Crude World
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Caracas had a booming business: See Sacha Feinman, “Crime and Class in Caracas,” Slate, November 27, 2006.
A highway: Brian Ellsworth, “A Closed Bridge Mirrors Venezuela’s Many Woes,” New York Times, January 22, 2006.
“magic performances, not miracles”: Fernando Coronil, The Magical State: Nature, Money, and Modernity in Venezuela, p. 389.
For a hallucinatory period: For a comparison of incomes, see Karl, The Paradox of Plenty, p. 120.
“Don’t study OPEC”: See Karl, The Paradox of Plenty, pp. xv and 4.
Widespread rioting broke out: For an overview of the Caracazo and Chávez’s career, see Jon Lee Anderson, “The Revolutionary,” The New Yorker, September 10, 2001.
El Country Club has horse stables: See Simón Romero, “Caracas Mayor Lays Claim to Golf Links to House Poor,” New York Times, September 3, 2006.
PDVSA allotted more to its social projects: See Obiko Pearson, “Chávez’s Largesse Puts Strain,” Associated Press, March 27, 2007.
Even during the boom years: On price-control problems, see Peter Millard and Raúl Gallegos, “Price Caps Ail Venezuelan Economy,” Wall Street Journal, February 15, 2006.
Chávez’s policies: In a critical Foreign Affairs article in March/April 2008, Francisco Rodríguez, formerly the chief economist of the Venezuelan National Assembly, argued that “most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated worryingly, and official estimates indicate that income inequality has increased.”
Conclusion
“the moral equivalent of war”: Carter made the remark in a speech on April 18, 1977.
Riggs Bank, which helped: Equatorial Guinea’s oil revenues remain beyond the control or the regard of its citizens. According to a report published in March 2009 by Global Witness, “While the IMF has publicly reported that more than $2 billion of Equatorial Guinea’s oil money is held abroad in commercial banks, it has not identified these banks. Given the history of poor management of Equatorial Guinea’s oil funds, if the IMF knows where this money is, it should say so.” The report posed a number of questions, including the following: “What due diligence are these commercial banks, wherever they are, doing on payments from the accounts, in order to ensure that state funds are not continuing to be diverted? Who are the signatories on the accounts?” The report is posted at www.globalwitness.org/media_library_
detail.php/735/en/undue_diligence
_how_banks_do_business_with_corrupt.
The law is a weapon: Siemens pleaded guilty in 2008 to violating the FCPA and agreed to pay record fines of $450 million to the Justice Department and $350 million to the Securities and Exchange Commission. Those fines were in addition to nearly 600 million euros paid to German authorities. The company had secretly made $1.4 billion in bribes across the world between 2001 and 2007. Although the American fines were record setting under the FCPA, they were not quite the result of prosecutorial zeal in America. According to a New York Times story on December 21, 2008 (“At Siemens, Bribery Was Just a Line Item”), German authorities began investigating Siemens in 2005 and informed American authorities a year later because Siemens shares were traded on the New York Stock Exchange. According to Corporate Counsel magazine, twenty-one of twenty-five new FCPA cases were self-reported in 2005-07, meaning the firms told authorities they broke the law. “Many voluntary disclosures came after violations were unearthed in the due diligence process for a merger or acquisition,” noted the story, published on July 16, 2007.
“There is no cure”: Ida M. Tarbell, The History of the Standard Oil Company, p. 227. Shearman & Sterling, an international corporate law firm, issued a report in March 2009 that said the number of new bribery cases reached a record high in 2007, with a total of thirty-eight initiated by the Department of Justice and Securities and Exchange Commission. The figure slipped to twenty-five in 2008. The report, “FCPA Digest: Cases and Review Releases Relating to Bribes to Foreign Officials Under the Foreign Corrupt Practices Act of 1977,” is posted at www.shearman.com/files/
upload/LT-030509-FCPA-Digest-Cases-and-
Review-Relating-to%20Bribes-to-Foreign-Officials-
under-the-Foreign-Corrupt-Practices-Act.pdf. PBS’s Frontline program “Black Money,” which aired on April 7, 2009, has a website with extensive links to bribery-related documents from, among others, the BAE, Riggs, Halliburton and Siemens cases. See http://www.pbs.org/wgbh/pages/frontline/
blackmoney/readings/.
On the economic side: On occasion, the World Bank has admitted its shortcomings. In an evaluation issued in 2007 (“World Bank Assistance to Agriculture in Sub-Saharan Africa”), the bank admitted that it should not have advised African governments to withdraw support from their farming sectors in the 1980s and 1990s. The bank wrongly expected that the private sector would provide necessary support; when that didn’t happen, farmers were devastated. “In most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew,” the bank admitted. NGOs have been even more critical. In a 2003 study, “Poverty Reduction or Poverty Exacerbation? World Bank Group Support for Extractive Industries in Africa,” a coalition of NGOs, including Oxfam America, Friends of the Earth-U.S. and Catholic Relief Services, noted, “The World Bank itself has produced little evidence to show that its extractive operations have contributed to poverty alleviation in sub-Saharan Africa.”
As I’ve said: It is important to remember that dependence on a basket of natural resources or balancing resource exports with farming and industry can lead to positive outcomes, as happened in Canada, Australia and the United States. This book has focused, instead, on countries that depend to an unhealthy extent on just oil and gas.
“humanity already possesses”: See Stephen Pacala and Robert Socolow, “Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current Technologies,” Science Magazine, August 13, 2004.
“a limited set of monumental tasks”: Robert Socolow, in a keynote speech, “Stabilization Wedges: Mitigation Tools for the Next Half-Century,” at a climate-change symposium in Exeter, United Kingdom, Feburary 1-3, 2005.
The battalion had lost: See Peter Maass, “Good Kills,” New York Times Magazine, April 20, 2003.
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PHOTOGRAPHIC CREDITS
Henri Bureau, Sygma/Corbis
Stuart Franklin, Magnum Photos
Christopher Morris, VII
Adam Berry, Bloomberg News/London
Peter Maass
Peter Maass
Brendan Smialowski, AFP/Getty
Ed Kashi
Michael Kamber
Michael Kamber
Peter Maass
Elaine Gilligan, Friends of the Earth
Antonin Kratochvil/VII
Peter Maass
Paolo Woods
Thomas Dworzak, Magnum Photos
Donna McWilliam/AP Photo
Ed Kashi
Ilkka Uimonen, Magnum Photos
Bruno Barbey, Magnum Photos
Abbas, Magnum Photos
Christopher Morris, VII
Thomas Dworzak, Magnum Photos
Christopher Anderson, Magnum Photos
Michael J. Slcezak
Paolo Woods
A NOTE ABOUT THE AUTHOR
Peter Maass, who lives in New York City, is a contributing writer to the New York Times Magazine. He has written as well for the Washington Post, The New Yorker, the New Republic, the Atlantic Monthly and Slate, and has reported from the Middle East, Asia, South America and Africa. He is the author of Love Thy Neighbor: A Story of War, which won book prizes from the Overseas Press Club and the Los Angeles Times.
THIS IS A BORZOI BOOK
PUBLISHED BY ALFRED A. KNOPF
Copyright © 2009 by Peter Maass
All rights reserved.
Published in the United States by Alfred A. Knopf, a division of Random House, Inc., New York, and in Canada by
Random House of Canada Limited, Toronto.
www.aaknopf.com
Knopf, Borzoi Books, and the colophon are registered trademarks of Random House, Inc.
Portions of this work are based on pieces that originally appeared in The New York Times Magazine, Mother Jones, The New Republic, and Outside.
Library of Congress Cataloging-in-Publication Data
Maass, Peter.
Crude world : the violent twilight of oil / Peter Maass.—1st ed.
p. cm.
“This is a Borzoi book.”
eISBN: 978-0-307-27319-2
1. Petroleum industry and trade—History. I. Title.
HD9560.5.M23 2009
338.2′7282—dc22 2009012303
v3.0