Strategies for Transnational Civil Society
Business: Target or Partner
in Promoting Positive Economic Political Change
Presented by Jennifer Davis, Africa Fund,Director
at the Council on Foreign Relations Conference on Nigeria, January
In my ten minutes its not possible to do more than paint with
a very broad brush and those of you who know far more about the
details of the Nigerian economy will forgive me if I omit elements
you see as essential, and will make good my omissions.
As many of you know a very large part of my life was devoted
to working for the imposition of sanctions on apartheid South
Africa. Naturally I spent a lot of time opposing corporate arguments
- and I cannot claim to have more than a couple of good friends
among major CEO's.
But I do have some - and more since the success of sanctions
has brought democracy and an explosion of new business leadership
from among former Trade Union and ANC leadership in South Africa.
All this to say that I do have concerns about the role of U.S.
and multinational corporations in Nigeria and I hope you will
not lay them all at the door of some form of knee-jerk corporate
Since the early 1970's the production and export of crude
oil has come to totally dominate Nigeria`s economy, most reserves
being found along the country's coastal Niger River Delta. Oil
revenues are vital to the survival of the military dictatorship,
accounting for 95% of hard currency earnings and at least 80%
of government revenue. Nigeria is among the largest producers
of oil in the world, (in the top seven) currently producing at
least two and one quarter million barrels of high grade "sweet
light" crude a day.
The U.S. is by far the single largest market for Nigerian
oil, purchasing between 35 and 45 percent of total production
annually. Figures for 1996, the most current, place U.S. purchases
of Nigerian crude at over $4 billion dollars.(595,000 barrels
per day according to the U.S. Energy Information Administration).
1998 marks the 40th year of oil production operations in Nigeria,
initiated by Shell in 1958. In that time the company has pumped
$30 billion worth of oil from Ogoniland alone and well over $100
billion worth of oil from the whole country. Nigeria's oil wealth
has financed decades of military dictatorships and made Shell
one of the largest and most profitable corporations in the world,
but it has brought only oppression, poverty and pollution to the
Indeed, between 1983 and 1994, a period of dramatic growth
in Nigerian oil production, per capita income plunged from nearly
$1200 to less than $250 in an unbroken period of dictatorship
that continues to this day.
Despite the immense cash flow generated by oil sales, the
Nigerian military regime is severely squeezed for capital and
has failed to meet payments on its huge foreign debt. It is also
about $1 billion dollars in arrears to the oil companies on its
share of production and maintenance costs and allocated only about
half of the amount sought by the companies for exploration and
infrastructure in the current budget.
The Key Companies
Three oil companies -- Shell, Mobil and Chevron -- produce
over 95% of Nigerian oil. Shell is by far the largest and produces
about 49% of the total, followed by Mobil (24% ) and Chevron (23%).
Shell has begun a nearly $4 billion expansion of its Nigerian
operations, with Mobil and Chevron also planning multi-billion
dollar developments -- primarily in natural gas.
Any attempt to assess how far major corporations can become
agents of economic and political change must take into account
both formal relationships and history.
Under Nigerian law all oil production operations are structured
as joint ventures between the multinationals and the State oil
company -- with the foreign firms as minority partners. This means
that Shell, Mobil, Chevron and the other foreign producers are
literally business partners with the Nigerian military government.
(Most joint ventures are 60 percent owned by the state and 40
percent by the multinationals. A few later ventures are 51-49.)
All the oil companies are deeply and structurally connected
to the repressive apparatus of the state. All oil companies are
required to pay the salaries and expenses of a special armed and
uniformed national police force tasked with guarding oil industry
facilities. These are not company security guards but national
security forces answerable to the dictatorship. In addition, after
years of public denials, Shell was finally forced to admit that
it purchased thousands of guns and millions of rounds of ammunition
for its police contingent, known among the people as the "Shell
Police." ( There are also "Mobil police", etc.)
According to the State Department's 1996 country human rights
report ALL Nigerian security forces engaged in widespread and
systematic human rights abuses, tho MOSOP has charged that the
Shell Police have been particularly brutal.
Moreover, Shell again after strenuous denials had to admit
last year that it made special payments to the notorious Rivers
State Internal Security Task Force (known as the "Kill and
Go Boys") the paramilitary occupation unit engaged in the
brutal repression of MOSOP and the minority Ogoni people. In one
documented case, a task force unit paid by Shell to disrupt an
Ogoni protest over a Shell pipeline opened fire on the peaceful
demonstrators, killing one person and wounding several others.
Ken Saro Wiwa's trial and execution in 1995 focused world
attention on what were longstanding acute tensions between Shell
and the Ogoni people; millions saw grim pictures of environmental
devastation and brutal military occupation.
This has been carefully documented in a recent World Council
of Churches publication, entitled Ogoni, The Struggle Continues.
Respected Nigerian academic Professor Claude Ake also compiled
detailed evidence about Shell's degradation of the fragile Niger
River Delta, describing hundreds of oils spills and the constant
gas flaring, a serious health hazard.
Shell blames particularly the continuous oil spills on community
sabotage to receive company damage awards. But Shell's own environmental
expert resigned after the company ignored his report on severe
pollution at Shell facilities in the Delta and refused to implement
international environmental standards for its operations.
Shell's own internal documents confirm that the company spied
on Saro-Wiwa in the 1990s as he traveled internationally to build
awareness of Shell's role in Nigeria and it failed completely
in 1995 to condemn the farcical proceedings of the Military Tribunal
which condemned him and his 8 fellow protestors to death, although
the proceedings were strongly condemned by by among others, Amnesty,
Article 19, the UN and the International Court of Justice).
In an effort to head off the executions, Ken's brother Owens
met with then Shell Nigeria MD Brian Andersson to seek the company's
intervention. According to Wiwa, Andersson said the company would
be prepared to use its vast influence to commute the sentence
but only if MOSOP repudiated its claims of environmental pollution
and ended the international campaign. Only at the 11th hour did
the company finally issue a brief public statement urging clemency
on humanitarian grounds. at the same time running ads in the British
press suggesting that the human rights and environmental movements
should bear responsibility for the executions.
In the face of growing MOSOP and international pressure for
change the company has responded with claims of corporate good
citizenship and an expensive effort to portray MOSOP as terrorist
and unrepresentative, rather than acknowledging the movement's
extensive support and seeking ways to address the urgent political
and economic agendas MOSOP presents.
None of this is unique - I have heard very similar statements
re good citizenship from Mobil executives who assure me that they
use quiet diplomacy where they can. I am reminded of a similar
situation in South Africa, where an irate worker in 1975 leaked
to us a General Motors "Contingency plan" which laid
out how the Company would co-operate with security forces in times
of unrest. Property needs protection.
The Case for Sanctions- the Debate
Given the regime's dependence on oil exports for its economic
survival, the Nigerian human rights and democracy movements have
called for international oil sanctions to secure the release of
political prisoners, return the military to barracks and implement
the 1993 election results.
But sanctions have been dismissed by the private sector, the
Clinton Administration and many policy analysts as, variously,
unwise (companies), politically impractical and functionally ineffective.
The private sector position can be understood as self interest.
The policy establishment argues that sanctions cannot work because:
I Nigeria could, over the medium term, find new markets, in
Asia, to replace lost sales in the U.S. and Europe. ii Only multi-lateral
sanctions could be effective and there is no consensus among the
great powers iii Enforcement would require a naval blockade of
They argue instead for the maintenance of the largely ineffective
diplomatic sanctions currently in place in the U.S. and Europe,
with the addition of a freeze on the personal assets of members
of the regime, which is unlikely to be very effective.
These measures would be further weakened by "constructive
engagement" i.e. normalized and vastly expanded diplomatic
contact, including direct military to military contacts with the
regime and at least tacit support for Abacha's transparently fraudulent
1998 transition exercise.
Nigeria is not South Africa, the argument goes, and sanctions
cannot and will not work as they did against apartheid. They are
correct, Nigeria is not South Africa. The regime's absolute dependence
on oil exports for survival and U.S. dominance of the Nigerian
petro-economy as both producer and consumer make a much stronger
case for sanctions than South Africa's relatively diversified
economy ever did. (given of course that no-one ever believed gold
The Case for Sanctions
Ironically it is only with hindsight that so many now argue
that sanctions on South Africa were a good idea. The policy makers
are as wrong about Nigeria now as they were about South Africa
when the battle for sanctions started in the 1960's.
At the heart of the case for sanctions is the understanding
that Abacha does not have a "medium term" in which to
re-route his markets. Asia in an economic crisis of vast proportions
has already dramatically reduced its energy demands. China, often
pointed to as a likely replacement market for Nigerian oil, is,
as the New York Times reported last year, heavily committed to
coal for energy production and lacks both the capital and the
will to convert to oil.
Moreover, there are significant retooling costs associated
with converting refineries geared for heavier middle eastern crude
to Nigeria's lighter premium grades. Adding to Abacha's difficulties
in locating new markets is the large and growing glut of crude
on the world market -- an oversupply likely to grow with the return
of Iraq to the market, the coming online of the Caspian Sea fields
and the ready abundance of North Sea and other crude grades comparable
in quality to Nigeria's sweet light exports.
At best Abacha would have to market his oil at a sharp discount
to attract buyers, further weakening his ability to finance his
corrupt and reactionary regime and imposing real costs for his
Fewer $ to spend and increased international diplomatic support
for democracy, can force Abacha to release prisoners and open
a dialogue with the democratic movement to resolve the crisis.
Abacha is clearly feeling increasing domestic pressures as
evidenced by his mass arrests of "coup plotters" including
his second-in-command and the outpouring of people in Abacha's
northern political stronghold to mark the death in prison of popular
democracy leader Shehu Yar- A'dua in December. At the point where
he is unable to pay off the Nigerian military and civilian ruling
elites his regime is doomed.
Arguments that only military action can effect sanctions miss
the point. The real goal of oil sanctions is to raise the costs
of repression past the point that the regime can bear.
The Case for Unilateral Sanctions
American diplomacy combined with determined American action
can build multi-lateral support for sanctions. But given the extraordinary
U.S. dominance of the Nigerian economy, the U.S. can act unilaterally
and should do so if necessary.
While the U.S. market is vitally important, and we believe
irreplaceable -- to the dictatorship, Nigeria accounts for less
than 7 percent of American oil imports. The U.S. can easily and
cheaply find new sources of Nigerian oil -- a view confirmed by
a 1994 GAO report.
But Abacha cannot find ready markets for half of his exports.
It is worth restating that two U.S. companies, Mobil and Chevron,
produce nearly half of Nigeria's oil, while the single largest
producer, Shell, is also vulnerable to U.S. pressure because the
U.S. is its single largest profit center. The U.S. therefore has
the capacity to act effectively and unilaterally against Nigeria.
The companies argue that others would replace them should
they withdraw, but only a handful of corporations have the capital
and the technical capacity to maintain Nigeria's huge production
and they too are American.
What seems lacking now is not an analysis to support the imposition
of sanctions, but rather the will to act to support democracy
The White House has avoided involving human rights and environmental
groups in the current review process and Congress seems paralyzed
by a combination of corporate lobbying and Nigerian influence
Recent reports raise concerns about whether illegal Nigerian
campaign contributions to President Clinton's re-election campaign
have touched the review process; there is certainly growing evidence
of Nigerian payoffs to U.S. religious and political leaders, tho
grassroots support for sanctions is growing.
World leaders from Nelson Mandela to Bill Clinton to John
Major and other Commonwealth heads of state have engaged in protracted
diplomacy to resolve the crisis in Nigeria and avert a bloody
repetition of the Biafran civil war. But without sanctions diplomacy
has been disarmed and it has been ineffective.
It is past time for America and the West to arm diplomacy
with power. There must be real consequences for the regime if
it continues its bloody war on its own people and real consequences
for the oil companies if they continue to finance military dictatorship
Reforming the System