That bonanza should be good news for the people of Chad, if the government honors a breakthrough agreement with the World Bank. To get the oil project off the ground, the bank has lent $300 million to Chad (some of which went to Cameroon), and is acting, effectively, as the project’s political guarantor. In return, Chad has agreed, in essence, to cede its sovereignty over how its oil income will be spent. It’s part of a new strategy in Africa to link aid and outside investment with good governance. Chad’s Parliament had to pass a law stipulating that 80 percent of its oil revenues will be spent on improving the general health and education of the country’s 8.7 million people, as well as for building basic infrastructure and developing rural areas. An additional 5 percent of the money will be placed in a special fund for the locals near the oilfields, and 10 percent will be put in escrow accounts for future generations. That leaves only 5 percent for the government to spend as it wishes. All the oil funds will be deposited in an offshore account, and a supposedly independent oversight committee (composed of leaders from all sectors of Chad’s society) must cosign all checks. If the scheme works, it could become a model by which the world’s wealthiest corporations agree to do business with some of the world’s poorest countries. “Until now, Chad has been absolutely dependent on foreign aid,” says Gregory Binkert, the World Bank’s representative in Chad. “Now, oil will make the country viable for the first time.”
While some might view the revenue-spending accord as neocolonialism, the arrangement may be a smart way to save Africa from one of its worst tendencies–squandering revenues from the continent’s bountiful natural resources. That’s what happened for years in Sudan, Angola, the Republic of the Congo, and in almost every resource-rich African country. Nigeria has earned vast sums since the 1970s from oil exports (nearly $20 billion in 2000, for example), but owing to corruption and mismanagement, the country’s standard of living has steadily fallen.
Chad’s president, Idrissa Deby, doesn’t exactly inspire confidence. He’s a former general turned dictator turned president who’s been accused of cheating at elections. Until now what he’s mostly developed is military muscle controlled by his ethnic group from the north. He’s also been implicated in the genocide that took place in the 1980s under his predecessor, Hissene Habre, whom he overthrew.
There isn’t much government to speak of in Chad: many of the administrative offices in the capital of N’Djamena look empty. What little infrastructure the country had under French colonial rule has been destroyed by the fighting of the last 40 years. The nation, three times larger than California, produces only 25 megawatts of electricity–the amount used by six medium-size office buildings.
Deby claims that’s he’s comfortable with the tough World Bank conditions. “The oil-revenue plan is exactly how we would have spent the money anyway.” Maybe. In 2000 Chevron and Petronas (Malaysia’s oil company) gave Chad $25 million for the privi-lege of becoming Exxon Mobil’s junior partners. Deby promisedto spend the money according to the revenue law, but instead bought guns, along with several new cars for himself and his cronies. Deby says the weapons were needed to fight off an incursion from a group based in Libya.
The oil companies also had to pay a price to get the Doba project started. The consortium’s production and pipeline plans were vetted by the World Bank’s board and numerous independent assessment groups. The pipeline goes through environmentally sensitive terrain –including virgin rain forests where Pygmies and other indigenous societies live–as it wends its way to the Cameroon coast, where the oil will be pumped into tankers. The consortium agreed to undertake numerous environmental and social programs, and committed $8 million to compensate people along the pipeline route who’d suffered losses. “The average land user along the pipeline is receiving about $1,000 of compensation,” explains ExxonMobil executive Andre Madec, who was until recently in charge of the Chad project. “In a country where they are living on an average of 50 cents a day that’s a huge amount of money.”
Many problems have been difficult to sort out, such as how to decide which locals should be compensated. “It’s not like you can go to the Oklahoma land office to check who owns a piece of land,” says Ellen Brown, an anthropologist employed by Exxon Mobil. “They are subsistence farmers who exhaust the land and move on. Legally it all belongs to the government.” The right to use it is based on local customs that have never been written down. There is also no banking system, so goods are exchanged through bartering. Those people who are awarded cash will either bury it or spend it, suggests Brown, because they do not want to be seen as richer than their neighbors. “One of the strong cultural drivers in this society is that everyone should be equal,” she said. Otherwise, “people are accused of sorcery.”
Right now ExxonMobil is focused on helping communities rather than individuals by building health clinics and schools. But the company provides only the physical buildings. “We can only do so much,” says Madec. “We’re not here to play the role of government.” Chad is supposed to provide the teachers and health workers and equipment, in accordance with the revenue-sharing law. But getting the social programs up and running will take years. A showcase health facility that ExxonMobil built four years ago in the village of Kome lacks medicine and has no paid staff. “We still don’t have the capacity to channel the oil money,” says Aziza Baroud, who heads a government group funded by the World Bank that’s supposed to help create a new bureaucracy in Chad. Still, Binkert believes that over time, an economic “multiplier effect” will take hold: building schools will create a construction industry. Paying teachers will create consumers who can pay taxes.
Watchdog groups worry that Chad could go the way of Nigeria and Sudan. In both these countries, which border Chad, a military regime controlled by northerners has expropriated the natural resources of the south. “That is exactly what could happen,” says Peter Rosenblum, who directs the Harvard Law School’s Human Rights Program. If it does, blame might fall on the U.S. government, which was a catalyst for the World Bank’s scheme.
Doing business in Africa has never been easy. “We don’t choose where the oil is,” says Madec, “the geologists choose it for us.” Put another way, even the richest oil company in the world cannot make the money trickle down to those who need it most. Once the project is running, the government could just change the rules. “The independence of the oversight committee that cosigns the checks with the government is fragile,” says Rosenblum. “I can imagine them being co-opted by the government.” And the law mandating how the government must spend the oil money has a clause allowing the president to revise the arrangement by decree after five years. “Priorities do change,” President Deby told NEWSWEEK. When asked if he would redirect funds to put down future rebellions, he replied, “Look what happened in the United States after September 11. No nation can compromise when it comes to security.” But in Chad, the oil deal with ExxonMobil just might allow people to reach for something more basic than a cache of firearms: a taste of economic security.
