ThinkTank

THiNKTaNK THE RISK PREMIUM A Shell oil employee gets kidnapped by African rebels.

I want my old America back. pg.5

FEATURES ch s Wat view at r e os om int videnk.c a d an inkt th

THE RISK PREMIUM pg22

THE WOLRD AT 7 BILLION

by Brian Walsh This month, the 7 billionth person will be born on a planet already strapped for resources. To mark this extraordinary milestone, explores the most pressing population issues of the day, from the quest for sustainable energy sources to a look at what our biggest cities could look like.

pg33

AMERICAS NEXT WAR

by Nate Rawlings America’s next fight will take place thousands of miles away from the battlefields of Iraq, in special cities where some of the wars’ most grievously wounded troops begin their journeys to their new normal.

Nate Rawlings takes an inside look at Brooke Army Medical Center.

pg28

WAS THE GOVERNMENT BAILOUT OF AIG ILLEGAL?

NOBEL PRIZE CONTROVERSIES

by Paula Pfieffer

This week we’ve already had accusations of insularity, Brits betting on Bob Dylan and the unfortunate case of a winner dying without the Nobel Committee realizing it. TIME takes a look at the most controversial moments in the 110-year history of the prize

Here’s what we have learned for sure during the past three years: No one likes bailouts. Not even, apparently, the people being bailed out.

pg22

by Jak Phillips

pg37

DEPARTMENTS APPLE’S MAC PRO MAY FADE AWAY. Apple has little reason to continue selling its pricey machine

pg 11 APPLE’S MAC PRO MAY FADE AWAY. Apple has little reason to continue selling its pricey machine

pg 11 APPLE’S MAC PRO MAY FADE AWAY.

pg17

pg17

pg17

Apple has little reason to continue selling its pricey machine

pg 11 APPLE’S MAC PRO MAY FADE AWAY.

The R e t r o s p e c t i v e s

The Currents

The Futures

Apple has little reason to continue selling its pricey machine

pg 11 WHERES FDR WHEN YOU NEED HIM?

AMERICA’S ‘OH SH*T’ MOMENT.

APPLE’S MAC PRO MAY FADE AWAY.

What can we learn from Franklin Deleanor Roosevelt

Has the U.S. deleted the very things that made it great?

pg 5

pg 8

Apple has little reason to continue selling its pricey machine

ITS THE END OF THE WORLD AS WE KNOW IT

THE CLEANEST CITIES IN THE U.S.

Harold Camping predicts the world will end today — he’s said that before.

A new World Health Organization report details air-pollution rates around the globe.

pg 7

pg 10

pg 11 CHINA’S CENTURY OR INDIA’S? The combined might of China and India could spearhead global growth in the coming decades.

pg 13

APPLE’S MAC PRO MAY FADE AWAY. Apple has little reason to continue selling its pricey machine

pg 11 APPLE’S MAC PRO MAY FADE AWAY. Apple has little reason to continue selling its pricey machine

pg 11

THE RETROSPECTIVES

TIMELINE 1933 Anti commo moloreperis ad

1934 Anti commo moloreperis ad

1935 Anti commo moloreperis ad

1940

Where’s F.D.R when you need him?

HISTORIC INSIGHTS INTO A RESSURECTED ECONOMY

By David M. Kennedy

A

las for countless pundits and inspirational speakers, it is appar-

egy pushed

was

Anti commo moloreperis ad

ently not the case that the Chinese

through

word for crisis is spelled by joining

policies that

1945

the characters for danger and op-

aimed not just to deal

portunity. But that common fallacy

with the immediate challenge of the

fabled springtime gave a stricken

nevertheless captures an important

Great Depression but also to benefit

nation a valuable psychological

metaphorical truth: whatever the

generations of Americans to come.

boost, but many of its initiatives did

perils it brings with it, a crisis can be

Pulling off a similar feat will require

not survive the Depression decade.

a grand opportunity. Among those

Obama to persuade Americans to

F.D.R.’s greatest achievements came

who have understood that truth was

see opportunities in the present

later. Their essence can be summed

Franklin D. Roosevelt.

crisis as well.

up in a single word: security.

Writing to his fellow Democrats in

A More Secure America

All the major New Deal reforms that

the 1920s, Roosevelt noted that

It’s old news that F.D.R.’s New Deal

endured had a common purpose:

their party could not hope to return

did not end the Depression. On that

not simply to end the immediate

to power until the Republicans led

score, there was little difference

crisis of the Depression but also to

the nation “into a serious period of

between Roosevelt and Herbert

make America in the future a less

depression and unemployment.” The

Hoover. But unlike Hoover, F.D.R.

risky place, to temper for genera-

Great Depression soon brought a

seized the occasion to shape a

tions thereafter what F.D.R. called

far longer and deeper period of woe

legacy of du-

than F.D.R. foresaw. But the crisis of

rable reforms.

the 1930s also provided an object

For that ac-

lesson in the relationship between

complishment

economic danger and political op-

— along with

portunity — a lesson Barack Obama

winning World

is now trying to follow. Obama, too,

War II — histo-

came to office in the midst of an

rians routinely

economic crisis, and in the solu-

rank him among the

the “hazards and vicissitudes” of

tions he has offered, it appears he

greatest Presidents.

life. By creating the Federal Deposit

has often looked to the example of

So what did Roosevelt’s greatness

Insurance Corporatiomation for in-

F.D.R., whose presidency — and the

consist of, and how did he attain it?

vestors.

very idea of activist government that

Forget about the Hundred Days

it represents — is very much back in

of 1933, the legendary crucible in

the public mind this year. Roosevelt

which F.D.R.’s anti-Depression strat-

Anti commo moloreperis ad

THiNKTaNK 3

supposedly forged. The legislative frenzy of that

Democracy cannot succeed unless those who express their choice are prepared to choose wisely.

The real safeguard of democracy, therefore, is education.

THE CURRENTS

America’s ‘Oh Sh*t!’

Moment

HAS THE U.S. DELETED THE VERY THINGS THAT MADE IT GREAT?

By Niall Ferguson

D

took little more than a decade.

is a familiar one to students of

A more recent and familiar example

financial markets. Even as I write, it

of precipitous decline is, of course,

is far from clear that the European

the collapse of the Soviet Union.

Monetary Union can be salvaged

And, if you still doubt that collapse

from the dramatic collapse of

comes suddenly, just think of how

confidence in the fiscal policies of

the postcolonial dictatorships of

its peripheral member states. In the

North Africa and the Middle East

realm of power, as in the domain of

imploded this year. Twelve months

the bond vigilantes, you’re fine until

ago, Messrs. Ben Ali, Mubarak,

you’re not fine—and when you’re not

on’t call me

ists gawp at the ruins that remain.

and Gaddafi seemed secure in their

fine, you’re suddenly in a terrifying

a “declin-

The notion that civilizations don’t

gaudy palaces. Here yesterday, gone

death spiral.

ist.” I really

decline but collapse inspired the

today.

don’t believe

anthropologist Jared Diamond’s

What all these collapsed powers

the United

2005 book, Collapse. But Diamond

have in common is that the complex

States—or

focused, fashionably, on man-made

social systems that underpinned

Western civi-

environmental disasters as the

them suddenly ceased to function.

lization, more generally—is in some

causes of collapse. As a historian, I

One minute rulers had legitimacy

kind of gradual, inexorable decline.

take a broader view. My point is that

in the eyes of their people; the next

But that’s not because I am one of

when you look back on the history of

they didn’t.

those incorrigible optimists who

past civilizations, a striking feature is

This pro-

agree with Winston Churchill that the

the speed with which most of them

cess

United States will always do the right

collapsed, regardless of the cause.

thing, albeit when all other possibili-

The Roman Empire didn’t decline

ties have been exhausted.

and fall sedately, as historians

In my view, civilizations don’t rise,

used to claim. It collapsed

fall, and then gently decline, as

within a few decades in

inevitably and predictably as the four

the early fifth century,

seasons or the seven ages of man.

tipped over the edge

History isn’t one smooth, parabolic

of chaos by barbarian

curve after another. Its shape is more

invaders and internal divi-

like an exponentially steepening

sions. In the space of a

slope that quite suddenly drops off

generation, the vast impe-

like a cliff. If you don’t know what I

rial metropolis of Rome fell

mean, pay a visit to Machu Picchu, the lost

into disrepair,

One minute rulers had legitimacy in the eyes of their people; the next they didn’t.

city of the

the aqueducts broken, the splendid marketplaces

Incas. In 1530 the Incas were the

deserted.

masters of all they surveyed from

The

the heights of the Peruvian Andes.

rule in China also fell apart with

Within less than a decade, foreign in-

extraordinary speed in the mid–17th

vaders with horses, gunpowder, and

century, succumbing to internal strife

lethal diseases had smashed their

and external invasion. Again, the

empire to smithereens. Today tour-

transition from equipoise to anarchy

THiNKTaNK 3

Ming dynasty’s

Read more at thinktank.com

THE FUTURES

Apple’s Mac Pro May Fade Away WITH FEW BUYERS FOR THE PROFESSIONAL-GRADE MAC PRO AND THE ONSET OF THUNDERBOLT TECHNOLOGY THAT CAN HELP ADDRESS THEIR NEEDS, APPLE HAS LITTLE REASON TO CONTINUE SELLING ITS PRICEY MACHINE

By Darrell Etherington

M

acbook

ing a computer around when it isn’t

using Thunderbolt technology—a

Pro has

profitable; consider the fate of the

further point reportedly raised in

long

G4 Cube, for example, which was

discussion among Apple execs.

remained

introduced to the world in July 2000

a profes-

and discontinued a year later after it

will soon allow video-capture cards

sional

failed to impress the buying public.

and other devices that use PCI

tool in an

Desktop sales in general have been

Express expansion connectors to be

otherwise consumer-focused line

flagging, with notebooks and tablets

plugged, outside the case, into an

of Apple (AAPL) computers. With

picking up the slack.

iMac, MacBook, or Mac mini. Thun-

Thunderbolt expansion devices

a significantly higher starting price

Apple has been cited as buck-

derbolt also allows direct connection

tag than its iMac cousin and a wide

ing the downward trend in desktop

of much faster RAID storage devices

range of upgrade options that most

sales, but the Mac Pro isn’t the

and multiple displays, something the

Apple products lack, it makes sense

computer whose sales we hear bro-

internal PCI Express slots in the Pro

that a report Monday (via AppleIn-

ken out during conference calls or

once provided exclusive access to.

sider) claimed the Mac Pro might

at Apple special events. That honor

soon be put out to pasture. Would

is reserved for the iMac, Apple’s

demanding set of niche customers,

Apple really close the door on its

all-in-one that proves there’s still a

but those buyers have become less

most muscular and expandable Mac

market for affordable, sleek, desktop

integral to Apple’s target market.

model?

computers.

Apple showed that it wants to keep

First, there are the reasons

The reason the Mac Pro doesn’t

The Mac Pro could still serve a

focusing on the consumer end of

Apple executives themselves gave

get a shout-out during Apple’s

its business when it discontinued

for considering shelving the Pro.

events is probably because Apple

the Xserve in November 2010 and

Reportedly, the sales of these

has nothing to crow about. If there’s

redesigned Final Cut Pro with non-

expensive computers have dwindled

good reason to talk about how well a

professional end users in mind. In

to the point where making them isn’t

product is selling, Apple usually isn’t

both cases, it eventually made con-

nearly as profitable for Apple as it

shy about doing so.

cessions to try to ease the blow.

once was. Apple has never been particularly sentimental about keep-

THiNKTaNK 3

Apple may also be able to serve demand for added expandability by

T HTHEERISK PREMIUM RISK

PREMIUM RUSSELL SPELL THOUGHT HE KNEW WHAT HE WAS GETTING INTO WHEN HE SIGNED ON WITH A HOUSTON COMPANY TO BUILD A PIPELINE IN NIGERIA, WHERE CORRUPTION AND VIOLENCE ARE COMMONPLACE AND THE SAFETY OF WORKERS CANNOT BE GUARANTEED. BUT HE NEVER IMAGINED HE WOULD BECOME A HOSTAGE—LITERALLY—TO AMERICA’S DEPENDENCE ON FOREIGN OIL.

R

ussell Spell was sleeping on a barge off the Nigerian

generously greased for what he called “community relations.” But he had

coast when he awoke to the sound of gunfire. A

never had any trouble personally. He liked the Nigerian people and loved the

longtime employee of Willbros Group, an international

routine and camaraderie of being offshore with longtime friends. And working

oil and gas contractor, Spell supervised workers laying

in Nigeria was steady; you weren’t shut down for weather, like in the Gulf of

an offshore pipeline for Shell. His shift was noon to

Mexico. Spell was scheduled for three months on and one month off and

midnight, so he was still in his bunk when he heard

made good money—$80,000 a year. It was enough to buy his family a brick

the sound of bullets exploding into metal, a commo-

house on a cul-de-sac within walking distance of Lake Conroe. His front door

tion so loud it seemed as if a helicopter was landing inside his cabin. The day

had a leaded-glass window that sparkled with rainbows in the afternoon sun;

had dawned placid and sweet, the barge an offshore oasis from the fetid air

his living room featured a big-screen TV. Spell had never finished college, but

and roiling gas flares visible on the coast at Shell’s Forcados export terminal.

his kids were in gifted-and-talented programs at good schools. His wife didn’t

Spell had no idea he was about to become a pawn in the increasingly violent

have to work. He never asked himself whether the job was worth the risk

war for control of the world’s diminishing petroleum resources.

because the answer seemed self-evident.

Spell, then 41, was pale and impish, a small, shy man with a wry sense of

Now, as the gunfire drew closer, Spell jumped out of his berth and ran to the

humor who still had the broad shoulders and bowed arms of the welder he

door of his tiny cabin to look outside. He saw a motorboat full of men shoot-

had been for much of his adult life. Born and raised in the East Texas oil field

ing as they approached the port side of the barge; shots came from starboard

town of Silsbee, he didn’t want for much and generally took what came his

as well. Spell thought about running, but there wasn’t any place to run to. The

way with equanimity. By 2006, he had worked in Nigeria for almost a decade.

attackers were swarming aboard, shooting all the while.

He knew the country posed its share of dangers to foreign workers, but he

“Get into cover!” It was John Hudspith, the Brit who was the security coor-

left the worry about kidnappings, robberies, and killings to his company

dinator on the barge. He was racing toward the bridge, trying to organize an

and to his wife, Regina. Spell did not, for instance, pay much mind to State

armed response.

Department travel advisories, like the one that, just a day before the attack

Footsteps pounded on the deck below, and someone—not someone from

on his barge, warned American citizens to stay away. “The lack of law and

Willbros—screamed orders. Spell could hear the continuous rat-a-tat-tat of

order in Nigeria poses considerable risks to travelers,” it said. “Violent crime

automatic weapons. Looking down the walkway, he saw powerfully built men

committed by ordinary criminals, as well as by persons in police and military

dressed in camouflage vests, ammunition belts draped around their necks

uniforms, can occur throughout the country.”

and shoulders. Black stocking masks covered their faces. They were com-

Spell knew the people of the Niger Delta were desperately poor, while corrupt

ing toward him, firing into doors that wouldn’t give way to swift kicks. Spell

officials lived like Saudi princes. He knew the air and water were poisoned

backed into the cabin, slamming the wooden door behind him. He and his

because multinational oil companies had exploited the region’s rich reserves

roommate, a baby-faced 23-year-old from Mississippi named Cody Oswalt,

for many years without a care. He understood that certain palms were

locked the door and hoped for the best. “What do we do?” Oswalt cried.

“Man, I don’t know,” Spell told him dryly. “But I hope we win.”

They held their breath, pinned to the wall, while the men stormed past. Where were the security guards Willbros kept on the payroll? Spell wondered. Supposedly, Willbros had three security boats and Shell had two—both armed with .50-caliber machine guns.

What happened to them? Why hadn’t anyone sounded an alarm?

WB 318 was Willbros’ largest and most profitable barge. Both Willbros and Shell paid handsomely for protection against surprises like this.

Suddenly the attackers came back. Spell heard them dragging one of his co-workers as they approached, beating him and demanding the whereabouts of the Americans. At Spell’s door, they stopped. “Open up! Open up!”

They pounded on the door and kicked at it with their boots. Finally, someone fired an automatic weapon at the door handle, and four or five men pushed inside.

They kicked Spell in the ribs and stomped on his stomach, cursing him and screaming for him to get up and out of his cabin. Oswalt got the same treatment. In the melee, someone knocked Spell’s glasses off his face, and he didn’t have time

whizzed by. Glancing around, he

purr. The boatmen went left, then

known for their fishing prowess and

to recover them before his attack-

spied a crate of ammo and found

right, then north, then south, fol-

maintain an almost mystical mastery

ers hoisted him up and shoved him

himself grateful that the kidnappers’

lowing the thinning tributaries that

of these waters and the mangrove

down the walkway, toward the deck

speedboats were easily outrunning

spread like tiny branches below the

swamps surrounding them.

and some waiting boats. When Spell

the security forces.

jungle

After about an hour and a half, Spell

hesitated on a stairway, someone hit him in the back of the head with the butt of a rifle, and he tumbled down the rest of the way. Another attacker crowed that they had the Americans.

They were loading barge workers into boats—nine men in all. Spell was shoved in with three other men, a knife at his back. One of the captors pushed him to the floor. “We are going to barbecue you,” one of the

caught sight of red cloths tied to

The cost of everything that can go wrong in a destabilized country rich in oil—gets figured into the price of every barrel. The cost of doing business in this dangerous world—a cost all of us pay at the gas pump—is called the risk premium.

men taunted.

jumped out and pushed the boat toward a tiny compound, splashing themselves with water. Spell started wading toward shore. One of the men pointed his automatic weapon and called him back. Anointing Spell with water, he explained: The Ijaws took their power from the water; Spell needed purification before he could be among them.

Finally, Shell’s Nigerian military

The old world vanished, and the

protectors appeared in a boat with a

They

crew firing shots that widely missed

from

their targets. The captors began to

into

fire back, and for five or so minutes,

River,

Spell felt the concussion of the bullets pounding his ears as they

THiNKTaNK 3

some mangrove trees. His captors

traveled

canopy. The captors removed their

new one closed in: heavy, warm air;

masks and showed Spell the charms

putrid water; leafy mangrove trees

that they believed kept bullets from

sinking their long, witchy fingers into

penetrating their bodies. The men

the shore; angry masked men and

patches of oil. The river narrowed;

were Ijaws, members of Nigeria’s

their guns. Russell Spell had no idea

the speedboat motor dropped to a

fourth-largest ethnic group, who are

the open sea the Forcados which was glazed with

where he was; all he knew was that

know it frightens oil field workers. In

claimed responsibility for still more

he could, quite possibly, be lost for

other pictures MEND members show

kidnappings and acts of sabotage.

the rest of his days.

their ostensible handiwork: pipelines

That same year—MEND’s first in op-

SPELL AND HIS FELLOW HOS-

and oil fields exploding in flames.

eration—the organization and similar

TAGES would easily recognize the

The video notes correctly that

groups kidnapped 128 foreign

men who appear in a YouTube video

Nigeria is second to Iraq as the most

nationals, shut down 25 percent of

titled “The Countdown.” Dated Janu-

unstable oil producer in the world.

Nigeria’s oil production, and helped

ary 2008, nearly two years after their

Words on the screen declare that

drive crude oil prices close to $80 a

capture, it is a recruiting tool, a slide

since 1995, when the government

barrel, according to the Norwegian-

show set to a rousing Nigerian pop

executed Ken Saro-Wiwa, an author

based international security consul-

beat and displaying a number of

and environmentalist who became a

tants Bergen Risk Solutions.

photos of buff, heavily armed men in

national hero for battling to end gov-

Most American consumers under-

T-shirts and camouflage gear point-

ernment corruption, the Niger Delta

stand that the invasion of Iraq has

ing menacing fingers at the camera

has become “hell on earth,” a land

contributed to the skyrocketing cost

and riding in speedboats as they

devastated by industrial pollution

of crude. It’s the war premium, what

proudly brandish their automatic

and increasingly violent protests, fol-

the market adds to the price of a

weapons. They claim to belong to a

lowed by equally violent government

barrel of oil because the crude that

group called MEND, the Movement

retributions—which many in the

once flowed from Saddam Hus-

for the Emancipation of the Niger

delta believe to be wholeheartedly

sein’s fields is now less dependably

Delta. In many photos the members

supported by the oil companies that

available. Americans are less aware,

wear stocking masks; in others, they

operate here.

however, that there is another reason

have painted their faces and bodies

Members of MEND were the very

why the price of oil has blown past

white, partly in honor of ancient

people who kidnapped Russell Spell

$100 a barrel and gasoline is ap-

traditions and partly because they

and eight co-workers and have since

proaching $4 a gallon: The countries

THiNKTaNK 3

falls victim to an incident such as kidnap, extortion, illegal detention of employees, or product tampering, Control Risks will deploy consultants to advise on negotiation strategies and liaise with law enforcement, families, and the media. We have handled more than 1,400 such crises.” A company called Worldwide Employee Assistance Programs now offers treatment for oil company kidnap victims suffering from post-traumatic stress disorder. Chevron has an in-house attorney who specializes in lawsuits brought by employees who have been kidnapped.

Because oil is often found in remote places, contractors have always had to construct entire cities—with roads and airports and sewage treatment plants—in order to keep their people comfortable. Now compounds and job sites also have to be secure, which means the cost of construction and protection has gone up.

Workers must be ferried to and from job sites in armored vehicles with (hopefully) trained guards. operate, with corrupt governments

limb in the case of the latter—are

penalties of the Foreign Corrupt

The complexities of the Federal Cor-

that are indifferent to the welfare of

disproportionately Texan. The expe-

Practices Act (FCPA), and the po-

rupt Practices Act can also ensnare

their citizens, in turn inspiring the

rience of Russell Spell and others

tential for lawsuits from employees

oil companies. The rule of thumb is

proliferation of guerrilla groups like

like him influences the employment

who find themselves unprotected in

that bribes to smooth the way for

MEND. The cost of drilling in these

practices and business decisions of

life-threatening situations. As long

operations do not bring the FCPA

venues—of attracting and protect-

major Texas companies, shapes the

ago as 1998, in Cabinda, Angola, a

into play, but companies that pay to

ing workers, of losing work time due

rulings of Texas courts, and affects

four-car motorcade containing thirty

win or extend contracts can end up

to sabotage, of paying ever higher

the costs of Texas medicine.

employees of a major oil company

as defendants in a major lawsuit or

insurance premiums, of making

In oil, as in war, the job of protecting

was attacked near the local airport

criminal prosecution, with legal fees

quasi-legal payoffs that are part of

vital American interests has been

by a rocket-propelled grenade.

that start at $3 million. As an execu-

doing business, of providing medical

contracted out to private companies,

Today, radicals who once sabotaged

tive for one major contractor told

treatment for kidnap victims like

whose employees can find them-

pipelines in Colombia have moved

me, a pipeline that might take two

Spell, of defending lawsuits, in short,

selves in harm’s way. In war-torn

on to Venezuela. Every such incident

months and cost $60 million to build

the cost of everything that can go

Iraq, more than a thousand workers

adds to the cost of producing oil.

in the U.S. would take at least six to

wrong in a destabilized country rich

for Halliburton and other contrac-

Not surprisingly, Exxon Mobil recent-

eight months and cost a minimum

in oil—gets figured into the price of

tors have been killed while trying to

ly announced that it would spend $1

of $150 million in Nigeria. “Your

every barrel. The cost of doing busi-

deliver toiletries or packaged foods

billion a year on exploration in safer,

imagination isn’t big enough to figure

ness in this dangerous world—a cost

to American soldiers. In oil-produc-

if less promising, locales like Ger-

out how Nigerians can separate you

all of us pay at the gas pump—is

ing countries like Iraq, Venezuela,

many, Greenland, and New Zealand.

from your money,” he said. Still,

called the risk premium.

Mexico, Nigeria, and those parts of

The private security business has

the delta’s sweet, cheaply refinable

No one likes to discuss oil’s risk

the former Soviet Union that have

burgeoned as the threats grow.

crude is a siren song to Big Oil,

premium very much, particularly in

been corrupted by the Russian mob,

“It’s become a number one priority.

especially because it can be shipped

Texas, because the talk is believed

American workers similarly find

Companies have to protect their

easily to markets in Western Europe.

to encourage violence and increase

themselves caught up in resource

most precious commodity, which is

Nigeria pumps more than two mil-

costs, not to mention scare off po-

wars. These countries may be rich

personnel,” says security expert and

lion barrels a day, worth about $84

tential employees. In the big picture,

in oil and gas, but they are rent by

former Bush confidant Joe Allbaugh,

billion a year. It provides a crucial 14

the risk premium is a worldwide

social inequities. American compa-

the CEO of the Allbaugh Company.

percent of American imports.

concern, but it also hits close to

nies that undertake the exploration

Willbros at one time had a group that

That is pretty much the extent of

home, because what affects oil af-

and exploitation of these resources

did nothing but repair damaged and

the good news. Nigeria is the poster

fects Texas. The companies and the

can easily find themselves grappling

sabotaged pipelines in Nigeria. The

child for high-risk oil exploration and

workers who bear the risk—financial

with civil strife, growing anti-Amer-

promotional materials for London-

production, a living testament to the

in the case of the former, life and

icanism, the constraints and stark

based Control Risks state, “If a client

so-called oil curse. This holds that

THiNKTaNK 3

countries rich in oil wealth tend to have stunted economic growth— agriculture and industry wither and corruption thrives—because all the focus is on one incredibly lucrative business. “Everything is extracted and nothing is produced,” explains University of Houston history professor Kairn Klieman, who offers the only course in the U.S. on Africa and oil. “The political culture is, ‘I don’t have to produce.’ ” According to Bergen Risk Solutions, oil accounts for 90 percent of Nigeria’s export earnings and fully 80 percent of the government’s rev-

tinderbox in which the Nigerian gov-

killed while trying to deliver toiletries

enues—but somehow 85 percent of

ernment is located in the north and

or packaged foods to American

the money ends up in the hands of 1

the oil is located in the south; the

soldiers. In oil-producing countries

percent of the population. Twice the

wealth is shipped north, while the

like Iraq, Venezuela, Mexico, Nigeria,

size of California, with an estimated

people who live in the south get vir-

and those parts of the former Soviet

148 million people, Nigeria is the

tually nothing. There, millions of des-

Union that have been corrupted by

most populous country in Africa and

perately poor people live in primitive

the Russian mob, American workers

eighth in the world, but 70 percent of

villages with no electricity or running

similarly find themselves caught up

its people live on less than $1 a day.

water. In the urban wasteland that

in resource wars. These countries

It is one of the most corrupt coun-

is Lagos, Nigeria’s largest city, they

may be rich in oil and gas, but they

tries on earth, rated 2.2 out of a best

live under the freeways in shanties,

are rent by social inequities. Ameri-

possible score of 10 on Transpar-

their cook fires coating the air with

can companies that undertake the

ency International’s 2007 Corruption

a sticky brownish haze. If you blow

exploration and exploitation of these

Perception Index. An estimated $400

your nose in the polluted air, your

resources can easily find themselves

mucus will be black. The govern-

grappling with civil strife, growing

In a sense, we’ve all been kidnapped

by Nigeria.

ment enjoys an enviable split with

anti-Americanism, the constraints

its multinational oil partners—taking

and stark penalties of the Foreign

anywhere from 50 to 80 percent of

Corrupt Practices Act (FCPA), and

the revenues—but public services

the potential for lawsuits from em-

are few to nonexistent; the govern-

ployees who find themselves unpro-

ment functions primarily to enrich

tected in life-threatening situations.

the officials who collect money from

As long ago as 1998, in Cabinda,

billion has been lost to

the foreigners who come to extract

Angola, a four-car motorcade con-

corruption since the country gained

oil. A former governor of Delta State,

taining thirty employees of a major

independence from Britain, in 1960,

James Ibori, managed to accrue his

oil company was attacked near the

and 14,000 people have been killed

own jet, his own Mercedes May-

local airport by a rocket-propelled

in violent outbreaks since military

bach, and some pricey London real

grenade. Today, radicals who once

rule supposedly ended, in 1999.

estate. Not only do foreign compa-

sabotaged pipelines in Colombia

In other words, oil and oil field

nies have to pay. limb in the case

have moved on to Venezuela. Every

service companies must operate in a

of the latter—are disproportionately

such incident adds to the cost of

Texan. The experience of Russell

producing oil. Not surprisingly, Exx-

Spell and others like him influenc-

on Mobil recently announced that

es the employment practices and

it would spend $1 billion a year on

business decisions of major Texas

exploration in safer, if less promising,

companies, shapes the rulings of

locales like Germany, Greenland,

Texas courts, and affects the costs

and New Zealand.

of Texas medicine.

The private security business has

In oil, as in war, the job of protect-

burgeoned as the threats grow.

ing vital American interests has

“It’s become a number one priority.

been contracted out to private

Companies have to protect their

companies, whose employees

most precious commodity, which is

can find themselves in harm’s

personnel,” says security expert and

way. In war-torn Iraq, more than a

former Bush confidant Joe Allbaugh,

thousand workers for Halliburton

the CEO of the Allbaugh Company.

and other contractors have been

Willbros at one time had.

THiNKTaNK 3