home > by publication type > daily analysis > The Return of Resource Nationalism
Email
| Prepared by: |
|---|
Venezuela is one of a few resource-rich countries attempting to renationalize the property of multinational corporations (AP Images/Fernando Llano).
In early 2007, Venezuela’s president Hugo Chavez gave some of the world’s biggest oil companies a choice (HChron): turn over majority control of their projects to a state-owned company and remain as minority partners, or face a complete nationalization of operations in Venezuela’s Orinoco River basin. The region’s reserves may rival those of Saudi Arabia, so for major oil companies the stakes were huge. Ultimately, Exxon and ConocoPhillips opted to leave, while BP and Norway’s Statoil decided to stay. The move proved especially costly for Conoco, which reported a 94 percent drop in the year’s second quarter earnings—a direct result of losing its Orinoco holdings (FT). Exxon said it was too early to gauge the impact of the seizure.
Venezuela is among a small but growing number of resource-rich countries to put the squeeze on international corporations. Russia early this year pressed both BP and Shell (Guardian) into turning over majority stakes in Russian gas operations to state-owned Gazprom. Bolivia nationalized gas and oil fields (NPR), and Ecuador used troops (Forbes) to take over Occidental Petroleum’s holdings. It is not just the oil and gas sector facing renationalization. Zimbabwe’s government said in June it would nationalize the country’s uranium (Reuters) as well as its coal and methane projects.
To the resource-rich developing states involved in such moves, it is an important signal of sovereignty. In an op-ed, Venezuela’s ambassador to the United States, Bernardo Alvarez, asserts that the benefits from the developing world’s natural resources “can no longer flow (HChron) in only one direction.” And though sometimes clothed in populist rhetoric, this trend seems less like the state seizures of the past because international companies are not entirely left out in the cold. Bolivian Vice President Álvaro García Linera told the Christian Science Monitor that his country practices a “21st century-style nationalization.” Russian President Vladimir Putin stressed that his country remained open to investment (NYT), pointing out that all of the world’s largest companies are represented in Russia.
Still, the reemergence of state-controlled resources has raised concern in some quarters. An internal study prepared by the U.S. military’s Southern Command last year obtained by the Financial Times says resource nationalism in Latin America’s energy sector will likely increase inefficiencies and “hamper” efforts to increase supply and production. According to the UN Commission for Latin America and the Caribbean, though foreign direct investment in the region has increased in terms of dollar amounts, its global share of money flowing into developing countries is shrinking, as transnational corporations lose ground (PDF) to state-owned companies.
Rigoberto Lanz, a senior adviser for Venezuela’s Ministry of Science and Technology, acknowledges that in the “short-term” his country will not be “an attractive market (WashPost)” for foreign investment, as businesses wait to see exactly the kind of economic model the country develops. Yet corporate experts note that with the right approach companies can be competitive and profitable in countries experiencing upswings in nationalized resources.
Weigh in on this issue by emailing CFR.org.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
The report of this bipartisan Task Force of distinguished leaders and experts represents a strong consensus on the importance of repairing America's immigration policy. It makes the case that maintaining America's political and economic leadership depends on attracting talented and hard-working immigrants, and on securing the country's borders in a smart, effective, and humane way.
This report finds that nuclear weapons will remain a fundamental element of U.S. national security in the near term, and makes recommendations on how to ensure the safety, security, and reliability of the U.S. deterrent nuclear force, prevent nuclear terrorism, and strengthen the nuclear nonproliferation regime.
About Independent Task Forces at CFR
Complete list of Task Force reports
Identifying international threats and acting on them may be the most difficult job for U.S. policymakers. This report
provides an actionable road map for managing international threats before they erupt into crises and makes a strong case that preventive action is not a luxury but a necessity.
For more than a decade, the United States has mostly watched from the sidelines as Asian countries organize themselves into an alphabet soup of new multilateral groups. In this report, the authors review the relationship between pan-Asian and trans-Pacific institutions and suggest policy guidelines for a new U.S. approach to this new Asian landscape.
Complete list of Council Special Reports
To request permission to reprint or reuse CFR material, please fill out this permissions request form (PDF), referring to the instructions on page 1.
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.