Anyone wanting to work out how to overcome the “resource curse” might like to “take a look at the Alaska Permanent Fund, something of a gold standard for transparency and investment smarts in the sovereign wealth fund world,” Bloomberg Businessweek reported in early April.
“In fact, the team in Juneau running the $41.4 billion fund occasionally receives visitors from resource-rich states such as Azerbaijan and Mongolia seeking guidance on managing sovereign wealth Alaskan-style,” the New York-based weekly business magazine noted.
US economist Thomas Palley is another fan of the Alaskan system and the use of a direct oil dividend to combat the “resource curse”.
“Good governance is key to heading off the natural resource curse,” he wrote in 2003 in a paper for the Open Society Institute’s Globalization Reform Project, of which he was director at the time. “However, developing efficient states with good governance takes time, whereas developing oil fields and building pipelines happens rapidly. Oil revenue distribution funds that directly distribute oil revenues to citizens are an important means of addressing this conundrum.”
However not everyone in Iraq is convinced. MP Haitham al-Jabouri, a member of Prime Minister Nouri al-Maliki’s State of Law coalition and of the parliamentary finance committee, argued that a direct oil dividend would deprive the state of income it needed to invest infrastructure and services.
Direct cash payments would just spur inflation and decrease the purchasing power of the Iraqi dinar, local economist Mohammed Abdel Rahman said. Instead he felt money should be invested in strategic projects that could create jobs, enhance the private sector and improve the livelihood of Iraqis indirectly.
And oil industry expert Bassem Abdul-Hadi advised caution, saying that while the Iraqi that some oil income is distributed to the Iraqi people, it was important to work out exactly how best to do this: distribution mechanisms needed study and the state also had to work out how much it needed to maintain its spending.
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