International Papers

Chad Says: Oil for the People!

Chad, landlocked in the middle of Africa and one of the poorest countries on the planet, is making headlines. It isn’t a coup d’état or a famine that’s attracting ink; Chad has oil.

The country officially joined Africa’s group of oil producers Friday when African leaders, World Bank officials, and hundreds of other invitees attended the formal inauguration of the 650-mile pipeline from southern Chad to a port in neighboring Cameroon. The World Bank-backed project takes a novel approach, incorporating strict anti-corruption measures to ensure that oil wealth be used not to enrich an elite few but to improve the lives of average citizens. Britain’s Daily Telegraph said, “Stung by the examples of Nigeria and Angola, where the benefits of oil wealth were denied to the people, the Chad scheme marked a serious attempt at change.”

A story in Canada’s National Post pointed to the United States’ growing stake in African oil. “Washington is quite happy to reduce its dependence on the Middle East. … Africa, which needs the money and isn’t nearly as troublesome, offers a welcome alternative.” According to the National Post, roughly one-fifth of the United States’ oil currently comes from West Africa—about the same as from Saudi Arabia. With the United States’ interest in African oil increasing, “so may its presence” on the continent, the paper said, pointing to the likely expansion of U.S. military bases in the region.

The Chad-Cameroon pipeline, which has been in development for years, has already begun to produce, with an initial 950,000 barrels already moving into the market. Papers report that at full production, the pipeline is expected to pump about 225,000 barrels per day for shipment across the Atlantic. Esso, a subsidiary of Exxon Mobil Corp., leads the multinational consortium running the project, with Chevron Texaco and the Malaysian company Petronas. (Britain’s Guardian reported Monday that Exxon Mobil has been holding “secret” meetings with environmental and human rights groups in an effort to shed its image as an environmental villain. Esso has long been the target of an international boycott by groups charging in part that the company undermines efforts to curb global warming.)

Oil is expected to bring in more than $80 million per year to Chad, which currently ranks 165th of 175 countries in the U.N. human development index and where corruption is said to be rampant. Cheer at the inauguration ceremony was accompanied by anxiety, according to France’s Le Figaro,which quoted an aid worker saying that Chad’s record of corruption and human rights abuses “doesn’t give the image of a regime capable of managing its petrodollars.” Environmental and aid organizations dubbed Friday a “national day of mourning,” arguing that widespread oppression and insecurity in Chad will only be exacerbated by the oil project. Le Figaro said, “It is true that to date, ‘black gold’ in Africa, which represents 7 percent of the world’s reserves, has more often been a synonym for poverty, conflict, and corruption than development.”

This legacy is what the World Bank apparently wants to reverse with its innovative scheme to place Chad’s oil revenues under tight scrutiny, the bulk of the wealth going toward the country’s infrastructure. The National Post reported that the money will be put into an escrow account in London, “where the bank will take 5% to pay back loans before the rest is earmarked for good works under the watchful eyes of an independent monitoring panel.” According to the paper, under the World Bank plan, the money for Chad is to be divided among an account for future generations (10 percent), development of the Doba basin region that houses the main oilfields (5 percent), and national projects in health, education, roads, and water supply (80 percent). France’s Libération reported that Chad has established a panel to ensure that funds are allocated according to these parameters. But, the paper said, an environmentalist activist protested that the group is dominated by people close to the Chadian president.

The Telegraph depicted the pipeline scheme as “already in trouble.” The paper reported that the Chadian government spent about $4 million of an initial $25 million payment on arms, apparently to counter an ongoing armed rebellion in the north of the country. “Supporters of the scheme hoped it was a temporary glitch, but it is not clear whether the government of Chad, the most corrupt nation in Africa according to a survey by the World Economic Forum, is serious about financial probity.”

Britain’s Guardian characterized the World Bank’s scheme for Chad as a gamble, counting on the country “bucking the trend” established by oil-rich Nigeria, Angola, and Equatorial Guinea—”showcases of how oil can breed kleptocratic elites and fuel corruption, conflict and poverty.” Chad’s president, Idriss Deby, said at the opening ceremony: “The coming oil income should not divert us from our usual economic activities. We must build a modern and working Chad together.” With all the complications that could come with her newfound wealth, the National Post story concluded, “Chad will be happy to take the money, and worry about the rest later.”