World Bank Project Helps Dictator in Chad
“We were promised development and all we got is misery – The influence of petroleum on conflict dynamics in Chad”.
A recent report by Claudia Frank and Lena Guesnet from the Bonn International Centre for Conversion (BICC) details how the Chad-Cameroon Oil Pipeline Project, which was intended by the World Bank to prove that investment in petroleum extraction could aid development and reduce poverty, has actually resulted in a deterioration in the natural environment and living conditions of people in southern Chad, without substantial investment of oil revenues into areas like health and education.
The central-Saharan nation of Chad has a long history of poverty, autocracy and conflict. Chad ranks 132 out of 135 countries on the United Nations Human Poverty Index, with an average life expectancy of around 48 years and 80% of the population living on less than a-dollar-a-day. However, Chad is endowed with substantial reserves of petroleum – increasingly bringing it to the attention of the United States, Europe, Russia, China and India. The World Bank’s Oil Pipeline Project aimed to extract oil in the Doba Basin in Chad’s south, exporting it 1,070 kms through the coastal nation of Cameroon, and using the income to lift Chad out of poverty. Investment for the scheme would come from a private consortium consisting of the oil companies ExxonMobil, Chevron and Petronas, enabling them to fund the biggest infrastructure project in Sub-Saharan Africa. The success of this visionary project would, “be measured by poverty reduction rather than by barrels of oil produced or millions of dollars received by Chad from oil exports”, using this “unprecedented framework to transform oil wealth into direct benefits for the poor, the vulnerable and the environment”. But today, almost ten years after the pipeline was officially opened, poverty is still entrenched in Chad, its President Idriss Déby has solidified his authoritarian rule, and rebel groups continue to roam the desert and occasionally lay siege to the capital N’djamena.
The BICC report argues that while the revenues from the petroleum actually could fund a transformation in the Chadian economy and help create food self-sufficiency, rather than investing in the Chadian people President Déby has used the income to maintain power. The money has been distributed through an elaborate patronage system to secure the loyalty of key political players, as well as being used to buy military equipment to fight the nation’s rebel organisations. While oil revenues are bolstering the government’s military ability to fight the rebels, they are perhaps counter-intuitively also encouraging people to join the rebel ranks. Chad has a history of negotiating with rebels and bringing them into government coalitions, so Frank and Guesnet argue that “joining a rebel movement can be a real option to gain access to power-positions and means of personal enrichment. As oil revenues are accruing into the state treasury and are managed by the same inner circle, such motivations might be higher than before”. Rebel activities are also related to the complex regional dynamics of the Saharan region, and the conflict in the neighbouring Darfur region of Sudan; while the discontent of Chadians about the poverty and corruption in their nation is not normally expressed through violence.
The income now flowing from the oil pipeline allows the Déby regime to ignore international pressure to democratise, and to continue operating an otherwise dysfunctional civil administration and judiciary. Chad has also sought in recent years to expand its oil industry further, by seeking a relationship with the China National Petroleum Corporation (CNPC). Thus Chad now exhibits all the characteristics of an authoritarian ‘petro-state’ – with a rich oligarchy, which maintains power through repression by oil-funded security forces, and shows little interest in social development or the diversification of the national economy. 80% of Chad’s annual budget now relies on oil revenue.
Chadian civil society organisations are calling for new national dialogue involving the government, the political opposition, civil society and the armed rebel groups – mediated by the United Nations – in order to plot a way forward for peace and development in Chad. They are also calling for reforms in which the armed forces are dissolved and a new national army is created, to be more representative of the entire Chadian population, and allow scrutiny of the Human Rights records of its members. But, “it is questionable, whether the current regime has any interest in executing these reforms”.
Now, Frank and Guesnet write, “instead of being the model project on which future oil and other natural resource projects can be based, the case of Chad can inform future extractive industry undertakings about what should be avoided and done differently. The most obvious conclusion to be drawn from the experience of oil exploitation in Chad is that certain preconditions have to be in place, if oil wealth is to contribute to poverty alleviation and the peaceful development of a nation”. The World Bank’s Extractive Industries Review concludes that these pre-conditions should include: “respect for human rights; consent of locally affected communities; adequate government capacity to enforce laws, monitor and regulate the extractive sectors; and demonstrated government and corporate commitment to transparency”. Why they didn’t think of these things before launching the biggest infrastructure project in Sub-Saharan Africa I cannot imagine. Perhaps they still clung to the obviously false notion that wherever there is capitalist investment, democracy and political pluralism surely follows.
As is to be expected, after helping create the conditions that will fund authoritarianism and conflict in Chad for the foreseeable future, the World Bank is trying to duck responsibility for the situation. But the BICC report notes that “the World Bank should have recognized [the] attitude of the government beforehand and taken the concerns of civil society groups more seriously by considering their proposed moratorium to ensure governance and oversight capacity and work towards stronger political commitment. As the World Bank evaluators note, leverage was lost as soon as the oil money started flowing”. The World Bank even failed to heed the warning of their own ‘Extractive Industries Review’, which in 2003 noted that, “Should progress in attracting investment outstrip progress in establishing governance prerequisites for good development outcomes, the Bank risks facilitating the wastage of a country’s non-renewable resources, as well as contributing to environmental damage, violence and weakening of the quality of governance itself. Moreover, when investment is increased in a poor governance environment, subsequent reforms are likely to become even more difficult (World Bank Operations Evaluation Department, 2003, p. 13)”.
Thus, the BICC report concludes that in future the World Bank should include civil society groups in planning from the very beginning, in order to ensure principles of good corporate behaviour are adhered to. Furthermore, consultation with the local population is vital and should occur as early as possible – including regular meetings and information literature in their local language. A strong and transparent oversight system must be developed to ensure the government implements agreed plans, with sanction mechanisms and legal action available as punishment for deviation. And a compensation system must be designed for affected locals, in order to mitigate any problems that arise and ensure wise investment of compensation funds. “In this way, conflicts, repression, and human rights violations can be prevented”.
Unfortunately, “despite the negative experiences in Chad, the World Bank is not drawing this conclusion”. The World Bank “recognizes some errors [they] committed … but does not go far enough as it mostly puts the blame with the government. Furthermore, the main argument to justify the World Bank’s involvement is that the oil would have been developed sooner or later and then without the safeguards of the World Bank”. Instead they conclude “that less rigid, more flexible rules would have been better”. It is impossible to believe that an organisation like the World Bank lacks the information or expertise to come to many of the same conclusions as the BICC report and others like it. Instead, it is clear that the main motivations that drive the Bank are not actually peace and development, but the promotion of international investment in the developing world, regardless of the consequences for those nations. For Chad, the oil rush they are sustaining still has the potential to fund national development, but for the moment it merely entrenches the power of the corrupt elite.