SPECIAL ARTICLE

Natural Resources and Energy Security Challenging the Resource-Curse Model in Bangladesh
Anu Muhammad

This article examines myth and reality vis--vis natural resources and energy security in peripheral economies, with special focus on Bangladesh. It highlights the fact that resource abundance does not automatically translate into development; countries like Bangladesh suffer because of their local hegemonic rulers and global alliances which, in the name of development, extract disproportionate private profits from common property through the use of corrupt practices and skewed policies. The article also insists that natural energy resources should be considered common property, and in order to make development meaningful and sustainable should remain so. Planned development of the national capability is an essential precondition to maximise the potential use of natural resources. In the context of Bangladesh, a ban on exporting mineral resources and open-pit mining is also necessary to ensure energy security and sustainable development. It concludes that energy-sovereignty is the key to energy security, and therefore to sustainable development.

tudies from different countries clearly show that an abundance of resources does not automatically translate into sustainable development. In many countries, certain conditions can even lead to resources becoming akin to a curse; the resource-curse phenomenon is now a real issue. Militarisation, war and conicts have been closely linked to the exploitation of energy resources. It is no secret that corruption, poverty, inequality, and repression go hand in hand with the exploitation of natural resources. Packaged programmes aimed at development and economic reform, imposed by international nance organisations such as the World Bank and the International Monetary Fund (IMF), have proved disastrous for peripheral economies. These programmes created greater energy insecurity and led to development that is unsustainable. Deregulated and speculative investment in oil and mineral resources in the last decade created an articial crisis, distorted markets and price hikes. This paper analyses the issue from both a historical and a global perspective in order to understand this resource-curse phenomenon, especially as it relates to Bangladesh. After conceptualising energy security and sustainable development, the resource-curse model, as it appears in many peripheral countries, is elaborated upon. Experiences of foreign direct investment (FDI) in the energy sector and the export promotion policies (campaigns) of resources are then examined. Different countries, with their differing resource domains and state policies, are then placed in four distinct groups and examined briey. The second part explores Bangladeshs energy resources and related policy implications. Factual evidence and documents are examined to understand the reasons behind peoples resistance to public policy directions. Peoples struggles and aspirations vis--vis prospects in the energy sector in Bangladesh have also been focused on.
Energy: Resource and Security

Anu Muhammad (anujuniv@gmail.com) teaches Economics at Jahangirnagar University, Dhaka, Bangladesh.

Economic & Political Weekly EPW

Energy security is the key to the sustained development of any countrys economy. The International Energy Agency (IEA) describes energy security as the uninterrupted physical availability at a price which is affordable, while respecting environmental concerns. Energy security is therefore linked with the availability of primary resources and easy access to these resources on the one hand, and the sustainable development of the country, on the other. Sustainable development requires a pattern of resource use, which aims to preserve the environment so that human needs can be met, not only in the
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present, but also for generations to come. Therefore, sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs (UN 1987). According to conventional economics, the availability of natural resources should be a strong component of energy security. Countries such as the US, Canada, Australia and Norway are rich in resources, and energy secured. However, an availability of primary energy resources does not automatically lead to prosperity for a country. Moreover, for many countries, it may lead to a corruption-underdevelopment-repression trap. Even that traditional development marker, the gross domestic product (GDP) growth rate, does not always have a positive correlation with resource abundance. Many natural resource-abundant economies grow slower than economies that do not possess substantial resources. Countries lagging behind in growth, such as Nigeria, Zambia, Sierra Leone, and Angola, are all resource-rich, while the countries known as the Asian tigers Korea, Taiwan, Hong Kong and Singapore are all resource-poor (Mehlum et al 2005), but are growth-smart.
Resources and Development: A Diverse Scenario

Keeping in mind their diverse experiences vis--vis resources and development, countries can be divided into four groups. Under Group A are the US, Australia, UK, France and Germany. These countries command not only their own resources, but also those of several other countries. The beneciaries of the colonial system, they host the big multinational corporations (MNCs) that control the worlds mineral resources.1 A few mutually linked companies dominate the sector in many countries, although their ownership is limited to the countries of origin. For instance, BHP Billiton and Rio Tinto are the two largest companies in coal; their host countries are Australia and UK and UK and Australia, respectively. Group B includes China, Malaysia, India, Brazil and Vietnam. These are all growing economies with good control over their own resources. They have developed national institutions, and are now expanding overseas. In each country, state-run agencies have the principal responsibility for managing ownership and making policies. In India, for instance, the Geological Survey of India, Mineral Exploration Corporation, National Exploration Corporation, National Remote Survey Agency, National Geophysical Research Institute, and Indian Bureau of Mines along with Coal India dominate the main functions of exploring, extracting and policymaking with regard to mineral resources (for details, see http://meaindia.nic.in/ indiapublication/mining.htm). In these countries, foreign investment does not undercut domestic investment; rather, it supplements it. Group C countries fall into the resource-curse category. They include Sudan, Nigeria, Colombia, Afghanistan and many others. These countries have no command over their own resources. Most of them had been colonised for hundreds of years and after independence, have been dominated by multinationals or centre countries, and by the local, repressive,
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corrupt ruling class. FDI has actually increased in these countries, yet it has neither created jobs nor encouraged capacity building or technical development at the local level. The meaning and outcome of investment in a resourcecursed country is markedly asymmetrical to that in a (capital) host country. The world has witnessed the havoc wreaked by multinational capital the wars and the bloodshed in its attempt to gain control over the earths mineral resources. The most recent episodes, as we know, were staged in Afghanistan and Iraq (Fouskas and Gokay 2005). The imperial powers have colonised knowledge, thought and skills, while engaging corrupt dictatorships and their allies around the globe to maintain the resource-curse phenomenon. Group D countries are mostly from Latin America: Venezuela, Bolivia, Ecuador, Argentina, etc. After being part of the resource-curse group for decades, they have successfully pulled themselves out of that trap in recent years, through political changes spurred on by peoples resistance to neo-liberal reform. Since then, they have been trying to give a new direction to development by changing policies, revising international contracts, and building new institutions. This group comprises nations that are struggling to emerge from a hellish situation marked by poverty, bondage and violence associated with the dictatorships of a few hundred years. This new beginning characterised by people exerting their rights over their own resources is not merely an economic breakthrough; it is also the forerunner of a new kind of freedom. Given the diverse experiences and tragic episodes in many countries, the question remains: Where does Bangladesh stand?
The Resource-Curse Model

The negative outcomes in oil- and mineral-dependent countries are referred to as the resource-curse (Tsalik and Schiffrin 2005). An abundance of natural resources does hinder economic growth in countries with grabber-friendly institutions, but not in countries with producer-friendly institutions (Mehlum et al 2005). Many countries rich in natural resources exploit and squander their wealth to enrich a minority, while corruption and mismanagement leave the majority impoverished. According to the second Arab Human Development Report, released by the United Nations in 2003, the high dependence on oil in parts of west Asia has led to the over concentration of wealth in a few hands, leading to faltering economic growth and weakening the demand for knowledge (Tsalik and Schiffrin 2005). There are several instances of growing repression and human rights violations linked to mineral resource exploitation. Almost one-third of India has been ruled by the military, with most of the troubled areas also being the resource-rich ones.2 In Nigeria, Shell pays the local security forces, which then commit atrocities in the Niger Delta; Chevron recruited and transported Nigerian military and police, who shot at and killed peaceful protesters from Chevron helicopters (1998 and 1999). Poet-activist Ken Saro Wa was hanged for his activism. In Myanmar (previously known as Burma), UNOCAL entered into contracts with the Burmese military to provide security
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for the Yadana pipeline; villagers are routinely killed, raped, tortured, and forced to work to build the necessary infrastructure (1994-present). In Colombia, riot police were brought in to remove the Uwa indigenous people resisting Occidental Petroleums oil projects in the late 1990s. An unending war rages against the Colombian people in the name of anti-drug operations. In Ecuador, the city of shell in the Amazon jungle, near Quito, is protected by a military base. Saudi Arabia and many other west Asian countries have been under total autocracy and repression for decades (Muhammad 2011; Perkins 2006, 2007). Despite its growing unemployment and poverty, Saudi Arabia entered into the highest single military contract (worth $30 billion) with the US in December 2011.3
Export and Perish

The Economist (4 April 2002), in a report on Myanmar, stated,

[A]n energy rich country, Myanmar is now suffering the worst fuel shortage in the region. Its own citizens are starved of electricity, but the regime sells a steady stream of natural gas to neighbouring Thailand. Yet this export benet has not saved the public nances. Current reserves are estimated at no more than $240 million enough to cover only the next six weeks of imports. A shortage of foreign exchange has caused the black-market price of gasoline to shoot up by 600% in less than a year.

Exports form an obvious part of any countrys economic activity. However, the reality changes according to context, for both commodities and the market. Here, we are specically discussing non-renewable resources exploited from nature, the export of which does not have the same consequences as, say, the export of renewables or manufactured goods. Corporate economists and policymakers generally argue that the export of mineral resources would accelerate growth in peripheral economies (for a detailed discussion on the gas export debate, see Muhammad 2004). However, a study on countries with diverse experiences concludes that on average, countries which started the period with a high value of resource-based exports to GDP tended to experience slower growth during the following twenty years... (Sachs and Warner 1997). In Saudi Arabia, whose proven crude oil reserves remain the largest in the world, per capita income has plunged from $28,600 in 1981 to $6,800 in 2001 (however, it increased again with the increase in oil prices in 2008). Nigeria has vast natural gas, coal, oil, and renewable energy resources that could be used for power generation and industrialisation. With an estimated 187 trillion cubic feet (tcf) of proven natural gas reserves (BP 2010), Nigeria is the ninth largest natural gas reserve holder in the world, and the largest in Africa. Multinational oil companies have been working in Nigeria for decades to explore and export energy resources to the US and Europe. However, the country suffers from huge load-shedding, poverty, unemployment, and a weak infrastructure. Clearly, all the oil revenues have not raised the standard of living. Between 1970 and 2000, the poverty rate increased from about one-third of the population to almost 70% of the population (Tsalik and Schiffrin 2005). According to another estimate, the number of Nigerians living on less than a dollar a day grew from 51.6% in 2004 to 61.2% in 2010, although Nigerias economy grew at an average of 7.6% between 2003 and 2010. While the lucrative oil industry has fuelled growth since the discovery of crude oil some 50 years ago, the sectors dominance has been a curse for the population (http://www.france24.com/en/20120219-oil-reliance-fuels-nigerias-poverty-say-analysts?ns_campaign=editorial&ns_source =RSS _public&ns_mchannel=RSS&ns_fee=0&ns_linkname= 20120219_oil_reliance_fuels_nigerias_poverty_say).
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Ecuador, another resource-rich country in Latin America, has had similar experiences. Since 1970, the period of the oil boom, the ofcial poverty level has grown from 50% to 70%, under- or un-employment has increased from 15% to 70%, and public debt has increased from $240 million to $16 billion. Allocations for the poorest segments, on the other hand, have declined from 20% to 6% (Perkins 2006). Congos bloody and cruel history owes mainly to its huge mineral resources. Seventy-ve per cent of Congolese natural resources are currently owned by foreign companies. Despite its huge mineral resources, Congo now ranks 158 and 142, respectively, in the per capita GDP and human development indices (for details, see http://www.dominionpaper.ca/articles/119).
FDI: The Other Story

Investment, both local and foreign, is crucial in any dynamic country. However, the terms and conditions, that is, the quality of that investment, matters a great deal. In conventional development economics, FDI from Western countries and MNCs appear to be a solution to the capital scarcity problem, and are viewed as an over-sure solution for the development needs of and poverty alleviation in peripheral countries. Nevertheless, a partial recognition of some ground reality is sometimes observed, for instance:
Foreign direct investment may bring benets, but it may also be overly capital intensive when there is surplus labor, or multinationals may present costs to the host country that mount over time and alter the cost-benet ratio unfavorably (Meier and Stiglitz 2001).

We have already seen how development in many countries takes a distorted, even destructive, form because of the high reliance on FDI in the energy sector. According to a UN report,
66 per cent of foreign investment in the 1990s went to the developing nations of Africa. It has increased to 87 per cent during 2000-05. Only Angola, Chad, Equatorial Guinea and Sudan, the four oil producing countries, received 56 per cent of foreign investment (UNCTAD 2006).

The report also noted that foreign investment in these developing countries was generally resource-seeking. Therefore, this investment had neither created jobs nor encouraged capacity-building or technical development at the local level. This sector is akin to an island, with MNCs being the ones who prot at the end of the day. In his well-researched book (Moody 2007), mining expert and author Roger Moody shows that economic growth has in fact been slower in countries that are dependent on MNCs for the exploration of oil and other mineral resources. These same countries, however, show a higher rate of political instability, poverty and violence. Drawing from examples around the
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world, Moody demonstrates how these companies have caused irreparable damage to the forests, jungles, water bodies, and environmental make-up of several nations. They have an abysmal record when it comes to safeguarding the environment and human rights. A study on the relation between development and capabilitybuilding, and the availability of mineral resources, concludes that many mineral-rich nations such as Zambia, Sierra Leon, Congo and Angola lag far behind in economic development, compared to other resource-poor nations (Economic Journal 2006). The study also found that wealth serves as a curse in some countries. Tempted by the rich resources, powerful groups effectively destroy democracy and its relevant institutions to facilitate their looting of the wealth. Another report, titled Fanning the Flames (http://www. waronwant.org/Fanning%20the%20Flames+15142.twl), compiled case studies of human disasters in some developing countries, caused by big mining companies that included BHP and Rio Tinto from the UK and Australia, respectively.
The Corporate Agenda

market (World Bank 2011; http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,menuPK:463288~contentMDK:20219974~p agePK:148956~piPK:216618~theSitePK:336930,00.html).

Clearly, the Bank aims to push for privatisation, which they believe will reduce the drain on the public sector, lower cost of production, and provide a level playing eld. The results in Bangladesh (which followed the World Banks prescription), however, were quite the opposite.
Privatisation and FDI in the Energy Sector

One should not ignore the fact that where common property resources are concerned, private property rights are difcult to dene, and its exploitation by one imposes costs on others, which, in many cases, refers to people in general (Dashgupta 1982). After studying the experiences of different countries, former chief economist of the World Bank and Nobel laureate Joseph Stiglitz asserted that:
[A] country that sells off its natural resources, privatizes its oil company, and borrows against future revenues, may experience a consumption binge that raises GDP, but the accounting framework should show that the country has actually become poorer.

He also said,
In many developing countries, privatization is tantamount to selling the natural resources to foreign rms, since there are no domestic rms with the capital and skills necessary to undertake the task of extraction (Tsalik and Schiffrin 2005: 15-16).

He also commented on the debate surrounding gas resources in Bangladesh:

A country like Bangladesh, with limited reserves of natural gas, might want to exercise caution when selling its gas, given that there is no other effective way of insuring itself against an increase in the price of energy over the long run (ibid: 15).

Stiglitz recommended that the international nancial institutions (IFIs) not put undue pressure on countries to privatise their extractive industries. The World Bank and its allies, though, have a specic agenda for their intervention in the energy sector in different countries. According to their ofcial statement:
The Banks Oil, Gas, and Mining Policy division through an integrated set of services, loans, technical assistance, guarantees and knowledge products provides advice on legal, scal and contractual issues, regulation, sector restructuring, and privatization. These efforts help state-enterprises transition to the private sector reducing the drain on the public sector, lowering costs of production, and providing a level playing eld that encourages entrepreneurs to enter a competitive

Immediately after independence, the Bangladesh Mineral Oil & Gas Corporation (BMOGC) was created through Presidential Order 27 on 26 March 1972. The reconstituted Corporation was named Petrobangla for short through Ordinance 15 of 22 August 1974 (for details, see www.petrobangla.org.bd).4 The Bangladesh Petroleum Exploration and Production Company (BAPEX), which emerged in June 1989, is an integral part of the Petrobangla as its Exploration Directorate (see http://www. bapex.com.bd). It should be noted that Petronas, the national agency for petroleum in Malaysia, is as old as Petrobangla. While the former is now competing in the global market and has become one of the new seven sisters, Petrobangla has been marginalised systematically to provide space to local and global corporate interests. The rst elaborate discourse of the World Bank on the energy sector of Bangladesh came in 1982.5 This report was based on the ndings of the Energy Assessment Mission undertaken in October 1981. Similar reports were issued at the same time for Indonesia, Mauritius, Kenya, Sri Lanka, Zimbabwe, Haiti, Papua New Guinea, Burundi, Rwanda and Malawi. Despite there being no scientic analysis cited, the report assessed the size of Bangladeshs gas reserves at 10 tcf.6 The Bank considered this substantial, economically recoverable natural gas reserves. They also discovered that at present consumption levels this amount of gas would last for several decades. The report then urged for a rapid and effective use of this major resource, as it could be a crucial element in alleviating the countrys current payment problems and enhancing its energy outlook (WB-UNDP 1982: 2). The report then recommended means through which Bangladesh could take advantage of these resources. Prescribing reform, the Bank said, Given Bangladeshs limited capability in mounting an exploration program on its own, it would need to make concerted efforts to secure the participation of foreign oil companies in this area (ibid: 4). Moreover, since the supply of gas is likely to remain well in excess of Bangladeshs expected internal needs for a substantial period of time, the report offered different export options, including: a. export gas through a pipeline to India; b. export gas after liquication; or c. attract export-oriented industries which are energy intensive, e g, methanol production and/ or use natural gas as a feedstock. Later, during the late 1990s, the World Bank and its allies reduced the list to only one option: export gas through a pipeline to India for a bright future.
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Similar reports and recommendations were issued from the Asian Development Bank (ADB), which proceeded with a major energy study and an update of the power sector master plan in the same year as the World Bank. Its report was more specic in recommending the most effective use of gas resource. A similar direction was set for the power sector. How the government, the Rural Electrication Board (REB) and Palli Bidyut Samity (PBS) came to an understanding, and where do the World Bank and its International Development Association stand in the process are matters of importance if one has to understand the development taking place in the power sector. Both the REB and PBS were results of earlier projects launched by these agencies (Muhammad 2003). In October 1996, while following up similar projects, the Government of Bangladesh approved a private sector power generation policy (PPGP). It stated, in essence, that a new power generation capacity would be created through MNCs in the power sector, who are usually termed Independent Power Producer (IPP). These new power generators would be constructed on a build-own-operate (BOO) basis. Four publicsector power generation projects (Barapukuria coal-based, Shahjibazar, Baghabari, and Sylhet gas turbines) were also postponed, and a decision made to carry them out through IPPs (for a detailed discussion on the role of IFIs in Bangladesh, see Muhammad 2003, 2008). As a result, FDI increased dramatically from the early 1990s. New contracts were signed with foreign companies in the gas, telecommunication and electricity sectors. According to World Bank estimates, since 1996 the annual averages of the highest capital inows of FDI took place in the gas sector, followed by the power sector over the next ve years. FDI in export processing zones remained comparatively low (WB 1999). Although the gures for telecom were small in the beginning, FDI inow in that sector alone has shown a substantial increase in later years. In 1993-94, six production sharing contracts (PSCs) were signed in the rst round. Cairn Energy-Holland Sea Search were awarded Blocks 15 and 16. Later, Halliburton/Santos took Block 16, and Shell/Cairn took over Block 15. Initially, Occidental was given Blocks 12, 13 and 14, which were then transferred to Unocal; later, these blocks were transferred once again to Chevron. Blocks 17 and 18 were awarded to OaklandRexwood, and later to Oakland/Tullow. United Meridian Corporation was given Block 22. In 1997, four PSCs were awarded in the second licensing round. Shell-Cairn Energy were awarded Blocks 5 and 10, Tullow-Chevron-Texaco: Block 9; Unocal, and later Chevron, got Block 7. Bapex is tagged with these companies, but with little share. According to these contracts, the country started purchasing its own gas with hardearned foreign currency initially at a price that was at least 30 times higher than that offered by public-sector companies. A policy was formulated to bring International Oil Companies (IOCs), or MNCs, to explore gas when BAPEX, the national exploration agency, was capable of doing the same. Gas-rich blocks in the east were awarded to IOCs, and common property transformed into private property. Instead of reducing the
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drainage of public money, as the World Bank had claimed, this privatisation increased this drainage signicantly. According to the Bank, Petrobangla buys gas from IOCs at a price linked to the international price of fuel oil. Petrobangla will incur increasing decits, leading to a negative cash ow (World Bank 2011: 13). After working to pave the way for these FDIs, in 1999 the World Bank stated that the nature of FDI has implied little augmentation of foreign exchange reserves, because
the bulk of FDI in the power sector so far is made up of imports (e g, pre-fabricated barge mounted power plants); so are capital costs of IOCs engaged in the gas sector, and much of the foreign investment and lending in the telecom sector nance imports of telecommunications equipment (ibid: 7).

The World Bank therefore made it clear that the import intensity of FDI inows and subsequent prot repatriation and interest payments imply a worsening current account decit associated with FDI (ibid: 7). According to the Banks estimates, FDI inow was far less than the outow, which was being spent on foreign imports related to the projects. The projection was that it would increase further. To understand the rationale behind the World Banks unusual recognition of the adverse effects of FDI in Bangladesh, one has to read their suggestion: There is no discernible accumulation of foreign exchange reserves in the absence of gas exports (ibid). The ADB, recognising the new problem, said, Although the individual companies responsible for ADB-nanced gas sector projects are protable, Petrobangla is incurring losses due to the increasing share of more expensive gas from IOCs (http:// www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-200936/SAP-BAN-2009-36.pdf). Therefore, the solution, according to the WB and the ADB, was very specic: (a) to solve the scal decit, raise the price of gas; and (b) to solve the pressure on foreign currency, export gas. Therefore, the prescription offered in 1982, that is, the export of gas, appeared as a compulsion in 1999; the periodic increase of the price of gas and electricity had become an urgent necessity. Governments proceeded accordingly; huge campaigns were begun in 1999 in favour of the gas export plan (from Bibyana, Sylhet to India) put forward by the US company Unocal. Bill Clinton, the then president of the US, visited Bangladesh in March 2000 as part of that campaign. However, independent experts and people in general were against this.7 Faced with popular protest against PSCs and gas export, the government formed two committees in 2002 one to analyse the reserve situation, and the other to decide on the best utilisation. After analysing all the relevant facts, the committee on utilisation reached a conclusion against export. It said, Involving the multinational oil companies in the countrys domestic gas market has drawn only negatives.
The Development of Burden

All the relevant facts show that by leasing out most resourcerich gas blocks to IOCs, Bangladesh has been turned into a hostage of sorts. The cost of production of gas and electricity, and therefore the scal burden, has been increased at a linear rate.
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Instead of saving public money, drainage and corruption have both increased manifold. In the past decade, multinational oil companies have received Tk 160 billion from selling gas to Bangladesh, which could have been purchased with Tk 20 billion from public-sector companies (Mostafa et al 2010). The drainage of foreign currency equivalent to Tk 140 billion in a few years is therefore a direct outcome of FDI in the gas sector alone. This amount is greater than the budget allocation for the energy sector in the past three years. Two arguments have always been offered in favour of bringing MNCs into the energy sector: (a) since countries like Bangladesh lack the necessary capital, FDI would full this need; and (b) as the country lacks technical ability, MNCs can provide the latest, efcient technology. Like in many peripheral countries, facts and gures in Bangladesh belie these arguments. (1) Privatisation and the entry of MNCs in the energy sector have increased public expenditure instead of reducing drainage of public resources, as claimed by the IFIs. For example, at least one 500 MW power plant could be built every year with the money spent (about Tk 25 billion) as subsidy for purchasing gas from MNCs. This amount is only increasing as their share grows. (2) While Bapex-Petrobangla spends Tk 1 billion to drill a well, MNCs usually do so by spending up to six times that amount (Mostafa et al 2010). This goes against the argument that MNCs are more efcient, and will bring down the cost of production. (3) While MNCs sell gas at $3-$4 per 1,000 cft (MMCF), Bapex could sell it at 25% of the price. (4) Governments have periodically increased the prices of gas and electricity to reduce the subsidy caused by the increased MNC share. The obvious outcomes are the rising costs of production and of living. (5) Bangladesh lost 500 billion cubic feet of gas due to the blow-outs in Magurchhara (1997) and Tengratila (2005). This equals the amount of gas used for power generation over 20 months for all of Bangladesh in 2011. (6) The compensation due from US company Chevron and Canadian company NICO is still unrealised. The price of the gas lost is more than $5 billion, which is nearly eight times the average yearly budget allocation for the energy sector. No government since 1997 has taken any step to realise the money owed. On the contrary, reports state the opposite:
Prime ministers had been seen interfering in the operations of the [parliamentary] standing committees on several occasions. For instance, the Daily Star reported (January 5, 2001) that the original committee report prepared in 1997 on the Magurchara gas eld blowout was not submitted to the parliamentary committee on Energy at the suggestion of the former Prime Minister Sheikh Hasina. She was in charge of the energy portfolio. The ofcials of the US oil company, Unocal (formerly Occidental) responsible for the blowout, incurring huge nancial and environmental loss for the country, did not appear before the committee, which was backed by the former prime minister [Shiekh Hasina]. Moreover, the immediate past prime minister, Khaleda Zia had been seen holding talks with chairmen of different committees and instructing them not to criticize ministers and deliberate corruption-related issues in the committee meetings, which could damage the images of the government (Rahman 2008: 96).

It is not surprising that the WB, ADB, or other IFIs, who were previously very vocal, have chosen to remain collectively silent over the issue of compensation. Therefore, every fact makes it clear that the World Banks claims about the benets of privatisation and FDI in the energy sector have been proved wrong, while their move has been proved fraudulent.
US Lobby and the Contract with ConocoPhillips

Recently, WikiLeaks revealed the extent of US lobbying in Bangladesh for US corporate interests. In fact, US involvement in lobbying, conspiring, and pressurising peripheral governments to ensure their corporate interests, especially in the energy sector, is well known. There is sufcient evidence to show that the US, aided by their various embassies, does not balk at killing people, driving bloody political change, backing autocrats, occupying land, and perpetrating genocide to protect big businesses (Blum 2003). To cite another example: months before the 2001 general elections, the then US Ambassador Mary Ann Peters suggested a ve-point economic action plan to the new government in its rst 100 days, the honeymoon period, as she termed it. She explained her position in a speech titled Accelerated Growth: A Challenge for the New Government, delivered at the monthly luncheon meeting of the American Chamber of Commerce (AmCham) in Dhaka on 15 May 2001. She emphasised, rst, signing an agreement between the government and Stevedoring Services of America (SSA) for a project worth nearly $450 million,8 and second, the export of gas to India for maximum returns.9, 10 A decade later, WikiLeaks exposed the US embassys private lobbying activities: US diplomats privately pressurised the Bangladeshi government into reinstating a controversial coal mine which had been closed following violent protests. A report on the leaked notes reveal:
[L]ater on in the cable, Moriarty privately noted: Asia Energy, the company behind the Phulbari project, has sixty percent US investment. Asia Energy ofcials told the Ambassador that they were cautiously optimistic that the project would win government approval in the coming months.

The cable also made it clear that the Energy Adviser agreed to build support for the project through the parliamentary process (http://www.guardian.co.uk/world/2010/dec/21/wikileakscables-us-bangladesh-coal-mine). Another report, quoting the US diplomatic cables leaked by WikiLeaks, added that the US ambassador had persuaded the government in July 2011 to award two blocks in the Bay of Bengal to ConocoPhillips, and permit Chevron to set up a compressor in Muchai (http://www.bdinn.com/news/conocophillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoyagreed-deals- wikileaks). On 16 June 2011, two oil gas blocks in the Bay of Bengal were leased out to ConocoPhillips. Independent researchers and public bodies expressed their main concern: (1) ConocoPhillips receives an 80% (effectively 100%) export opportunity (15.5.1, subject to Articles 15.5.4, 15.5.5 and 15.6).
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when semi-military (BDR) forces red upon the crowds. The peoples uprising spread across the country, and the government was compelled to sign an agreement on 30 August.11 The Phulbari Agreement (as it came to be known) was signed between the Government of Bangladesh and the agitating people12 on 30 August 2006. The main points of the agreement were: (1) Phulbari coal project will be scrapped and Asia Energy will be ousted from the country. (2) No open-pit mining will be allowed anywhere in the country. (3) Mining method and other steps for coal development and utilisation will be taken after proper consultation with the people, keeping national interest intact. The main reasons for the strong opposition to open-pit mining, foreign ownership, and export were: Coal: The New Frontier (1) About 2,00,000 people from 150 villages would have to be Bangladesh has ve coal mines with approximately three evacuated for only one mine area. billion tonnes of coal reserves. Bangladesh is comparatively (2) Dewatering in the mining area would not only disturb the new to the eld of coal mining, and is yet to start mining in a major aquifer, but would also damage the most massive aquifer in big way. Since the early 1990s, big mining MNCs have started north-western Bangladesh, turning the area into a virtual desert. exploring the business potential. The Geological Survey of (3) Huge areas outside the mining zone would be affected by Bangladesh (GSB) discovered the Barapukuria coal mine, the the depletion of groundwater. This area currently provides a rst that was feasible for mining, in 1985. It went into operation signicant portion of the countrys food supply. The open-pit under Petrobangla, the national agency, along with a Chinese mine project would therefore have a serious impact on the nations food security and environment. contractor, in 2004. The Bangladesh government originally awarded a licence to (4) After destroying food and human security through the exexplore the Phulbari coal mine in 1994 to the Australian traction of coal, energy security would be destroyed through the company, BHP Minerals. In 1997, Asia Energy was formed, and export of coal. An expert committee formed by the government also spoke in 1998 BHP transferred its licence to this newly-formed company, incorporated in the London Stock Exchange Alternative against the project, terming it legally awed, environmentally Investment Market. Asia Energy changed its name to Global disastrous, and economically against national interests (Islam Coal Management after the bloody uprising in Phulbari in 2006). However, all the resistance, the Phulbari agreement, and August 2006. Its major shareholders are Polo Resources US, RAB Capital, UBS, Fidelity Group, Barclays, Credit Suisse, LR the expert committees recommendations could not stop the Global, Ospraie Management, Capital Group, and Argos vested local and foreign interest groups from lobbying for the project. We have already looked at the Table 1: Coal Mines in Bangladesh role played by the US embassy in Dhaka; Year of Discovery Location Depth Reserve Comment (Metre) (Million Tonne) the British High Commission was no ex1962 Jamalganj, Joypurhat 640-1,158 1,050 Too deep to be technically feasible ception, as evidence from British parliain the foreseeable future. mentary proceedings show. Gareth Tho1985 Barapukuria Dinajpur 130-506 390 Production since 2005, owned by mas, UK Minister for International DevelPetrobangla, operated by Chinese opment and Business, stated in a parliacompany. Landslide and water logging 1989 Khalashpir 257-482 685 Project submitted for mining mentary answer in April 2008: (2) Bangladeshs share is given as not more than 20 per cent (15.5.4). Moreover, the country will have to build its own pipeline to bring its share onshore. (3) The production limit is relaxed (to more than 7.5%). (4) The Joint Review Committee and Management Committee are dominated by ConocoPhillips. (5) ConocoPhillips has a bad record for blow-outs in other sea blocks; however, there are no concrete compensation conditions in place. (6) Authority over the Bay of Bengal is crucial for Bangladesh. This is now being threatened (Petrobangla 2011). People staged strong protests, which included two general strikes before and after the contract was signed.
1989 1997 Dighipara Phulbari, Dinajpur 328-407 150-240 500 572 Reserve yet to be confirmed Open-pit mine was planned by a mysteriously formed new mining company. It was rejected by both experts and people in general. Three people were killed and hundreds were injured in resistance gathering on 26 August 2006

Greater Europe Fund. With only 6% royalty for Bangladesh, 75%-80% of the coal was planned for export through the Sundarban mangrove forests. This project faced huge resistance, rst from the local community, and then from the national organisation to safeguard national interests and the environment. At a huge demonstration on 26 August, three people were killed and hundreds injured
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We have provided support to Global Coal Management Resources PLC, through the British high commission in Dhaka. They have lobbied to ensure that the Government of Bangladesh take the companys interests into consideration and do not prohibit opencast mining. The British high commission will continue to remain in touch with the company and will represent their interests as appropriate. The Bangladeshi Caretaker Governments new draft coal policy leaves the way open for opencast mining in Bangladesh in the future (http://www.publications.parliament.uk/pa/ jt200910/jtselect/jtrights/5/5we19.htm).

Nevertheless, the peoples resistance continues to be strong enough to confront the global alliance hungry for Bangladesh coal.
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Bangladesh: Challenging the Model

Bangladesh began well in the early 1970s. Later, however, it became embedded within the neo-liberal (conservative) development paradigm, and was soon destined to become another resource-cursed country. Privatisation of natural resources, the subsequent handing over of those resources to MNCs, the projects to export gas and coal, and open-pit mining pushed Bangladesh into the resource-cursed model, with the aid of local and global alliances comprising MNCs, governments of the US, UK, Germany, and Australia, and the World Bank and ADB. Although this approach remains strong, the collective efforts of experts, academics and activists during the past 12 years made a signicant dent in this trajectory. Resistance during 1999-2004 against gas export (which deprived both the people and the economy), the Phulbari uprising and the national resistance in 2006 against the Phulbari coal project (which continues; the last long march was held on 24-30 October 2010), the peoples tribunal against the World Bank, IMF and ADB (2008), and protests against the gas deal with ConocoPhillips since 2008 (including two general strikes in 2009 and 2011), have brought issues related to energy security and sustainable development to the fore.13 These counter-hegemonic efforts have mobilised public opinion against anti-people corrupt deals, and in favour of utilising natural resources for the countrys own people and economy. The peoples consensus has emerged on the following issues:

(1) The people of the country should have 100% ownership and authority over their own resources. (2) The neo-liberal development paradigm should be replaced by a people-centric development policy. (3) IFIs disastrous policies should be rejected; they should be made accountable and their immunity scrapped. (4) Food and energy should be the priorities. No destruction of agricultural land and no export of energy can be allowed, considering the urgency of both food security and energy security. (5) No development project that destroys peoples lives, livelihoods, and the environment can be acceptable. (6) Peoples consent and participation in ensuring long-term sustainability must be part of the development process. (7) Greater efforts should be made to explore the huge potential of renewable energy. An innite supply of solar power and wind for power generation are available all year round in Bangladesh. The costs are still comparatively high; but research and innovation in the right direction, aided by the right institutions, will soon bring them down.
Conclusion

Bangladesh has been neither a resource-abundant country nor a resource-poor one. It has several resources: fertile land, underground and surface water, rich biodiversity, and human resources. Bangladesh has limited mineral resources like natural gas and coal, which are nonetheless crucial to achieving energy security. It also has abundant sun and wind, sources of

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innite renewable energy. However, the country still lacks the political will and institutional set-up to utilise its own resources in a way that best serves its people and environment. Global capital is in confrontation with people all over the world, especially over three issues: (a) Should a people and country own and exercise authority over their own lives and natural resources, or should global corporations be allowed to take over? (b) Should natural resources be used or preserved for the development of a country, or should they be extracted to maximise the prot of MNCs and their junior partners?
Notes
1 The largest oil companies in the world are called super-majors and include Royal Dutch/Shell, BP, Total, ExxonMobil, and Chevron, Texaco. At another level are the majors, such as Conoco Philips, Occidental Petroleum, and Unocal. 2 India might be known as the largest democracy; however, militarisation and repression threaten human rights in several areas. Arundhati Roy writes regularly on the military-corporate nexus and the myth of Indian democracy (see, for example, Roy 2011). 3 The Washington Post also adds, The deal outlines of which were disclosed to Congress last year also calls for refurbishing 70 F-15s currently in Saudi Arabias ghter eet, as well as providing munitions, spare parts and training for Saudi pilots and air crews. The deal comes at a time when the Pentagon is considering supplying bunker-buster bombs and other munitions to another key gulf ally, the United Arab Emirates (http://www.washingtonpost.com/world/national-security/massive-us-saudi-arms-deal-seen-as-a-foreign-policy-security-and-economic-boon/2011/12/29/ gIQATNWQPP_story.html). 4 On 13 November 1976, through Ordinance 88, the importation, rening, and marketing of crude and petroleum products were vested with the newly-formed Bangladesh Petroleum Corporation (BPC). 5 The report was a product of the Joint UNDP/ World Bank Energy Sector Assessment Programme. It was kept secret, in the same line with most other reports of these agencies. According to its rst page, This document has a restricted distribution. Its contents may not be disclosed without authorisation from the Government, the UNDP or the World Bank. 6 Later, total reserves of extractable gas (proven and probable) in the country were estimated at 20.5 TCF. While the total reserve remaining is now 12 TCF, this may increase to 20 TCF with the ongoing exploration by BAPEX. With a 7% GDP growth rate, the demand for gas in next 50 years is projected at more than 150 TCF. 7 A long march from Dhaka to Bibyana in March 2002 played a signicant role in forcing the government to revise its decision. 8 After intense public pressure, it was investigated and legally challenged. Later, it was discovered that the entire procedure was legally awed, after which the Court put an end to it. 9 The resistance put up by the people halted the US companys plan to export gas. It would have led to a long-term disaster otherwise. 10 See Muhammad (2001). This was published as a response to the Ambassadors agenda for action. The US ambassador did not respond. 11 For details of this uprising, the series of events, and theoretical position see Muhammad (2006, 2007).
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(c) Should the resources remain common property, or be turned into the private property of corporations? Like many other countries, Bangladesh has been struggling with these issues since the 1990s. Global experiences teach us that energy sovereignty is the key to national sovereignty, security and development. Therefore, countries like Bangladesh have no other option but to make fundamental changes in their approaches towards development to break out of the resource-curse model, and survive, develop and ensure energy security for sustainable development.
(2006): Phulbari and the Peoples Verdict, available at http://www.thedailystar.net/2006/ 09/24/d609241501130.htm (2011 [2007]): Development or Destruction: Essays on Global Hegemony, Corporate Grabbing and Bangladesh (Sraban). (2007): Phulbari, Kansat, Garments 2006 (Mass uprising in 2006), Sraban. (2008): Kothai Jachche Bangladesh (Sanghati). Perkins, John (2006): Confessions of an Economic Hitman (UK: Berrett Koehler). (2007): The Secret History of the American Empire (New York: Plume). Petrobangla (2011): Model Production Sharing Contract 2008, 16 June. Rahman Taiabur (2008): Parliamentary Control and Government Accountability in South Asia: A Comparative Analysis of Bangladesh, India and Sri Lanka (London: Routlege). Roy, Arundhati (2011): Walking with the Comrades (New Delhi: Penguin). Sachs, Jeffrey D and Andrew M Warner (1997): Natural Resource Abundance and Economic Growth (Harvard University: HIID). Tsalik, Svetlana and Anya Schiffrin, ed. (2005): Covering Oil (New York: Open Society Institute). United Nations (1987): Our Common Future, the World Commission on Environment and Development (WCED) report. United Nations Conference on Trade and Development (UNCTAD) (2006): The Least Developed Countries Report (New York and Geneva: United Nations). World Bank, United Nations Development Programme (1982): Bangladesh: Issues and Options in the Energy Sector, Report No 3873BD, October, Report of the Joint UNDP/World Bank Energy Sector Assessment Programme. World Bank (1999): Foreign Direct Investment in Bangladesh: Issues of Long Run Sustainability (Washington DC: World Bank). (2011): World Development Indicators, available at http://data.worldbank.org/data-catalog/world-development-indicators/wdi-2011, accessed 6 September 2011.

12 The people were represented by the National Committee to Protect Oil Gas Mineral Resources Port and Power. 13 The National Committee to Protect Oil Gas Mineral Resources Port and Power has been actively involved in mobilising public opinion against corrupt anti-people deals since 1998. The committee comprises political parties, academics, experts, students, ethnic minorities, women and men.

References
Blum, William (2003): Killing Hope: US Military and CIA Interventions since World War II (London: Zed Books). BP (2010): Statistical Review of World Energy, available at http://www.bp.com/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html Dasgupta, Partha (1982): The Control of Resources (Oxford: Basil Blackwell). Fouskas, Vassilis K. and Bulent Gokay (2005): The New American Imperialism: Bushs War on Terror and Blood for Oil (Westport, CT: Praeger). Islam, Nurul et al (2006): Report of the Expert Committee (REC) to Evaluate Feasibility Study Report and Scheme of Development of the Phulbari Coal Project, submitted by Messieurs Asia Energy Corporation (Bangladesh) (AEC), September, available at http://meghbarta.info/ development-and-policy/6-development-andpolicy/78-summary-of-the-report-of-the-expert-committee-rec-to-evaluate-feasibilitystudy-report-and-scheme-of-development-ofthe-phulbari-coal-project-submitted-by-messieurs-asia-energy-corporation-bangladeshpvt-ltd-aec-.html Economic Journal (2006): Institutions and the Economic Growth, Economic Journal, 16 January. Mehlum, Halvor, Karl Moene and Ragnar Torvik (2005): Institutions and the Resource Curse (Oslo: Department of Economics, University of Oslo). Meier, Gerald M and Joseph E Stiglitz, ed. (2001): Frontiers of Development Economics (Washington DC: World Bank). Moody, Roger (2007): Rocks and Hard Places: The Globalization of Mining (London: Zed Books). Mostafa, Kollol, Mahbub Rubaiyat and Anupam Saikat Shanto (2010): Jatiyo Sampad, Bohujatik Punji o Malikanar Torko (Sanghati). Muhammad, Anu (2001): US Ambassadors Honeymoon Proposal for Bangladesh, FDI and Our Agenda, Daily Star, 28 May. (2003): Bangladeshs Integration into Global Capitalist System: Policy Direction and the Role of Global Institutions in Matiur Rahman (ed.), Globalisation, Environmental Crisis and Social Change in Bangladesh (Dhaka: UPL). (2004): Foreign Direct Investment and Utilization of Natural Gas in Bangladesh, available at http://www.networkideas.org/featart/jul2004/ fa26_FDI_Gas.htm
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