The recent news that Liberia is now permitted to mine and export its diamonds and that the Legislators have approved the Metal Steel agreement brings mixed feelings. On the one hand, economic activities would increase, while on the other, most Liberians could suffer more misery. Predictably, had Liberia increased its share of the revenue and profits from the sale of its natural resources, multinational corporations would have had reduced opportunities to increased their profits at the expense of ordinary Liberians.

Unlike Nigeria and Chad that own over 50% of stakes in their minerals, oil and gas, (Wikipedia and Christian Science Monitor respectively, 4/23/07) Liberia has no power in determining when and how profits made from its natural resources are distributed. Such a minimal bargaining influence allows profiteers to report lower profits and leaves the government with insufficient funds to address the economic disparities that have occurred in Liberia for more than a century. More so, now that President Ellen Johnson Sirleaf has promised to make Liberian Government’s newly anticipated Investment and Revenue Code pro-business, foreign investors and a few Liberian elites are likely to gain a larger share of profits and Liberia might lose much needed revenue.

What does a pro-business Investment Code imply and who benefits from such a policy? John Perkins defined pro-business in his book (Economic Hit Man) as going beyond giving tax breaks and duty-free privileges to corporations. The policy includes reducing workers’ safety and workers’ share of productivity, loosening environmental policy, or transferring corporate cash reserves outside of a country, a recipe for liquidity problem. Further, such a policy would not have allowed lawmakers of Nigeria, if it did not own 57% stake in the oil industry, to question Shell for awarding a $434-million engineering contract in March 2001 to a foreign firm. He added that experts at the World Bank most times coerce officials of government to institute policies of privatization and pro-business.

Proponents of privatization and pro-business policies, argue that privatization and pro-business policies increase a host country’s economic activities as well as taxes. How do policies that increase a country’s liquidity problems among others, spur real economic growth? In fact, Wall Street is now encouraging companies to reduce profits by paying excessive salaries to chief executives. Lloyd C. Blankfein of Goldman Sach got 54 million dollars as bonus in 2006. Jenny Anderson (NY Times, 4/24/07) reported that twenty-five hedge executives made between 240 million dollars and over 1 billion dollars in 2006. Worst, Matt Bai (NY Times Magazine) said the need for campaign funds makes it difficult for politicians to care for their constituents because they are beholden to corporations. I hope the recent mineral contract with Mitel Steel and the lift of UN band on diamond exports will not primarily serve the financial interests of the Liberian government elites and foreign investors at the expense of exacerbating poverty and hardships among typical Liberians.

Understandably, President Sirleaf could be trying to satisfy her colleagues, Mr. Paul Wofowitz, President of the World Bank, and other international corporate tycoons for their assistance in obtaining the promised relief of Liberia’s debts. If this is what motivates the rush to provide sweeter deals for foreign investors in Liberia, then there is a real need for concerned Liberians to worry. Well yes, it is concerned Liberians who should worry because privatization and pro-business policies, instituted since 1847, did more harm than good for ordinary Liberians. For instance, Bomi Hills became Bomi holes as multinational corporations and a few Liberian government elites made millions of dollars through the sale Liberia’s iron ore and other mineral resources.

To understand why Liberia could reap minimal benefits from its mineral resources while Nigeria and Chad continue to receive significant share of oil profits, let’s recall the article on diamonds operations in Botswana and Sierra Leone published in the NY Times, 3/25/07. The article informed us that in Botswana, with government exercising a significant role, got a reasonable share of its diamonds profits. While, Sierra Leone, with little government role, got a mere 3% of diamond profits. The article also added that Botswana got a higher percentage even though its diamonds lie locked deep underground unlike Liberia, Sierra Leone, Angola, Ivory Coast or Congo where diamonds wash up in rivers and often sit just a few feet below the surface. But Sierra Leone’s diamond operation has about 2,500 sprawling mining businesses, coupled with the fact that diamonds are so easy to transport without notice. The ease with which one can transport diamonds makes it difficult for officials to apply tough regulations, and the meager revenues the Sierra Leonean government derived from its diamond operation coupled with the low wages paid to miners has made miners poorer in Sierra Leone.

Could Liberia promote the idea of owning a bigger stake in its natural resources without problems from the World Bank and other international creditors? Or is it unrealistic for Liberia to try to increase its ownership in its resources even though other countries do? For instance, some petro-state countries in the Middle East own larger interests in their mineral and strategic assets. In addition, nations such as Isreal, not blessed with oil deposits, has carefully managed and at times reduced pro-business policy or privatization policy in its military industry. Steve Weitxman of the Associated Press (3/5/07) reported that Israel, realizing the security-importance of the military industry created state-owned companies to produce military equipments for the State, and subsequently for market.

Like Israel, City of New York does not own natural resources. Yet it established rent control regulations that aim to assist both ordinary citizens and corporate employers in NYC. In addition to reducing inequities, the policy also assist NYC corporations to get access to skilled residents who could not afford to live in the city due to its high rent. Another useful example about how contemporary policy has moderated away from a pro-business policy could be found in the energy industry. In that energy industry, many U.S. government officials who had promoted pro-business policies to reduce electricity cost are now embracing pro-people policies since they have seen post-deregulation costs escalate to 72%. (NY Time, 2/17/07).

Also, the U.S. Federal Government does not implement a single economic policy either. In some areas, the U.S. does limit pro-business policy when necessary. For example, after World War II, President Eisenhower, due to concerns about a Soviets’ invasion, did not assign the construction of the inter-state highway system to profiteers; rather he used the government Army Corps of Engineers. Currently, U.S. officials are financing welfare programs not just to fulfill moral responsibility. They are happy that such benefits also help to sustain stability by calming unemployed residents and idle teenagers from becoming disruptive to normal business activities.

President Sirleaf should know that the economic imbalance in our society is now dividing our citizenry along class lines as Liberians were prior to April 12, 1980. Interestingly, every Liberian agrees that high poverty rates are unacceptable. But some of the president’s advisors might not share the concerns that her government’s current economic policies would increase and even sustain inequality in our country. Many of her advisors who may have escaped the adverse consequences of failed policies in Liberia believe that those Liberians who were left behind should search for an economic activity without government assistance. They are not alone. Arthur C. Brooks (Wall Street Journal) said experts at the World Bank and President Bush’s partisans are relatively untroubled by inequality, and hence, are unsupportive of government income redistribution. Accordingly, they believe that pro-business policies or privatizations provide better opportunities for everyone to succeed.

Should Liberians debate the issue? I hope we do before many more pro-business deals for the sale of our natural resources are entered. Had Liberians discussed the way forward, preferably before major mineral contracts were signed, panelists would have explained reasons why Nigeria, following its civil war, decided to secure and gain a larger and controlling share over its oil industry. On the hand, panelists would have discussed the shortcomings when a nation, such as Sierra Leone receives only 3% of the profits of diamonds.

President Sirleaf’s intention in encouraging foreign investors into Liberia’s mineral industry may be good; however, her failure to secure a controlling share for Liberia over its own minerals is disappointing. The limited revenues Liberia will receive from her pro-business deals may be inadequate to provide needed infrastructure such as good roads, electricity, quality education, etc. This situation may not only result in forcing Liberia into obtaining additional international debts, but could produce more resentment and political instability.

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