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tv   Politics and Public Policy Today  CSPAN  May 4, 2016 11:17am-1:18pm EDT

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assets. many of them have assets. which then allows them to have a more gradual pace of adjustment. our message has been that practically for all the oil exporters they're going to have to do some fiscal adjustment. how fast you have to do it depends on how much buffers you've accumulated. some countries have buffers. can take more gradual approach. some have no choice but to do big adjustment now. just segue here about latin america. latin america, say commodity producers and oil producers, ecuador has suffered. a lot of commodity producers, colombia, chile, they have been affected by the decline of revenues but not so much. it's a generalized trend. times are not as good as it used
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to be. it's been long term thing that's been happening. now, when we kind of look at what we predict about market prices, this picture on the left gives you a good idea of how quickly prices have come down in terms of relative to their historic average. you do see -- there are periods of ups and downs this is a rapid decline from quite a peak. and if you look at the right hand side you can see some of the figures, also, that we don't expect prices to rise anytime soon. okay. now kind of taking a step backwards, looking at what's it been like in the past. volatility is not anything new for the oil prices and for this region. and one of the things that's been difficult is oil prices are really hard to predict.
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we don't even try at the imf to do macro models on this, none of them work. what we do is you have to look at, say, futures prices. and even then you can see there's a huge range of uncertainty if you look at the chart here. this is giving you a sense that nobody knows, and if someone claims they know what's going to happen, it's -- doesn't seem like many people have been able to do that. looking forward, and you can see how things have changed relative to our expectation on the right hand side chart. what do we think things are going to do in 2014. we thought oil prices would moderate but still stay at high levels. look at what happened since then. the problem is often that, you know, inevitably commodity prices come back down. once you're in the middle of the boom you say this is the new normal. it's going to be high prices going forward. but you can see often what goes up does come back down.
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now, because of that high volatility, and your commodity exporter and you mostly rely on commodity revenues for your financial fiscal spending. you have an awful lot of volatility. you look at the commodity exporters then, say, the right hand side here. and even looking at mena has a big range how much gdp ratios bounce around. in advanced countries like non-commodity advanced countries, revenue doesn't very that much as a shared gdp. you do have that in a lot of the commodity producers. and what this has tended to do historically is lead to boom bust cycles. when the money is pouring in, huge increases in spending. and always it's insufficient savings once the collapse comes
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and you have to have procyclical cuts in budgetary spending. in some ways people think this is how the resource course works. if you look from a long term prospective. norway manages resources well. in terms of the left hand side is saying real income per person. that's gone up in norway over time. for many commodity exporters they're stuck at their level of gdp per capita of the 1970's. this is the kind of story we get. so this in effect leads to this weaker growth. this is just in some sense summarizes. the rest of the world has been having study growth. commodity producers despite having the gift of commodities have done worse. all right. now what's fiscal policy, what should fiscal policy do to help break this curse and to really
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put together a better future and at the same time deal with the kind of the current challenges. we really -- six months ago in october fiscal monitor we had an entire chapter on this thinking what are the pillars of a good fiscal strategy, first is you have to improve the resilience of your revenues. you have to develop some non-commodity earnings. there's no way around it. those revenues are less volatile. if you have consumption based taxes, a typical emerging economy tax base you'll have less volatility in your revenues. you need to diversify and develop non-tax revenues. you have to improve the efficiency of spending. a lot of the metrics we do in terms of looking at how much bang for the buck you get for spending and oil producers it's
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quite low. there's a lot of inefficient including in the public investment and energy subsidies. many oil producing countries provide gasoline at a price really below the market. world mark price. that's an implicit subsidy. and if you just -- get rid of that, charge at least the global market price, plus perhaps even some -- higher price to cover negative external events from energy use like many countries do that would allow more resources to be used for a better purpose such as education spending. number three, third pillar is strengthen institutions, not just political but also a lot of the economic institutions, better fiscal planning, better budget institutions that lead to better bang for the buck for your public spending. last is developing adequate buffers. what we mean by this is savings. you have to have a framework
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that ties your hands in good times and forces you to save during good times so you don't have to cut spending in bad times. that's at the present juncture that's a lot of countries may say how is that relevant now we're in the bad times? point is now you want to lay the framework for setting up some rules, some guidance for your fiscal policy to make sure the next time there is a boom, that you save more of it than you did. okay. a few more details on this. we've talked a bit about it. increasing the resilience of budget -- this is -- i'm repeating, but i think it's worth it. on the right hand side the non-oil revenue it's much lower than the emerging economy average. countries that also have the typical administrative challenges of administering taxes, emerging economies, they're doing better than the mena region. there's room to do more non-tax
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revenue -- not commodity revenue. here's an idea looking at certain components. on the left side, personal income taxes, these are even lower than the non-say resource rich mena countries. value added tax, general sales tax, these are the two areas in terms of where there's a big scope for raising revenue. and the right hand side is saying even revenue mobilization in terms of the quality of revenue administration, how much revenue you get for percentage of tax rate. that's not very high. that's part of the institutional improvements that are needed. improving the efficiency of spending. the problem has been the boom bust cycle. if you look at the rates of spending on the right hand side chart, you can see in terms of what happens during the cycle when your commodity prices are
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down you cut prices when prices go up, then spending all of a sudden zooms upward and then afterwards, spending growth goes down. it's kind of this yo-yo cycle of this -- which i think it makes it difficult to make sure, for example, all public investment projects are appropriately vetted for value for money perspective. okay. here you can see also i would focus on the right hand side chart is we've also done studies looking at how much would your real public capital stock be in terms of services if it was efficient. you can see it's been high public investment in a lot of resource rich countries in mena. that hasn't translated to better services from these -- the infrastructure, really you can image if you're responding money and it doesn't lead to producing
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a good road, that's not very efficient. this is in some sense a gap between what's spent and what you see on the ground in infrastructure. so there's a large efficiency gap in public investment in the mena region. third looking at strengthening institutions, here it's not just political institutions but it's also economic institutions. you can see here this is from the world bank's governance index. how do these countries do versus resource poor country. it's saying almost every metric you look at. commodity producers have worse institutions and in effect you can see what happens, that leads to lower economic growth. in terms of fiscal institutions, what's most important, a median term fiscal framework. have to start thinking about spending and your budget
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envelope more than one year at a time. you have to have more of a medium term plan. second key component is a commitment to transparency. that can help make sure then that the public understands what's -- what government policies are. their can be more dialogue on what our spending priorities, what are not. these are a couple of things that are important from a standpoint of institution building. fourth, build adequate buffers, that's saying during good times you need to save. many countries did do some savings. but about 30% of this extra revenues were saved. 70% were spent. ideally spending should grow at a constant rate year after year. if you saved enough during good times you don't have to save as much during bad times. it's important now to put that framework in place.
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in many countries we're at the space where we're not going to be accumulating buffers we're going to have to draw down our buffers and at the same time really readjust eventually spending to a level of revenues that's not going to be as high as in the past. okay, one of the challenges countries face is that at the exact time when you need to borrow, that's when your conditions get worse for you. what you see is kind of a spread between markets perception of risk and commodity pricing, commodity prices go down. borrowing costs for commodity producers go up. markets in some ways don't always allow then these say commodity producers to smooth consumption by borrowing in bad times. so that's one of the reasons countries still may need buffers. and a good medium term framework to give markets assurance this government is committed to in effect having a solid fiscal
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position and this is a spending path. this is the deficit path. this is my medium term plan rather than just a yearly approach where you don't know from one year to the next what's going to be happening to revenues and spending. in conclusion, then, you can see this -- we are one of the kind of biggest boom bust cycles we've seen in commodity prices. it's not entirely new, but you can see this is quite a big fluctuation. it reminds us it's important to take into account uncertainty when we're doing fiscal projections and being cautious that there's -- if you're a commodity producer there's an awful lot of volatility. oil producers all are going to have to jaadjust even those who have big buffers, the question is how fast. there's a need to fundamentally rethink what can the state afford to do and not do in terms of realistic revenue estimates.
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we have to think about the next cycle that's put in place a fiscal framework that is actually there. that can allow us to accumulate those buffers in good times. i mean, when you also think of, okay, what are these countries need to do to grow? and if we're not going to have this commodity price as a source of growth. i mean, in revenues. in some ways oil producers are in the same boat that everyone else is. there's no way around enhancing structural reforms. that is, you can't expect to get a big push from, say, public investment. you don't have the fiscal resources to do it. the world economy is growing at a slower pace, so external demand is not going to be the engine of growth. a lot of countries are stuck in this that they have to do more of the fundamental structural reforms through the labor markets, product markets to get growth growing. you have many countries with very low interest rates. you can't expect monetary
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stimulus to help. we're in a world where have to tackle the structural reforms to get growth going. >> thank you, that was a wonderful setting of the stage. the menu of options as you nicely outlined improving resilience of budget revenue andficienand fi efficiency of spending. each of those reform efforts is happening in the very different contexts. i would like to talk a little bit about the context in which the kind of effort is taking place in algeria. >> thank you very much. to the team for inviting me to speak on a distinguished panel and speak about algeria. i don't think we talk about algeria enough in this town. algeria is an important country in the region. what happens in algeria and the
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political economic security sense effects all of its neighbors in north africa and in the subsaharan africa. in many ways these subregions are more interconnected than ever. algeria is an important anchor in the region. it plays an important role in the security of the region, it plays an important diplomatic role in resolving conflicts in neighboring subregions. it's one of the largest natural gas producers in africa. second largest supplier of gas to europe. and it's one of the top oil producing countries in africa. so algeria is a pivotal state. yet there's a lot we don't know about algeria. and in talking to people observers analysts, there's always a lot of frustration when it comes to analyzing algeria. and observers often describe the country as resistant to change. people dismiss reforms as
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cosmetic. and now with the fiscal crisis and the drop in oil prices, there are high expectations among many international observers that the economic crisis will lead to a serious of reforms in algeria to diversify the economy too, attract foreign investment to change the taxation system and the high burden of subsidies. but i think a lot of these assessments in many ways disqualify or disregard the importance of algerian history and its experiences in shaping current political debates and most importantly debates about reform. so by looking at algeria's experiences over the last several decades, we see that economic reforms in times of crisis triggered by lower oil prices have led to extreme violence and instability, which have threatened the entire state system of algeria.
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and partly as a result of those experiences, the government's approach has been very cautious and moving forward will likely be very incremental in moving forward with different fiscal economic reforms. but the important point to take away here, is that there is positive forward movement, despite a wide array of challenges. so what i want to do briefly in my 15 minutes, is to briefly skep sketch out past reform experiences and look at how the current economic climate affects foreign investment and assess the current reform effort. so to really understand algeria, we have to go back even before the french conquest of 1830. but in the interest of time, i'm going to start in july 1986. but before i get there, i want
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to just first recognize that hydrocarbons and hydrocarbon revenue is the life blood of algeria. it accounts for about 60% of government spending. and 90% of export revenue. afterindependen independence th government made a conscious decision to prioritize hydrocarbon development and production at the expense of other sectors. and the revenue from energy was used to prioritize social spending and subsidies and a social welfare system to help maintain stability. so in many ways, distributing oil wealth throughout the economy and society is a way to create a system or a sense of fairness in algerian society. and people have come to expect government jobs, subsidies, food subsidies, fuel subsidies, free healthcare, free education.
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and so fundamentally energy and energy revenue are linked to stability in algeria. so in mid1986 the price of oil dropped from $30 a barrel at the beginning of the year to about $10 a barrel in july of mid 1986. this led to a drop in about half of the country's revenue from $14 billion in the early part of the decade to about $7 billion in 1986. an immediate drop by half of government revenue. and the declining revenue forced the government to start cutting spending on social welfare. they cut food subsidies, prices soared. the black market thrived. there was high unemployment and a very long population. and this financial crisis that algeria found itself in the mid 80s caused a lot of resentment and unrest.
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it triggered protests and demonstrations in 1988 where hundreds of people were killed. as a result of this social and economic crisis, the government decided to open up and liberalize not only the economy, but the political system as well. and in opening the economy, many of these socio economic problems were exacerbated by higher prices, more unemployment. it was the political opening that changed algeria fundamentally. 1989 constitutional reform and political liberalization allowed for the creation of political parties, free elections, and in 1989 and then in 1990, excuse me. in 1991. a consortium or coalition of political islamic groups won local election and the first
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round of parliamentary elections in a stunning defeat for the regime. and these are islamic groups some of called for imposing sharia or islamic law in algerian society which had been created or as the state created after independence, a more secular society. so what happened next really scarred algeria for decades. the military moved in, nullified the election results. swept the politicians out of power. banned the islamic salvation fund which was the key political islamic party that had won the elections. and in the ensuing decade, fought algeria found itself fighting a war against terrorism where over 150,000 people were killed. many of us here know this history. but i think it's important to remind ourselves of the impact this has had on algeria today.
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we have to understand this experience to understand the current debates over reform in algeria. there are two things that brought that nightmare to an end in algeria. the first was the president who came to power in the late 90s. started a process of national reconciliation and created a new consensus within society and within the political system. the second development was the increase in oil production and oil prices, which allowed the government to continue -- or to revive this heavy state spending on social welfare and subsidies, which helped stabilize society. so in 2011, after the outbreak of upriseings in neighboring tunisia, libya, egypt and else where. alger ia found itself in an
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position to increase spending. housing subsidies, infrastructure, raising public sector wages across the board, including for the security services. and military. and they increased military spending dramatically to face a range of threats on their borders. but now with the massive drop in oil prices, algeria is back to this point where it has to make choices about spending with less revenue in a climate of political uncertainty and a very complicated and challenging regional security environment most importantly in neighboring libya, tunisia and mali where there are insurgencies and terrorist threats. these are countries that border on algeria. so as algeria makes its choices in this much more difficult fiscal political and security environment, i wanted to lay out
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some of the economic factors that it's facing. so 2016, algeria is facing the lowest economic growth in two decades. 1.4%. this is the lowest since 1997. government revenue has dropped in half in the last year. as a result of not only declining oil prices but also declining output from maturing fields. and a growing domestic consumption of energy which is taking away some of those potential exports. so according to the imf, algeria's break even point is about $93 a barrel. so as a result, there's been a rise in the budget deficit from 6.2% in 2014, to about 11.5%. again, the budget deficit is almost doubled in the last year. and this is troubling because energy is connected to political
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stability, social stability and it's at the heart of algeria's stabalization policy. so it can't maintain the same levels of spending. and so in 2016, the government has started to adjust its spending. they cut overall spending by about 9% in the new budget. most of this is for transportation infrastructure projects. they've raised gasoline prices as of january. they've increased value added taxes on some products. they're raising import duties on some products. and they've scaled back plans for investment in other energy sectors such as refining capacity as well. they've been drawing down foreign reserves. algeria built up a massive stock of foreign reserves over the last decade. has it also paid off almost all of its foreign debt. and in 2013, it had about $200 billion in foreign
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reserves. it spent those down to $120 billion according to the algerian government. it also has an oil stabilization fund where it's put money aside from high oil prices to also help with social spending. that fund has dropped -- the reserves in that fund have dropped in half over the last couple of years as well to about $32 billion. so now what? the consensus among international analysts and observers is that in order to promote economic growth and diversification algeria needs to take a long list of economic reforms to diversify the economy to open up its investment, to encourage investment and foreign investment in particular. many algerians have actually reached the same conclusion. however, there are difficult debates in algeria over the nature of that reform. should -- some people are arguing it's better to open up
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to foreign investment at all costs rather than take on foreign debt. some are arguing that algeria should take on debt but only from certain lenders. some argue that algeria should continue to drive down -- draw down its foreign currency reserves to maintain social spending and subsidies. dollar a there are a lot of questions but the important point is there is a debate and a will for change. in 1986 we saw hydrocarbon law that started to make the investment climate a little bit better and reduce taxation for foreign companies. in the 90s cooperation with oil companies expended. in 2013 there was a revised hydrocarbon law. now there are intense rebates being revived over reforming the investment climate. there's a new draft investment law that's being debated within the government and parliament that would give tax exemptions on property for a certain amount of time. other tax benefits, so there's a
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broad recognition in algeria that change is necessary. diversification and foreign investment is imperative to improve output over the long term and strengthen other sectors of society. it's important to manage expectations. reform will be incremental and modest. overall the government will be cautious in part because the country in the region are in such a precarious situation in terms of the political security and socio economic challenges and because of their previous history. and the economic reforms that we're going to see may not be conclusive. they might be satisfying to certain constituencies within algeria and not to others. they might improve the investment climate for certain sectors and not others. it may not be as complete or as whole or as conclusive than many international observers want or
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think algeria should move forward with. but there is a broad recognition that change is necessary. the question is, the extent and the speed of that change. and the challenge ahead for algeria is to insure that the incremental changes that we're seeing add up fast enough to create a set of conditions that can manage short term risks and instult whi instability why encouraging investment and laying the foundation for growth. thanks. a wonderful historical or look forward grounded in historical reality of the role that energy plays in politics in algeria. i would love to turn to aaron. you can speak from here or the podium, your call. and for a bit a view of nigeria which i think is different in some ways. >> good. thank you for allowing me to sit
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down. thank you to csis for having me back and to you all for coming. my organization nrgi has been engaged a lot lately with the question of low energy prices. we have programming in some of the worst affected countries and an ongoing series of publications on the topic that's called falling prices, rising risks. my specific beat as was said is nigeria. nigeria is now in the middle of its fourth or fifth major oil price shock, depending on how you define major. so how's is going? not all the news is bad. in fact, if you look across the continent, nigeria is better placed in some ways than other african producers, particularly some of the newer ones.
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so its oil fiscal regime is generous enough and production costs on most fields are low enough to keep most active upstream projects kind of ticking along. near term production is not certain to decline rapidly at current investment levels, which, you know, aren't optimal, but, anyway. unlike some other especially the newer producers like tanzania, say, nigeria hasn't pinned its hopes and dreams on the success of a lot of big new expensive exploration projects that are economically unviable. and it also didn't have any plans for a big licensing round that turned out hohum. like what happened say, in uganda. it was mostly nigeriaen companies that won.
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now, socio economically, nigeria has a very large for the continent non-oil private sector.sector. oil and gas total government revenues, total government spending and government oil revenues each make up less than 10% of gdp every year. so the fate of the oil sector isn't tied as inextricably to what goes on in oil. and fiscally so far, we don't see no turning back signs that nigeria is unable to meet its obligations without some outside program of support like is happening in ghana or angola.
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but at the same time the oil prices are placing a lot of pressure on nigeria's external and fiscal accounts, as we have heard already for some of these other countries. oil and gas accounts regularly for around 90% of the country's export revenues and foreign exchange earnings. cruise oil 60 to 70% of its total revenues during the boom years. total reported revenues for 2015 were about half of 2014. and this is led to depleted oil savings, declining foreign reserves and a multibillion dollar backlog of debt at the national oil company and npc and this is debt mainly to npc's
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private oil company's partners. now i like to be able to say that the low oil prices are the only cause of these problems will be particularly unenviable on the continue tent is that this is not the case. there were other less savory factors in play here. so at the same time they were waking up to deal with the morning after headache us of a pretty serious rampage of oil sector corruption and mismanagement under the last government which has been gone for a little under a year. so in new yoigerinigeria's case
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history may be as much as the low oil price accounts for the difficult monetary and fiscal positions it now finds itself in. i'll give you an example. so foreign reserves are low because the central bank is spending billions of dollars a year to protect the local currency against a high demand for dollars in the country. exchange earnings from oil. but then there are some other things. particularly under the last government. for example, large amount of flows, wires out of private accounts in the country to offshore locations of a billion dollars or more a month in parts of 2014 and 2015 unchecked ul
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legal often time fraudulent speculation in the local currency market and pretty remarkable amounts of cash-based money laundering and bulk smuggling and hoarding of dollars particularly ahead of the election where it was not uncommon to have the central bank allow several hundred million dollars at a time to go out the back-door in the evenings on trucks and such. so whoops. now if we leave behind the cloud coo coo land where conditions on the ground aren't necessarily anymore reliable gauge of what's
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going on than there are in this town. then what's all this doing to ordinary nigerians? nothing catastrophic, so far. and particularly, when view ed from 30,000 feet like we are here. but it's certainly the case that there are plenty of companies and individuals who are suffering now. civil servants aren't being paid salaries on time. not all of the nonoil sector are shedding productivity. consumer price inflation is up about 4% in six months. gasoline and jet fuel shortages are becoming pretty routine. there are concerns about foot shortages and compared with 6 or 7.
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the official to all this is a little bit difficult to talk about because the new government hasn't announced any sort of comprehensive survival or recovery u plan. in general, lack of clear direction or articulation of economic policy for the country has been one of the new things that the government has had people concerned by. so far the main sort of legs of a recovery z plan, if i can call them that, are pretty heavy on spending. so a boost in capital expenditure in the federal budget mainly for things like transportation and power and that's a record $30 billion budget for this year that doubles the deficit like in algeria. government of artificially high
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foreign exchange rate and controls on foreign currency sales in the country. it's also so it wants to roll out a bunch of social welfare type programs, cash transfers, youth employment schemes, that sort of stuff. i'm not an economist. so there's no way i'm going to opine about the adequacy or wisdom of any of this as a solution to nigeria's problems. but from a resource governance perspecti perspective, i'll say a couple things. so far, government's biggest focus in the year or so that it's been in office here that it replaced the last bunch has been
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on finding money for its spending priorities and figure ing out how to deal with its debt. and it's done this in particular by sort of encouraging probity in public decision making and plugging or trying to plug some of the worst leakages in public revenues. there's a whole bunch of things that it's done. i think i'll skip the laundry list in the interest of time and say that to me, well, it's perfectly understandable, particularly in a climate like this, where the everyday pressures on government to find money to pay people, to pay contractors, to make sure there's enough gasoline in the country, it's totally understandable that all of that would take upmost official
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attention. we also have to keep in mind nigeria is dealing with a lot of complicated security challenges, not least boko haram, that also direct a bunch of eyeballs away from some of the other problems. but to me, the biggest open question right now is how far is this government using the drop in prices as an opportunity to address some of the deeper governance problems that led to where they are now in the first place. in this area, i think it's actually more pressing and relevant to talk about a couple of things that aren't happening. number one, leading back to a point that benedict made.
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new yoigeria is not going a lot mobilize nonoil tax revenue. particularly company income tax and vat. there's been a corporate tax registration drive in the country, which is good but haven't heard about a lot else. tax election accounted for 3 to 4% of gdp. other producers of nigeria's you can see 15%, 20%, instead in order to finance the budget this year, there's more talk of borrowing. that's borrowing up to $5 billion potentially through euro bonds, maybe through the world bank, maybe through the chinese. now that's perfectly rational as a short-term solution.
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you can't build a high performing tax administration system overnight when you're facing a public rev lieu crisis. and nigeria's total public debt right now is a relatively non-wolly 15% or so. but if you look further out, there's some concern to be had about whether government can continue to spend at the levels and in the priorities that it wants to without taking on unsustainable debt. the finance ministry said the federal government is going to spend 35% of their own revenues to serve as debt. and most of that is relatively expensive domestic bank debt that comes due relatively soon.
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so not a lot going on to boost tax revenue. the thing that's an open question is how far is the government going to try to control questionable public spending through deep er institution reforms. so far the new administration seemed to have command and control of improving public institutional performance. you put the right people in the right positions and you get them to clean up some of the biggest messes. in a country like nigeria, particularly coming out of the last administration putting in place a little more organizational discipline is not a bad thing.
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so not clear if that's in and of itself. as a good case, we can take the national oil company itself. so when the new government came in the top leadership was replace ued and some of the nastiest, costliest contracts were cancelled. all perfect ly reasonable thing, but so far a lot of the broader and a forward looking reform proposals haven't said much about how government is going to address some of the bigger unanswered questions about an npc's role in the sector. for instance, how big should its footprint be. what parts of the sector, what parts of the business should it be active in? how should it fund its operations and share revenue
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with government? lots of open questions there. and what assets should it keep and what should it sell off. continually punted on these questions. largely for political reasons. doing so, again, could be costly and particularly when the oil price goes back up again or government changes hands. it's also worth pointing out that most reform ideas for the sector so far have been coming from inside an npc itself. a lot of them have good stuff in them and they seem broadly sensible for the moment. it's also hard to imagine any
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successful oil sector reform campaign that didn't have some buy in from an npc. but i would suggest that it's probably not going to be that long before we start to see some clear limits on how far an npc can be expected to reform itself. now just to wrap up, i know that it's very easy for somebody like me to come and pontificate from a safe distance about what other governments should be doing. i certainly haven't come here to prof size some sort of financial doom for nigeria. the country does have a way of mutt ling on through every crisis. there always seems to be some kind of crisis. this isn't just the latest one.
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i also don't want to feed some of the undo cynicism about nigeria that tends to make the rounds in d.c. sometimes. we need to keep in mind that the government has been met at the door by what must be the biggest sustained public revenue crisis in nigeria's history. certainly if you measure in absolute tenders. also revelations from the ongoing anti-corruption drive in the country suggest that mismanagement of public institutions under the last government had gotten so bad that when this government took office, it basically had to jump behind the wheel of a runaway
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car. the wheels were about to come off. that they have succeeded in putting the brakes on some of the worst abuses is already a significant success. now u nigerians and outsiders like us are looking forward to seeing some more definite signs of the long-term direction of travel. thank you. [ applause ] >> great, thank you, that was wonderful. glad to know there's places elsewhere than d.c. as well. why don't you talk to us about iraq? >> thank you, and thank you very much for having me here today.
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so i'm from iraq oil report and we're in iraq centric news and information service and i run the information side of that, the custom research division. so our clientele certainly very interested in the issues that we're talking about here today and there's sort of a lot of my work has shifted to focus on that and away from some of the other things we were focusing on previously such as the then vud as the oil boom in kurdistan and opportunities in bast ra. so a lot of the focus has shifted to this issue of fiscal crunch and reform and how to move forward. so by means of a brief outline, i will sort of be talking about two different entities. iraq and the kurdistan region. they are at present in terms of governance energy sector reform
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efforts that i couldn't really glom them together. so i guess just throw water at me if i start to go on too long. so at the outset, iraq is in the headlines in d.c. because of the isis crisis and the ongoing fighting in the western and north of the country and also the chaos in baghdad. protesters stormed into the green zone and occupied parliament. so i'm not going to get into the weeds on that exciting stuff. i'll sort of only touch on that as it relates to some of this reform effort stuff. so certainly as the other folks
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on the stage here have said iraq is struggling with a lot of the same problems that sounds like algeria and nigeria and other oil producers are. namely in the time of high oil prices they didn't do a lot to inoculate themselves against a potential crash. in fact, certainly in baghdad and kurdistan, i have personally heard from people back when oil was over $100 a barrel, this message that this is going to continue because it's happened for the last couple years. therefore it will happen going forward. and i think government behavior reflected to that belief so you had some sort of rainy day funds for iraq in the form of the development fund for iraq that was actually drawn down during high oil prices and isn't as available as it would be if that hadn't happened. you have also got a bloated
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public sector based on political parties in the government. lots of subsidies and inefficiencies in both writing tariff laws and collecting those tariffs. so i guess look iing i'll go through the political oil sector environment and reforms that are underway. i'll try to do the same for the kurdistan region if i have time. but politically despite this chaos in baghdad that's seen the cabinet more or less dissolve, the prime minister put forward successive slates of new members who have either been holy or partially rejected by iraq's fractured political e elite. ministries including the ministry of oil have continued to function. so even though the oil minister
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has stepped away from his day-to-day duties, he's still stamping the things that he's the only guy that can stamp. there's a deputy minister running the day-to-day. so despite the cabinet being in chaos, the ministries are still largely functioning. this week will be decisive in terms of establishing whether he's able to cobble together a new cabinet and stay in office which just looks likely. but despite the cay jos and dysfunction, the government is still working. so where the political element also comes into play is how they are -- how the government is able to address reforms. i'll get into more of that later, but briefly, part of what they are trying to do to bridge this crisis is talk to
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institutions like the imf and other international development wings of different governments and the folks that those institutions are talking to are not necessarily -- their jobs are in question. so that's all been delayed at a time when they really need pretty urgent assistance. on the economy, production continues to increase. exports continue to increase. but despite these increases, revenues have plummeted. and the production increases are nowhere near enough to make up that gap. i won't just spit a bunch of numbers at you, but in the first three months of this year, revenues were about for the central government were averaged about $2.5 billion a month. those figures in the first three
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months of 2014 were in access of $7 billion despite production being 20% low er. huge despaisparity in terms of money iraq had coming in. in the best o of times, iraq's budget process didn't work smoothly often what was on paper along the books was more notional than what was actioned. and this has been exacerbated a lot by the falling oil prices and the fact that the oil price has been below what they accounted for when they drew the budget up. so this has led to a squeakiest wheel allocation of money where rather than ministries anticipate what they will have for an operational budget and a neediest basis.
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working as much as possible are at the forefront. obviously, defense spending because there's an ongoing war on multiple fronts with isis. the oil sector has also been seen as a place where they need to continue having high levels of investment spending, but a product of that is prioritizing those things. pensions, salaries, defense and oil sector investment means that investment in nonoil sector has fallen by the wayside. so when it's obvious they need to diversify, they don't have money to invest in doing that. and for all those above reasons, it's also not a particularly entice i enticing time for foreign companies outside the oil sector to invest money. in terms of the oil sector they are continuing to invest in the
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sector's development but about half the levels that they had drawn out in their integrated national energy strategy. so even though it's prioritized, it's taken a significant hit. so this means that operating in southern iraq have been told to invest less money because most of the investments are cost recoverable and ultimately paid for by the government so the directives are do what you need to do to sustain production, but we no longer view these production increases that we drawn out previously as realistic. there's also a delay in funding projects critical to addressing current and future bottlenecks in future production and exports. there's a big water injection project that will be critical in reaching plateaus.
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there's some pumping and storage at the depot both of which need to be done to come anywhere close to the production goals set out by the government and both where it's not clear where the financing will come from right now. there's also concerns about infrastructure damage to which could be a shock to iraq's ability to export and that's not getting the investment it would otherwise. shifting then to efforts on reform, the four things that were laid out earlier, iraq is doing one of those fairly effectively and that is cutting expenditure. that's largely out of necessait and the fact that the money is simple uly not there. they have been able to trim away operational budgets and figure out place where is they can cut.
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they have also lost control of the significant swath of their territory so are no longer fielding the expenses associated with that. there's been sort of a built in place to cut expenditure. this also comes at the expense of diversification. so iraq was getting a lot of advice from development organizations on building industrial cities and figuring out ways to develop manufacturing in industry and that has slowed down a lot. there's also been an effort to improve tariffs on things like electricity and they have done a good job of drawing up tariff systems where they are able u to continue to protect the neediest, but charge more to
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wealthier folks and industry, but actually implementing those has been challenging. and despite the obvious financial crunch iraq is under, the ministry of electricity has been push ed back from lots of other quarters of government of that thinks these will look bad if they are implement ed. so in addition to this, they are looking at things to help bridge their budget deficit. like an imf package, although that will cover their deficit and is not a silver bullet by any means. they are also a lot of other oil producers dipping into foreign currency reserves so they were in ak sj of $50 billion by the end of last year and have had to use those and i'm not an economist, but i believe the mechanism is the central bank essentially provides money to
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the private banks in iraq to buy ministry of finance issue bonds so this is a way to address the deficit, but is not a long-term solution and runs the risk of destabilizing the currency if they do it too long. they are also getting soft loans from the japanese international coordination agencies providing a number of loans to iraq. the u.s. government is obviously providing a lot of military aid, which is saving them probably billions of dollars in defense expenditures. they are making steps towards having foreign companies invest in areas that were previously the per view of the government. the best example of that recently is a swiss-chinese consortium building a refinery
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that will be owned rather than turned over to government upon completion. in terms of longer-term reforms, there's been talk for a long time about revising the service contracts between the government of iraq and international oil companies in southern iraq and also about that proves a bridge too far at least drawing up different contract templates for future licensing rounds that will help guard the government when prices do drop. there's also more institutional things such as cutting public sector employment, streamlining ministries, but that has also particularly given the current political environment proved so challenging as to not be a near term solution. so the upshot is they are finding a way to cut spending to a degree that they are able to
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go part of the way towards addressing the budget deficit, but the more institutional changes and revising oil contracts have proven a lot more difficult and are really vulnerable to political chaos when it's an unclear who the minister of oil or minister of finance will be a week or two months from now. it's hard to make any real progress on that kind of change. so i will very briefly address the kurdistan region and hopefully somebody asks me a question about it and can to it in more detail. but briefly, the kurdistan region continues to sort of be this entity between the two dominant political parties and they are looking at a lot of the same financial constraints and needs for reform.
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but the fact that you're almost looking at two ebt entities within kurdistan has been an impediment. they have been very good at bad. contractors instead of cash. long-term reforms that will reshape the economy have been very allusive in the part because of the internal politics. in terms of the oil sector, they actually have done a good job in recent months of moving towards paying the oil companies as per the terms of the production sharing contracts they signed for a long-term they were ad hoc or no payments. i think it's four months running now they have made payments as
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per the terms of the contracts. however, what they haven't been able to do is dip into the access that they owe for back due exports. because the kurdistan region is a sub state entity, they are not eligible for the same assistance that a date government would be so rather than engage someone like the imf, they are often going to oil trading houses that vz v less forgiving terms. they are also getting loans. i would anticipate probably have some -- there's something expected in return in terms of political allegiance and addressing issues in syria and that kind of thing.
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>> thank you very much. that was great. and thank you to each of you. it's no small toosk take countries and do it in is a minutes. we do appreciate it. the juxtaposition laid out in the front sort of you said something was the failure to inoculate. no country we talked about has not been in this period before, though there's a lot of color around why this time is different and complicated for each of those countries. i'm going to open it up for questions. i would ask you to please state your name and your question. i'm going to take a few of them together to try to address them. we did start a little late so i'm going to let this go about
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ten minutes on. but my question just throw into the mix for all of you is what a lot of people wonder is so prices go up. does any of this stick? how does that change what we have seen under way and does it change the chances of it succeeding or failing? wait for the microphone. >> thank you, my question is open to the panel. nobody mentioned specifics about the organization of petroleum in exporting countries. i would like to know as part of the problem or part of the solution. thank you. >> who would like to start?
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>> i'll u tackle your briefly first. i think there's some optimism amongst folks i have talked to in the kurdistan region particularly that it's been something of a wake up call where there were some institutional problems that could be glossed over before that have just become readily apparent now u and they are actually seeking advice from external experts now. there's a recognition of the need to get away from subsidies. they have gotten out of providing gasoline. that's been turned over to the private sector. and i think that's something that will probably survive this current price environment. there's other stuff around electricity tariffs that
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probably will also. so i think there are some elements that will. i'm going to leave that to my colleagues. >> i'll address your question as well. in algeria, even during the years of high oil, they were take i taking various steps to try to improve their position. they paid down all the external debt. they saved and built up their foreign currency reserves. they were taking steps to prepare for this moment or this period. i'm not sure they expected it to be this drastic in such an insecure sort of security political environment in the region, which makes it more difficult. but in 2013 there was the
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reviced high u dro carbon law. i and i think while the reforms are not inevitable, the debate over reform has become part of the political climate in algeria. >> in terms of prices go up, whether will that resolve the problem? i would say no because if you look at that shart showing long-term growth and what's happened is the problem is that then the next -- unless we do something to save more once prices go up, we'll be stuck in the same situation. i u agree the encouraging thing is when countries have done energy pricing reform so next time prices go up, gasoline prices should go up in these countries. that's really key. we have seen some producers taking steps to address this.
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there's a number of countries that have done this. this is really key to make sure that we're really ready for the next reform and decline of prices and we also have to put in place now nontax revenue systems. so we don't have to have ad hoc measures to put in place these changes in revenue system. >> i have no idea how opec works. sorry, can't help. i grow the abbreviation.
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for nigeria, hearing that question, the question that it raises in my mind is when. plolitical will even though i detest that phrase to sort of continue with a limited program of reforms. worst case scenario that i can imagine is if prices went up a year or 18 months before the next presidential and other elections, elections in nigeria are very expensive. and there's no meaningful distinction in the minds of many
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politicians between public funds and campaign finance. so a lot of the stuff i u talked about earlier about trucks leaving the central bank with hundreds of millions of dollars at a time, thags campaign money. a lot of the progress such as it is over the last few years being very rapidly swept away and people saying i think it depends on the time frame. >> i was hoping someone else would take the bull by the horns. the one thing i'll say, and i'm sort of stepping a bit outside of what i'm commenting on here.
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i'm not in a position to say whether the organization is a part of the solution or the problem, but i think there's some mistrust between members that make it less effective than it could be if some of those trust deficits were addressed. so i'm not sure that all the member countries believe the others will operate in good faith and their interests will be looked after if they make concessions in the near term. >> an extension of that issue is not only the decision making structure, but u what other countries within opec are choosing to do and how whether that's relevant in the countries you're talking about. are the reform efforts and production decisions being made by other countries relevant in driving the countries you're talking about or is it all politics local and these reforms
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are local and doesn't really factor into very much. we have a burst of questions. and then we'll go to the back. >> reporter with energy wire. i would say this is a fairly pessimistic outlook on how resill yant a cycle looks. how representative is this of the universe of oil dependent economies? norway aside because they have had a strong framework in place for a long time. is this one end of the spectrum or a pretty good look at how things are for these countries? >> my question is for the three countries that you're looking at, what are some things u.s. policymakers could do better in
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terms of transparency, better fiscal management in terms of dealing with your countries specifically or conversely maybe missteps or mistakes being made now that sort of play into some of these bad habits? thanks. >> one in the back. >> i do security and threat analysis. i have a quick two-part question. the first is for aaron. i did not hear you mention piracy in the gulf of givenny and second how about theft when people steal from the pipelines or oil and gas to actually fundraise and things like that? how can that it be prevented? >> okay. so one directly for you and a
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couple others. but we're going to do our elevator speech here. >> on the -- i think i would say yes, but there's a lot of variation within that. you look at which countries saved a lot. that does vary a bit. so i think it's some ways more optimism if you look at the lessons from some of the nonoil commodity producers. some have been able to manage resources. now they have fiscal space to use that to help offset the adverse effects of commodity price shocks. so i think there are cases where in effect countries can do a good job of managing volatility u and saving during good times
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to spend. a lot of it will be particular depending on quality of the institutions. you can see in general it's a broader -- it's not just the oil sector. when you have good fiscal institutions, that can generally help you manage the revenue as well. >> then you can add on some others. >> thank you. i think historical experience it's crucial to understanding the question about u.s. interaction and engagement with algeria or any country for that matter. u.s. cooperation is better than it's ever been. it's more robust and addresses more issues than ever before. in many ways this relationship, the bilateral relationship has improved dramatically since 2001. but we have to understand that algeria fiercely guards its
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sovereignty and doesn't like foreign governments or institutions telling it how to run its affairs. and as i mentioned in my introduction, if we really want to understand al joer ya, we have to start in 1830. because the kol lonization process, which many people dismiss as ancient history is something that's fresh in the minds of many people in algeria. they wanted independence of a brutal struggle only in 1962. there are people in the room that were alive then. i wasn't. but that's had a major impact on the way they view foreign intervention and foreign plans to reform its economy and banking system. in the 1990s it was forced to undertake a series of imf restructuring which exacerbated many of the socioeconomic and security challenges that i laid out earlier. so moving forward in terms of u.s.-algerian engage m, it has
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to be cautious and take into effect those historical experiences. >> so an observation at first. i would say what's happened with isis since mid-2014 is sort of reshaped how the u.s. administration views its relationship with both iraq and kurdistan regional government. this has been striking with kurdistan where it's more how do we deal with the relationship to the peshmerga or valuable pa partner in fighting isis. and similarly i think with the central government there's been a lot more effort put into training, equipping, pushing the idea of some -- what was
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probably branded as the national guard but we're now calling a national mobilization chrks is the equivalent of popular mobilization. so i don't really want to get into what i think policymakers should do, but i would say in this period of reshaping relationships with baghdad based on security concerns over isis, folks should certainly keep in mind that isis will probably be gone at some point and just sort of thinking about what will the impact in the oes isis landscape be of how we're changing our relationships now. >> in terms of u.s. policy, in the energy sector, to be honest,
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i u don't see the u.s. has a ton of policy levers that it can pull. either in the energy sector specifically or fiscal or monetary policy. whether we like it or not. i'm an anti-corruption person, so i'm going to talk about corruption. i can't help it. so specifically for nigeria, i think the biggest question for the u.s. government particularly when you see all that went on under the last administration corruption wise is where were you when that billions of dollars or so a month that was being wired out of the country from private accounts, you might like to think it's all going to some place like that, but if you
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dig into the e details, a lot of it is here either physically or invested in one way or another. so going forward, i personally think the u.s. owes a little bit of debt to nigeria to assist with some of its asset recovery work in particular. and they are heavily invested in that. but other organizations so targeted sanctions and travel bans, asset freezes, placement on do not trade lists, that sort of sufficient stuff, standard
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stuff. the other thing i would say and i think you would probably agree with this we have talked about it before is but u.s. aid to nigeria, i would point out the security sector in particular. we talk a lot about aid being conflict sensitive in the security sector. if we could be a bit more corruption sensitive as well if due diligence could be done more to rily, i'm not there at the associating table, but sometimes if a few more. conditions can be imposed because it's all fine to want to help our saying things like $15
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billion in recent years was spent on fraudulent security contracts and a a lot of that was money out of a central bank truck. so being a little more sensitive and realistic about those sorts of things. that would be a big help. and then quickly piracy and oil theft. i didn't mention it partly because i don't think we know where it's going. and how much of a problem it's going to be. piracy specifically, it's not always a huge threat to the oil sector. most of the ships that get hijacked are not oil tankers. most of the pirates are not sophisticated to know what to do. so they would rather take gas that we can off load for money. and then in terms of oil theft, when you're at $30 a barrel,
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it's a lot less attractive to steal oil because along the way there are a lot of people you have to pay. not that you can't still make money, but it's a little more of a headache. now you have a government that is watching a little bit more closely. there are still risks involved. right now there's a whole stream of crude oil in nigeria that's out. it's been out since late january. it's out because some oil thief had the sophistication to put on a scuba suit and dive under the water and install a an illegal tap on to the line and during the course of that they skajed the line. now the line is going to be out probably until june or so. so 250,000 barrels a day in a low price period is a big deal
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for a country like nigeria. if we keep seeing more of those, that can be a big problem. in terms of how you u address it, i think my time u is up. >> well, it is. but you can always talk about it afterwards. i really do need to cut it up. you want to thank you for being part of this discussion. it's terrible we ask you to do these things quickly, but u everybody has benefitted from it. join me in thanking the panel. [ applause ]
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news reports say that presidential candidate john kasich u will be suspending his campaign. the ohio governor cancelled the news conference in washington, d.c. today. the kasich u campaign has scheduled an announcement in ohio this afternoon at 5:00 eastern. campaigning continues by both
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candidates on the democratic side. bernie sanders won most of indiana's democratic delegate, but hillary clinton received a number of them. she now has a total of 2,202 delegates to bernie sanders' 1,400 delegates. >> madame secretary, we proudly give 72 of our delegate votes to the next president of the united states.
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president obama is traveling to flint, michigan, today to talk about the water situation there. he's meeting with local officials and residents. of his remarks at flint nor northwestern high school at 4:00 eastern. >> this weekend, the c-span cities tour hosted by our charter and time warner cable partners takes you to san bernardino, california, to explore the history and literary culture of this city, located east of los angeles. on december 2nd of 2015, 14 people were killed and 22 were seriously injured in a terrorist attack at the inland regional center in san bernardino. we'll talk with congressman pete aguilar about the attack and recovery efforts by the community. his district includes the inland regional center. >> when we talk about terrorism, when we talk about the fight against terror, it isn't something that's in the abstract anymore. it's something that across this
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country you know, means something. because this isn't a big city here in san bernardino that was attacked. this could happen anywhere. >> we'll also speak with san bernardino councilman about establishing a permanent memorial. >> it highlights their lives and what they contributed to our local community. and certainly, it's always near and dear place for us to kind of provide a place for consolation, serenity. we're thinking a serenity garden, a prayer chapel of some sort in and around this area. >> on book tv, we'll learn about the fammole of wyatt upper. his book, the earp talks about their connection. >> it goes back to 1852 when the father of wyatt earp, nicolas
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earp, was basically left his family temporarily. they were living in monmouth, illinois. he heard about the gold rush in northern california. before he came back, went back to the midwest, he ventured down to southern california, and he passed through the san bernardino valley. and he vowed that one day he would come back to san bernardino. >> and on at american history tv, we'll talk about the importance of the railroad to san bernardino with allen, the san bernardino historical vice president. >> construction was completed in 1918 that replaced a wooden structure that was approximately 100 yards east of here that burnt in 1960. why the depot was built a lot
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larger than they needed was they decided to house the division headquarters at this location at that time. >> watch the c-span cities tour saturday at noon eastern on c-span2's book tv and sunday afternoon at 2:00 on american history tv on c-span3. working with our cable affiliates and visiting cities across the country. >> on american history tv on c-span3 -- >> we're here to review the major findings of our full investigation of fbi domestic intelligence, including the program and other programs aimed at domestic targets. fbi surveillance of law abiding citizens and groups, political abuses of fbi intelligence, and several specific cases of unjustified intelligence operations. >> the 1975 church committee hearings convene to investigate the intelligence activities of the cia, fbi, irs, and nsa.
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saturday night at 10:00 eastern, the commission questioned former associate counsel and staff to nixon, on a plan he presented to president nixon to collect information about anti-war and radical groups using burglary, e electronic surveillance and opening of mail. >> for a number of years up until 1966, that had been successful and valuable. again, particularly, in matters involving espionage, and they felt that it again because something given the revolutionary climate, they thought they needed the authority to do. >> just before 7:00 p.m. eastern -- >> one person came and she said you were chosen. she was there for four years already in the concentration camp. she spoke hungarian also, and they asked her, what is happening to us?
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and she said you see that smoke? there are your parents. >> holocaust survivor anna gross recalls her family's experiences in nazi occupied hungary in poland, and forced hard labor. this event was part of the united states holocaust memorial museum's first person series. and 8:00 -- >> an arkest broke into the office in nearby pittsburgh, shot him twice, and repeatedly stabbed him. berkman, however, is one of the great failures in assassination history. not only did he fail to kill brick. he also undermined the strikers for whom he was professing sympathy. because in many ways, public opinion saw this outburst of radical violence as a discredit
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to the union movement. >> the university of maryland's robert childs on the labor and social unrest at the turn of the 20th century, and then sunday morning at 10:00 on road to the white house rewind, the 1968 presidential campaign of former democratic governor of alabama, george wallace. for the complete weekend schedule, go to c-span.org. >> immigration and customs enforcement director sarah saldana testified before the house oversight and government reform committee about the agency's deportation practices. she says more than two thirds of the criminals released by i.c.e. last year were due to court order. members of the committee questions mr. saldana about why those convicted of violence offenses were released back to the u.s. rather than deported to their country of origin. the hearing is over three hours.
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>> committee on oversight and government reform will come to order. without objection, the chair is authorized to declare recess at any time. preparing for this hearing has been -- i'm telling you, hard to keep your cool in preparing for this meeting. let me tell you the heart of why we're here today. immigration customs enforcement, i have met with the men and women who work there, wonderful, hard-working, dedicated people who do a hard and difficult job. but i have to tell you, what's going on in homeland security, what's going on with immigration
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customs enforcement, is one of the most infuriating things i think i have seen in this government yet. in the three-year period, immigrations and customs enforcement has released more than 86,000 criminal aliens into the american public. these are people that were here illegally, got caught committing a crime, were convicted of that crime, and then instead of deporting them, they were just released back out into the united states of america. all told, they had more than 231,000 crimes that they were convicted of. 86,000 of these people. in 2015, 196 of these people were convicted of homicide, and i.c.e. released them back to the public rather than deporting them. 124 of those that were released between fiscal year 2010 and
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2015 went on to commit homicide. let me give you some other stats. in 2013, iso.c.e. released 36,0 criminal aliens who were here unlawfully and present in the united states. as of september 2014, 5,700 of those individuals went on to commit additional crimes. in march of 2015, i.c.e. director sarah saldana testified before this committee that during fiscal year 2014, i.c.e. released another 30,000 individuals as criminal convictions. in fact, i.c.e. released 30,558 criminal aliens in 2014 who had a combined 79,059 convictions, instead of deporting them. of those 30,558 criminal aliens,
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1895 were charged with another crime following their release. their convictions including sex offenses, assault, burglary, robbery, driving under the influence, and i.c.e. told us in 2015, the agency released 19,723 criminal aliens with a combined 64,197 convictions, including 934 sex offenses, 804 robberies, 216 kidnappings and 196 homicide-related convictions. and that's on your watch. they were under -- they were here illegally. they got caught committing a crime. they were convicted of the crime, and instead of following the law and deporting them, you released them back into the public and they commit more crimes. how do you look those people in the eye? how do you go back to a family and say, you know, nay were in our detention and we thought it would be better to let them out into the united states of america? that's so wholly unacceptable.
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i want to show you this football stadium. this is notre dame football stadium. you released more people that were convicted of crimes that should have been deported than you can fit into that stadium. you would still have people waiting outside the lines. those are the criminals that you released instead of deporting. one of the people that's very passionate about this issue that spent a lot of time on that is our colleague, mr. desantis of florida. >> thank you, mr. chairman. you know, we in this country, the government at all levels, has a responsibility to protect the safety of the american people. for the federal government, most of the crimes committed, particularly violent crimes are handled at the state level. i wish we could prevent every crime from happening. i wish we could. but the fact of the matter is we rely on deterrence, penalties to prevent people from committing crimes. but in this case, this is an example of where government could have prevented all of these crimes.
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you have somebody, and the story that came out, i thought, was shocking where between fiscal year 2010 and february of 2015, there were 124 individuals who were in the country illegally, had been previously detained by i.c.e., and were released that were charged with homicide. you look at the number of convictions that we have seen for people who have been released by i.c.e., even after being convicted of rape, of homicide, of domestic violence, violence against women, other sex offenses. this is putting the american people at risk. something is wrong. something needs to change. we have tried to highlight this over and over again. we get the numbers of convictions. finally given to us for '15, and it's startling because we're told, oh, we're going to focus on getting the criminals, yet you have criminals in your
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possession, don't have a right to be here, yet they're released into american society and then they reoffend. so mr. chairman, i thank you for having this hearing. this is immensely, immensely frustrating issue to see this because some of these crime victims, the families, you can say to them had the federal government simply done its job, maybe your loved one would be here today. i yield back. >> i thank the gentleman. director saldana is about to testify before us, has testified before. she said, quote, we welcome any amount of resource, any amount of money that we have. we can always do more with more resources. we are just doing the best we can with the resources we have right now, end quote. except in june of 2015, department of homeland security leadership took $113 million from i.c.e.'s enforcement budget and asked congress to reprogram it to other dhs components with
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no role in immigration enforcement. further, in the latest budget justification, homeland security seeks $185 million less, less, for deportation and transportation. despite a mandate in the law requiring i.c.e. to maintain 34,000 detention beds, i.c.e. only wants funding for 30,913. this administration's failure to secure our border, enforce immigration laws and hold criminal aliens accountable creates an ongoing threat to our public safety and sometimes delays consequences for innocent americans. many of those losses are preventable. the numbers became real in february of 2015 when the national security subcommittee hearing, during the hearing, we heard testimony from mr. jamil shaw whose 17-year-old son was murdered by an alien living in the united states illegally. mr. espinosa had been released from jail on a conviction for brandishing a weapon before the shaw slaying. this is a weapons conviction.
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we also heard from mike rowen back, the uncle of grant. grant was 21 years old when he was killed in maesa, arizona, while working an overnight shift at a local convenience store. guy is just working at the convenience store late at night. the alleged killer was in removal proceedings due to a burglary conviction but released by i.c.e. on a $10,000 bond. grant was killed. the families are not the only victims of crimes committed by aliens unlawfully present in the united states. today, we continue to put names and faces with individuals whose lives were changed forever by the death of a family member killed by a convicted, convicted criminal alien. common thread among these stories we're about to hear today is that each of them were preventible. if i.c.e. had only followed the law, it's highly likely this witnesses would not be sitting here today grieving the loss of another loved one. i thank the family members who
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will be joining us on the second panel. they are heartwrnching stories and it's preventable. it didn't have to happen. you could have deported them and you chose not to. and it's just infuriating. my time has expired. let me recognize the ranking member, mr. cummings, for his opening statement. >> thank you very much, mr. chairman. let me first of all start off by expressing how very sorry i am for the families of casey chadwick, sarah root, and marilyn ferris. the crimes that were committed against them were brutal and barbaric. and their lives were stolen away from them all too soon. but not only were their lives stolen away from them, their lives were stolen away from their parents and their friends
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and relatives. and so to mr. root, mrs. heartling i want to thank you for being with us today. i thank you for something else, though. i thank you for taking your grief and turning it into a passion to make sure that it does not happen to anybody else. i really appreciate that. thank you. i know how painful it must be to relive these nightmares. especially before a congressional committee. when i read your testimony, mr. root, i got to tell you, you said over and over again, a parent should never have to do this. identifying a child who has been harmed and murdered. so only you can truly know what
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losses mean to your families. i also lost a loved one. five years ago, almost to the day, a nephew. at old dominion college. folks busted into his room, blew his brains out. 20 years old. and then to go there a few days later and to see his brains splattered on the wall. i tell you, when i read your testimony, i could not help but think about all of that. and a lot of people don't understand when you have somebody who is murdered. i tell people it's hard to mourn properly, because you're always wondering why it happened, how it happened, sometimes in my case, who did it. but at the same time, you mourn for what could have been.
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every time a friend of the folks get married, you think about your own. you know, what her marriage would have been like, or you hear about a child being born. it's just constant, when the birthdays come, when christmas comes, everything. it's like it replays in your mind mourning over and over and over what could have been. and so i know you want answers. and you deserve those answers. and so i want to thank you also, mr. burrbank and mr. martin for being here for dedicating your careers to combatting all types of horrible crimes in your communities. and it is -- should be the business of this congress to help you be able to do your
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jobs. effectively and efficiently. after all, you go out there, you put your life on the line over and over and over again. and so often, you run into crimes that you can't even solve. you try, you do the best you can. you don't get the cooperation. so i am committed to making sure we get to the bottom line. and director saldana, i want to thank you for your testimony and for your work as a public service. servant. it is crucial that we hear what immigration and customs enforcement has learned from these cases and about your ongoing efforts to improve the agency's procedures. you can understand why people are upset. everyone on this committee wants to help improve public safety and enhance the security of all of our communities. our committee is not just about oversight, and i emphasize this over and over again. it's not just about oversight.
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it is also about reform. if we identify a problem, our goal is to address it. for example, in one of the cases we will discuss today, i.c.e. repeatedly attempted to deport the perpetrator to haiti. before his release in 2012, but the haitian government refused to accept him. not once, not twice, but three times. even after haitian officials agreed to allow him to board a plane bound for haiti, they reversed themselves and refused to accept him. i'm sure these facts offer little solace to mr. chadwick's family. so we need to ask what ice could have done. what i.c.e. could have done differently and what i.c.e. can do in the future to improve these procedures. we also need to, and i think the chairman made a good point. we realize that there are issues that go to resources.
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but the question is, are we using the resources that we have effectively and efficiently? we also need to ask what more we as a government can do to force recalcitrant countries like haiti in this case, your hato h their treaty agreements and accept their own citizens. this process is already under way thanks to senator richard blumenthal and christopher murphy and joe courtney of connecticut. on november 24th, 2015, they sent a letter to the inspector general of the department of ho homeland security requesting an investigation to determine what more i.c.e. could have done, and i quote, to overcome the objections of the haitian government to the removal of this individual, end of quote. so i ask unanimous consent to enter their letter into our official hearing record today, mr. chairman. >> without objection, so
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ordered. >> the inspector general agreed to their request and this investigation is now under way. i absolutely support these goals. what i absolutely do not support, however, is a hateful rhetoric we hear and have heard coming from some of my members of the republican party who disparage all immigrants with false condemnation. donald trump has labeled mexican immigrants as rapists. he's also called for a shutdown of muslims entering the united states. these were not accident lapses of off the cuff remarks. they are genuine statements from the leading republican candidate for president of the united states of america. in 2016. if you think his rhetoric, his words, they're not cause for actual harm, consider the brutal assault of a 58-year-old homeless latino man in boston last august, two brothers, scott
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and steve leader, who have extensive criminal records, hit him in the face, urinated on him, punched him, hit him with a metal pole, and then walked away laughing. when questioned by the police, one of the brothers said, and i quote, donald trump was right. all these illegals need to be deported, end of quote. when donald trump heard about this brutal attack, he said it was a shame, but that his supporters are very passionate and, quote, want this country to be great again, end of quote. so as i close, we remain silent, if we remain silent in the face of these actions, hate will become our new normal. b what we are hearing is racism, pure and simple. i don't like to use the word because it sometimes is difficult for people to hear anything else. it can become a distraction. we're trying to work towards
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real solutions. like tackling criminal justice reform, immigration reform, and gun violence. unfortunately in this case, it's warranted. so i have lived too long and fought too hard. i will not sit by silently as some try to plunge our nation into a hateful division where we turn against each other. and so i hope our committee ultimately will do more than just hold hearings, series of hearings, on immigrants who commit crimes. i hope we will all take heart and examine all of the legitimate questions, and there are a lot of legitimate questions here, we are facing as a nation. and that we will act to develop the bipartisan solutions needed to address them. we must come together to reject racist rhetoric and work to make our communities safer in a comprehensive and constructive way.
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again, can want to thank our witnesses for turning your pain into a passion to do your purpose. thank you very much. i yield back. >> i thank the gentleman. i would like to ask unanimous consent to put into record a letter from senator grassley and senator earnest regarding the case of sarah root. without objection, so ordered. we'll hold the record open for five legislative days for any member who would like to submit a written statement. we recognize the distinguished statement on the first panel. welcome the honorable sarah saldana, director of united states immigration customs enforcement at the department of homeland security. thank you for being here, pursuant to committee rules, all witnesses are to be sworn before they testify. if you'll please rise and raise your right hand. do you solemnly swear or affirm that the testimony you're about to give will be the truth, the whole truth, and nothing but the
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truth? >>. >> do. >> thank you. let the record reflect the witness answered in the affirmative. we would appreciate if you would limit your oral testimony to five minutes. your entire written statement will obviously be made part of the record. ms. saldana, you're recognized director for five minutes. >> thank you. i cannot tell you how disheartening it is to sit here and hear an issue and very important issues related to the topic of immigration reform be bandied about as a political football. i'm a former united states attorney. i was a prosecutor for ten years. i am about the law and law enforcement. i'm about identifying problems and correcting them. i am here to get, to tell the public what the situation is with some of the issues we face, inform the public, and i would really appreciate we focus on solutions. solutions as opposed to polil

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