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Ghana votes for a share of the oil

Observations on democracy

The people of Ghana have been told before that oil will be their saviour. But as President John Kufuor steps down after two terms of office, his successor could be the first leader to see benefits from an offshore discovery of oil reserves estimated at 1.8 billion barrels. Ghana would become an "African tiger", Kufuor said last year. "With oil as a shot in the arm, we're going to fly."

Ghanaians go to the polls on 7 December to select a successor to Kufuor. Eleven million voters will choose between two leading candidates - Nana Addo Dankwa Akufo-Addo of the ruling New Patriotic Party and his National Democratic Congress opponent, Professor John Evans Atta Mills. It is expected to be a close-fought election.

The new president could see the crude start to flow in 2010, and his main task will be to ensure Ghana does not fall victim to the curse that stalks so many oil-rich nations.

The reserves in the waters of the old Gold Coast could make Ghana one of sub-Saharan Africa's biggest oil producers - though they are small compared with neighbouring Nigeria's (more than 36 billion barrels) or Angola's (eight billion).

Voters will see those two examples as instructive. They need only look a couple of hundred miles east to the Niger Delta to see that oil wealth and better lives do not go hand in hand. Here the local people suffer, their fishing waters polluted, their villages sliced in half by leaky oil pipelines, while only the politicians, bandits and foreign companies seem to benefit.

To the south, in Angola, oil revenues do not reach much beyond the president's family and cronies - certainly not as far as Luanda's sprawling slums.

Vitus Azeem, who runs the Ghanaian branch of Transparency International, the Berlin-based anti-corruption watchdog, doubts that Ghana's find will do much for its 23 million people. He points out that the nation's other troves of natural wealth failed to enrich the people. After all, it is the world's second-biggest cocoa grower and Africa's second-largest gold miner, yet remains a low-income country where most of the population live on less than a dollar and a half a day.

International interest in African oil is growing fast. Last year, the continent produced 12.5 per cent of world oil - and Ghana is the "new play". The government has issued exploration licences to a slew of foreign consortia and the Ghana National Petroleum Corporation is taking a share in all to ensure revenues for the country. But the national oil company has a patchy history. This past summer, Tsatsu Tsikata, a former head, was jailed for five years for misappropriating state funds.

Both presidential candidates are well aware of the pitfalls that await an oil-producing Ghana. On the plus side, the incoming president will have the benefit of advice from Norway, the country that has probably been most successful in handling oil wealth; there is talk of transparency, safeguards such as bank accounts controlled by independent third parties, and of investing in schools, health and infrastructure.

President Kufuor, a gentle if uninspiring man, has strengthened democracy and the economy. An important part of his legacy will be secured if, as expected, this handover of power is free and fair.

But when the first barrels of oil are pumped, Ghanaians will demand more than democracy of their new leaders. Aidan Heavey, chief executive of Tullow Oil, an Anglo-Irish company, believes there is reason to be optimistic. He describes the Jubilee field, so named because its discovery coincided with Ghana's 50th anniversary of independence in 2007, as "world-class, a jewel".

"Ghana is incredibly fortunate that it has found oil today and not 30 years ago," says Heavey. During the oil boom of the 1970s, foreign companies struck far more lucrative deals with African governments.

The deal with Tullow gives Ghana nearly two-thirds of profits; in addition, oil companies will pay 35 per cent income tax. This is expected to amount to billions of petrodollars.

The question for Ghana's voters is what the country's new rulers would choose to do with this newfound wealth.

This article first appeared in the 08 December 2008 issue of the New Statesman, After the Terror

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.