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The Link Between Oil and Poverty

Oil and Poverty
Oil has been a massive drive for inequality in the modern world, especially The Organization of the Petroleum Countries (OPEC) member states. Oil and poverty intertwine, especially in OPEC nations. OPEC, at its core, is a union of oil-producing countries that work together to make decisions on how much oil countries extract and export around the world. While OPEC strength has diminished in the world with increased oil supply coming in from Canada and The United States, OPEC nations still have stranglehold grips on their economies and governments. OPEC found its beginning in the 1960s with five countries, including Kuwait, Venezuela, the Islamic Republic of Iran, Saudi Arabia and Iraq.

Reliance on Oil Revenue

One thing that all the founding OPEC nation members have in common is a poor Freedom House Index score. Kuwait currently has the highest score with Freedom House giving it an overall score of partly free while the other four have a score determining them not free. With five distinct countries with different styles of government and cultures with one being across the globe, the one common thread is the large oil reserves that each of these countries relies on. For instance, a report by export.gov finds that “oil comprises nearly half of Kuwait’s GDP, around 95 percent of exports and approximately 90 percent of government revenue.”

The fact that government revenue comes mostly from Kuwait’s nationalized oil industry and the Kuwait Petroleum Company (KPC) shows an alarming trend. With the country relying mainly on oil revenue, the government taxes the population less, meaning that the government can ignore the requests for policy reform for less risk. If everyone in the United States decided to protest government activity, the federal government would have a serious fiscal issue on its hands, but if Kuwait’s population decided to stop paying taxes, the overall fiscal attitude of Kuwait would only change minimally.

Kuwait’s failure to support its people reflects in the numbers. According to the Central Intelligence Agency (CIA) Factbook, the total unemployment rate in Kuwait is 15.4 percent, with women being 30 percent unemployed and men being 9.4 percent unemployed. The CIA also cites that current health expenditures are only 4 percent of the economy, and there are only two beds per 1,000 people. These three simple metrics show a blatant disregard towards social issues such as women’s rights and political/economic issues such as health care and infrastructure.

Solutions

In some ways, the problem of oil and poverty and OPEC is self-repairing. As large and easy oil reserves start to dry out, the cost of obtaining more oil will increase to the point where it is no longer economically feasible to extract it. There is much debate as to when this will occur, but for many western countries, green energy has already become cheaper than traditional fossil fuels. This trend reflects in its GDP growth rate, which the CIA has concluded to be negative 3.3 percent and has been negative since 2015. With 90 percent of the countries’ GDP tied up in oil and the growth rate being negative, one can infer that as the world’s oil supplies dry up and people’s preferences shift towards green energy, Kuwait will eventually have to find another way to support itself.

Fighting the fight against OPEC and oil and poverty is easier than one might think. Since OPEC operates as a union based on exports, supporting NGOs and governmental policies towards green energy in any capacity either directly on indirectly damages OPEC. A great NGO to support is Green America which has the mission statement, “Our mission is to harness economic power—the strength of consumers, investors, businesses, and the marketplace—to create a socially just and environmentally sustainable society.” With Green America’s goals of social equity and sustainability, it is the perfect NGO to counter oppressive regimes that profit from killing the planet.

– Spencer Julian
Photo: Wikipedia

 

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Five Facts About Development in Tajikistan

development in Tajikistan

Tajikistan is a country located on the frontiers between Europe and Asia. This largely unheard of, mountainous country has a population of more than 8.6 million with an average GDP per capita of around $3,200, placing it near the bottom of the global ranking. However, over the past few years, the GDP of Tajikistan has grown between 6 and 7 percent. This article will address five facts about development in Tajikistan, including the challenging areas and opportunities that the country faces.

Five Facts About Development in Tajikistan

  1. Geography: Tajikistan’s geography is impugning its development since more than 90 percent of the country is mountainous. If fact, much of the land lies above 3,000 meters in altitude. Subsequently, the population is largely rural and widely dispersed, complicating infrastructural developments. However, as a result of this landscape, the majority of Tajikistan’s electricity production comes from hydroelectric power. The system is still largely inefficient though, especially in winter months. Users reporting shortages up to 70 percent of the time in winter months. Recent efforts have sought to address the gaps in provisions. In March 2019, the World Bank agreed to finance the rehabilitation of the Nurek Hydropower Plant, which generates 70 percent of the country’s energy demand. The rehabilitation should increase the plant’s winter generation by 33 million kWh, allowing it to meet winter energy demands and become a net exporter of energy in summer periods.
  2.  Government Policy: According to the U.S. State Department, Tajikistan is a country of ‘high risk’ but ‘high reward’ investment. Despite its consistent low ranking on the Freedom House Index, which measures civil and political rights, continual economic reforms have increased its Economic Freedom and promoted more investment. These reforms helped Tajikistan officially join the WTO at the end of 2013 after the changes made in property and investor rights. The 2019 ‘Doing Business’ World Bank report stated that Tajikistan had increased its rank overall by taking steps to participate more in the regional economy. Through the Simplified Customs Corridor agreement, Tajikistan has improved customs clearance with Uzbekistan. Based on the international classification, the poverty rate is projected to fall to 12.5 percent by 2020.
  3. Labor Migration: Due to the lack of employment opportunities, Tajikistan has a negative net migration rate, meaning that there are more people leaving the country than entering it. Most of the migrants are working-age men going to work in Russia. In 2015, worker’s remittances accounted for around 29 percent of Tajikistan’s GDP. But, this dependency means that Tajikistan’s fiscal health dropped from 95.8 percent to 60.3 percent in the period from 2016 to 2017 as a result of Russia’s economic downturn. To increase the opportunities for the workforce, the International Labour Organization has launched a pilot project aimed at strengthening National Skills Development systems as part of the ‘G20 Training Strategy’. Although it only has 1,460 participants so far, the updated frameworks could help increase Tajikistan’s current low productivity.
  4. Gender Disparities: In Tajikistan, women face a number of barriers to succeed economically, gain access to education, find employment or receive healthcare. They receive fewer years of schooling than their male counterparts and earn approximately 60 percent of what men do. However, with a migrating male workforce, female participation in the economy could be beneficial for economic development in Tajikistan. With help from funding from U.N. Women, the Tajikistan National Business Association for Women runs a number of training programs to improve employment opportunities for women. From 2015 to 2018, 3,200 women received training in business and 2,200 women received training in vocational areas. The organization also runs a bi-annual women-only entrepreneurship competition, which received more than 700 applications in both 2016 and 2018.
  5. Border Problems: Tajikistan shares a 750-mile long border with Afghanistan, one of the world’s largest opium producers. Consequently, illegal drug trafficking in Tajikistan is estimated to be worth around 30 percent of the GDP. However, the Project for Livelihood Improvement in Tajik-Afghan Cross-border Areas (LITACA) is one of a number of projects seeking to enhance cross-border cooperation between Tajikistan and Afghanistan, especially for women entrepreneurs. The Government of Japan finances this initiative, and the UNDP Tajikistan implements it in order to add stability and security to the region and ease border tensions. This program introduced around 25 socio-economic projects between 2014 and 2017, boosting economic growth to 45,000 people on both sides of the border. The project improved direct access to “schools, hospitals, irrigation, drinking water, energy supply, roads and bridges” for more than 388,000 people.

Tajikistan faces a number of barriers to its economic development. However, these five facts about development in Tajikistan show that important work is being done. There are many opportunities for growth. Economic reforms and continued investment could change the lives of the hundreds of thousands affected by poverty.

– Holly Barsham
Photo: Unsplash