Resource TrapLogic follows that the wealthier a country becomes, the more financial resources it should have to combat poverty. The European Union countries and the United States have many programs to address domestic and global poverty, administered by both non-governmental (NGO) and governmental organizations. Taking the logical argument further yields that countries with vast natural resources should be equally capable of fighting poverty. By monetizing their vast natural resources, they should have plenty to provide for their citizens. The reality though is starkly different due to the resource trap.

Resource Trap

While rich countries are capable of enacting change, the manner by which their wealth was accumulated affects how their governments appropriate funds. The resource trap, or resource curse, as called by the Natural Resource Governance Institute (NRGI), posits that resource-rich countries tend to have higher rates of conflict and authoritarianism combined with lower rates of economic stability and economic growth. Along with the NRGI, Bloomberg finds that countries with vast natural resources have high degrees of conflict, corruption and poverty.

One of the many examples of this conundrum in the world today is Iran. According to the CIA’s World Factbook, Iran’s economy has a large industrial sector which makes up 35.3 percent of the country’s GDP. Iran’s large oil reserves gave rise to its top three industries: petroleum, petrochemicals and gas production. These three are resources commonly cited in reports regarding resource traps.

Even though Iran is rich with natural resources, it has an Aggregate Freedom Score of 18/100, which categories the country as “Not Free”. In their report on Iran, Freedom House cites antigovernment protests over the worsening economy and corruption as a factor in Iran’s low score. These dynamics have rendered the country prey to the resource trap. Resource traps like those found in oil-rich countries are especially troublesome because their governments are beneficiaries of vast amounts of income that would otherwise come from taxation. Since the government does not depend on tax revenues to remain in power, the will of the people tends to be ignored, which leads to unchecked corruption.

Economic Monitoring

NGOs combating corruption in oil-rich countries work to address how petroleum-based revenues are used to suppress its people. According to Radio Farda, Iran has a record of marginalizing NGOs that attempt to address the exploitation of its citizens. Solving the riddle of resource-trapped countries is a hard task and involves a multitude of tactics. Most of the work done by NGOs in Iran is done through the World Bank’s Economic Monitor program. Monitoring efforts like these where selected topics of interest to Iran and the international community are published provide data useful in liberating countries from their resource traps.

– Spencer Julian
Photo: Flickr

Fuel Shortage in Venezuela
In 1960, the Organization of Petroleum Exporting Countries (OPEC) established to coordinate and unify policies around the price of oil. This intergovernmental organization consists of 15 nations that produce 44 percent of the world’s oil and own 81.5 percent of the world’s oil reserves. Given the importance of oil in today’s economy, it is reasonable to assume that OPEC members are well-off, especially those with vast oil reserves. However, the fuel shortage in Venezuela proves otherwise.

Fuel Shortages Starve the Country

Venezuela, one of the five OPEC founders, boasts the world’s largest oil reserve. Although this South American country sits on a vast reservoir of mineable liquid gold, there is a fuel shortage in Venezuela that starves it. Due to years of mismanagement and corruption, the oil-rich nation has dried up its gasoline pumps, leaving lines trailing from gas stations that last hours. People can sometimes wait for days to fill their tanks. In the southern and western states of Tachira and Bolivar and the central states of Carabobo and Aragua, people can wait in line for five hours or more. Venezuela has limited power so it rations it; periodic power outages means that people cannot pump gas. However, there are no gas shortages in the country’s capital, Caracas; oil tankers divert into the capital to supply its six million citizens, but also to prevent political unrest around the Parliament.

These fuel shortages and gas station lines are impeding on already troubled Venezuelan lives. The hyperinflation and lack of job opportunities in the country hinder a good quality of life and gas shortages push this even further. Citizens cannot get to their jobs when their cars are empty on fuel or when they are stuck in line to fill up.

However, the fuel shortages in Venezuela are troubling to not only the day-to-day lives of citizens but also the entire agriculture industry that feeds the population. Fuel shortages compound the effect of food insecurity. When there is a shortage of fuel, food cannot make it from farm to market or from city to city. There is no rail system to move food either. Farmers leave harvested produce to rot, simply because the truck that transported vegetables to the market never arrived. On May 20, 2019, the National Federation of Cattle Ranchers in Venezuela issued a public plea to the government citing its difficulty moving cattle across the country.

Delayed shipping dates are not the only way fuel shortage in Venezuela impacts agriculture. Farmers might have nothing to sell because pesticide shipments might not arrive to prevent insects ruining their harvest. Without the shipment of crucial parts, farmers cannot operate basic equipment and without a reliable gas pump, workers cannot take the bus into work. Fuel shortage in Venezuela impacts not only the food but the equipment and the workers necessary to cultivate crops.

Plummeting Oil Production in the World’s Largest Oil Reserve

In the past, Venezuela has provided generous gas subsidies to make fuel almost free. However, the issue of fuel shortage began in 1989, when then-President Perez announced an end to the gas subsidy. The announcement resulted in large riots and since then, the suggestion of increased prices of oil is taboo. Thirty years later and after six years of economic crisis and recession, oil is still cheap, but production has dropped significantly. At the beginning of 2019, PDVSA, the state-owned oil and gas company, produced 1.2 million barrels of oil. On April 2019, this figure dropped down to 830,000. This decrease in production is due to obsolete machinery and under-resourced facilities. Additionally, as of now, only two refineries are in operation.

In addition to the mismanagement and corruption that has caused these plummeting oil production rates and shortages, the Maduro government also blames the corruption of former management of resources and U.S. sanctions. These sanctions prevented the export of specific materials that refine crude oils into usable fuel.


Corruption, mismanagement and sanction stand-offs are difficult to address. However, there are many NGOs that operate on a community level and provide for those immediately in need. The Venezuelan Engagement Foundation Group (VEFG) is one of these NGOs with programs that address the effects of the fuel shortage and resulting food insecurity. One of its top missions is to provide nutritional meals to children in need through food programs. This year, its food programs have targeted communities in need, mainly children who are the most impacted demographic regarding food shortages. VEFG’s #FeedAKid campaign guarantees that $1 can give a child one meal a day through community kitchens and school canteens. Currently, VEFG feeds 3,000 children, teenagers and elders in 32 different centers worldwide or 90,000 meals a month.

Venezuela’s position is full of contradictions. As an oil-rich OPEC country with fuel shortages and once the richest country in South America, it is now grappling with hyperinflation, failing job markets and food insecurity. The corruption and mismanagement in government have failed to convert the potential of oil into social welfare. Venezuela has limitless potential in terms of its crude oil reserves ready for refinement. The efforts of NGOs on the local level and change on the national level will refine the crudity of poverty into prosperity.

– Andrew Yang
Photo: Flickr