Will Oil Change São Tomé and Príncipe?

São Tomé—São Tomé and Príncipe is only three hundred miles from Bioko, the island on which Malabo, the capital of Equatorial Guinea, is situated, but culturally, politically, and socially, Equatorial Guinea and São Tomé might as well be on different planets. One is a brutal, paranoid dictatorship that terrorizes its own population, while the other is a relatively open multiparty parliamentary democracy with no history of bloody coups or violent insurrections. One is a country run by a greedy ruling family that accumulates wealth and power at the expense of other, resentful ethnic groups, while the other is a country where all citizens are the descendants of Portuguese slaves and therefore share a common history of oppression and a conspicuous lack of ethnic hatred. One government assumes that every foreigner who turns up uninvited is plotting a coup, while the other promotes ecotourism and small-scale cacao farming. One nation is swimming in oil wealth, while the other is dependent on international aid for its survival.

However, the two countries do have one thing in common: geology. São Tomé, Príncipe, and Bioko are links in a chain of ancient volcanoes that stretches to Mount Cameroon on the mainland. And since the Gulf of Guinea became known as a heavyweight oil province, there has been considerable interest in these tiny islands. Analysts have spoken of a billion barrels or more in potential reserves, and speculators have quietly moved in to stake claims to offshore licenses. In August 2000 a poorly defined maritime border with Nigeria was settled hurriedly in anticipation of oil exploration, and a Joint Development Zone established by the two states.

But some analysts remained skeptical, suggesting São Tomé’s potential as an oil producer had been hyped excessively by Arab-bashing neocons in the United States. Such skeptics point to the fact that in 2002, as the American press fêted São Tomé as the “new Saudi Arabia,” an exploratory well had yet to be drilled, and the country was at least ten years away from becoming an oil producer even if there was any oil. And, to some extent, the naysayers have been vindicated by the international oil industry’s lukewarm response to the exploration blocks made available by São Tomé over the past two to three years. Even in the most promising block of all, Chevron drilled a well in early 2006 and found the results disappointing. By early 2007 it is likely the company will have exited São Tomé altogether. Nevertheless, there is no question that São Tomé has some oil, and possibly enough of it to make the island nation a significant producer in coming years. And, perhaps more important, it seems to lack much of the baggage that can make oil companies nervous about investing in Africa.

In fact, one of the first observations many visitors make upon arriving in São Tomé is that it doesn’t “feel like Africa” at all. There is no African food, no African music, and virtually no trace of traditional African religion. The clothes, the architecture, the cuisine are all European. All names are Portuguese and, with the exception of a dying island patois, Portuguese is the only language spoken. Those who have traveled to both Africa and the Caribbean are struck by just how much closer São Tomé appears to the latter. The place is a quintessential tropical island paradise. Groups of naked children play in the ocean, while teenagers wander along deserted beaches shaking coconuts out of palm trees. From the water’s edge, rain forests climb up precipitous peaks that seem perpetually encircled by mist. Abandoned plantation estates, pink and crumbling, hide between mountains like forbidden cities. In town, pairs of boys speed around on rickety motor-scooters, and a handful of banged-up old taxis sit idly waiting for fares—but in one of the world’s smallest and sleepiest capital cities, where it seems half the buildings are government ministries, it’s often easier to walk. With its languid beaches and European lifestyle, São Tomé seems far more “New World” than African. Barbados without the tourists.

It is precisely this lack of “African-ness”—this conspicuous absence of ethnic conflict, instability, and government brutality—that both the international community and the oil industry are counting on. Development experts from around the world have taken a keen interest in São Tomé, eager to play their part in what might just turn out to be an African success story. And São Tomé has reciprocated. Its president, Fradique de Menezes, a darling of the West, has made all the right noises about wanting to ensure that the opportunity provided by oil wealth is not wasted, that revenue is handled transparently, and that oil does not become a source of conflict or economic stagnation. “I have promised my people that we will avoid what some call ‘the Dutch disease,’ or ‘the crude awakening,’ or ‘the curse of oil,’” he told a rapt audience in Washington in 2003, with a beaming Colin Powell listening approvingly.

However, this puts the cart miles before the horse. Not only does no one really know how much oil São Tomé has, but São Tomé can be said, without much exaggeration, to be totally unprepared for life as an oil-producing country. The country suffers from endemic poverty and an extraordinary lack of what development experts call “institutional capacity.”

Just how poor and underdeveloped is São Tomé? Not only is there no university in the country, but the one high school is so strapped for cash that it must teach São Tomé’s students in three five-hour shifts, beginning early in the morning and lasting until late into the night. The country’s national budget in recent years has averaged a mere $50 million, much of it coming from traditional crops such as coffee and cacao, or from fishing. An additional $35 million in the form of international development aid pours in every year, making the country one of the world’s biggest recipients of direct aid as a percentage of GDP. The lion’s share of this aid has traditionally come from Portugal and from Taiwan, which views its special relationship with São Tomé as a fairly inexpensive vote in its favor at the United Nations. (Unfortunately, the strategy has largely backfired, since São Tomé has lately proved unable to pay its $17,000 dues to the United Nations and has therefore been ineligible to vote in the General Assembly.)

The country is so poor, in fact, that it has resorted to some fairly creative fund-raising schemes. The São Toméan postal service once issued commemorative Marilyn Monroe postage stamps it hoped would turn into collector’s items, supplying a substantial percentage of the nation’s income. In recent years, one of São Tomé’s biggest industries after cacao has become routing phone-sex numbers that have been banned in Europe and America through its telephone exchanges. In the 1980s, as part of a deal with the Spanish government, São Tomé even agreed to accept Basque political prisoners from France in exchange for an increase in foreign aid, in effect allowing itself to become a penal colony for ETA militants. Very few were sent over in the end, but a wizened and long-bearded man with leathery skin can still be seen hanging around in São Tomé’s bars every evening, watching the sun set.

Possibly the only characteristic of São Toméan society more persistent and more predictable than its poverty and its lack of capacity has been the cliquishness and cronyism of its tiny political class: a few dozen Portuguese-educated technocrats, none of whom knows the first thing about petroleum geology or licensing rounds or international-exploration contracts. São Tomé politics has always been a claustrophobic affair—the exclusive preserve of an entrenched (and largely mestiço) elite. “Somos todos primos” goes the unofficial slogan of São Toméan politics—”We are all family here”—a cheerful boast about the country’s lack of ethnic hatred that has gradually taken on an ironic significance in the face of endless corruption scandals. Since 1991, when the country gave up Marxism-Leninism for multiparty democracy, electoral politics has been a ferocious, fast-paced series of spats and feuds and shifting coalitions and partisan realignments, most simply formalizing personal or financial disagreements of the country’s political leaders. Just since 1991, São Tomé has experienced fourteen changes of government—more than many African countries put together. The current president alone has gone through eight prime ministers since he was first elected in 2001. And in 2003 dissatisfaction with the way the country’s future oil wealth was being managed helped provoke a coup that briefly ousted the president before the Nigerians stepped in and had him reinstated—reinforcing suspicions about who was really running the country.


On one of my last days in São Tomé, I rented a 4x4 and drove to some of the island’s more remote villages to see what the population outside the capital felt about the coming of oil wealth. I stopped in Agua Izé, a handful of tidy cobblestone streets flanked by faded stucco houses sitting on a plain overlooking the palm-fringed coastline. The village was once part of a plantation estate, and at the top of the hill stood the old plantation hospital, a magnificent stone edifice with a grand twisting balustraded staircase in front that was being steadily swallowed up by tropical vines and banana trees. The year of its construction—1914—had been chiseled elegantly over the entrance, a reminder of a time when the Portuguese empire believed it was here to stay. Now, a woman and her children, dressed in filthy T-shirts and sandals, sat in the empty window frames looking bored.

In the cobblestone streets below, a toothless old man played a traditional Portuguese fado on his guitar while a group of young men sat on piled-up planks of wood arranged around a fire, watching a pot of water boil. My presence attracted a crowd of angry young men who were more than willing to share their thoughts about the promise of oil in São Tomé. Despite their tattered clothes and beer-infused breath, they were articulate and well-informed about the “dossier petróleo,” as the oil issue is called in São Tomé. All were aware that it would be several years before the country actually saw any money from oil exploration, and all expected their elected politicians to squabble over access to the spoils. Few expected any real change to their lives.

“Look around you!” one man shouted, and I paused to take in the grass growing through cracks in the stucco walls and from between the cobblestones. Children and pigs and chickens wandered about, ducking in and out of houses whose doors and windows had been missing for decades and whose roofs had been badly compromised by years of tropical rains. “The schools and hospitals we are using are the same ones the white man left behind. We keep hearing money is coming, money is coming, but it is just coming and going to banks in Switzerland and the United States. Oil can be a blessing or a curse, and if São Tomé turns out to have no oil, we could all end up owing too much money.”

A little farther down, at the end of the island’s only paved road, is the town of São João dos Angolares. There, a Portuguese family had converted the small colonial plantation house into a tasteful bed-and-breakfast and art gallery. Fresh coffee beans from the estate’s trees were being ground by an old man using an antique hand-cranked mill, filling the veranda restaurant with an intoxicating aroma. Local artists’ paintings and sculptures were on display. São João was, in short, possibly the most romantic place on earth.

Was it possible—just possible—that the African oil boom didn’t have to be a story with an unhappy ending? Would this tiny twin-island nation, with its open democracy and stated commitment to revenue transparency and sound fiscal management, prove the cynics wrong? Even good people tend to go a bit funny in the face of millions of dollars, and there was no compelling evidence that São Tomé’s politicians were “good people.” In an impoverished and desperate country with weak institutions, powerful neighbors, and a culture of dinner-table politics, there is every likelihood that a spectacular infusion of foreign exchange will act as a destructive and destabilizing force. But, say the optimists, at least São Tomé has the advantage of coming late to the game, and having the examples of Gabon and Nigeria and even the relative newcomer Equatorial Guinea to learn from.