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The Resource Miracle

TIME, May 21, 2012
By: Bono

 

[Note: This essay appeared in the May 28, 2012, edition of TIME magazine.]

It's become the go-to cliché of modern economics. Natural resources are a "curse." When a nation is over-reliant on one or two commodities like oil or precious minerals, corrupt government ministers and their dodgy associates hoard profits and taxes instead of properly allocating them to schools and hospitals. Happy the country that lives on nothing but its wits; cursed be the one that thinks it can get rich by planting or digging or drilling for wealth.

Such is the collective wisdom. So we must ask the collectively wise, How did the U.S. avoid the curse? And what might that tell us about other countries' chances of doing the same?

When European settlers arrived in North America, they found a continent groaning with abundance -- soil in which anything would grow, stands of timber marching to the horizon. Under the land were vast reserves of gold and silver, coal and oil. Over time, Americans learned how to harvest this natural endowment -- not just to build a modern society but also to feed and supply the world.

The story, of course, wasn't always a happy one. The extraction of oil, coal and minerals brought, and still brings, a cost to the environment. Still, the bounty didn't and doesn't belong only to the barons. And that, unlike finding oil in your backyard, has nothing to do with luck. Americans put in place laws regulating how those resources get extracted and how good fortune gets shared.

This summer the world has a chance to work that miracle a second time -- and without the worst parts of the American story. As they gather at the G-8 summit at Camp David this month and again in June at the G-20 in Mexico, international leaders focused on the euro and Iran should make time to ensure that a new resource boom benefits the many, not the few.

This new boom won't be in the U.S. It will be in developing regions like Africa. In many ways, Africa is to this century what North America was to the 19th. It has 60% of the world's undeveloped arable land and vast reserves of coal, oil and minerals, together with enormous renewable-energy resources.

Sub-Saharan Africa is also home to 400 million of the world's poorest people. These resources should be theirs. Get the development of them right and the forthcoming financial resources--invested well--can transform the lives of countless numbers of people.

Food and agriculture are the place to start. At Camp David, the G-8, led by President Obama, will work on an ambitious plan for global food security, centered on commitments made and costed by 30 nations in the developing world. By partnering with such leadership, there is a very real chance of lifting 50 million people out of extreme poverty over the coming decade and sparing 15 million children the cruelty of severe malnourishment.

This isn't about the G-8's committing massive new aid increases. It's about continuing present investment and making it smarter. Beyond food, Africa's vast oil and mineral reserves can be a pipeline to investments in health, education and roads. Mineral extraction is an expensive enterprise, and those who invest in it deserve to make a profit. But they should pay what they owe to governments. Transparency is the vaccine to prevent the biggest disease of them all -- corruption, which any African will tell you is killing more kids than HIV/AIDS and malaria combined.

That's why in 2010 the U.S. Congress passed groundbreaking legislation that requires every extractive company listed on a U.S. stock exchange to publish any payments they make to overseas governments, project by project. That information lets Africans hold their leaders to account for the way revenue is spent. Even oil companies will benefit: they're less likely to be criticized by those whose resources they are harvesting. But while the Securities and Exchange Commission crafts rules based on this legislation (amid lobbying by those who think it doesn't work for them), the European Union, considering its own new law, contemplates something worse. World leaders can break the logjam by backing tough rules on the transparency of payments.

In hard times, we hear a lot about "resource management." Resource mismanagement -- whether food insecurity or corruption in oil and mineral development -- is something the G-8 can reverse, and it can do it not by spending new money but by acting in partnership with the developing world.

If I've learned anything in more than 25 years of making noise about this stuff, it's that partnership trumps paternalism. This summer let's hope the G-8 and G-20 listen more intently to the people we hope to serve and bring the boom without the bust.

© TIME, 2012.

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