"We are not so stupid to suffer the so-called oil curse."
--Cambodian Prime Minister Hun Sen
Corruption doesn't occur because people are stupid. On the contrary, people can be quite cunning when it comes to skimming. In light of the recent clamor over Cambodia's potential oil reserves -- first discovered by Chevron
The World Bank's Doing Business project, which I've written about here, has ranked Cambodia 143rd out of 175 countries in terms of the ease of transacting business there. This puts the country on fairly equal footing with nearby Laos (No. 159), but compares extremely unfavorably to its neighbors Thailand (No. 18) and Malaysia (No. 25). I find the ranking a useful proxy for the amount of corruption in a country, because the more transparent it is to conduct business, the less incentive there is for bribery and black markets. I'm not casually leveling a corruption charge based on this ranking alone, however -- it fits into a much broader picture of corruption in a country that is recognized for such by everyone from the United Nations to Transparency International to Cambodian civil society groups.
I just don't see the benefits of this oil revenue trickling their way down through to the less privileged members of society. Why not? The institutions simply aren't there, and it seems inadequate to blame their absence on a lack of state revenue. Education, for example, has not been prioritized in the past, and I don't see a reason to believe that will suddenly change.
We've seen what oil can do to an impoverished country like Nigeria. It's hard to say if such a situation would occur in Cambodia, because the extent of its oil and gas reserves is presently unknown. But the last thing the world needs is another humanitarian disaster in an unstable country because of crude oil.
This find is great news for offshore drillers like Transocean
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Fool contributor Toby Shute doesn't own shares in any company mentioned. The Motley Fool has a disclosure policy.
