Proposals for policy change very often come from a moral or aesthetic dissatisfaction with the observed facts of life. This is an inevitable starting point. But it is not enough. To arrive successfully at the final destination, at the formulation of a legal proposal acceptable by society, one needs to pass through several other stages. At the second stage, one forms a sample of facts that fits the observed pattern, excluding facts that do not. At the third stage, one checks the facts. Some will be well-known and visible, others less well-known and obscure. Some will be similar to the initial source of dissatisfaction. At the fourth stage, one imaginatively tests the proposal — the candidate solution to the problem — against all facts included in the sample. Only if the desired proposal passes all tests in application to all cases are we able to offer the measure for public consideration and possible acceptance. So let us try to apply this approach to the idea offered by Leif Wenar in his deeply morally motivated article, “We All Own Stolen Goods.”
The first statement, “You very likely own stolen goods,” seems to me obvious and needs little debate.
However, the existence of the so-called “Resource Curse” seems to me unproven and lacking confirming facts. The mere fact of a substantial recent literature that regularly uses the term does not convince me of the validity of the concept; it looks to me like a mythical artifact.
The story of the tyrant Teodoro Obiang of Equatorial Guinea could not be more disgusting, but unfortunately it is not unique. We do not have go too far, but need only look at recent events — in Russia, for example — to find many quite similar facts. But with one important correction: Mr. Obiang tends to be rather more modest compared to some of my compatriots in the Russian government and in government-owned and government-related companies.
“Mr. Obiang has just bought his sixth private jet.” Mr. Anatoly Chubais, who manages the half-government-owned company RAO UES, had six jets eight years ago, when its sales and profits were a small portion of what they are today. And this is not to mention the dozens of other companies with private fleets; the government-owned airline Rossiya now has about a hundred jets.
“Mr. Obiang’s son prefers Lamborghinis.” To say that every second high-ranking bureaucrat in Russia’s Federal Security Service, Customs Service, Constitutional Court (sic!) in Moscow drives either a Lamborghini or Porsche would be a slight exaggeration, but probably only a slight one.
Malnutrition in Mr. Obiang’s country is not disputable. From 1998 to 2005, average life expectancy for men in Equatorial Guinea fell by 2.1 years, while the total population from 1999 to 2007 increased by 23%. Nevertheless, over a corresponding period of time, Russia’s male life expectancy fell by 2.4 years, while the total population of the country decreased by 3.7%.
“Mr. Obiang is killing or menacing his opponents.” What has happened with Anna Politkovskaya, Alexandr Litvinenko, dozens of Russian journalists, 331 hostages in the Beslan school, 130 hostages in the Nord-Ost theater siege in Moscow due to efforts of governments troops and with hundreds of thousands Russia’s citizens in Chechnya is well known as well.
Mr. Obiang has been proclaimed “the country’s God.” Mr. Putin has been proclaimed “the national leader.”
The list of similarities can be continued, but the main idea seems to be clear enough. If Prof. Wenar’s proposal for the approach toward Equatorial Guinea and Sudan is accepted, why should it not be applied toward Russia as well?
Another set of problems arises with his suggestion to use the Political Rights Index produced by Freedom House. True, this is probably the best indicator today of the political control citizens have over those who hold power. Nevertheless, the index is not free of shortcomings, which are admitted even by its authors. The index’s problems are due to the fact that it is based not on hard but soft data, produced by a collection of opinions rather than objective facts. Therefore, critics might reasonably argue that it could be manipulated in order to receive a desirable political score — for example, for a fraction of the expected gains.
The other issue is that the list of the worst countries (probably better to say: “regimes”) with the score “seven” — Myanmar, Equatorial Guinea, Libya, North Korea, Somalia, Sudan — is not final. Among the regimes omitted from Prof. Wenar’s article are not only the rather anti-American political regimes in Uzbekistan, Syria, and Cuba, but also the America-neutral ones in Zimbabwe, Turkmenistan, Vietnam, and the quite American-friendly one in Saudi Arabia. The last country is also one of the main suppliers of oil for the United States. What about the application of the measures of the “Clean Hands Trust” against those regimes, including the one in Saudi Arabia?
“Seven” in the Freedom House scale for political rights of citizens is a really bad score. But a score of “six” was posted for countries such as Iran, Oman, Qatar, Pakistan, Kazakhstan, Russia, Angola, Azerbaijan, Cameroon, Tunisia, Gabon, Congo, Chad, Brunei, and Algeria, and “six” is not much better. Should these countries be excluded from the list? Should they go on it? What about countries that score “five”? We could continue until eventually we ask ourselves: where to put the borderline? And it is impossible to avoid the last, but not the least, question in this section: Should the “Clean Hands Fund” be applied only to Equatorial Guinea and Sudan, or to all the above-mentioned countries? And what will the scale of its operation imply?
Dictatorship is dictatorship, always and everywhere. Revenues derived from the national economy — including natural resources — are spent on luxury goods, redirected to the army and police, spent on security apparatus and warfare, and piled up in tax havens from Switzerland to exotic tropical islands. The amounts have multiplied over a short period of time in many of the above-mentioned countries. What is the source of this money? The statement given by Prof. Wenar is straightforward and simple: “This is literally theft.” Why theft? Theft from whom? Whose property was it before it was “stolen”? The answer offered is straightforward again: “The natural resources of a country belong to its people.” This is, from my point of view, the weakest link in the whole chain of the author’s logical construction. With all due respect to Mr. Bush’s statement about the rightful owners of Iraq’s oil, this does not seem that strong an argument in the context of a serious legal debate. The views of Hugo Chavez and Ayatollah Khamenei will not help much, either. Article 1 of the primary human rights treaty, which says that “All peoples may, for their own ends, freely dispose of their natural wealth and resources,” may be even less convincing.
Mr. Obiang and Mr. Putin, as well as many other similar figures, could claim that they, too, are people of their respective countries and, therefore, natural resources must belong to them. Moreover, since governments and states are representative bodies of the people, governments and their leaders could easily argue that they have a stronger legal claim to the country’s natural resources than anybody else. According to them, since all the people of the country cannot actually physically own and manage their countries’ natural resources, this “heavy burden of owning the assets” must be placed on the shoulders of government. And since governments are also too large to manage resources effectively, the “right” and “best” people to do it will probably be the leaders of the government, or their designated representatives, who just by coincidence turn out to be their relatives, buddies, closest friends, partners, and colleagues.
It is not a huge revelation to say that, here in the real life of the modern world, many tyrants, dictators, authoritarian leaders, scoundrels, and swindlers of all kinds maintain that what has been laid out above is the most basic, sensible, and attractive principle of resource ownership. Tyrants prefer to see the natural resources of their countries proclaimed as belonging to all the people. Why? Because when translated into practical political language, this really means that resources must be nationalized, government-owned, and government-managed. It means that resources must be controlled and used by us, the beloved leaders. In other words, the principle of the national ownership of natural resources deeply embedded in international law in reality is not a solution to the problem that attracted Prof. Wenar’s attention, but is instead its true and deepest cause.
This failure to identify the real problem leads the author to mention, among other options, a faulty solution: the proposal to create a so called “People’s Fund,” “a mutual fund built up by auctioning the country’s natural resources, from which any citizen could at any time withdraw their per-capita share of the revenues.“Instead of solving the problem of ineffective use of natural resources with their privatization, another problem is added — the ineffective use of resources accumulated in the “people’s,” “national,” “nationalized,” “state,” “state-managed,” and similar funds. Problems are not being eliminated, but multiplied.
The most “promising” strategy proposed by Prof. Wenar, to take legal action in U.S. jurisdictions against middlemen who trade “stolen” resources, seems to me not only impractical, but also as moving against fundamental principles of free trade.
Another proposal — creating a “Clean Hands Trust” against natural resources exported from countries with tyrannical regimes — immediately raises many questions. For example, why should the Trust cover only natural resources? What about other goods? What about services? If the answer is positive, and tariffs are to be raised against all goods and services imported from a country with a particularly tyrannical regime, what is the difference between the proposed measure and traditional economic sanctions? Their ineffectiveness is well known.
Another set of questions can be raised regarding the fairness of punishing private entrepreneurs who are citizens of a country facing tariff sanctions. In addition to the suffering caused by their own political regime, it seems that those business people will be punished again by sanctions from the United States. Would that be fair? And would this really accelerate desirable change within the tyrannical regime?
If the proposed tariffs are to be raised just against government companies or the leaders of tyrannical regimes, it would be better to make that clear. But in that case it would be helpful, first, to widen and “smarten” the possible range of sanctions, including issues of visas, entries into democratic countries, bank accounts in states with the rule of law, etc. And, second, to exclude natural resources from the objects of those sanctions’ application.
If someone is guilty of stealing national resources — of grabbing public money, destroying freedom and democracy, and violating the rights and property of the people living under repressive regimes — it is not really about oil. It is not really about gas or diamonds. It is not really about natural resources at all. It’s not about goods, or services.
If someone is guilty of stealing resources, the issue is not what is stolen, but rather who is stealing. Our focus ought not to be on the objects of theft, but on its perpetrators. If the purpose of Prof. Wenar’s proposal is to punish someone, it is better to punish those who are really guilty, not those who are most accessible or convenient.
Andrei Illarionov is a senior fellow at the Cato Institute.