tv Politics and Public Policy Today CSPAN May 6, 2016 3:19pm-5:20pm EDT
>> well, i mean, it makes things a little bit simpler. we don't have to worry about three separate headquarters, hotels and, you know, programming is going to be something we're going to be working through. there's a lot of things that are already done. i mean, the stage is done. there's things that just have to happen. we moved the convention up seven weeks to july. certainly when we were talking about an open convention it seemed like i was a genius for doing that. but now -- now we just have to get cruising and get going. >> just some of what rnc chair reince priebus said today at an event held by politico. you can watch it in its entirety on c-span at 8:00 p.m. other prime time programs are "book tv" with programming from recent book festivals and c. fan 3 it's "american history tv" with archival coverage of past presidential races.
on "american history tv" on c. fan 3 -- >> we are here to review the major findings of our full investigation of fbi domestic intelligence including the cohen tell 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 convened to investigate the intelligence activities of the cia, fbi, irs and the nsa saturday night at 10:00 eastern the commission questioned former associate counsel and staff assistant to president nixon tom charles houston on a plan he plent presented to president nixon using burglary, electronic surveillance and opening of mail. >> the bureau had undertaken black bag jobs over a number of
years up until 1966. it had been successful and valuable, again, particularly in matters involving espionage. and that they felt this, again, w something given the climate they needed to have the authority to do. >> and just before 7:00 p.m. eastern -- >> and one person came and she said you were chosen -- she was from czechoslovakia. she was there for four years in the concentration camp. and they asked her what's happening. they are our parents and our -- and she said, you see that smoke? there are your parents. >> hollocaust survivor talks about auschwitz camp and forced
hard labor. it's part of the first person series. then at 8:00 on lectures in history -- >> an anarchist named alexander berkman broke into frick's 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 frick, he also undermined the strikers for whom he was professing sympathy, because in many ways public opinion saw the outburst as a discredit to the union movement. >> 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 "american history tv" weekend schedule go to cspan.org.
recently our campaign 2016 bus made a visit to pennsylvania during its primary. stopping at grove city college, slippery rock university, washington and jefferson college and harrisburg area community college where students, professors and local officials learned about our road to the white house coverage and our online interactive resources covering the campaign trail found at cspan.org and our bus ended in warrington, pennsylvania, where it visited a middle school to honor seven ninth graders in the student cam competition. a special thank you to the cable partners armstrong and comcast cable in helping to coordinate t these visits. earlier this week the center for strategic and international studies held a discussion on the impact of low oil and gas prices on countries that rely heavily on the income from those exports
focusing on algeria, nigeria and iraq and how the governments and economies are affected. this is an hour and 40 minutes. >> okay. good morning. my name is sara lattis and i direct the energy and national security program here and i'm very pleased to have all of you here today for us for today's event risk and reform an outlook for oil and gas exporting countries. this is actually the second in a set of events that we're doing looking at countries around the world that produce and rely on the revenue from oil and gas and how they're faring with low oil prices over a sustained period of time. a couple weeks ago my colleague and senior vice president here at csis facilitated an event on brazil and venezuela. it was very interesting and content-rich discussion about not only what's happening in the
oil and gas sector in those places but also the reform efforts and/or political issues that are taking place in both of those countries and what that might mean for oil markets going forward. and today what we wanted to do was sort of continue that type of discussion focusing on three different countries, algeria, iraq, and nigeria. i know it's a lot for a short session, but what we thought we would do is bring in some experts who are not only focusing on the energy sectors in those regions but also on some of the political and economic dynamics there as well. but to get us started off we've been having some really great discussions with dr. benedict clemens from the imf. benedict is the division chief for expenditure, policy division and fiscal affairs department at the -- at the imf and we're very pleased to have him here today to talk about the menu of reform options that the imf thinks about when considering revenue
dependent oil-producing economies and the ways in which they can adjust and respond to a low oil price environment both in the near term and over time. so, he's going to set the stage by providing a little bit of the way that they're thinking about the current -- the current environment and the options before different countries and then we've got a really excellent panel. we're going to start with a colleague here at csis who is a senior fellow and deputy director here. he's an international renowned expert on the maghreb but much further into the region as well and a darn good colleague at that. and then we're going to go to aaron sein. aaron has been here before. he's a financial crimes lawyer and investigator working as a senior governance officer at the natural resource governance institute, nrgi. aaron was here not too long ago with a colleague of ours -- with a program, the africa program here at csis to talk about the reform efforts under way in
nigeria. we just found his expertise so compelling that we wanted to bring him back for this discussion so very pleased to have him here with us today. and we'll end with jared levy the director of the iraq oil reports custom research division and we are subscribers and we think they're one of the essential vehicles out there for tracking what's going on in iraq. so we're going to try to get through a fairly robust agenda in a short period of time and keep everybody to about 15 minutes each and open it up to discussion. i would ask you to please not only turn off your phones we're being webcast and televised as well, please wait for the mike when you ask questions and make sure we can hear. and before i stop talking so we can get to the people have all of the expertise on the panel i want to say a big thanks to my colleague and co-author zach tyler for putting together this excellent event and i'm looking forward to learning a lot.
so, without further ado, dr. clemens? >> okay. thanks, sara. what i'm going to be talking about is -- i guess i need to put my -- >> just the down arrow. >> just the down arrow. >> uh-huh. >> this one. from the fiscal policy standpoint, framework for fiscal policy for oil exporting countries. a lot of this is going to draw on the recent semiannual report we do at the imf called the fiscal monitor, giving a snapshot of what's the overall picture, fiscal picture, for not only the world as a whole and here what we're going to focus on is the oil producers, what kind of fiscal situation do they face let's say for the next five years or so. so, in terms of the structure of
the presentation, i'll first talk a bit about what is the macrofiscal developments what do we see in the data and then talk about even looking backwards a bit volatility and the uncertainty facing oil producers that we see. then the third part will be more proscriptive, okay, what do we think needs to be done to provide a fiscal basis for sound and sustainable growth and last just wrap-up on the conclusions. so, in terms of macro-fiscal developments, here i want to give a sense of how are the oil producers doing versus everyone else. here on the left-hand side -- this is looking at the overall fiscal balances for countries. and you can see the red line here for oil exporters on the top, and you can see how their fortunes have changed. if you look at what's happened on average surplus positions. and then this very sharp decline in 2015 and 2016. generally the oil exporters on
average had a reduction in their revenues of 6% of gdp, so that's a very big amount. you can see they're doing a lot worse than other emerging and developing countries, so that's a bit the story. and going forward, if we look, let's say, 17, 18, 19, things are not expected to get much better. if we look at, say, current fiscal plans that countries have in terms of their spending and revenues and looking at what people expect from oil prices, it doesn't look like it's going to get any better. now, one of the things that the oil producers are facing just like everyone else is a reduction in economic growth. even going forward. if you look on the right-hand side of the chart, aes, that's the anxiousdvanced countries an you look at the red bar in terms of what growth has been lately on -- which is the red versus blue, you can see there's a reduction in potential growth. so, this is making it difficult
for everyone to say grow themselves out of fiscal problems, because the growth outlook has been not as favorable and going forward it's not expected to pick up either. now, if we look, then, a little closer middle east and north africa, this gives a sense, then, of how revenues are evolving if we look at what we expect for the next few years, the 2016 to 2015 to 2020. you can see almost across the board here you've got most countries expecting much lower revenue than they had. even in some cases lower revenue than they had in, let's say, 1990 to 2008. so, generally what we see is tough times in the sense of much reduced revenues going forward which is just consistent with that same picture we had then of showing the overall fiscal balances. now, what the other thing that's happened is spending has
actually gone up a bit. if we look then also, like, at the 2016 to 2020 on the far right hand this green bar, you can see spending now even if you take into account the budget cuts the countries have planned, still that spending to gdp ratio is much higher than it was relative to historic periods. so, some countries have taken measures to contain spending but if we look just at the average for those years, spending still remains quite elevated. now, when you put that together declining revenue and spending not going down that much, what you get is even bigger deficits so that's what these minus numbers, then, are when the budget balance is negative means when you have a budget deficit. you can see here that we are expecting in many countries big deficits going forward. and before the crisis we'd say there's a lot of countries with a balanced position or even
surpluses. this is the overall. now, to give you a hint of almost what we think countries should do, you can look at this chart. this is just on the left is simply saying that these countries that kind of have a balanced budget would need a break-even price of many of them over $60 a barrel. oil being in the $40 something range countries are going to have deficits. and why and what's the big issue for these countries? the message is here on the right-hand side chart. the big message is that mena, these countries generate very little in nonoil revenue. if you look at, say, the top chart on looking at emerging countries as a whole, you're actually seeing good progress in raising revenues over time. mena, progress has not been that great. and it's still stuck at low levels. now, these countries have big budget deficits, but one advantage many of them have they
have accumulated some assets if you look at even their net foreign assets position. 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 a segue here about latin america. latin america, say, commodity producers and oil producers, say, ecuador, they've also suffered. a lot of commodity producers, let's say colombia, chiles of the world, they've also in some ways been affected by the decline in revenues but not so much. but it's more of a generalized trend for all the commodity
exporters times are not as good as they used to be. for mineral exporters the decline started in 2012 so it's been kind of a 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 -- how quickly prices have come down in terms of relative to their historic average. but you do see -- i mean, there are periods of ups and downs, but this is a fairly rapid decline from quite a peak. and then if we look on the right-hand side we can see some of our -- the figures also that we don't expect really prices to rise anytime soon. okay. now, kind of taking a stem bast backwards looking what it's been like in the past, volatility is really 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. we don't even try at the imf to try to do macromodels on this or models. none of them work. what you have to do is look at, say, futures prices, and even then you can see there's a huge range of uncertainty if you look at the fan chart here. this is just giving you a sense, then, nobody knows. and if someone claims they know what's going to happen, it's -- it doesn't seem like many people have been able to do that. and looking forward. so you can see how things have changed relative to our expectation. on the right-hand side chart, where what did we think things were going to do in 2014? well, we thought oil prices would maybe moderate, but still stay at high levels. and now look what happened since then. i think the problem is often that, you know, inevitably commodity prices come back down, but once you're in middle of the boom, you say, ah, 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. now, because of that high volatility and your commodity exporter and you most rely on commodity revenues for your -- for your finance fiscal spending, you have an awful lot of volatility, then, in your total revenue. if you just kind of look at, say, the commodity exporters, then, in, say, the right-hand side here except mena and even looking at mena there's a very big range in terms of the stand are a deviation how much revenue to gdp ratios bounce around. in advanced countries like noncommodity advanced countries, look, revenue doesn't vary that much as a share of gdp from year to year, but you do have, then, in a lot of the comodty producers. and what this has tended to do historically is have -- lead to boom/bust cycles. when the money's pouring in, huge increases in spending. then always it's insufficient
savings once the collapse comes and then you have to have very pro-cyclical cuts in budgetary spending. what this has resulted in really is in some ways people think this really is how the resource curse works. if you kind of look from a long-term perspective norway is the country that managed resources well in terms of the left-hand side is, say, real income per person. that's gone up in norway over time. for many comodty exporters they're stuck practically at their level of gdp per capita of the 1970s. so, this more or less is what kind of the story we get. so, this kind of in effect leads, then, to this weaker growth. this is just in some sense summarizes the rest of the world has been kind of having steady growth. commodity producers despite having this gift of commodities have done worse. all right. now, what's fiscal policy --
what should fiscal policy do to kind of help break this curse and to really put together a better future and at the same time deal with the kind of the current challenges. well, we really -- and we actually more, like, 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, that is, you have to develop some noncommodity revenues. there's no way around it. this will, then -- because those revenues are less volatile, if you have consumption-based taxes, income-based taxes more of a typical emerging economy tax base you'll have less volatility in your revenues, so you need to diversify and develop these nontax revenues. secondly, you have to improve the efficiency of spending. if when a lot of the metrics we do in terms of looking at how much bang for the buck you get
out of spending and oil producers it's quite low. there's a lot of inefficiency including -- including in the public investment. but also energy subsidies, many oil-producing countries provide gasoline at a price really below the market, world market price. that's really an implicit subsidy, and if you just get rid of that charge at least the global market price, plus perhaps even a higher price to cover negative external effects from energy use like many countries do, that would allow more resources to be used for better purposes such as education spending. number three, third pillar is to strengthen institutions, not just political but also a lot of the economic institutions better fiscal planning, better budget institutions that lead to, say, better bang for the buck for your public spending. and last is really developing
adequate buffers or what we mean by this is savings, that is, you have to have a framework that really ties your hands in good times, it forces you to save during good times so you don't have to cut spending in bad times. so, that's at the present juncture that's a lot of countries may say, well, how is that relevant now we're in the bad times? well, the 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. now, a few more details on this. we've talked a bit about it. increasing the resilience of budgets. this just, again, i'm repeating but i think it's worth just look on the right-hand side. the nonoil revenue. it's much lower than the emerging economy average. so, even countries that also have the typical administrative challenges of address ministering taxes, emerging economies, they're doing better than the mena region, so there's
room to do a lot more nontax revenue. now -- or noncommodity revenue and here's an idea looking just, say, at certain components. if we look, say, on the left-hand side chart, personal income taxes, these are even lower than the nonresource-mena countries. goods is services taxes, such as a value-added tax and general sales tax, these are the two areas in terms of where there's a big scope in terms of raising revenue. the right-hand side is saying even revenue mobilization even in the quality of revenue administration, how much revenue you get per percentage of tax rate, that's also not very high. so, that's part of the institutional improvements that are needed to kind of gain more revenue. okay. improving the efficiency of spending. i mean, this -- you can see the problem has been this boom/bust cycle. if you kind of look at the real rates of growth of spending on the left-hand side chart. you can see that in terms of what happens during the resource
cycle when your commodity prices go down, you cut prices. when commodity prices go up, then spending all of a sudden zooms upward and then -- and then afterwards the commodity spending growth going down, but it's kind of this yo-yo cycle which i think it is makes it difficult to make sure, for example, that all public investment projects are appropriately vetted for value for money perspective. okay. here what you can see also i would focus on the right-hand side chart is we've also done some studies looking at how much would your real public capital stock be in terms of effective delivery of services if it was efficient. we can see there's been really high public investment in a lot of resource-rich countries in mena, but that hasn't translated to better -- better services from these -- from this infrastructure or really -- you can imagine if you're spending
money and if it doesn't lead to producing really a good road, that's not very efficient. this is in some sense a gap between what's actually spent and what you actually see on the ground in infrastructure and so there's a large efficiency gap in public investment in the mena region. third, looking at, say, strengthening institutions, here it's not just political institutions but it's also economic institutions. you can see here this is from more the world bank's governance index. if you look at the inner circle here is, like, how do the -- how do these resource-rich countries do versus, say, the resource-poor countries so that generally what it's saying is almost every metric you look at commodity producers have worse institutions and in effect you can see what happens that leads to is lower economic growth. now, in terms of fiscal institutions, what's most important. median term fiscal framework.
you have to start to think about spending and budget envelope more than one year at a time. i mean, you have to have more of a medium-term plan. and a second key component is a commitment to transparency, that can help make sure, then, that the public understands what's -- what government policies are. there can be more dialogue, then, on what are spending priori 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. about 70%, then, were spent. the idea ideally is that spending should grow at a constant rate year after year. if you saved enough during good times, then you don't have to cut spending so much during bad times. so, it's important now to put
that framework in place. but in many countries now we're at this phase where we're not going to be accumulating buffers. we're going to have to -- we're going to have to draw down our buffers and at the same time really readjust eventually spending to a more 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 borrowing conditions get worse for you. what you see is this kind of a spread between, let's say, markets' perception of risk and commodity commodity prices go down and borrowing costs for commodity producers go up. markets, then, don't always allow then the, 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 that this government is committed to
in effect having a solid fiscal 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. okay. so, just 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 really reminds us it's important to take into account uncertainty in 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 adjust even those that have big buffers. the question is how fast. so, there's really this need to fundamentally rethink what can the state afford to do and not do in terms of realistic revenue
estimates. we also have to think about the next cycle. let's put in place a fiscal framework that is actually there, again, allow us to accumulate those buffers in good times. i mean, when you also think of, okay, now, what do these countries need to do to grow. and if we're not going to have this commodity prices as the source of growth. i mean -- and revenues. in some ways oil producers are in the same boat that everyone else is, that 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's 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 to labor markets and product markets to get growth
going because there are no easy solutions. you can't expect monetary stimulus to help so we're kind of in a world where we have to tackle the difficult structural reforms to get growth going. thank you. >> thank you. >> well, thank you, dr. clemens, that was a wonderful setting of the stage. the menu of options that you nicely outlined and improving the budget revenue and improving the spending and strengthening institutions and building adequate buffers and those are hard things to do in the best of times, right? but each sort of those reform efforts is happening in a very different political and economic context. i'd love to talk to heim to talk a little bit what is the context about which that kind of effort is taking place in algeria. >> thank you very much, sara. exactly the rest of the csis energy program team for inviting me to speak on such a distinguished panel and to speak about algeria because i don't think we talk about algeria enough in this town. algeria is an important country
in the region. what happens in algeria in the political, economic, security sense affects all of its neighbors in north africa and in the sahel, inafrica, because in many ways these subregions are more interconnected than effort. algeria is an important sank ore in the wreejen. algeria is natural gas producers. external suppliers, and it's one of the top oil-producing countries in art ka, to algeria is a pivotal state, yet there's a lot we don't know about algeria. in talking to people, observers, analysts, there's always a lot of frustration when it comes to analyzing algeria.
people dismiss reforms as cosmetic, and now with the fiscal crisis and drop in oil prices there are high expectations among many international observers that the economic crisis will lead to a series of reforms in algeria to to diversify the economy, to attract foreign investment to change the taxation system and the high burden of subsidies i think a lot -- algerian history, and in shapes current political debat debates. so by looking at algeria's -- we see the economic reforms in times of pam crisis, triggered by lower oil prices have led to
extreme violence and instability. and partly as a result of those experiences, the government's approach has very contest and moves forward will likely be very incremental in moving forward with different fiscal economic reforms. but the important point to take away here is 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 sketch out past reform efforts in this historical experiences, look at how the current economic climate affects debates over reform and foreign investment, and then 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 the
interest of time i'm going to start in july 1986. it accounts for about 60% of government spending and 90% of export revenue. so after independence, the government made a conscious decision to prioritize hydrocarbon development and production at the expense of other sectors, and the revenue from energy to help maintain, to distributing oil well is a way to create a system or a sense of fairness in algerian society. and people have come to expect government jobs, future
subsidies, fuel subsidies, free health care, free education. so fundamentally energy and energy revenue are linked to stability in algeria. ? mid 1986, the price of oil dropped in the matter of months to the beginning of the year to about $10 a barrett in july or mitt 1986. this led to a drop is in about happen of the country's revenue, in the early part of the decade to about $7 billion in 1986. >> so an immediate drop by half, and the declining revenue forced the government to start cutting spending on social welfare. they cut food subsidies, prices soared, the black markets thrived. there was high unemployment and a very european population, and this financial crisis that algeria found itself in the mid
80s caused a lot of resentment and unrest. it triggered protest and demonstratio demonstrations? 1988, where hundreds 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. in opening the economy, many of these socioeconomic problems were exacerbated by less competition, fewer price controls, higher prices, more unemployment. but it was the political opening that really changed algeria fundamentally, and 1989 constitutional reform and political liberalization allowed for open and free elections for the creation of political parties, and in 1989 and then -- in 1990 -- excuse me, in 1991, a consortium or coalition of
political islamist groups won local elections and then won the first round of parliamentary elections in a stunning defeat for the regime. these are islamist groups, some of who called for imposing sharia law in algerian society which had been created, or as the state created after independence, a more secular society. so whap happened next really scarred algeria for decades. the military moved in, nullified the election results banned the salvation front which was the keep party which would won the elections algeria found itself fighting a war against terrorism
i think it's important to remind ourselves the impact this has had on algeria today. we have to understand this experience to understand the current debates over reform 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.
they launched on housing, subsidies, across the board, including for the security services now it's back to this moment where it has to make choices about spending with less revenue in a climate of political uncertainty and very complicated and challenging regional security environment, most importantly in laboring libya, tunisia and mali, where insurgence sis and terrorist threats. these are ought countries that border on algeria. so as algeria makes its choices in this much more different
fiscal, political and secured environment, i just wanted to lay out some of the economic factors that it's facing. so 2016 algeria's facing the lowers economic growth in two decades. this is the lowest since 1997. government ref has dropped in half as a result of not only declining oil prices, but also declining output from matures fields and growing domestic consumption of energy, which is taking some of those potential exports. so again the budget deficit hats almost doubled in the last year,
and this is troubling, because the in is connected to political stability, social stability, and at the heart of the stabilization policy, so it could maintain the same levels of spending. so in 2016, the government has started to justify it's spending. they cut about 9% in the new budget. most of this is for transportation infrastructure projects. they're raising import duties, and they have scaled back plans for investment in other energy sectors, such as refines capacity as well. they've been drawing down foreign reserves. algeria built up a massive stock of foreign reserves, as it also paid off almost all of the foreign debt. so in about -- in 2013, it had
about $200 billion in foreign reserves. it spent those down to about $120 billions one of at the put money aside from high out prices to also help with social spending. that fund -- the reserves in that fund have drop in half over the last couple years as well to about $32 billion. now what? the consensus among international analysts and on or abouters is that in order to promote economic growth and promote 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 al jeerance have actually reached the same conclusion however, thereof different debates in algeria over the nature of that reform.
some are arguing it's better to open up to foreign investments in all costs rather than take on foreign debt. some are arguing that algeria could take on debt, but only from some lenders. some argue that algeria should continue to draw down its foreign currency reserving to maintain social spending and subsidies. there are a lot of question, but i think the important point is that there is a debate and there is a will for change. in 1986 we sigh hydrocarbon law that started to make the investment climate a bit better and reduced taxation for foreign companies. in 1990s cooperation with foreign oil companies expanded. in 2013 there was a revised hike roe carbon law and now there are intense debates being revived over reforming the investment climate. so there's a new draft investment law that's being debated that would give tax xempss on property for a certain amount of time, other tax
benefits. so there's a brought recognition in algeria that change is necessary, that diversification and foreign investment is an imperative to improve energy output over the long term and strengthen other productive sectors of society. but it's to manage expectations. i think reform will be incremental and modest. the overall the government will be cautious in part because the country and the region are in such a precarious sit ways in terms of the security -- and because of the their previous history. they might be satisfying to certain constituencies and not others. they might improve in thee certain sectors and not others.
down. >> thank to you csis for having me back and to you all for coming. my organization and rgi has been engaged a lot lately with this question of low energy prices. we have programming in some of the worst affected countries, and also an ongoing series of publications another topic that's called falling price is rising risks. my specific beat, as was set, is nigeria. so nigeria. it's not in the middle of the fourth or fifth major oil price shot, depending on how you define major.
mostly nigerian companies that won. now socioeconomically, nigeria has a very large, to the continent, non-oil private 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 non-aisle sector in nigeria isn't tied as inextricably to what goes on in oil as it is in some other countries. and fiscally so far, we don't see any definite any no turn back signs that nigeria will be unable to meet its obligations without some outside program of support like is
happening in ghana or angola. 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. crude oil sales alone gave government 60% to 70% of its total revenues during the boom years. total reported revenues for 2015 were about half of 2014. and this has 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 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 about nigeria's position on the continent is that this is not the case. there were other less savory factors in play here. so at the same time the oil price fell, nigeria was also 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 nigeria's case a recent
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. to go out the back door in the evenings on trucks, and such. so oops. now if we leave behind the cloud cube cuckoo land of abuja, the
capital, where conditions on the ground aren't necessarily any more reliable gauge of what's going on than there are in this town. then what's all this doing to ordinary nigerians? nothing catastrophic, so far. and particularly, when viewed 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 food shortages in parts of the country, and gdp is compared at 2%, compared with 6% or 7% in
the oil boom. the official response to all of this is a little bit difficult to talk about because the new government hasn't announced any sort of comprehensive survival or recovery 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 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. the government has said it wants
to continue protecting the nyra, through a combination of an artificially high foreign exchange rate for the nyra and controls on foreign currency sales in the country. it's also said it wants to roll out a bunch of palliative social welfare type of 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 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 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 up most official 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. nigeria is not doing a lot, it seems, to mobilize non-oil tax revenue, particularly company income tax and v.a.t. 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 size, 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. you can't build a high performing tax administration system overnight when you're facing a public revenue crisis. and nigeria's total public debt right now is a relatively non-wooly 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. 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 deeper institution reforms. so far the new administration seems to have sort of a command and control idea 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.
however, it's not really clear if that's a sufficient response in and of itself. as a good case of this, we can take the national oil company itself. and npc. so when the new government came in the top leadership was replaced. some of the nastiest, costliest contracts were cancelled. s some audits were ordered. you know, all perfectly reasonable things, 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 with government? lots of open questions there. and what assets should it keep and what should it sell off. nigeria has repeatedly 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. i think it's always 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 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 prove sigh profit sill some kind of is it financial doom for nigeria.
the country does have a way of muddling on through every crisis. there always seems to be some kind of crisis. this isn't just the latest one. i also don't want to feed some of the undue 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 sudden and sustained public revenue crisis in nigeria's history. certainly if you measure in absolute terms. also revelations from the ongoing anti-corruption drive in the country suggest that revenues and 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 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 nigerians and outsiders like us are looking forward to seeing some more definite signs of the longer-term direction of travel. thank you for listening. >> thank you. [ applause ] >> great, thank you, that was wonderful. glad to know there's cuckoo 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. so i'm from iraq oil report and we are in iraq-sent rick 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 what was then viewed as the oil boom in kurdistan and opportunities in basra. 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 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 anbar and mosul, in the western and north of the country and also the chaos in baghdad. if people are following the news, protesters affiliated with the old friend al sadr recently 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 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 public sector pate patronage system based on political parties in the government. lots of subsidies and inefficiencies in both writing tariff laws and collecting those tariffs. so i guess looking i'll go through the political, economic and oil sector environment for iraq and the reforms that are under way. 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 successful slates of new cabinet members who have either been wholly or partially rejected by iraq's fractured political elite, ministries including the
ministry of oil have continued to function. so even though the oil minister 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 chaos 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 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 has 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 months of 2014 were in access of $7 billion despite production being 20% lower. huge disparity in terms of the 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. 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 s of investment spending, but a product of that is prioritizing those things. pensions, salaries, defense and oil sector investment means that investment in non-oil 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
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 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 anticipated plateaus in fields in basra. 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 of which it's not clear where the financing will come from right now. there's also concerns about aging 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 necessity 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. 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 to
continue to protect the poorest and neediest, but charge more to wealthier folks and industry, but actually implementing those has been challenging. and despite the obvious financial crunch iraq is under, they get pushed -- the ministry of electricity has gotten pushback from lots of other quarters of government of that thinks they'll look bad if they are implemented. 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 assets 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 the private banks in iraq to buy ministry of finance issued bonds so this is a way to address the definite at this time, but is not a sustainable 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
that would be owned by that consortium 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 technical 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 oil 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 go part of the way towards addressing the budget deficit, but the more institutional changes and things like revising oil contracts have proven a lot more difficult and are really vulnerable to political chaos when it's 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. how am i doing timewise? two minutes. so i will very briefly address the kurdistan region and hopefully somebody asks me a question about it and i can get to that in a little more details. 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. that the central government is, but the fact that you're almost looking at two entities within kurdistan has been an impediment. they have found ways to cut spending, which is often reduced salaries, issuing ious to 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 time they were either
ad hoc or no payments. i think it's four months running now they have made payments as 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. the last bit that i'll sort of summarizing three pages here into a minute, but because the kurdistan region is a sub-state entity, they're not eligible for the same assistance that a state government would be, so rather than engage someone like the imf, they are often going to oil trading houses that have less forgiving terms than mime like the i want mf or western governments. they are also sort of getting loans from places like turkey, which are -- 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. so it's a challenge being a substate agency engaged in trying to reform and deal with low oil prices. i will wrap up there. >> thank you very much. that was great. [ applause ] and thank you to each of you. it's no small task to take countries and do it in is a 15 minutes, so we do definitely appreciate it. i think 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 ten minutes on. as long as you can stay, to 12:40. 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? >> i guess i'll tackle users 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 probably will also. so i think there are some elements that will. and i think there will be some that go back to old bad habits. opec, 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 taking various steps to try to improve their fiscal position. they paid down all the external debt. they saved and built up their foreign currency reserves. they build up their rainy day fund or oil stabilization fund, so 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 revised hydrocarbon law, and there's been an ongoing effort to talk about reform. 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 chart 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 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. 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 new place now non-tax 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. for nigeria, hearing that question, the question that it
raises in my mind is when. political will even though i detest that phrase to sort of continue with a limited program of reforms. worst case scenario that i can political 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 politicians between public funds and campaign finance. so -- and this was -- a lot of the stuff i talked about earlier about trucks leaving the central bank with hundreds of millions of dollars at a time, and that's campaign money, even though it was also public money. so if the oil price were to raise in that time window, i could imagine a lot of the progress, such as it is over the last few years, being very rapidly swept away and people saying nigeria is still nigeria, so i think it depends on the time frame. >> i was hoping someone else would take the bull by the horns with the opec question. the one thing i'll say, and i'm sort of stepping a bit outside of what i'm commenting on here.
i think, um -- you know, 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 tha members that make it less effective than it could be if some of those trust deficits were addressed. so, you know, i'm not sure that all the member countries believe the others will operate in good faith and that their interests will be looked after if they make concessions in the near term in terms of production and exports. >> an extension of that issue, too, is not only sort of the decision-making structure within opec but what other countries in opec are choosing to do and whether that's relevant in the countries you're talking about. are the reform efforts and/or production decisions being made by other countries driving decision making or capability in each of the countries you're talking about it or is it all
politics are local and these reforms are local and, therefore, it doesn't factor into very much. we do have a burst of questions that always happens. so, i'm going to take them very quickly, ojenny first, then here and we'll go to the back. >> hi, jenny mandel reporter with "energy wire." mr. clemens, my question is mainly for you. i would say this is a fairly pessimistic outlook on how sort of resilience to boom/bust cycles looks. and my question is how representative is this of the world -- the universe of oil dependent economies? norway aside obviously because they've had a strong framework in place for a long time. but is this one end of the spectrum or is this a pretty good look at how things are for the oil dependent countries? >> go right here. >> great matthew page with the council on foreign relations. my question is for heim, jared and aaron. for the three countries you're
looking at, what are some things that u.s. policymakers could do better in terms of improving the type of transparency, better fiscal management, in terms of dealing with your countries specifically or conversely maybe missteps or mistakes that are being made now that sort of, you know, play into some of these bad habits? so thanks. >> one in the back. >> my name is scott morgan. i do security and threat analysis. i have a two-part question. the first part is for aaron regarding risk. i did not hear you mention piracy in the gulf of guinea as a potential risk and how assets -- and how this could be in effect. and second also for aaron and also for jared. how about, you know, when theft, you know, when people steal from the pipelines oil and gas so they can actually fund raise for terrorist attacks and things like that, how can that be
prevented? >> okay. we got -- so one directly for you, ben, and a couple others but we'll do our elevator speech here. we'll try to do it real quick. >> is this representative, i think i would say yes. but, of course, there's a lot of variation within that. we look at, for example, which countries saved a lot during the last boom, that does vary a bit. i think where in some ways there's more optimism if you look at the lessons from some of the noncommodity -- or the nonoil commodity producers like chile, colombia, peru, some countries have been able to really manage resources in a way that, for example, during now they have fisczscal space to us that to 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 and saving during
good times so they can spend in bad. but a lot of it, yes, will be particular depending on quality of the institutions and you can see in general it's more -- a broader -- it's not just the oil sector. in some sense it's broader. when you have good fiscal institutions that can generally help you manage the commodity revenue fluctuations well. >> and then down the line on the u.s. policy question and then you can add on some other, aaron. >> great. thank you. i think historical experience, again, is crucial to understanding the question about u.s. interaction and engagement with algeria or any country for that matter. u.s./algerian cooperation is better than it's ever been. it's more robust than it's ever been. it addresses more issues than ever before. and in many ways the bilateral relationship has improved dramatically since 2001. but we have to understand that
algeria fiercely guards its sovereignty and doesn't really like foreign governments or institutions telling it how to run its affairs. and as i mention in my introduction, if we really want to understand algeria, we have to start in 1830 with french collienization because the process which many people dismiss as sort of ancient history is something that's still fresh in the minds of many people in algeria. they wanted their independence after a brutal struggle only in 1962. there are people in the room here that were alive then. i wasn't. but that has had a major impact on the way algeria views foreign intervention and foreign plans to reform its economy and its banking system and 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 cooperation and engagement i think it has to be cautious and take into account those historical experiences. >> thank you, jared. >> i guess i'm going to be sort of intentionally vague here. so, an observation at first. i would say the -- what's happened with isis since mid-2014 has sort of reshaped how the u.s. administration views its relationship with both iraq and the kurdistan regional government. this has really been striking with kurdistan where kurdistan is more from sort of how do we deal with the baghdad relationship to the peshmurga a valuable 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 probably initially branded as the national guard but we're now calling the national mobilization which is sort of the sunni arab equivalent of the popular mobilization. so, you know, i don't really want to get into what i think policymakers should do, but i guess i would say in this sort of period of reshaping relationships with baghdad and erbil based on security concerns over isis, folks should certainly keep in mind that, you know, isis will probably be gone at some point and just sort of thinking about what will the impact in the post-isis landscape be of how we are changing our relationships now. >> aaron? >> so, in terms of u.s. policy, in the energy sector in nigeria
to be honest i don't see that the u.s. has a ton of policy levers that it can pull. either in the energy sector specifically or about, you know, nigerian fiscal or monetary policy, whether we think it or not. i'm an anti-corruption person so i'm going to talk about corruption. i can't help it. so, i mean, specifically for nigeria, i think the biggest question for the u.s. government or at least parts of the u.s. government particularly when you see all that went on under the last administration, corruptionwise, is where were you when, you know, that billions of dollars or so a month that was being wired out of the country from private accounts, you know, you might like to think, oh, it's all going to, you know, st. kitts or
someplace like that, but actually, you know, if you dig into the details, a lot of it is here, somewhere or another. either physically or, you know, invested in one way or another. so, going forward, i personally think that, you know, the u.s. owes a little bit of debt to nigeria, to assist nigeria with some of its asset recovery work in particular and the fbi and doj seem like they're already fairly heavily invested in that. but, then, other organizations, state, treasury, you know, there's still going to be a lot of money coming into this country and a lot of it's here already. so, just thinking in terms of, you know, targeted sanctions and, you know, travel bans, asset freezes, placement on do-not-trade lists that sort of stuff. standard stuff, seems perfectly
applicable to a country like nigeria with the levels of illicit financial flows that it has. the other thing that i would say, and i think that you would probably agree with this, matt, we've talked about it before, is -- is that for u.s. aid to nigeria -- and i would point out the security sector in particular. if aid -- you know, we talk a lot about aid being conflict sensitive in the security sector, but if it could be a bit more corruption sensitive as well, if due diligence could be done a little bit more thoroughly and, you know, i'm not there at the negotiating table obviously but sometimes if a few more conditions could be imposed, you know, because it's all fine to want to help our allies with security challenges and all that, but then, you know, when you see in the papers
now nigeria saying things like $15 billion in recent years was spent on fraudulent security contracts and a lot of that was money, again, that came out of the back of the central bank in a truck. so, you know, being a little bit more sensitive to -- 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 yet where it's going and how much of a problem it's going to be. piracy i would say specifically that it's not always a huge threat to the oil sector because most of the ships that get hijacked are not oil tankers. most of the pirates are not really sophisticated to know what to do with a tanker load of oil if they get their hands on it so they would rather take diesel fuel or gasoline or something where you can quickly take it and off-load it for
money. and then in terms of oil theft, well, when you're at 30-some dollars a barrel, 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, you know, it's a little bit more of a headache. and now you have a government that is watching a little bit more closely than the prior one. but there are still risks involved. right now there's a whole stream of crude oil in nigeria that is out. the forcado stream which produces about 250,000 barrels a day, it's been out since late january, and it's out because somebody -- some oil thief had the sophistication to put on a scuba suit and dive under the water and install an illegal tap on to the line and in the course of doing that they damaged the line and now the line is going to be out probably until june or so shell says. so, 250,000 barrels a day at a
low price period is a big deal for a country like nigeria and if we keep seeing more of those, then that could be a big problem. in terms of how you address it, i think my time's up. >> well, it is. but you can always talk about it afterwards. two of our panelists have to go so i really do need to cut it off. i want to thank you all very much for being part of this discussion. you have such deep expertise it's terrible we ask you to do these things quickly, but i think everybody has benefitted from it. so, please join me in thanking the panel.
earlier today republican national committee chair reince priebus talked about the presidential race and the gop presumptive nominee donald trump including yesterday's comments by house speaker paul ryan who said he can't support mr. trump at this time. here's a portion of his comments. >> i think paul's just being honest with how he feels. and i think he's going to get there. by the way, he wants to get there. it's just that, you know, he just wants some time to just work through it. >> politico's reporting this morning that that meeting on capitol hill next week is expected to go ahead. do you expect speaker ryan to be there? >> yeah, i do. i talked to him multiple times
yesterday. and he wants it to go forward. and, look, he was being honest. he said he's not there yet but he wants to get there. so, yes, he will meet. >> now, after speaker ryan made his comment that he was not ready to jake tapper on cnn's "the lead" how quickly did donald trump call you? >> well, i had talked to him already once that day. but i had talked to donald trump and paul ryan multiple times yesterday afternoon. >> but donald trump called you within minutes. >> you're pretty good. i can't lie. no, i wouldn't lie anyway. >> okay. what was his mood? >> you know, it wasn't, like, furious or anything, it was, like, what do i -- what do i need to do. i mean, i'm -- and so i said, listen, let me just, you know,
my view is just relax and be gracious and i'll talk to paul and we'll try to work on this. >> just some of what rnc chair reince priebus had to say earlier today at an event held by politico. you can watch the comments in their entirety at 8:00 p.m. eastern on c-span, other programs are "book tv" and on c-span3 it's "american history tv" with archival coverage of past presidential races. c-span's "washington journal" live every day with news and policy issues that impact you. coming up saturday morning politico pro education reporter maggie severnce joins us by join to discuss student loan defaults
and "new york times" neil irwin will examine the latest jobs numbers which were released yesterday and their impact on the health of the economy. also coral davenport "new york times" energy and environment correspondent will discuss her story on an unusual $48 million federal grant awarded to relocate an entire community in louisiana struggling with the impact of climate change. it's the first such grant of its kind. and finally we'll take a look at the high school advanced placement u.s. government exam with teachers both from edadlai stev stevenson high school. they'll answer questions from high school students on the content and structure of the exam. be sure to watch c. f-spc-span' "washington journal" join the discussion. on "american history tv" on c-span3 -- >> we are here to review the maker findings of your full
investigation of fbi domestic intelligence yincluding program 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 the nsa, saturday night at 10:00 eastern. the commission questioned staff assistant to president nixon tom charles houston on a plan he presented to president nixon to collect information about anti-war and radical groups using burglary and electronic surveillance and opening mail. >> the bureau had taken black bag jobs for a number of years up to 1966 that had been successful and valuable particularly in matters
involving espionage and they felt this, again, wassing? that given the revolutionary climate they thought they needed to have the authority to do. >> just before 7:00 p.m. eastern -- >> and one person came, and she said, you were chosen -- she was from czechoslovakia. she was there for four years in the concentration camp. and they asked her, what's happening to us. where are our parents. and she said, you see that smoke? there are your parents. >> holocaust survivor anna gross recalls her family's experiences in nazi occupied hungary at auschwitz in poland and forced hard labor. it was part of the first person series. then at 8:00 in "lectures in history" -- >> an acnarcist named "a""er
berkman broke in frick's office shot him twice and repeatedly stabbed him. berkman, however, is one of the great failures assassination history. not only did he fail to kill frick, 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 to the union movement. >> the university of marylands robert chiles on the labor and social unrest at the turn of the 20th senn century. and the campaign of george wallace. for the complete "american history tv" weekend schedule go to cspan.org. next a discussion about the u.s. and china's nuclear weapons policies. a panel put together by the
carnegie endowment for international peace addressed ways to promote dialogue and understanding and identified linguistics as one of the major hindrances in current discussions. this is an hour and a half. >> and it really is a pleasure to welcome all of you to what i think is -- program today. it's also a great pleasure for me to welcome back to carnegie on our panel a couple of very distinguished alums from carnegie. formerly was the director of the carnegie moscow center during the time when -- ambassador in moscow and later a wonderful colleague as assistant secretary -- [ inaudible ] also evan mederos who was a number of years ago a junior fellow at carnegie and has gone on to do wonderful things as a scholar and in government.
in government most recently as policy adviser on asia. it's a particular pleasure now that he's a managing director of the yoeurasia group. it's a pleasure to welcome back a wonderful colleague and friend over a number of years lynn brooks with whom i first worked many years ago who has gone on to make enormous contributions to u.s. national security policy, not only at the white house but at the arms control and disarmament agency and who led the s.t.a.r.t. negotiations and the new s.t.a.r.t. negotiations subsequently. and finally it really is a pleasure to welcome a wonderful carnegie colleague whose article in "arms control today" last
december on chinese nuclear thinking really is the centerpiece for today's discussion and for our panel and whose work over a number of years really does embody the very best that the carnegie endowment as a global institution has to offer the world. so, once again, thank you all for coming today and i hope you'll join me in offering a warm welcome to our panelists. thanks. >> well, thank you very much, everybody. thank you, bill, for that very warm introduction. i'm going to be moderating the session today. these issues of chinese nuclear doctrine and strategy are near and dear to my heart as somebody that's worked on these issues at the carnegie endowment at the arms control association, so i was very encouraged to see that arms control today remains alive and well and it was the host of the excellent, excellent article. but also more importantly because the nuclear issues are ones that are central to big
questions of strategic stability in the u.s./china relationship. they're ones that i worked on when i was at the national security council and so i'm glad to see that scholarship and activism on these issues continue today. what i'd like to do is begin with a presentation 10 to 15 minutes to outline the key issues outlined in his excellent article and invite rose and linton to make some comments and reactions and we'll get a conversation going and open it up to you for your ideas and thoughts, so thank you. >> thank you, evan, and thank you, bill. i'm so honored to have the discussion today. back to 2000 i believe evan and i had a lot of discussions on this issue. and he was really the pioneer on this subject, so today i'm so
happy to explain my idea and to have discussion moderated by evan. today i'm going to explain how we should at least make calculation behind our nuclear weapon policy. what is our nuclear philosophy. there are several reasons of, you know, for us to consider this subject. for many decades china has kept a small nuclear force and a low alerting status. there are two theories about why c china did so. one theory is china had very limited resources and low-level technical support, so china had to do so is one theory.
according to this theory now china has more resources and more advanced technologies so everything will change. this is one theory. another theory is that china chose a small force and low level of alerting level because the chinese believe that this is a good choice. and china made the calculations according to its own understanding about the roles of nuclear weapons. so, the research is really important for the international scholars regarding china's nuclear strategy, nuclear posture and nuclear philosophy. it's also very important for the chinese scholars to have public debate within china.
so we have, you know, two -- one in the national and another domestic proposal. today basically i will explain the two issues. one is nuclear technology in china and what is the chinese paradigm for study. so, i will begin with nuclear technology in china. the first group of nuclear terms i want to explain include security and safety. you know, in english security is about how to avoid an attack and safety is about how to avoid accidents and nural disasters. in chinese, however, there's only one word that includes the
meanings of the two words. so, in china the assumption is that the consequences of security problems and safety problems are very similar. so, we should fit them together. we should use the same system to deal with two different kind of incidents. but here, you know, in the united states, people treat the two kind of issues separately. nuclear safety is safety issue. nuclear security, security issue. in china, you know, we consider that -- we look at the similarities of the two kind of issues. so, in china this is called comprehensive security theory. according to this theory, we should not emphasize only one
side while ignoring the other side, for example. the comprehensive security theory allows china to optimize its nuclear weapons system i the big framework, that is, to treat safety and the security issues the same level. and in china we need to balance the power of nuclear weapons and the safety of nuclear weapons at the same level. this could explain why china chose to have a low release of nuclear weapon launch because that could significantly reduce safety problems. another group of words i