Saturday, September 13, 2008

Big Oil Money = Big Problems

In 2000, one of the poorest countries in the world struck gold - black gold. Exxon and a consortium of oil companies discovered vast reserves of oil under the hot, dusty terrain of southern Chad. Millions of barrels to fuel global demand lay just within reach - but there was one major problem: Chad is a land-locked country. It has no ports, no railroads and no water transportation routes; carting barrels of oil on the backs of camels wasn't exactly what Big Oil had in mind. So, in one of the most ambitious projects of its kind, the oil companies built a 665-mile pipeline from Chad to the coast of Cameroon.

This deal would bring billions of dollars to Chad, providing riches in a place where the previous two largest industries were cigarettes and beer. However, Africa has a shoddy track record of getting the money to help anyone but the elite. The World Bank tried something groundbreaking to prevent the new-found riches from being whisked away to a private swiss bank account. It entered into an agreement with Chad that would only give Chad the money in return for investing it in anti-poverty measures. This was hailed as a landmark achievement and the future looked bright. Then, the pipeline was built.

I have heard so many first-hand accounts of the damage to society that occurred thanks to the pipelines. Yes, the oil companies built roads and infrastructure - but home prices rose 500 percent, food prices sky-rocketed and the oil companies imported hundreds of workers from Indonesia and the Philippines. Locals could not afford to stay in their own houses or villages and were forced out. White workers received special passes to allow them to cut in front of any line they wanted and lived in single units with AC. Imported workers were stuffed into barracks eight at a time. Native Chadians were forced to sleep under the stars on the ground. Despite these challenges, many people felt the suffering was worth it because of how the money would change the country for the good overall.

Well, the money started pouring in and the government became more and more corrupt, less and less transparent, and eventually did everything it could to avoid using the money to fund real anti-poverty measures. They have used the crisis in Darfur as an excuse to purchase weapons. They have said "the government is too corrupt to follow the anti-corruption agreement" with the World Bank.

Finally, after eight years of trying to set up a different model - the World Bank quietly ended its "landmark" agreement with Chad. It is now completely up to the will of the government to invest this incredible new flow of money in real, meaningful development activities to benefit the average Chadian citizen.

To read more, check out the New York Times article on this latest setback for my friends and family in Chad.

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