Under the treaty, the transfer of these funds does not end with nation-states. These royalty revenues would even be extended to “peoples who have not attained full independence or other self-governing status.”15 That means that groups like the Palestinian Authority and potentially other groups with terrorist ties could get in on the bounty.
The point is that it is our money, not the United Nations’. American firms prospected for the oil, financed the drilling, invented the deep-sea technology, took the risk of a dry well, and are entitled to reap the rewards of their efforts.
AIDING THIRD WORLD COUNTRIES DOESN’T HELP THEM
But, our liberal friends ask, shouldn’t we extend our aid to the third world? Don’t we have a moral obligation to fight poverty and help them feed their people?
But wiser heads in the developed world realize that increasing the flow of revenue to third world autocracies would just expand their opportunities for graft and corruption. The funding would not flow to their needy people but to the avaricious Swiss bank accounts.
Indeed, some economists like Dambisa Moyo, an African woman who wrote Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, believe that foreign aid is really counterproductive.
She argues that aid is just an invitation to corruption. It means that governments become like private franchises, raising their money abroad and spending it in unaccountable ways. Their citizens don’t care. It’s not their money. And the effort of ambitious people to get their hands on the aid sparks civil wars, coups, corruption, and political instability, which makes real economic growth impossible.
Moyo, who studied at Harvard, earned a doctorate in economics at Oxford, and worked at the World Bank, poses the challenging question: “Has more than $1 trillion in development aid to Africa over the last several decades made the African people better off?”16
Her answer is a resounding no. She elaborates: “In fact, across the globe the recipients of this aid are worse off; much worse off. Aid has helped make the poor poorer and growth slower…. The notion that aid can alleviate systemic poverty and has done so is a myth. Millions in Africa are poorer because of aid. Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.”17
Moyo says that revenues such as what the Law of the Sea would cause to flow to the third world creates a pot of money over which various factions, tribes, parties, and regions can compete. She likens it to diamond mines or oil wells, “a kind of curse because it encourages corruption and conflict, while at the same time discouraging free enterprise. Not only is aid easy to steal, as it is usually provided directly to African governments, but it also makes control over government worth fighting for. And, most importantly, the influx of aid can undermine domestic savings and investment.”18
US foreign aid has failed in its primary mission of alleviating poverty. Since 1980, the United States has given more than $309 billion (in inflation-adjusted money) in development assistance to poor countries. (This sum does not include military aid or humanitarian relief for natural disasters.) And it hasn’t worked.
Of the 97 countries that got development aid from the United States between 1980 and 2006:
• a quarter actually saw a net drop in their per capita GDP.
• 28 had almost no growth—less than one percent.
• 39 had minor growth averaging only 1–4 percent per year.
• Only 4 had real economic growth of 5 percent or more. They were Bosnia, Serbia, Cambodia, and Botswana.
WE’D HAVE TO GIVE AWAY OUR TECHNOLOGY, TOO
But sending money to third world dictators is not even the most obnoxious part of the Law of the Sea Treaty. Beyond taxing royalties, the treaty obliges American energy companies that wish to drill more than two hundred miles off our Continental Shelf to share their technologies—for free—with the ISA.
Senators Orrin Hatch (R-UT) and John Cornyn (R-TX)—both opponents of the treaty—warn that under it “nations with mining and resource recovery technologies like the United States will be obligated to share those technologies with Third World competitors, and that is one of the many issues, which trouble those of us opposed to the treaty.”19
They add: “in other words, US companies would be forced to give away the very types of innovation that historically have made our nation a world leader while fueling our economic engine.”20
In a phrase out of Star Trek, the treaty sets up an “Enterprise” to facilitate third world access to drilling technology. It provides that “if the Enterprise or developing States are unable to obtain” drilling equipment commercially, there is a duty imposed on signatory nations to “facilitate the acquisition of mining technology.”21
Sensibly, the Cato Institute argues that “the Enterprise and developing states would find themselves unable to purchase machinery only if they were unwilling to pay the market price or were perceived as being unable to preserve trade secrets. The clause might be interpreted to mean that industrialized states, and private miners, whose ‘cooperation’ is to be ‘ensured’ by their respective governments, are then responsible for subsidizing the Enterprise’s acquisition of technology.”22
Cato also notes that the treaty empowers the Seabed Authority to “take measures… to promote and encourage the transfer to developing States [of] technology and scientific knowledge so that all States Parties benefit therefrom.” If the US signs the treaty, the Seabed Authority would have enormous leverage over American energy companies to compel them to “share” their technology for free!23
American firms will have to survey the ocean floor, locate mineral reserves, raise the capital to drill, assume the risk of failure, and even pay the Enterprise a quarter-million-dollar application fee to get their approval for the well. Then, when they get oil, they must pay royalties to the Seabed Authority and give the Enterprise access to their technology!
And the application fee and royalty tax could go higher. Cato warns that the treaty allows an “as yet undetermined, level of royalties and profit sharing. The Institute notes that the ‘system of payments’… shall be ‘fair both to the contractor and to the Authority,’ fees ‘shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals,’ even though, as Cato notes, “seabed production is more expensive, riskier, and occurs in territory beyond any nation’s jurisdiction.”24
Yet some major oil companies support the treaty! They argue that their legal claims to the right to drill far offshore (beyond the two-hundred-mile limit) are shaky and that recognition of their wells by an international authority would give them the legal protection that they need.
Elliot Richardson, who led the American delegation that negotiated this treaty during the Carter years, says that the United Nations’ assertion that the ocean’s resources are “the common heritage of mankind” has made it impossible for any seabed mining without UN approval. He warns that “if any mining defied international law, its output would be subject to confiscation as contraband.”25
The Cato Institute rightly asks “who would do the seizing?” There is no UN Navy, but there is a US Navy that would protect our commercial interests in the face of a hostile seizure.26