Another good read from a HN comment: The Iraqi who saved Norway from oil.

The problem:

Poor countries dream of finding oil like poor people fantasise about winning the lottery. But the dream often turns into a nightmare as new oil exporters realise that their treasure brings more trouble than help. Juan Pablo Pérez Alfonso, one time Venezuelan oil minister, likened oil to “the devil’s excrement”. Sheikh Ahmed Yamani, his Saudi Arabian counterpart, reportedly said: “I wish we had found water.” Such resignation reflects bitter experience of the way that dependency on natural resources can poison a country’s economic and political system. Inflows of hard currency push up prices, squeezing the competitiveness of non-oil businesses and starving them of capital. As a result, productivity growth withers (a phenomenon known as “Dutch disease” after the negative effects of North Sea gas production on the Netherlands). Meanwhile, the state institutions in charge of oil often become corrupt and evade democratic control. And oil-rich states almost invariably waste the income it brings, many ending their oil booms deeper in debt than when they started.

The solution:

The trick of the Norwegian model was to retain the private sector’s competitive drive and its expertise – which Norway sorely needed – by making sure that the regulator was independent enough to rein in the state oil company as well as its private-sector peers. This was not secured without a fight. Statoil, after all, was going to generate a lot of money – and very soon it did. Willy Olsen, a fast-talking former Statoil manager, says: “Statoil and the Norwegian Petroleum Directorate didn’t have the friendliest of relationships. The first 10 to 12 years, the institutions were very unbalanced – Statoil was much heavier. NPD had to fight to gain respect, and for that it needed enthusiasts with enough competence that they could not be dismissed.” That became al-Kasim’s mission – and his job for the next two decades – as the regulator’s director of resource management.

The result:

Norway’s state oil company, StatoilHydro, is internationally recognised as a competitive commercial player and one of the most environmentally and socially conscious ones to boot. Since 1996, every krone the government has earned from oil has gone into a savings fund, which now totals some £240bn – more than a year’s gross domestic product and equivalent to about £50,000 for each of Norway’s 4.8 million citizens.