In the past couple days, the New York Times has published two stories about new energy. In one about new controversial gas drilling in Colorado, The Times is pretty clearly against drilling. There is a risk of pollution (there always is an environmental cost in all energy, including green energy). But what upsets The Times is its aesthetic damage to the Roan Plateau.

“The rugged hills are dotted with sage and aspen groves. Some creeks are watering holes for cattle, but most appear untouched, rushing through the deep shale canyons that define the plateau’s topography. Vegetation hangs from some escarpments, and smooth shale slabs hold back pools of trout.”

The Roan has roads and development but its beauty holds a special meaning to many inhabitants who want to preserve it.

The following day, The Times condemned a similar aesthetic concern about Nantucket Sound where the Wampanoag tribes have objected to a wind farm.

“Tribal officials say their culture requires them to greet the sunrise each day and that this ritual requires unobstructed views. Their claim should be rejected by the responsible federal and state officials. Another round of bureaucratic reviews would drag out an approval process that has gone on much too long and give opponents time to find some other way to derail the effort… The alliance includes many local people but has been largely underwritten by wealthy homeowners from Nantucket, Martha’s Vineyard and Cape Cod who hate the idea of having 440-foot windmills on the horizon.”

I’ve never been to either place: I’m sure they’re both lovely. Of course, neither may be the Grand Canyon or other place of such wonder and beauty that they become an international treasure.

But I am not sure why one is aesthetically worth preserving and the other isn’t — except that The Times is pro-green energy, the same way the gas companies, which seem rather more immune to the delights of the Roan plateau, are pro-gas. It’s not the beauty of the landscape to The Times — it’s the beauty of the idea.

I’ve seen wind and shale gas projects — there are both near where I live, and I have to say, the huge turbines are strange and majestic but somehow not hideous (although they do apparently harm migratory bird populations and cause other problems). On the other hand, a shale gas well, after drilling, is roughly the size of a garden shed — not a terrible blight on the landscape and possibly easier to hide than a cell phone tower or a ranch. And I am not choosing with any side. There are significant problems with all the choices.

Giant oil rigs, coal strip mining, careless traditional well placements are ugly. They absolutely do ruin a beautiful landscape. In calculating wind or gas projects, the natural landscape must be considered – but fairly and equally.

Remember the fable of the grasshopper and the ant? The ant toils away storing grain for winter, while the grasshopper parties through the summer and dies of starvation in the winter.

Something like that is happening in Chile. Chile is the world’s largest copper producer. Like several resource-rich countries — especially those with oil like Saudi Arabia and Kuwait — Chile has a sovereign wealth fund, meant to increase the country’s wealth through external investments, independent of reserves.

(Actually, Chile set up two — one to be held against future federal pension shortfalls; the second, created in 2007 out of the old 1985 Copper Stabilization Fund, was to save when copper prices were high in order to smooth the economy when times were rough.) Dozens of oil countries have sovereign wealth funds but only a few are as transparent, well organized, or publicly accountable as Chile’s.

Most poor resource countries will say that Chile, a middle-income country, was better off to start than they were, and that they cannot have sovereign wealth funds: they need the money from the resources immediately, for urgently needed projects. Yet, with few exceptions (Botswana and Norway come to mind), their use of the money has rarely had the positive impact on their people or helped their economies as Chile’s approach.

Michelle Bachelet, the single mother who is Chile’s current president, is widely credited with the economic judgment that saved her country — and especially its most vulnerable citizens — from the worst of the global economic crash. She will leave office in a few months with the highest approval rating (76%) in history of any president of Chile. She had not been popular till the economic crisis.

The New York Times reports, like the ant of the fable,

“Ms. Bachelet resisted the cries of politicians to use revenues from copper sales to try to close Chile’s inequality gap, one of the world’s worst. Instead, during her first three years in office, her government set aside $35 billion in revenue from the boom. When the global financial crisis hit, the value of Chile’s exports sank by more than 30 percent. But by then Chile had nearly $20 billion invested in overseas sovereign wealth funds alone.
“We have the distinction of perhaps having the only sovereign funds that made money during the crisis,” said Andrés Velasco, Chile’s finance minister.
With billions of dollars saved, Ms. Bachelet’s government legalized alimony payments to divorced women and tripled the number of free early child care centers for low-income families. It added a minimum pension guarantee for the very poor and for low-income homemakers.”

And as importantly, in January, Chile announced a $4 billion economic stimulus including direct transfers to lower income families.  The IMF had recommended less.

Bachelet said in a speech to the OECD (Organisation for Economic Cooperation and Development) Council in May:

“… instead of reducing social spending in the face of the crisis, we are actually raising it. And we are doing so without increasing public debt.
A few months ago, we modified our unemployment insurance system so that Chilean workers are better protected if they lose their jobs. This year too, thanks to a pension reform approved last year, my government will increase the basic solidarity pension, received by the most vulnerable Chileans, by 25%.”

Other countries (like China) have used their savings to smooth their economy during this downturn. But few have been as wise and humane as Chile’s.

Let us now all mourn the passing of Paul Bloom.

Who?

I hadn’t heard of him either till he died. So I took a few moments to research.

Why should you care that he died?

Paul Bloom was one of those bureaucrats who — to many people who do not want to be bothered with cumbersome federal regulations — is a killjoy and someone who makes life so much harder than it has to be. In this case, those grumblers would be the oil companies and their Reagan Administration pals of the 1980s.

Paul Bloom was also one of those bureaucrats who gives a good name to government workers who actually try to do right by the American public, and to remind institutions — even those of such long-standing power that they can urge the overthrow of annoying Third World governments — that they cannot be above the law. (This wasn’t such an easy assumption back then.) Bureaucracy can work to a country’s advantage.

Originally a natural resources lawyer, Bloom got to be Special Counsel for Compliance at the Carter Energy Department, it appears, mainly because the people the Administration wanted weren’t interested. According to the Denver Post, his widow recalled after the appointment, his friends offered their condolences.

He was brought in to investigate the oil companies’ compliance with the price controls started under Richard Nixon. (Whatever you think of price controls, they were still laws that had to be obeyed.) The idea of taking on Big Business wasn’t new at the time: this period was the height of consumer protection. But gasoline had been cheap for so long, and American commercial power so overwhelming in the world, that most of the public’s wrath in the 1970s had been reserved for OPEC. At the time, it hadn’t occurred to them, I don’t suppose, that the industry could be jiggering the prices.

Bloom and his office found widespread non-compliance: 33 out of 35 of the largest oil producers and refiners were accused of overcharging the American public to the tune of $11 billion.

The oil companies unsurprisingly balked. The regulations were undoubtedly complex and arcane, and yet, multibillion oil dollar companies with hundreds of lawyers on the payroll could probably have figured them out if so inspired.

(This is the difference between then and now. In today’s derivative debacle, it seems so much of the financial catastrophe was created by years of federal “oversight” that just couldn’t be bothered to do the accounting — to hunker down and crunch the numbers with any understanding. What else can account for AIG? Bernie Madoff? All the banks? Crooks assume you won’t care enough to dust off your math skills once you graduate. Luckily, by coincidence, a week ago,  Ken Salazar, the Secretary of the Interior, stopped a last-minute Bush provision granting an unnaturally low royalty rate (of 5% versus a more normal 16.7%) to shale oil companies operating on federal land in the West.)

Many oil companies tried to wait it out. It didn’t work. Bloom won a surprising number of his cases. After Ronald Reagan was elected, on the day before he left office in 1981, Bloom gave $4 million he had collected to several charities to help the poor heat their homes through the winter.

Soon after setting up shop, the conservative new Administration demanded the money back from the charities. This quickly turned into a PR nightmare, with the Salvation Army offering to return their Christmas Santas to the streets to collect for the federal government. (The money that had not been already spent was returned.)

The Administration then sought to gut the program by slashing the department’s budget by 80%. The pro-oil move was transparent. Time Magazine in 1981 quoted, then- Representative Barney Frank of Massachusetts: “If this was a budget decision, then I’m Lady Diana Spencer.”

By 1987, the department had collected $6 billion from the oil companies, including over $2 billion from Exxon alone. Much of the money went to states to help with energy programs.

Back in private practice, a few years ago, Paul Bloom and his law firm fought and saved the Zuni Salt Lake from a mining concern.

The Denver Post obit adds,

“In New Mexico, Paul Bloom was known for his knowledge of water law. He started at the state engineer’s office in the 1960s and filed the Aamodt water rights case for the state in 1966, his family said.
In May, Democratic Sens. Jeff Bingaman and Tom Udall introduced an act to realize a 2006 settlement of the 43-year-old fight between the Nambe, Pojoaque, San Ildefonso and Tesuque pueblos along the Rio Pojoaque basin. The act would authorize construction of a regional water system.”

Paul Bloom was born in Virginia, attended law school at the University of New Mexico, died of pancreatic cancer at the age of 70, and leaves behind a widow, brother and three children.

We often think of bureaucrats as faceless paper-pushers — politicians can seem more glamorous. Paul Bloom was perhaps the first to hold the great and near-great oil companies to account.

For more reading on these cases against the oil companies, check out my main source: “Chalk one up for the permanent government; the bureaucracy took on Reagan and big oil - and won “; Washington Monthly, Oct, 1987 by Rich Jaroslovsky.

This is “Upgrade Your Electric” week for the Obama Administration.  First, the President announced a $3.4 billion upgrade for the US electric power grid.

Then yesterday, Secretary of State Hillary Clinton announced that the State Department had decided to help Pakistan upgrade its electricity to prevent the frequent outages. These electricity problems, according to the State Department’s website, stem from outdated equipment, mismanagement, and non-payment.

The same website says the program will consist of six projects, such as the repair of 11,000 agricultural pumps, which are used for electricity transmission, and improved efficiency at various power stations, including a dam on a section of the Indus River in the Northwest Frontier Province.

Electricity in Pakistan is, I understand,  very expensive.  In a country with such huge income inequality, I do not know if this new plan will help those who cannot afford power.

I don’t doubt Secretary Clinton really wants to improve the lives of Pakistanis or that better electric service would be a help. The problem with this sort of announcement and project is that, unlike huge US projects of yesteryear, this kind of Lady Bountiful act does not serve US interests as well as the State Department PR department seems to think it will.

This kind of aid is not soft power. It’s naked power, albeit of an economic and political kind. The plainly visible strings attached can only fuel the suspicion and cynicism of those in Pakistan who are already suspicious and cynical towards the US.

Real aid is a real gift – it can be offered in charity (as in natural disasters) or as the right assistance at the right moment (as with the Marshall Plan). The right time for America to have helped Pakistan with its power was probably decades ago. We should still give it, but unfortunately, this gift from the US is probably not going to change any hearts and minds.

I myself hate it when people go around telling me they are going to give me what I really want, when they haven’t even had the respect to ask. As in Afghanistan, the trick is not to give the people what we think they must want most. It is about what they think they want most.

Right now, with oil rising to $80 a barrel, it is important to recognize that the price of oil does not reflect the value of oil but the value of the dollar. There is still fairly weak demand for oil.

Meanwhile, the fate of the greenback is being tugged in different directions by different international coalitions with very different agendas. East Asia, which has so much trade with the US and a lot of dollars in the individual reserves, has an economic incentive to help keep the dollar strong. And as the dollar falls, so does the Chinese yuan, making China’s exports more competitive than smaller countries in the region. Europe too is worried that as the buck falls, the euro will rise, meaning that continent’s exports will be priced out of some markets.

Ironically, the US itself has little incentive to prop up the currency — a weaker dollar makes American exports more competitive (good for the economy), even as the government prints more money (making each dollar supposedly inherently less valuable) for the stimulus and other projects. Of course, too weak would be bad — it’s a balancing act. Excessive debt can lead to some distrust of the future strength of the American economy.

The anti-dollar people have a more political agenda. Many of them are oil exporters who are not particularly politically cozy with the US, and some would like to see the dollar replaced altogether when it comes to paying for oil. This wouldn’t change how much oil was inherently worth, it’s just an opportunity to dig at the US.

The grumbling has been going on for months. In early October, there was a report out of London that a number of countries from the Middle East and China and Russia were planning to trade oil in a different currency. Even before that, it was not a secret that these countries have been unhappy with using dollars. Russia, China and others have suggested creating a global alternate currency to the dollar, which sounds like financial Esperanto and about as likely.

Others like Iran and the irrepressible Hugo Chavez of Venezuela are more interested in regional currencies. The regional currencies sound more practical and popular; but unlike Europe, there just isn’t a lot of trade between Latin American countries to make it useful. This reminds me of the old idea of import substitution — infinitely more appealing as an idea than needed as a practical reality.

Oil is priced in dollars but it isn’t tied to the value of the dollar. Countries can complain there are transaction costs and other considerations in converting other currencies to dollars to actually pay for the oil. But that’s what happens with any reserve currency.

The dramatic weakening of the US economy has undoubtedly offered opportunity to those who chafe at America’s global position (especially given the level of American financial irresponsibility that cause that weakness and would certainly have sunk many other countries) and those with ambitions to use its diminishment in search of their own aggrandizement. There’s nothing as informative as hard times.

I hope the new Nigerian peace plan works. For years, Nigeria has been the poster child for everything that can go wrong when a country discovers oil. Instead of the prosperity, thousands have died violently, the country’s infrastructure has crumbled, the Niger River delta has been environmentally devastated, the army has run amok among the population, its politics have set an internationally recognized standard for corruption, leaders have been killed, oil companies sued, the general economy in a disaster with rampant poverty while hundreds of billions of dollars in oil revenue has disappeared.

Once Africa’s number one oil producer, Nigeria has now slipped behind Angola. For the past couple years, with the attacks on facilities and pipelines, Nigeria has been losing 1 million barrels or more of output a day. Its output, for much of the year, around 1.6 million barrels a day, has been far below its OPEC quota.

Violence against civilians, always bad, increased in the past few years in the Delta, Nigeria’s oil producing region, as rebel groups like MEND (The Movement for the Emancipation of the Niger Delta) and others attacked locals (for a variety of reasons), fought with Nigerian security forces (themselves guilty of innumerable human rights infractions), and engaged in kidnappings, mayhem, and money-making schemes like bunkering (stealing oil).

But in early October, many leaders of these groups and an unknown number of their fighters had accepted (at least for now) the amnesty offered by President Umaru Yar’Adua.

Why the sudden change? Amnesty is important but it comes down to one thing: money. Money in two ways. First, there is no doubt that the people and communities of the Delta have gotten the short end of the economic stick for decades. One report estimates just 13 percent of the oil revenues is earmarked for the delta states, made even scarcer by massive corruption of local government representatives. The national government is pushing a bill to give a higher percentage of the monies directly to the villages of the delta. After all this agony, shouldn’t any government looking at the case of Nigeria conclude it’s just easier and smarter to share the money with the local people from the get-go?

More ominously, the amnesty offers each former fighter approximately $13 a day to stop fighting. In a country where most people earn less than $2 a day, this is paying them very well, for —- not being a problem. Which is to say, they are cut in on the deal. They are not earning the money; they are being paid off. If you think about it, is a payoff really the best way to address corruption?

Yet such is often the stuff of peace plans. Will it work? It’s a huge step — acknowledging local rights to the money is huge. Yar’Adua will have to deliver on his end of the plan; such plans have failed before in Nigeria and things have gotten worse. No one actually is talking, either, about how many of the 8,000 rebels out there have signed on.

The one thing that will make the biggest difference in the lives of the locals is a real economy. The Economist reports

“the militants have also been promised retraining and education. Many … want to resume careers as welders, lorry-drivers and engineers… Some dropped out of the University of Port Harcourt to join the militants. One, who was studying gas engineering, says he would like to work for the oil companies he used to attack. All say that they expect the government to help them learn new skills or resume studies.

Reuters quotes a local fish-seller speaking the wisest words of all —not just for Nigeria but so much of Africa: “Give them jobs. If you do not give them jobs, they will go back to what they did before.”

For most of its existence, the UN hasn’t dealt with oil, gas or mining much. It has gotten involved on mostly small scale, small bore development projects, and, of course, the disastrous oil-for-food program in Iraq. Natural resource development is considered an internal matter, and one involving the private sector — a part of the universe the UN has had little to do with. But with the high number of extremely bad and dangerous situations involving natural resources, the UN cannot and should not stay on the edges of the issue much longer.

Right now, it has a small grant from the EU to try to address conflict and natural resources, including extraction resources, water, and land. A small group is working on a handbook on dealing with natural resources and conflict for relevant country offices. It’s tiny, but it’s a start.

The UN can’t, and never will be allowed to, police natural resource situations even if it had the desire, which I doubt it has. It is caught between the desire of its member states for internal sovereignty and control over its own territory and the howling needs of the people of those countries, stuck in a situation where they have no control over what happens to the land they live on or the water they drink.

I have a few starting suggestions on what could it say to alleviate the situation with extractabler resources, especially non-confrontationally. Of course, all situations are individual and each will take on a life of its own in response to the specific situation

1) Establish tighter universal environmental guidelines that protect land and water at Western levels or beyond, that include environmental studies of local impact. Sometimes corruption allows for lax protections but much of the time it is lack of government capacity and intimidation by the company. Tighter standards are the problem of the extraction companies (meaning they are the ones who pay the costs), and while they always whine and moan how environmental protection means they can’t afford to drill, somehow they always find a new creative way to meet new and tighter standards. And they still make money.
2) Make sure the contract includes mutually acceptable emergency plans and backstops for accidents and disasters.
3) Make sure the plan includes reclamation plans that are locally specific and enforceable. This is also paid for by the company.
4) Offer detailed information about the extraction process, especially its environmental impact, to the people of the area, the national and local media, civil society groups and the government, so everyone knows what to expect.
5) Offer informational and supportive workshops to local civil society so they can determine and control the local impact of the project — socially, economically, environmentally. Support their involvement in the negotiation process.
6) Push for independent economic and environmental impact assessment requirements before the contract is signed or the project starts.
7) Help everyone manage expectations about how long a good contract takes to write and, especially,  about the money. Governments — everyone — see oil or gold or whatever as the pot of gold at the end of the rainbow. It isn’t. Honest economic projections and financial commitments should be done ahead of time. And one selling point that companies (and some governments) always announce is that the project will create jobs. Extraction processes rarely do and most of the jobs will be turned over to skilled outsiders.
8) Develop an inter- or intra-state oversight commission that can deal with emergent and on-going situations to deal with problems as they happen.
9) Identify where water is being wasted, misused or could be recycled.

And this is a more expanded list of possibilities.

1) Support international transparency initiatives by the World Bank and other groups. Dishonest governments (and their cronies) don’t want to say where the money is going; international corporations view secrecy as normal business practice. But governmental accountability is the bedrock of good governance and economic development — think of where Nigeria would be today if the $400 billion stolen over time through corruption had actually gone to infrastructure and the people. Corporations are slowly coming around to the idea, but need more reassurance (and pressure) to come clean.
2) Bring civil society into the contract negotiations. Defuse a potential conflict situation by takimg into account the concerns and needs of the people. This does lengthen the time it takes to complete a contract negotiation. But as a little old woman in my country of Pennsylvania was supposed to have said while holding out for better terms on a gas contract, “The gas has been there for billions of years. It’ll be there next year.”
3) Offer conflict prevention/resolution training to the personnel (of all levels) in the extraction company. Many international actors go into these development situations offering a school or clinic (that soon falls into disrepair); the Chinese have been building roads. This is PR and not substantive.
4) Broker the creation of an ombudsman office to help bring civil society and the corporations’ representatives (ones with some power to make things happen) together, especially on a regular basis.
5) Recommend that the country contractually obligate the extraction company to use local workers whenever possible.
6) Help the government develop a plan to share a portion of the wealth with the local community. Increasingly, countries are finding that, for peace, it is essential to offer to give the communities involved a cut in the royalties. This is the plan in Ghana, Uganda, and now Nigeria. There are a number of ways the income can be distributed and it should be up to the community involved.

Does anyone have any other ideas?

There is a potentially dramatic change in the location and availability of natural gas globally. If all comes to pass as predicted, it would alter the geopolitical power of some countries like Russia, while lessening American, and possibly Chinese, Indian, and European, dependence on foreign oil and gas. Unlike normal natural gas, which is often found with oil fields (as well as alone), this “unconventional” gas is embedded in shale, a sedimentary rock located thousands of feet below the surface.

There was no easy way to get such gas out since it was trapped in dense clay rock until a few years ago. Halliburton devised a way to not only fracture the rock to release the gas, but to drill horizontally so each well could access much more gas. This made it economically feasible to go after the gas.Most of the shale gas that is being developed is in the US.

No one doubts that, environmentally speaking, natural gas is the least unfriendly of the fossil fuels or that it leaves the lightest footprint where it is extracted.  

Two major concerns have arisen: one involves the use of certain toxic chemicals like benzene to fracture apart the clay of the shale (called “fracking”). The fear is that a spill or mistake could contaminate the land or, more likely the water table through which the gas well passes on its way to the shale.

The second is the unusually large quantity of water that is required to drill and frack a well that can be up to 15,000- 16,000 feet long. It can take a million gallons of water or more. Even if some of the water can be recycled, you’re still talking about a major withdrawal from the aquifer.

A million gallons of water is not a HUGE amount (geologists I have talked to relate it to swimming pool volume) if you live in the verdant Eastern seaboard or much of Europe. But it adds up especially when it comes to healthy flow and wildlife. It is a critical amount if you live in the American West or North Africa or much of Asia.

 One of the most desirable shale deposits in the US is the Marcellus play which stretches diagonally from upstate New York through Pennsylvania into West Virginia. Sober environmentalists, hysterical summer residents, hyperventilating politicians, and people who just plain old don’t trust any energy company have all been campaigning against drilling but they are fighting a losing battle.

 Millions of acres of the New York City watershed have already been safeguarded, but most land remains in private hands and the money is proving irresistible in this economically depressed region. According the New York Times, “There are already about 13,000 active oil and gas wells in New York, about half of them already using hydraulic fracturing.” There are also a huge number of wells over in Pennsylvania, which is much more pro-drilling than New York State, and whose streams and tributaries also feed into the water supply of New York, New Jersey and Philadelphia.

In a major decision, in late September, the New York State environmental regulator issued what they saw as acceptable guidelines for drilling wells to extract the natural gas of the Marcellus. The environmentalists do have one greatly important point — current federal standards and previous practices should concern anyone who cares about water safety.

“We need to have a zero-risk policy here, and it is not appropriate to allow drilling in such a unique and extraordinarily valuable resource,” said Kate Sinding, a senior attorney at the Natural Resources Defense Council. “The record in other states is so abysmal, and it doesn’t take much to do better than other states.”  (NYT)

 

 

Although drilling won’t be stopped, it would serve everyone much better if the state required area environmental impacts, extremely high drilling standards, emergency plans, fail-safes, and clean-up procedures to be in place before the rush starts in earnest. Energy companies can call their toxic mix a corporate secret, but they would be better served with greater transparency.

 It is also true that the volume of water requested by gas companies has been, to be kind, extravagant. A request for a million gallons a day for drilling purposes by energy giant Chesapeake was shot down by the interstate Delaware River Basin Commission a couple weeks ago. Chesapeake withdrew the request.

The role of water is rarely discussed in energy development. But huge amounts of water are also needed for cleaner coal plants (emissions control comes at the expense of water), biofuel, and solar. Water needs to be part of the equation from the beginning of any energy development.

 Thankfully, there are groups working feverishly in New York and Pennsylvania to iron out procedures to protect water, limit water use (much more can be recycled that often happens), and to figure out what to do with the contaminated water that cannot be recycled.

 Their work can help protect and set standards for those around the world who follow.

One heart-warming story I have been following has been the epic international showdown between the IRS and the Swiss banking giant UBS. Until recently, if you were to ask any American to name a “good” country, Switzerland would probably have come to mind first, because of its role in World War II. More recent events bracingly remind us that there is a difference between neutrality and goodness. Sometimes neutrality can foster and protect wrong too.

So the IRS finally got the inside track (an internal whistle-blower) on the secret UBS bank accounts of thousands of Americans (and their hundreds of millions of dollars), forcing the bank to divulge depositors’ names, and playing chicken with the tax cheats — Do we have your number? Do you feel lucky? Pay up or else!  More than 7500 Americans fessed up to avoid prosecution . They had banks accounts in 70 countries.

If only we could do that with all the crooks in the world.

Last week, I went to an event at NYU on African economic development. Ghanaian economist Yaw Nyarko, who is co-director at NYU’s Development Research Institute (with famed anti-aid economist, William Easterly) was rightly lamenting the fact that while it’s great to catch American tax cheats, it would completely change the dynamics of the developing world, especially in Africa, if there was a way to track the illegal bank accounts of those dictators, crooks, and cronies who have plundered their countries’ coffers of either aid monies or especially, resource revenues. For example, up to $400 billion in oil money has been stolen in Nigeria alone.

In some socially conscious circles, offshore or complicit banks that hide or launder ill-gotten gains have assumed the role of chief villain once reserved for oil companies. To find and return the money would make a huge difference in the fortunes of these countries, but such initiatives have been slipping lately.

In Nigeria and Indonesia, anti-corruption commissions have been thwarted, its people threatened. Most countries don’t even try. When British Petroleum (BP) agreed to transparency, the Angolan government forced them to back down.  Last week, anti-corruption groups in Zambia organized a honk-a-thon to protest the state’s refusal to pursue former President, Frederick Chiluba’s surprising acquittal in a corruption trial this summer. (Honkers were arrested.)

Of course, it isn’t just oil money. Michela Wrong’s book,  It’s Our Turn to Eat, tracks the entrenched corruption (from stolen aid and other revenues) that fanned the flames of extreme ethnic violence in Kenya after the flawed 2007 election. Earlier this year, NGO Global Witness released its report, Undue Diligence: How Banks Do Diligence with Corrupt Regimes. http://www.globalwitness.org/media_libra… )

Transparency initiatives like Publish What You Pay and Extractive Industries’ Transparency Initiative have spent eight years struggling to get extraction companies and governments to open their books and account for the money, but to little avail.

Ironically, it’s not hard to track such wire transfers or deposits. |Surveillance equipment and banking technology are easily sophisticated enough to track suspicious financial movements.  It just takes political will, which has been sorely lacking from offshore banks and corrupt governments and most noticeably, Western countries. Finally, this September, in Pittsburgh, the G20 asked the international FATF (Financial Action Task Force), which is supposed to set banking standards, to make anti-corruption a higher priority.

In another blog, I’ll write about new US initiatives to force the issue of corruption, the multinationals, and international law and how they might backfire.

According to the UN, there are more than 370 million indigenous people in some 70 countries worldwide. For centuries, indigenous people have endured bias and, in some cases, severe racism.  Their lands were (and sometimes still are) considered empty and fair game for others to exploit.

Up to sixty percent of the world’s most desirable mineral resources are on lands that belong to indigenous peoples, which means how individual countries, multinational corporations and the international community address the rights of indigenous people will have major implications for economic development, international trade, the environment, human rights and basic justice. Indigenous people in resource rich areas are rightly concerned about environmental degradation, human rights violations and being dispossessed from their ancestral land.

Last month, in Western Australia, the 200 families of the Martidja Manyjima people decided to challenge the world’s largest mining company, BHP Billiton, seeking to limit the amount of land it can lease, the amount of water it can draw from the aquifer (currently billions of gallons used) and to end its destruction of cultural sacred sites. They want to stop the company’s expansion. There is some legal precedent — a similar challenge was defended when a suburb of Perth was at stake. Will Australia, so heavily dependent on minerals, step up to the plate when it comes to aboriginal rights?

Indigenous people have begun to push back against the encroachment of mining and extraction companies and slowly they are gaining ground. Last spring, in Peru, the indigenous people of the Amazon banded together to force President Alan Garcia to back down and the country’s Congress to overturn the two decrees that had sought to open more than 100 million acres of the Amazon basin to extraction projects and other development.

Unusually, in Peru’s situation, the indigenous people, who do not usually work together or uniformly see eye-to-eye, had come together, and, as a united front, they were successful. But not before the protests became violent.

No situation should have to come to that. This past March, an international conference on indigenous people and extractive industries was held in the Philippines, organized by the indigenous rights group, Tebtebba. Indigenous people from every continent were present to discuss problems and solutions that stem mainly from mining. (Mining has the biggest environmental footprint and usually creates the worst environmental destruction.)

Some non-governmental organizations, including World Resources Institute, have recommended a policy approach that calls for free, prior, and informed consent by indigenous people to such invasive industries — but why would any group be tempted to offer consent? Without an economic incentive — and many extractive industries promise the moon when it comes to jobs and then never deliver — and strict environmental protections, there will be no reason to give such consent. Extraction companies need to make better and more direct and reliable economic offers, and countries need to establish powerful environmental limitations and guidelines.

“The Manila Declaration” from the conference demands “compensation and restitution for damages inflicted upon our lands, territories and resources, and the rehabilitation of our degraded environments caused by extractive industry projects that did not obtain our FPIC (Free, Prior and Informed Consent)”.  The Declaration asks for monitoring, accountability, transparency, high multiple impact statements.

I thought of this when I attended a “State of the State” discussion at Alaska House in New York City last week. The panel, which included the head of the Carlyle Group, the chancellor of the University of Alaska, and Daniel Yergin (author of the seminal book on oil, The Prize), unsurprisingly focused mainly on energy.

Alaska not only has oil, but tons of natural gas, and recently, TransCanada and Exxon have agreed to partner with the state to start work on a 1700-mile, $30 billion pipeline to get it to the lower 48.

Oil accounts for almost 1/3 of the jobs in Alaska and, according to one of the speakers, the overwhelming majority of the state’s income. It is a resource-rich and –dependent place. A portion of the state’s oil revenue goes to The Alaska Permanent Fund. The Fund has acted as a proto-type sovereign wealth fund and currently has a balance of more than $30 billion — because of the small population, every year Alaskans receive a sizable “dividend” from the state.

For me, the most fascinating perspective came from Margie Brown, the CEO of the Cook Inlet Region Native regional corporation. Before the oil pipeline, Alaska was a young and fairly poor state; the indigenous people were its poorest and most marginalized. But they had never given up (or had to give up) their claim on 96% of the land — hundreds of millions of acres. So when oil was discovered, the Indians and Inuits of Alaska forced the issue legally.

There was never truly a question of whether the indigenous people would or could claim all the land. So in 1971, the claim was settled in the Alaska Native Claims Settlement Act, which gave the Native people 44 million acres and nearly a billion dollars. Instead of the money being given directly to the people, 13 regional corporations were set up. These corporations, made up of the different native groups, used their share of the money for economic and social needs. The idea was that the money should make the tribes self-sufficient — which some did better than others.

One typical native idea, according to Brown, is the sharing provision: 70% of a corporation’s income is given to a pool to be shared with the other 12 Native corporations on a per capita basis. Shares of the corporation belong to the natives of the individual tribes — they cannot be sold, only inherited, to keep the wealth in the hands of the indigenous people. Corporations have invested in mining ventures, tourism, infrastructure, banking, and local business. There is a yearly independent and transparent audit.

Not long ago, in Yellowknife, in Canada’s Northwest Territories, 27 Canadian tribes came together to form a native corporation. And recently, a member of the Navajo tribe came to see Brown to investigate the idea of a tribal energy corporation for their area in the Southwest.

The idea of a native corporation is only one possibility that indigenous people can develop to manage their resource wealth. The Alaska experience shows it is the local people who can and must develop the solution, and that doing so does not mean a total end to extraction, nor does it mean the end to the inherent environmental dangers of extraction resources —- as Alaska knows only too well. Greenland’s Inuit are also developing democratic plans for development.

Local input makes it better and more palatable —  a win-win for all concerned, hopefully without the violence seen in Peru.