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June 26, 2000

The World Bank's
Resource Grab

Diamonds don't kill people,
People kill people


The World Bank is not often seen as, well, a serious player. This is compounded in certain parts of London by an unfortunate allocation of the name in "rhyming slang", on which I refuse to elaborate. However, they have finally come up with something worth reading, a report "Economic Causes of Civil Conflict and their Implications for Policy." The basic premise is natural resources cause civil wars. There are many other things that cause civil wars, large diasporas, dominant ethnic groups, lack of economic aid. In the end however, natural resources that are the real curse, and guess what the solution is; we should control the resources for the Third World.


The idea is simple. Natural resources like diamonds and cocaine (also coffee – but I think they are including this to make up the numbers) are easy to sell and offer fantastic profits. Unlike manufacturers or services, they are hard or impossible to move to a more beneficial business climate. The solution to this curse is simple, a global regulation of these businesses, with the responsible and government friendly big companies running the show.


Do you know what a big shoe size means? As you have probably guessed by now, at least among children the size of your foot has a very strong correlation to the neatness of your handwriting. When this was first found out this caused a stir, as it seemed to show a weird genetic disposition to neat handwriting. The problem with these results is that they did not take account of age. An eight year old is not only going to have smaller feet, but messier handwriting than a fourteen year old. The mistake was not the collection of this data but the interpretation. By not segregating the results by age, a correlation was seen that did not exist. Could this be happening again – but with deadlier consequences?


The report heavily relies on statistical analysis. The author, Paul Collier, drags out a large amount of statistics, many of which appear compelling. For example, a country with 45% of children in school has a 14% chance of conflict, while a country with 55% has a 10% chance. So the answer is putting children in school? Well, not quite. Wars do two things; firstly, they take you men out of the farms, factories and mines. Who takes their place? Secondly particularly in civil wars, armies recruit school age children. There seems to be a fundamental confusion of cause and effect.


Other statistics are popular. A large diaspora ferments war. Alternatively, does a nasty civil war or brutal dictatorship produce a larger refugee population? Sensible economic policies reduce unrest. However, when recovering from a civil war with two large armed groups of young men, the last thing you do is impose austerity and close the chance of a civilian job in the near future. Moreover, which countries go back to war, one's escaping from it? In this case the proposed preventative treatment could directly lead to a relapse. To be fair they do point out that a country that has been in a civil war in the last five years has a 50% chance of relapsing. This makes a far bigger difference than any discussion on schooling and foreign aid. In fact it skews the whole picture, something the authors seem to ignore. If the countries were segregated at all times between those, which had suffered civil war and those that did not then this would be a serious piece of work rather than a confusion of input and results. If the publicity – which is all that most policy makers will read – pointed out this central 50%, then the report would seem less like propaganda. Unfortunately, it was not to be.


The biggest fallacy is that those countries dependent on natural resources are most susceptible to civil wars. If the conclusion were that those countries without significant manufacturing or service sectors were more prone to civil wars, then this would suggest the deeper cause. Natural resources cannot move. Multinationals, capital and skilled workers can. So where there is a war they do. You cannot choose where to mine diamonds, but you can choose where to build a new car plant or base a fund manager. Therefore, the reliance on natural resources is not a cause of civil wars, but a result of them.


The remedy on this "over-reliance" is a massive increase in international governance over the sale of natural resources, and a reduction in national sovereignty. The report proposes the following five remedies:

  • Diversify the economy away from dependence upon primary commodities.
    Read; let us decide your economic policies.
  • Secondly, make looting rebels unpopular by transparently using the revenue from primary commodity exports to fund effective basic services such as primary education and rural health clinics.
    Let us decide how you spend your money.
  • Third, enlisting the international community to make it more difficult for rebel groups to sell diamonds and other commodities which they loot.
    Let us decide to whom you sell.
  • Fourth, generate rapid growth to counter the effects of low income and economic decline.
    I said, let us decide your economic policies.
  • Fifth, provide credible guarantees to protect minorities in societies where a single ethnic group dominates by entrenching their rights into a national constitution.
    Now that you have let us play with your economy, let us decide your political arrangements.

This is a rationale for a new imperialism, which can be sold on the most humanitarian grounds. While it was clear that the Gulf War was about Western control of oil, all future wars over resources can be justified because it is for the people. Who can be callous enough to argue against that?

Text-only printable version of this article

Emmanuel Goldstein

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Emmanuel Goldstein is the pseudonym of a political drifter on the fringes of English classical liberal and Euro-sceptic activity. He is a former member of the Labour Party, who knows Blair and some of his closest buddies better than they realise, yet. He has a challenging job in the real world, working for a profit-making private company and not sponging off the taxpayer in politics, journalism or the civil service. "Airstrip One," appears Mondays at

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Well, who will gain from this? A massive extension in government control over natural resources is proposed, but governments are not stupid enough to pretend that they can do this competently (well not that stupid.) There are some people who can adequately deal with this situation, experts. Big natural resources companies can police these agreements and turn a profit. We have seen this with diamonds and De Beers, now the rationale is there for taking it wider.


Oil is a standing disproof to the idea that natural resources breed civil war. Valuable, easy to plunder and easy to mix, oil should be the perfect fuel for civil wars. And it produces... Norway. Norway is perhaps an exception but there are enormous producers of oil without civil wars. Saudi Arabia may be nasty, but it is very stable, as is Libya. Mexico has a civil war, but away from the oil-producing region. There are moves for local control over oil revenues in Aceh and the Niger Delta, but any armed insurrection is puny and easily contained by the military.


The most damning point about this scheme is that it has been tried, and it does not stop war. The war on drugs has meant that the lawless now offer protection to growers of coca, opium and hashish. Why would a war on blood diamonds be any different?


The World Bank may not seem like a hotbed of opposition to the free market, but their dangerous and crack-brained scheme is precisely that. By helping large companies, decide developing countries' policies, setting their cartels and spending their money we take away the most valuable development tool, experimentation. Countries will not be allowed to experiment outside agreed lines, resource prices will be loosely fixed and big companies will grow fat. Who do you think will end up enforcing this state of affairs?

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