Oil Wealth In The New Libya

Libya’s new rulers have suggested they’ll be able to “kick start” the country’s oil production but the new oil chief says it will take more than a year to get the oil flow back up to speed. UCLA political science professor Michael Ross tells anchor Marco Wermans why Libya’s oil wealth could be detrimental to a democratic future.

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Marco Werman: Those attempting to forge democracy in Libya and rebuild the country know the process won’t be cheap.  And in that context Libya’s vast oil wealth can be seen as a blessing.  But some see the country’s oil as a potential obstacle and a major challenge for the new government. Michael Ross has written extensively on what he calls the curse of oil wealth.  Ross is a professor of political science at the University of California in Los Angeles.  He fears Libya’s oil holdings might be something of a liability.

Michael Ross: No country with as much oil wealth per capita as Libya has ever made a successful transition to democracy.  The countries that have tried, like Iran, and Russia and perhaps Iraq, but none of them have done very well.  And I fear that Libya is gonna face the same kind of problems as the other countries.

Werman: Well, what is it about oil, why isn’t oil wealth and democracy, why aren’t they compatible, especially in the Middle East?

Ross: Oil wealth produces this huge stream of revenue that goes right into the government’s hands.  Normally, governments are responsive to the population partly because they need tax revenues from people.  And as we know from our own national experience, when there’s taxation there’s a demand for representation.  And when a government like Libya’s is able to fund itself through selling oil around the world and not collecting taxes from their people, people don’t tend to demand the same kind of accountability.

Werman: What’s your sense then of how oil wealth might be managed in the new Libya?  Are you seeing early and positive signs that suggest the new government might actually be able to setup a legal framework to manage the revenue?

Ross: The critical thing is going to be how transparent they are.  If the new Libyan government is willing to reveal all of the details of who’s paying it, how much money it’s collecting in each month, what its contracts look like, I think there’s a reasonable chance that people will be starting out from a much stronger position and demanding a lot more accountability.

Werman: And from what we hear, the early days in Libya it’s not seeming that way.  There are already signs of patronage and corruption among the Transitional Council, at least anecdotally from what we’re hearing.  How much time do you think the new government in Libya will have to prove to Libyans and the world that they are in fact fair and just order masters of their country’s oil?

Ross: The probably don’t have much time at all.  One of the problems with countries in Libya’s situation is that as soon as the transitional government comes to power that the force that has brought these different tribes, these different interests together was the overthrow of the Gaddafi regime.  And that’s gone, that unifying purpose is gone.  And the next stage is going to be all of these different groups looking to gain control of the resources of the Libya state and fighting to get what they see as their fair share of the pie.

Werman: Michael Ross, a professor of political science at UCLA.  He has a new book out next year, it’s called The Oil Curse: How Petroleum Wealth Shapes the Development of Nations.  Michael Ross, thank you.

Ross: Thanks for having me.

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