by Maniza Naqvi
It's a place of darkness. People are poor and hail from tribes and clans. They live in basic shelters in remote villages, with no running water or electricity, and no access to clinics. Subsisting on seasonal work, hunting and fishing to stock up food for the lean months, they worship nature's beauty. They consider themselves hardy, descendants of those who suffered war, famine, and religious persecution. They resent that their part of the earth gets attention only through the prism of movies or when natural or manmade disasters strike. Then oil is found and they are blessed.
Nope, this is not one of the 53 countries in Africa. It is not a “fragile state” the term often used for the richest in oil and gas and other mineral resources countries in Africa with the poorest citizens affected by the curse of resources: foreign meddling, conflict, war, corruption and autocratic dictators. This is Prudhoe Bay, Alaska, in the 1970s.
In 1975 the Alaska legislature asked itself: Was it morally acceptable or ethical for the generation whose presence in Alaska coincided with the oil boom to get all the benefits, leaving the following generations to deal with the decline and fall? No said the majority who thought the Alaskans of the future should have a nest egg and be allowed to share in a temporary windfall from the finite oil resource.
Alaska set up the Alaska Permanent Fund Corporation (AHF). In 1987, the APF was worth US$11 billion, and by 1997 it was US$24 billion, exceeding total state oil and gas revenues. As of March 2013 it was US$45.5 billion (here). The lesson is that managed professionally, a national asset can grow into the future beyond the finite resource. You can read the whole case study by Steve Cowper, a former Alaska Governor (no, not that one), in a book edited by the World Bank's Jennifer Johnson Calari here. In neighboring Alberta in Canada the Alberta Heritage Fund had been set up a year earlier (here).
Iran's Citizen Income Scheme (here), along the lines of the APF, is the largest in the world providing cash transfers to all its citizens, universally from its oil revenues. Per capita $500 is transferred to over 75.3 million citizens costing about $45 billion a year (here) and will amount to 15 percent of national income, while Alaska's average is 3-4 percent (here).
If ever there was ever a notion of a perfect nationalization then this would be it, to give to the people in a country what belongs to the Nation, its wealth earnings while making sure that the earnings keep growing for future generations. This is redistribution and growth of wealth. Other examples of such funds: The Future Generations Funds in Kuwait (here and here); Norway (here), the Diamond Empowerment Fund in Botswana (here)and Wyoming's Permanent Wyoming Mineral Trust Fund (here). A list if countries and their sovereign wealth funds is here.