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The Other Resource Curse

Author: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Maurice R. Greenberg Center for Geoeconomic Studies
February 7, 2013
Foreign Policy

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For as long as people have talked about moving beyond fossil fuels, another tantalizing prospect has hovered over the horizon: the decline of resource-rich authoritarian countries and the rogue nonstate actors that depend on them. A world of reduced demand for coal, oil, and gas is a world in which Iran, Russia, and various al Qaeda supporters are significantly weakened. That would certainly qualify as good news.

But visiting Mozambique last week, I was reminded that not all of the losers from lower fossil-fuel demand will be the traditional bad guys. Mozambique's economy has tripled in size in the decade since the end of the country's 15-year-long civil war, but GDP per capita remains barely over $1,000 a head -- and highly concentrated among relatively wealthy elites. Leaders in Maputo, the capital, relied on international aid for 40 percent of the national budget last year.

But an end is in sight: Massive coal deposits and offshore natural gasare poised to end Mozambique's aid dependence and rapidly increase economic output. The most bullish projections are far from assured -- Mozambique suffers from a lack of skilled labor, regulatory capacity, and essential infrastructure. But perhaps the biggest unknown is demand for what the country hopes to sell. If the world were to sharply reduce its dependence on fossil fuels, appetite for Mozambique's exports would decline or vanish, likely leaving the country in considerably worse shape.

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