The curse of natural resources :a vulnerability assessment for Lebanon -

Abstract

At first glance, natural resources are considered a blessing to the endowed country; however, taking a second look at major oil exporting countries and African OPEC members such as Libya and Nigeria, it can be noted that this blessing has become a curse hindering political and economic development. “Barriers to economic diversification, poor social welfare indicators, poverty, inequality, unemployment, corruption, poor governance, and conflict,” (Karl 2004) have become recurring characteristics of oil dependent countries. On the other hand, few yet exceptional countries such as Norway managed to escape the curse. Hence it is of interest to examine the Norwegian management of petroleum resources. In light of the recent discovery of oil and gas in Lebanon which imports over 95percent of energy consumed and ranks among the 50 most corrupt countries in the world (Transparency International 2013), the country is now “faced with the prospect of long term energy self-sufficiency and the development of a new revenue stream for the economy” (Darbouche, El Katiri and Fattouh 2012). The question to be tackled is how can the ‘resource curse’ not only be avoided in Lebanon but turned into a blessing. This will be done by examining the lessons from failures of resource-rich countries sharing common characteristics with Lebanon (Libya and Nigeria) and understanding the key causes and results of the resource curse in order to avert it. Moreover, after presenting an overview of oil and gas discoveries as well as major milestones and remaining obstacles facing the Lebanese oil and gas sector, policy recommendations and action plans will be derived, from three case studies in order to help Lebanon escape the resource curse. Economic implications of the discoveries will be discussed, and a ‘Vulnerability Index’ will also be created, based on several components and indices, to assess the degree of Lebanon’s susceptibility to the oil curse.