A failure but the oil keeps flowing

Over a year after the World Bank formally withdrew (September 2008) from the social welfare portion of the Chad–Cameroon Petroleum Development Project (CCPDP), acknowledging that the goals were not going to be met,[1] the number and diversity of new analyses make now a good time to revisit the CCPDP and the lessons brought on by this 'pioneering and collaborative effort'.[2]

I begin with a brief description of the project. The CCPDP formally involved the international financial institutions (IFIs) led by the World Bank, a consortium of petroleum corporations led by ExxonMobil (called Esso in Chad), and the governments of Chad and Cameroon, whereby an oilfield was constructed in the Doba region of Chad and a pipeline built from that oilfield to the Kribi port on the Cameroon coast. The World Bank offered three justifications for its involvement in the project.[3] First, Chad has a comparative advantage in no resource except petroleum that could provide adequate revenue for the social welfare of its people. Second, though Chad has petroleum reserves, its governing institutions were too weak to beat the 'resource curse' (the argument that petroleum has inherent qualities that lead to corrupt governments).[4] Thus, petroleum corporations did not have adequate incentives to assume the political risk required for investing in Chadian petroleum production. Third, and most important, the World Bank had a chance of beating the resource curse and helping Chad’s people by attracting petroleum corporations through mobilising the World Bank’s experience with 'development as governance'. According to the notion of development as governance, economic development requires not only the removal of barriers to free-market operation (structural adjustment) but also creation of institutions that enable effective market transactions to occur (governance, including contract enforcement and the protection of private property). As a result, the World Bank underwrote part of the Chad and Cameroon governments' financial commitments and more importantly underwrote the political risk by coordinating a multi-volume documentation of environmental, social and financial requirements for the project, as well as a multi-layered system of instruments for monitoring the implementation of these requirements.

I suggest four broad approaches in consideration of the project. The first approach comes from the IFI literature. In a November 2009[5] report, the World Bank Group (IFC and IBRD) acknowledged the following:

'The evaluation finds that the program’s fundamental development objective of reducing poverty and improving governance in Chad through the best possible use of oil revenues in an environmentally and socially sustainable manner was not achieved. It therefore rates [the] overall program outcome unsatisfactory despite the technical and financial success of the main pipeline project. While the program suffered from some design flaws and supervision shortcomings, the principal reason for its overall disappointing outcome was the lack of government ownership.'

This report is primarily an update of a December 2006[6] report where the World Bank declared the project satisfactory in design but unsatisfactory in operation, and the new report seems simply to elaborate the original conclusion. That is, the World Bank and the corporate participants did all they could, the Chadian government failed its people, there is little to be done to resolve the Chad situation, and this case can provide lessons for extractive industry support in the future. The lessons learned in the November 2009 report vaguely reference the ever-present need for increased concentration on capacity-building and measures to ensure government ownership.

The second approach is reflected in an August 2009[7] International Crisis Group (ICG) briefing report. The ICG comes to the same conclusions as the IFIs that the project failed because the Chadian government failed. Their report is marginally more useful because it places the project in larger historical context and also more accurately argues that external actors (governments and corporations) have their own personal goals and these goals are often not the same as the social welfare goals put forth in projects such as the CCPDP. However, the ICG does not interrogate these divergent goals, but rather portrays these goals as if they are externalities, not directly related to project success. The ICG 'solution' also simply restates the original goals of the CCPDP, calling for better governance and increased accountability and transparency for recipient countries. The ICG authors are more optimistic than the World Bank in that they suggest those goals can somehow still be achieved in Chad even given the failure of the CCPDP. The authors evidently hope that prescribing the same solutions over and over again will lead to a different result (somewhat like the famous quote that the definition of insanity is doing the same thing over and over again and hoping for a different result). Thus, the report is worth skimming to get a sense of the Chadian context, but not useful for understanding what should be done next.

The third approach primarily arises from social movements that spoke out in opposition from the beginning, arguing that the project did not have a chance of success. Particularly visible on an international level have been the Environmental Defense Fund,[8] Catholic Relief Services[9] and Amnesty International.[10] These organisations argued that the Chadian government did not give adequate indication that it would follow through on the governance and social welfare promises. Different from the first two approaches, opposition groups place responsibility for project failure on the IFIs and petroleum corporations as well as the government. They accuse these organisations of acknowledging human and environmental rights only hesitantly, in a context of extensive social movement pressure, and often failing to follow through. Massey and May, in 'Dallas to Doba'[11] (p. 273), call the extensive CCPDP documentation a good example of the 'ascendancy of transparency over compliance'. That is, there was plenty of documentation, monitoring and noting of failures. However, little seemed to change after the failures were brought to light and acknowledged. After the social welfare aspects of the project failed, these social movement organisations have primarily folded subsequent events into their original analyses, with few new conclusions and recommendations except that organisations need to keep up the pressure on government, business and intergovernmental organisations. Brendan Schwartz and Valery Nodem provide an excellent example of such analysis and prescription, with a strongly fieldwork-based argument in a recent Alternet article.[12] Their article is quite valuable in that they offer many stories of people in Cameroon and Chad who have been denied the compensation that formed a core of the project’s social welfare documentation. They concentrate their recommended responses on the US, and concisely describe pressure group goals in the following manner:

'The ultimate goal of international campaigning is to "leave African oil in the soil" and build stronger governance beforehand since the extractive industries almost never contribute to development.'

I argue for a fourth approach, which resembles the third in that it is critical of IFIs, governments and corporations and also recognises the importance of social movement pressure in regulating these organisations. However, whereas the third approach concentrates on the failure of these actors as well as recipient countries to fulfil stated development objectives, the fourth approach is much more cynical about donor objectives and concentrates on important unanswered questions about such projects as the CCPDP. How is it that the project fell apart so quickly, almost as if it were a planned demolition, and under the watchful gaze of multiple layers of inspection? As Chad has descended again into civil war, ironically leading even to the destruction of the oil ministry office, how is it that the Doba oilfield is so well-protected from this instability? An 11 February 2008 Reuters article[13] states the following:

'A rebel attack on Chad's capital a week ago did not affect the country's 140,000-160,000 barrels per day (bpd) of oil output but the violence disrupted prospecting and plans for a new refinery, the oil minister said.

'"Production has continued as normal", Oil Minister Emmanuel Nadingar said on Monday amid burned papers and broken furniture at his ministry building, which was looted following the Feb. 2-3 assault on N'Djamena by eastern rebels.'

More broadly, why were all of the volumes of documentation by corporations, IFIs and governments limited to the initial development of the Doba oilfield in Chad and the pipeline through Cameroon to Kribi on the Cameroon coast? It is clear that the petroleum project is designed to be far broader than the Doba oilfield. Taguem Fah writes the following in an excellent article on the Chad Basin in 2007 (p. 105):[14]

'The production capacity of the pipeline is currently 225,000 barrels of oil per day; and it will decline only after it reaches a peak in a couple of decades. However, the size of the investment signifies a commitment to a much longer-term exploitation. By the time the Doba field, estimated at a total reservoir of one billion barrels, is emptied, other fields already being explored in Chad, Cameroon, Niger and Central African Republic are expected to take over.'

In July of this year, news came out of work beginning on a new pipeline from the Koudalwa oilfield to the Djarmaya refinery north of the capital N'Djamena. The pipeline is a project of the China National Petroleum Corp.[15]

This broader view of petroleum exploitation in the Chad basin has important similarities with the long period of key commodity exploitation in Nigeria. As Frynas argues,[16] there is significant evidence that the kind of instability and violence found in the Niger Delta (and which I note now occurs in Chad) can actually be considered a competitive advantage if it allows for continued exploitation and if the cause can be placed on an ineffective and/or corrupt government rather than corporations or other interested parties. While this view of the CCPDP ascribes rather darker motives to corporations and allies than much of the social movement literature, the short-term implications are similar. Social movement pressure and information are critical for bringing light to the dark side of corporate-led petroleum exploitation, if only because corporations and associates are required to continue responding and changing their strategies. Long-term transformation, however, requires creative strategies that do not simply call on corporations and associates to respect their stated promises but incorporate much more difficult tasks of breaking through smokescreens between what corporations say they are doing and actions they take daily in furtherance of exploitation.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* Nicholas Jackson is currently working on a project examining corporate responses to social movement pressure.
* Please send comments to [email protected] or comment online at Pambazuka News.

NOTES

[1] http://go.worldbank.org/LNOXOH2W50
[2] http://www.ifc.org/ifcext/africa.nsf/AttachmentsByTitle/ChadCamProjectOverview/$FILE/ChadCamProjectOverview.pdf
[3] See the World Bank Concept Paper at http://go.worldbank.org/2Q72D32120
[4] Watts offers an effective critique of the resource curse on p. 387 of 'Righteous Oil?: Human Rights, the Oil Complex and Corporate Social Responsibility' (Annual Review of Environment and Resources (30), 2005: 373-407):
. . . in this sort of analysis, it is not clear what causal powers these material and other features of oil actually possess . . . if oil hinders democracy (as though copper might liberate parliamentary democracy?), one surely needs to appreciate the centralizing effect of oil and the state in relation to the oil-based nation-building enterprises that are unleashed in the context of a politics that predates oil.
See also Watts, Michael J. 2005. Resource Curse? Governmentality, Oil and Power in the Niger Delta, Nigeria. In The Geopolitics of Resource Wars: Resource Dependence, Governance and Violence, ed. Philippe Le Billon:50-83. London; New York: Frank Cass.
[5] http://siteresources.worldbank.org/INTOED/Resources/ChadCamReport.pdf
[6] http://go.worldbank.org/NK5U64X7U0
[7] http://www.crisisgroup.org/home/index.cfm?id=6288&l=1
[8] Horta, Korinna. 1997. Fueling Strife in Chad and Cameroon: The Exxon-Shell-ELF-World Bank Plans for Central Africa. Multinational Monitor 18, no. 5: 10-13.
[9] Gary, Ian and Nikki Reisch. 2005. Chad’s Oil: Miracle or Mirage? Following the Money in Africa’s Newest Petro-State. Washington D.C.: Catholic Relief Institute and Bank Information Centre.
[10] http://www.amnesty.org/en/library/info/POL34/012/2005
[11] Massey, Simon and Roy May. 2005. Dallas to Doba: Oil and Chad, External Controls and Internal Politics. Journal of Contemporary African Studies 23, no. 2:253-276.
[12] http://www.alternet.org/
See also the wonderful blog http://pipelinedreams.wordpress.com/
[13] http://www.reuters.com/article/latestCrisis/idUSL11653282
[14] Fah, G. L. T. 2007. The War On Terror, the Chad–Cameroon Pipeline, and the New Identity of the Lake Chad Basin. Journal of Contemporary African Studies 25, no. 1: 101-117.
[15] See news in http://www.straitstimes.com/print/Breaking%2BNews/World/Story/STIStory_398066.html October update found at http://news.bbc.co.uk/2/hi/africa/8298525.stm
[16] Frynas, J. G. 1998. Political Instability and Business: Focus on Shell in Nigeria. Third World Quarterly 19, no. 3: 457-478.