined in its american colonies but that wasnt enough so it sold govt jobs to whoever paid for them , or rewarded private adventurers who conquered the new lands by granting them lands and the right to exploit the natives, moreover it practiced strict ‘mercantilism’ so that the colonies could only trade with the metropolis using her ships and only buy from the metropolis whatever it had to offer …., govt monopolies abounded which would only be given to those with special connections to the crown….as Fukuyama puts it “access to markets and the right to make productive economic investments were limited to individuals or corporations favored by the state, This meant that the route to personal wealth lay through the state and though gaining political influence. This then led to rentier rather than to an entrepeneural mentality …….The landowning and merchant classes that emerged under this system grew rich because of the political protection they recieved from the state.”

    So from the very start and throughout much of our history we have looked at the state as the primary source of wealth and welfare, long long before oil ever made its appearance in our economy. What oil probably did was exarcerbate a tendency which was already deeply rooted in our national ethos. Democracy only transformed that connection into the most virulent destructive form of populism .

    Giving people money wholesale from oil royalties or dividends wont change our mentality, we are on average big frivolous consumers but lousy producers of wealth , the entrepeneural spirit is not universal but an outlier feature of a part of our population ……., thats not getting us anywhere. If resources are short you use where it can yield the most profit , thats what the Japanese and Korans did , give the money to big competent corporations with the understanding that they had to use it for the economic growth of the country….. .

    We are stuck with the idea that its individuals who heroically do great things for the economy , we are idolizers of bigger than life personalities , but what allows economies to grow are teams of organized people with the expertise and ambition and discipline to give it the best optimally productive use……!!

    The other elephant in the room is that we are delighted to see oil as something religiously grand and inexhaustibly bountiful, not as a BUSINESS which requires a lot of organized planning and effort and expert work by teams of skilled people who dont care Sh…t about politics or ideology , only about getting things done …….and for that we have to create a new type of organization which isnt subservient to partisn political agendas or flashy ideological delusions , who can do a public job but using the methods and mentality of the best technocratic business organization ……..We must create an organization which is only loosely tied to partisan politics but neither indifferent to the need to serve the public good , which are centered on doing a job , on performing very specific tasks with optimal efficiency , think for example of the US Army corp of Engineers or of those new type of govt bodies like the budget responsibility office in the US or in the US , who audit and score every plan and project which is proposed for approval using public resources , moreover which monitors its performance and grades its success or failure in specific terms that anyone can understand , Maybe they can include some private business partnership to bring in expertise that doesnt exist in the current public sector……

    I am not delighted with these clownish ideas that are being brought to our attention , it reveals the intellectual and imaginative poverty of people who aspire to deal with a very difficult subject without knowing anything about it …..!!

    • I have thought for sometime that Venezuela’s issues were cause by a culture that developed as a result of the Spanish colonization. There was a slight pause in the 1950’s with the very large influx of European immigrants which brought a totally different cultural view. The country became very wealth not just by oil but by the hard work developing the businesses and economy in other areas.

      Now many of those immigrants and their descendants have left the country or have been forced out. An Venezuela seems to be experiencing a “regression to the mean”

      So, the question is: Can any approach actually allow Venezuela to recover w/o changing the fundamental underlying culture of corruption and self enrichment?

      How does one actually go about changing the entire culture of a country?

      • Let the British colonize it, you only need to look at History and the British Empire, ask Colomine.
        In other words convert to the dolar and bring in foreigners to run your oil fields as your own people could not organize getting drunk in a whiskey distillery.

  10. Create a new economy dependent on oil, to replace a failed economy dependent on oil?

    Haven’t we learned anything about the VZ horror story, and increasingly some other countries as well, that this one trick pony (oil) economy is destined for failure?

    • The current Saudi Prince/head of state (is he King?) sees the writing on the wall, and he’s making drastic changes to their economy/investment strategies.

      • The Crown Prince has grand plans, but they still continue to sink billions more into oil facilities. Meanwhile he has already been caught splurging almost $1 Billion on a single piece of real estate and one painting.

    • The problem is that we have a whole shitload of oil, underground. And it’s losing value with every day that goes by. We need to get it out and leverage that resource in order to transition to another, non fuel-based economy. But we NEED to get it out first.

      • A lesson from Geology 101 way back in the day:

        Question: “What differentiates an ore from a rock?”

        Answer: “01% Geology, 99% Economics.”

      • Losing value every day that goes by…Sigh.

        You have been drinking way too much of the fracking/shale oil/renewables Kool-Aid.

        Have you actually seen the figures of oil consumption? Have you noted that consumption keeps increasing (bearing in mind a small drop during the financial crisis) or that China has been increasing their consumption every year for the past few years?

        What I love about the renewables/fracking cheerleaders is that they actually think everyone will be driving electric cars in 10-15 years and that everyone will be able to afford renewables because it will be so cheap by then. Never mind that many people in Africa, India, China, etc. (the vast majority of the world’s population is not in Scandinavia) still lack basic services, they will all of a sudden, magically, end up driving electric cars and installing solar panels in each of their houses (or huts) and there will be regulation in place to oversee all that (all in record time – how did the implementation of solar energy laws go in Spain btw?).

        And this is the whole premise behind the “losing value every day…”. Had it been for the “losing value every day cheerleaders, we would have probably sold off a large chunk of our oil at $3 dollars per barrel in the early 90’s, because you know, it is losing value every day (that was exactly the same argument of “la apertura petrolera”).

        I’m all up for diversifying the economy, etc. but the losing value every day thing is nothing but absolute bollocks.

        • So the fact that new to the market is 3 mil barrels a day of sweet crude from Iran, negates completely on the world stage any market oil production that Venezuela even produced at its height of production, let alone that half of that is not on the open market today.
          Thats why in Venny Traders analogy, i allways think he is a bullshit merchant.
          So is the value of oil now, more or less than 3 years ago muppet. Has the Saudi war on fracking worked?
          So yes you talk “absolute bollocks”
          Yet another fucking expert on here.
          And yes i have worked for BP and Lukoil in the Middle East.

      • This is half of the theory, the other theory is that oil consumption will continue to climb. In Moises Naim prologue to this book he quoted that Saudi Sheik phrase that “stone age did not end for lack of stones”. He forgot to say that we did not stop using stones, as we did not stop using iron and industry did not disappear after the end of the Industrial Age.

        At best, there could be a transition of a dominant source of energy and the word dominant is important here. As VennyTrade says there are quite a good amount of emerging economies that will be looking for cheap, reliable, instant, and low technology energy source. Guess what, that is oil as far as alternative technologies continue to be expensive, cumbersome, complex and not necessarily adapted to the technical capabilities of a given country.

        Just because a bunch of yuppies are driving Prius and some very wealthy people are now boasting Teslas, it does not mean that soon Maikel in el Guarataro will be servicing his Chevy-Volt on Sunday among couple of cajas de polarcitas. In fact, personal transportation accounts to about a 5th of the global oil consumption.

        As per Barclays, by 2040 electric cars would cut about 9 mmbd of oil consumption but the projected energy consumption as per the EIA is 28% (all sources) with oil (as liquid) increasing 33%.

        Another issue to be aware of is that heavy transportation and aviation currently have very low chance of fundamental changes, that is reciprocating engine (diesel) for the first and gas turbine for the second. You won’t be able to move a VLCS (Very Large Container Ship) with a bunch of lithium batteries.

        As per Forbes, Norwegian oil consumption continues to climb in spite of the introduction of electric cars. I can tell you for sure, as I have spend time in Stavanger, there are not more energy conscious people than the Norwegians.

        My biggest issue with this line of thought (and the book) is that it is only considering one potential outcome. That potential outcome is easily challenged and even if LL and GB are right, technology transition will require (in your words) a shitload of time.

        Leopoldo Lopez and most Venezuelans think that the solution is more oil. Well guess what, that has been the so called solution from since oil existed in our lives. I am very disappointed that in LL summary in the Atlantic, there is minimum discussion on the major issue that is at hand: corruption and waste.

        I rather propose something a tad different: tackle the corruption, produce less oil and seek for other kinds of economies that are more in line with our other resources and geographical position. In other words, China is not a power house because it has oil but because it has a lot of people and made the steps to change the paradigm. You may say the same of Canada, Australia, Norway and other countries with more or less the same Venezuelan population.

        But until people like Mr. Toro, Capriles, Naim and (why not) Leopoldo Lopez do not own the failure of the pre-Chavez era, I doubt we will learn the lessons required to move on to the next phase of our history.

        https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/electric-cars-and-oil-demand.html

        https://www.ft.com/content/ea7f3c08-c3a9-11e7-b2bb-322b2cb39656

        https://www.theatlantic.com/international/archive/2017/12/fixing-venezuela/548465/

        https://www.forbes.com/sites/rrapier/2017/07/12/norways-oil-consumption-rises-despite-42-electric-vehicle-share/#6dcd1d9a7152

        • Colomine, btw, are you London-based? I used to live very very close to Thali. Have you tried Gymkhana? I like it much more…

          • Nope, but I go there about 4 or 5 times per year, same with Aberdeen and Inverness. Home is Calgary (for now).

            I always stay at the hotels in that area…

            I will try on my next trip. Thanks for the recommendation!

          • Oh Colomine you have so disappointed me,

            Hey Crusader…

            Good defense on the arepa and the children reference for someone that do not have business here. I guess it is an obsolete(?) form of defense of an otherwise colonial power. No offense taken.

            Whats Canada like this time of year, any power cuts, can you get petrol there, Hay hallacas!
            I love a bit of character assassination facilitated by a bit of hypocrisy.

  11. When Spain colonized us , being a poor state with a lot of military expenses, it totally depended on the wealth it could extract from its colonies to make ends meet , it therefore created and sold or granted monopolies or privileges on anything the colonies could produce , its didnt have the resources to conquer the new lands so it allowed private adverturers to do the job and rewarded them with lands and the right to exploit the natives that lived in it , it sold govt jobs to the best bidder, it applied a mercantilist trade policy so that the colonies could only trade with the metropolis (on ships belonging to the metropolis) through one single port in spain and forced the colonies to buy all they might need, from the metropolis …. this led to a situation in which the only way to wealth involved getting some favor from the crown . As Fukuyama puts it “access to markets and the right to make productive economic investments were limited to individuals or corporations favored by the state .This meant that the route to personal wealth lay through the state and through gaining political influence ..This then led to rentier rather than an entrepeneural mentality …the landowning and merchant classes that emerged under this system grew rich because of the political protection they recieved from the state…….

    This state of affairs did not change with independence , political connections have all through our history been key to personal wealth …..long before oil made its appearance in Venezuela and after it did, what oil did was to exarcerbate a mental tendency which already had deep roots in the Venezuelan ethos . With democracy partisan patronage became virulently populistic but otherwise the rentier mentality remained untouched .

    The fact of the matter is that the premise that every one is potentially endowed with an entrepeneural mentality is false , in Venezuela people with an entrepeneural mentality are a minority while those with a rentier mentality represent the vast mayority of the population, for reasons that have a long history and which wont easily change just because they recieve some share in the oil royalties and dividends, most of us are great consumers but not so great at being productive ……!!

    If resources are short then you prioritize and instead of giving everyone a share of the countrys oil income best to allow it to be accesed by individuals or corporations that can best use it to contribute to our economic growth , thats what Japan and Korea did to get their economy modernized . and it worked for them .

    Not mentioned in the book is the original sin of Venezuerlans in looking at the oil as some sacralized bountiful inexhaustible resource , which endows Venezuelans with patriotic pride and which will yield optimal results with no special expertise or care needed to make it productive . its been treated as a proud symbol of national greatness rather than as a business which requires a lot of expert organizational work to make it productive, its a gift from the gods rather than a business that people have to work hard at monetizing .

    There is much more to be said on the subject but I am dissapointed at the amateurishness of the proposal made in the book , they have gone for the easy flashy quick fix rather than for the really hard complex set of remedies that are needed to integrate the oil business with our national ambitions to become a better more developed ……I see is a an analytical flop …..

    • Así es, la riqueza de un país está en las personas y no tanto en sus recursos. El cambio tiene que ir desde abajo hacia arriba, no al revés y nadie sabe cómo lograr algo así. Si en Venezuela gente con “entrepeneural mentality ” es minoría y se prefiere gastar lo que se tenga sin pensar en el mañana, cualquier idea para organizar mejor la sociedad, por muy buena que sea, fracasará o se quedará a medias.

  12. Mi Negra 2.0.

    It seems to me the problem is structural. What you do with the profits sounds like one of the least challenging aspects of it.

    Not that it’s not important. But at first glance, the book doesn’t seem nearly comprehensive enough.

  13. The reason Norway works is because they don’t let massive amounts of oil money enter the national economy, this would open the floodgates (I get the “human capital” requirement, but then you’re just inflating housing/medical costs). The Arab petrostates work in a (similar) fashion as proposed here, with their state jobs that overcompensate, and they can’t seem to escape the Dutch Disease. I just have a hard time imagining this turning out differently.

    I mean, this proposal is better than the current situation, but that’s not saying much.

    • In all these equations with Norway remember the cost of living there is nearly 50% more than in the USA. Not many drunk Churchilian types there.

    • The reason Norway works well is because they built strong institutions before getting wealth in large quantities. The reason Venezuela doesn’t work well is because we got the wealth in large quantities before building the institutions.

      Leopoldo’s solution (which is not really his as other readers have commented) is nothing more than a Mickey Mouse solution at this stage. The problem about corruption needs to be tackled FIRST.

      • Agree and as i have said so many times the corruptions is completely parallel to having a bolivar currency. I do no know 1 Venezuelan and especially not one Arab or Chinese that isnt using your false currency for fraud. It is an insipid putrefying substance that infects every one here and untill it goes you will never be able to combat micro or macro economic problems, why because 90% of your population has used it (the bolivar-dollar) illegally and thats what you people dont want to face. I repeat i have never met any one here that hasnt been corrupt. Fucking live with it and let that be the foundation for any future argument re changing this place and more importantly the people.
        But you continually show you dont want to.
        Carry on having your conversations about big oil…..you have heavy crude and even the Canadian sandtar is more economic than your shit. Carry on in the fracking world as you constantly get left behind.
        Dont worry as the Iranian sweet crude negates everything that you produce.
        But OPEC, but OPEC, but OPEC yes that works well.
        So the problem is the amount of wealth! no having worked for over 2 years(5 winters) in Norway on the Mountain and Arctic Warfare unit with the British Army its the people that make the difference.
        Venezuelans need to look in the mirror to see the problem that they face. Trying to parallel Macro, Micro and Oil issues here does not have a parallel with the rest of the world.
        I read all the comments here and people in my opinion just dont get it.

  14. To continue the analogy of the drunk, it is tipical of one to talk about what he would do if he had this or that, but that’s a problem for someone who has or can easily enough get this or that. For the drunk, there are actually many, much more important tasks to worry about. It makes his musings about what he would do with this or that seem absurd.

      • I would not consider Lahey a “professional” drunk, just a falling down drunk at this point. (Although the actor who played him recently passed away ????)

        The corruption on display in VZ makes it impossible to see anyone in power is sober. 1000+% inflation makes all reality rather twisted.

        “When you drink against the grain, you lose!”

  15. Lei el prologo de Moises Naim y me siento un poco culpable de haber hecho comentarios tan duros , es realmente un acto de valentia y entereza lo que hizo LL para desde su celda contribuir a la redaccion del libro , creo que el analisis que hace MN es excelente y agudo y que la idea con todas sus fallas abre la puerta a una discucion seria sobre el destino del petroleo en nuestro pais……, ojala la discucion se produzca, el trato del ingreso petrolero como un patrimonio a destinar a cumplir metas de todos los venezolanos es valida , quizas lo de las cuentas individuales presenta sus problemas , pero la nocion de disociar la actividad petrolera del juego de los apetitos politicos y sus desvarios es una idea a rescatar …

  16. The solution, as usual, is education. Imagine the person who has little to none trying to navigate these waters. It’s hard enough for a group of college grads to see what’s true and what’s right, if such a thing exists in any absolute sense.

  17. Mientras ustedes discuten aquí sobre la Venezuela del año 2100 o 2200, esa que producía 140 barriles de petróleo per-capita/año hace 50 y hoy produce 21 (¿no habría que empezar discutiendo cómo producir más en vez de cómo se reparte el dinero?) el drama se desarrolla en twitter. Les dejo con unos ejemplos

    “a los niños muertos por desnutrición en Venezuela les hacen alitas de ángeles con el cartón de las cajas CLAP. No hay palabras para describir tanto dolor.”
    Omar Zambrano

    Camarada Presidente @NicolasMaduro No es justo ésta cerradura 3.500.000 ,oo Bs . Que es eso ? Hasta cuando golpean el bolsillo del pueblo , Por Diosss
    SIEMPRE CHÁVEZ !!!‏ @Cabrera13A

    Trabajaré 84 horas semanales, no dormiré en mi casa 4 de 7 días si es que llego a dormir y todo por 3 dólares semanales los cuales la mitad gastaré en transporte. Qué fino graduarse.
    Ricardo‏ @LePetitRich

    Cuando se puede leer en la prensa cosas como “”Yo como mortadela con arroz, plátano con mantequilla, sardina con yuca y puras cosas así. Pesaba 82 kilos cuando comenzó el año, ahorita peso 62” (señora que pasó la noche esperando para comprar un pollo) entiendo que todo esto ya no puede durar mucho más pero es imposible predecir cómo terminará. Veremos…

  18. Plenty of comments already about this…and as has been said, the issues are not solved by money alone, but by creating wealth which comes from having an educated population who create jobs, industry etc etc. which is why after all the industry having been destroyed in the last 15 years everything has to be imported, people are starving and, one can’t find even incredibly basic things like a tire…which used to be produced locally in plenty of quantity.

    And this idea is of course nothing new…but to see a current example of this model working today one only need to go to an Indian Reservation that has a casino…the members of the tribe receive quite a bit of money on a monthly basis, excellent right? Well, yes, if what is considered excellent is that each family has a very nice house, cars etc. but not so excellent when you see that the only real business in the area is the casino. There are no manufacturing industries, commerce, creative industry or the like. So asides from the nice houses the rest of the landscape is pretty bleak…

    An improvement for the individuals. But if that is the only plan of what to use the countries riches for then a country that does not build.

    • WC—you had an important post within the last week on the relationship between taxes, subsidies and prices.

      To carry that thought forward, the first question that needs to answered is; Who does the oil belong to, the State or the citizens? If it belongs to the State, the unnatural relationship of citizen dependence will continue. If it belongs to the citizens and the State has to recover some portion of that wealth through taxes the current relationship is reversed. The State will be forced to explain where the money is going and the benefits that taxes paid are creating. This all, of course, assumes that the current Regime is no longer in power and some sort of actual democratic process can be developed.

      There seem to be a lot of people here who feel that the population of Venezuela are too “uneducated” to decide what is best for themselves. So the inferred idea is to take their freedom to choose/vote where an appropriate level and use of tax monies should be. Other than those whom argued here for reduced suffrage, I can not think of a more elitist idea.

  19. 1. That a Fondo Patrimonial de los Venezolanos should pay out only to those over 18 years of age, makes absolutely no sense. It is our kids that most need it.

    2. Why should payments be limited to health insurance, education, a home or to fund a pension?

    3. Just the reference to a “Fondo” makes me think of the fights that are going to ensue to become Fund Managers.

    We do not need more redistribution besserwissers or profiteers!

    The issuance of debit cards to all Venezuelan’s with which distribute net oil revenues directly to all citizens is a feasible inexpensive way of making the government depend on the people, and not, like now, depend on what happens with oil.

    May I offer you my vision about my (Venezuelan) Fiscal Paradise?

    https://perkurowski.blogspot.com/2012/03/my-tax-paradise.html

    • 1. Assuming that that the thing will get any profit after the current debacle 10 years, 20 perhaps?

      2. If you give people money for these services, would it mean privatization of the current health, education etc. How you would guarantee that the population would not end up buying beer (as per Mr. Toro, moderate consumption is good for your health).

      What about black market and trades?. The issue with Clap is perhaps the best example of handouts going wrong…let’s not even talk about populism and dependence.

      3. Like anything in Venezuela, if they stole the Chinese Fund, the macro economic stabilization fund, and even the elderly fund, savings funds and any other thing with fund at the end; whom will dare to guarantee they won’t do the same with this other idea. By the way, like in any other private company, isn’t the board of directors in conjunction with the financial department that decide the profit share?. That board of directors is the state hence accountability won’t be created just because you are in this profit share deal.

      Fundamentals is the key Mr. Watson, white collar thieves need to go to jail regardless their connections.

      4. What would you do with the ups and downs?. If you get people used to have their “profit share” would you prepare them when you slash the profit in order to re-invest?. or low oil prices?

      The nonsense of thinking that by removing the money from the state, it would ultimately reduce corruption and somehow make the state accountable is a surrender to corruption and mediocrity. It basically says that the state is unable to develop its own check and balances to manage the, in the case of Venezuela, idiosyncratic and endemic corruption. (See point #2 & 3)

  20. This article presents interesting ideas, but as an outsider I radically disagree with them. The idea that every citizen is “entitled” to Venezuela’s oil wealth, that the State is some magical inexhaustible source of money, is what got Venezuela into this mess. What is needed is a change both in policies (obviously) but also in mindset.

    For starters, the article mentions Norway, but neglects to mention that Norwegians at the pump pay the HIGHEST FUEL PRICES IN THE WORLD, despite being an oil rich producer. Why? They realize they are not entitled to free oil. It’s just a resource buried on the ground, that other people are making the effort of digging up, with their expertise, their machinery and their money.

    In Norway, the State is a mere shareholder of the national oil company, owning a large share of the stock. But it does not control the company, it does not appoint its CEO, it does not manage its investment decisions or its employee payroll. This is what makes the difference: Working institutions, capitalist pro-investment policies and a less entitled mindset.

    What the Venezuelan state needs to do is to appoint private management to PDVSA, allow shareholders to decide its investment decisions, retain a large stake, even a controlling stake in the company (acción de oro) just in case, if it wishes to, but otherwise back off and let private management take over and reap its fair share of the profits invested.

    It needs to tell Venezuelans, loud and clear, that there is no free ride, that the oil days are over, and that if the country is to progress, it needs to lift up its sleeves, get in the mud and get to work.

    Paradoxically, to suceed as an oil exporter, Venezuela needs to forget it has oil. Make the budget assuming a $1 barrel, let the private management reinvest in exploration and production properly, and have any excess profits the state gets from its stock invested into a sovereign wealth fund no goverment is allowed to tap into except in exceptional times of global recession to conduct anti-cyclical policy, with Congressional oversight and free access of information about this fund to the public.

    Of course, for any if this to happen Venezuela first needs to ditch its suicidal communist dictatorship, so this whole discussion is simply an ivory tower academic debate.

  21. This article presents interesting ideas, but as an outsider I radically disagree with them. The idea that every citizen is “entitled” to Venezuela’s oil wealth, that the State is some magical inexhaustible source of money, is what got Venezuela into this mess. What is needed is a change both in policies (obviously) but also in mindset.

    For starters, the article mentions Norway, but neglects to mention that Norwegians at the pump pay the HIGHEST FUEL PRICES IN THE WORLD, despite being an oil rich producer. Why? They realize they are not entitled to free oil. It’s just a resource buried on the ground, that other people are making the effort of digging up, with their expertise, their machinery and their money.

    In Norway, the State is a mere shareholder of the national oil company, owning a large share of the stock. But it does not control the company, it does not appoint its CEO, it does not manage its investment decisions or its employee payroll. This is what makes the difference: Working institutions, capitalist pro-investment policies and a less entitled mindset.

    What the Venezuelan state needs to do is to appoint private management to PDVSA, allow shareholders to decide its investment decisions, retain a large stake, even a controlling stake in the company (acción de oro) if it wishes to, but otherwise back off and let private management take over and reap its fair share of the profits invested.

    It needs to tell Venezuelans, loud and clear, that there is no free ride, that the oil days are over, and that if the country is to progress, it needs to lift up its sleeves, get in the mud and get to work.

    Paradoxically, to suceed as an oil exporter, Venezuela needs to forget it has oil. Make the budget assuming a $1 barrel, let the private management reinvest in exploration and production properly, and have any excess profits the state gets from its stock invested into a sovereign wealth fund no goverment is allowed to tap into except in exceptional times of global recession to conduct anti-cyclical policy, with Congressional oversight and free access of information about this fund to the public.

    Of course, for any if this to happen Venezuela first needs to ditch its suicidal communist dictatorship, so this whole discussion is simply an ivory tower academic debate.

  22. Toro almost makes it sound as if Venezuela was on the verge of becoming a Latin Norway but a little accident happened.

    Venezuela definitely made big progress from Gómez times until some time in the eighties…nineties but it was still what I have always called a fundamentally feudal country with an incredibly arrogant top
    that considered and considers itself cultural elite.

    Venezuela could be best compared to a Colombia mixed with a Saudi Arabia.

    Norway was not a poor country because it found oil, even if some, even in Norway, might think so.
    Norway is currently wealthier than Sweden or Norway but even back in the sixties the standard of living was not different from that of Sweden or Denmark or other wealthy countries in Europe.

    Just look at the hard figures and take a book or two about socioeconomic history of Sweden, Norway, etc.

    Norway was actually one of the countries that saw hardly anything of feudalism as seen in the rest
    of Europe or, with a new shape, in Spanish America.

    This is the the thing people like Toro and others find boring, not worth talking, as they cannot be described in fancy pseudo-technocrat terms: education, real, effective education to the median citizen and an open debate culture were the keys to it all
    and from there the rest….well before oil came in.

    Norway had almost universal literacy at the start of the XIX century.
    Back then it already had some world mathematicians.
    The equivalent to Doña Barbara could be a certain novel by Nobel prize Bjørnstjerne Bjørnson about a humble boy from the province who studied hard to become something equivalent to a specialized agronomer.
    Doña Bárbara, although considered by many Venezuelans as a tale of the fight against backwardness is about the feudal señorito from the capital who studied law and went to the province to show what self-styled elite people from Caracas consider progress. This reminds me of what Alexander von Humboldt wrote on how some Venezuelan elite people, some who later were considered independence heroes, viewed as ‘enlightment’.

  23. By the way the “enlightened” Masonic here are worse than useless, so forget about enlightenment.
    Fuc^& me i have had another power cut!
    Bring on the 10th century candles ha ha Venezuela.

    • That’s exactly what I was about to ask. The fund was proposed by the Rodriguez in that book. I know that Leopoldo Lopez reviewed it. Quico tell us.

  24. The apocalyptic notion that we are soon to see the demise of oil as one of the main sources of energy is likely much exagerated …….but inevitably its time of decline will come as it came to coal, and even sooner than that it may cease to become the fabulous source of great easy wealth that it once was , it can remain a moderate money maker for a long time but probably it will require being much more efficient in its production refining and handling that has been the case so far …that by the way is what has allowed coal to survive…..even with razor thins profits .

    Having a more diversified economy , one much less dependent on oil is something we all desire , but getting there may not be so easy , and doing so without the help of oil well neigh impossible ……so lets get real …!!

    The future of oil faces a growing problem , that undeniable , its no longer economic for power generation (less than 5% of its use excluding natural gas), and there are many technological advances which will in time substantially lower its use in transportation (as far as I can recollect responsible for 50 odd % or more of oil usage) so that leaves its use in manufacturing and other industrial processes (30% of its usage) ……

    On the other hand there are many new and cheaper sources of oil which are in direct competition with our traditional Venezuelan production ………our best traditional markets in the US are quickly reducing their imported oil intake due to new technologies and the increase in their own production , thats not going away , new markets will have to be developed which are more advantageous to us ( the rest of latam ??) , The far east is a market which is much closer closer to huge reservoirs of middle east oil which is much cheaper to produce handle and refine , same goes for india which is next door to iraq and iran.

    Our oil industry is in a state of shambles and restoring it will take a lot of resources and some very intelligent policies and require the development of a new muh more efficient oil industry which can also face the problems of our declining light crude fields .

    Additionally we have the problem which come first to our mind and its our political incapacity to handle our oil industry wisely and rationally which is the reason we want to take the control of its income away from our always corrupt and corrupting political classes and the governments that they come to dominate……..this last is a different challenge.

    This second challenge is as tough as all others and much more intractable …… only way out of it to limit the capacity of government to control the income from the resource , having it recognize and respect that it is a business , like any other business and that means transforming the form of government so that it is functionaly made to operate separately from the State seen as something a- political technocratic , more result and performance oriented (like just any business) which serves a purely public function and limit the political function of government to approving the guideline main policies that the technocratic state proposes to its after due vetting by NGO type think tank public corporations . Also accepting that it wont produce utopia but just an improvement to our situation which makes life better for most and just acceptable for the unsalvageable masses that already people our political landscape ..

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