Fueling strife in Chad and Cameroon
The Exxon-Shell-ELF-World Bank Plans for Central
by Korinna Horta
Multinational Monitor, May 1997
Exxon, Shell and the French oil company ELF have teamed up
to launch Africa's largest oil development project ever.
The consortium plans to invest $3.5 billion to develop oil
fields in southern Chad that are estimated to contain approximately
900 million barrels of recoverable oil reserves. The companies
intend to pipe the oil through neighboring Cameroon to the Atlantic
coast-a 600-mile journey that traverses biodiverse forests and
politically volatile lands. At the coast, the companies will load
the crude on to tankers bound for Europe.
World Bank funding through both the International Development
Association (IDA), the lending window for the poorest countries,
and the International Finance Corporation (IFC), which lends directly
to the private sector, will represent the foundation of the project's
financial structure, according to a leaked Exxon document. Although
the Bank's $370 million represents little more than 10 percent
of over all project costs, Philippe Benoit, the World Bank official
who leads project preparation, and his colleagues at the Bank
say the oil consortium will not go forward without World Bank
support. World Bank participation greatly reduces the political
risks for the consortium; because maintaining good standing with
the World Bank is a pre-condition for receiving aid and credit
from many sources, Chad and Cameroon would be unlikely to interfere
with the operations of a World Bank-backed project. The consortium
also hopes that the World Bank's imprimatur will attract additional
low-cost funding from export-credit agencies and commercial banks.
The IFC plans to help the consortium raise about $1 billion in
limited recourse debt (debt for which the liability of the parent
company is limited).
While World Bank officials are heavily involved in project
preparation, the Bank's Board of Directors has not yet approved
funding of the controversial project. Critics say project approval
would mock the Bank's stated mission of poverty alleviation, and
signal that the Bank's new emphasis on cooperation with the private
sector will amount to little more than a new corporate welfare
Secrets and Lies
Watersheds, protected forest areas and biodiversity are severely
threatened by the planned oil and pipeline project," says
Louis Djomo, who coordinates the African Forest Action Network
(AFAN), a network of 60 West and Central African non-governmental
organizations. "We are especially worried about water pollution
since the pipeline will cross several of our largest rivers, which
are used by local communities for their daily needs."
Ogoniland in neighboring Nigeria is a painful example of the
devastation of villagers' lands and livelihoods as a result of
oil pollution. Drinking water is polluted, fish have disappeared
from the rivers and streams and crops have ceased to grow on large
stretches of now-infertile land.
Oil consortium representatives insist these environmental
dangers will be avoided. In a May 1997 letter to an environmental
organization, Exxon emphasizes that it will conduct an environmental
and social impact assessment before proceeding with the project.
It also points to a World Bank established Environmental Panel
that will assess the project's performance-though the Panel's
reports will not be public.
The affected communities have little to rely on other than
the consortium's goodwill. These communities will have difficulty
speaking out about environmental and health impacts of the project,
given the prevailing political climate in Chad and Cameroon. The
U.S. State Department's Report on Human Rights says both governments
have committed gross human rights abuses and show little respect
for basic civil rights, including freedom of speech.
The oil consortium's actions have not engendered faith among
local communities or environmentalists in Chad, Cameroon or the
West. Outside of elite government circles, few people in Chad
or Cameroon have any detailed information about the project.
"We only found out details about the project from our
colleagues abroad," says Samuel Nguiffo, a forest expert
and director of Environment and Development, a respected Cameroonian
environmental organization. "Our government thinks that regular
people cannot deal with information, only those in power can."
"In Chad, the oil issue is closely managed by a single
family around President Deby," says a Chadian human rights
activist who cannot be named. "Even the ministers have no
Secrecy pervades every aspect of the project. Exxon will not
allow foreign journalists to film or photograph its base camp
in southern Chad's remote Doba region. When German journalist
Martin Zint contacted Exxon in Germany before embarking for southern
Chad, he was told that there were only a couple of trucks at the
project site. But when he arrived, Zint discovered an Exxon camp
complete with buildings, infrastructure and equipment. "They
did not let me visit the installations or take pictures,"
he says. "They seem to think that as long as there are no
pictures, there will be no story."
The companies are tightly managing project information in
the United States as well. Exxon has held numerous meetings with
U.S. government officials from the U.S. Agency for International
Development, the Environmental Protection Agency and especially
the Treasury Department, which decides how the United States will
cast its vote as a member of the World Bank's board of directors.
But company officials have been reluctant to share information
with administration officials. "It was odd. Exxon did not
even want to release overheads to us, although we requested a
copy" after an October 1996 company briefing, says a U.S.
government official who does not wish to be named. Other officials
at the meeting were surprised that Exxon did not release any written
information on the project, not even a briefing paper or a one-page
Fueling civil strife
The political economies of Chad and Cameroon do not augur
well for an equitable distribution of the oil revenues the countries
may earn from the project. Until recently, the Swiss company Coteca
controlled Chad's national treasury, according to the British
Economist's Intelligence Unit Publications. Foreign donors insisted
on the unusual arrangement to alleviate concerns that the country's
president would use the treasury as his personal piggybank. The
situation in Cameroon is little better, with the Economist Intelligence
Unit reporting that the government suffers from a "historic
lack of transparency in its recording of trade figures, especially
for crude oil exports." Transparency International, an international
coalition fighting corruption in international business transactions,
ranks Cameroon among the world's top 10 most corrupt nations.
Transparency International did not consider Chad because its
international business dealings have been limited. Foreign investors
have been put off by a vicious civil war that has consumed Chad
for 30 years. The causes of the conflict are complex and can in
part be traced back to arbitrary map-drawing in the late nineteenth
century by France, the colonial power, which threw together populations
that had little in common with each other. The war has pitted
the largely Muslim North of the country against the Christians
and animists who populate the southern agricultural center. Doba
is the geographic heart of the southern rebellion against the
As the revenues from southern oil fields are pumped to the
North, southern demands for greater autonomy are likely to escalate.
These demands are likely to be met with greater repression, which
could shatter the country's fragile peace.
"There is a lot of talk about the coming oil bonanza
in N'Djamena, but Chadian human rights monitors fear that the
oil will lead to an increase in repression and human rights violations
in the South-in short, that the Doba Basin will become the next
Ogoniland," says Irene Mandeau, who heads Amnesty International's
working group on Chad.
A tragic incident in Doba, first reported in 1994, may portend
more widespread abuses to come. When Dingamtolem Ajikolmian, a
local peasant, heard that an airplane was to land on a nearby
field, he decided to take his children to witness what is a rare
event in this remote region. He was shot to death in front of
his children by the security forces protecting Exxon staff, according
to Claudia and Martin Duppel, volunteers from Germany who lived
in the Doba region for several years. Local villagers testified
that Ajikolmian was a local resident, had never left the village
and just wanted his children to see an airplane. But the military
chief insisted that Ajikolmian was a rebel, thereby officially
justifying the killing and closing the case.
The oil consortium denies any responsibility for the murder,
and no compensation was ever paid to the victim's family. Exxon's
German office wrote to journalist Zint in February 1997 that the
company bore no responsibility for the incident since the shots
were fired by a member of the Chadian security forces. The letter
added that it was unclear what the man was doing on the airfield,
and concludes that "it might have been a misunderstanding
between the security forces and the villager, because of language
Language differences may indeed exacerbate tensions in the
Doba region. The Chadian security forces, which protect the oil
consortium, are mainly recruited from the ethnic group of Chad's
president, Idriss Deby. Most of these recruits are Arabic speakers
from the North, who do not know the local languages of the South.
Local discontent appears on the rise, according to recent
visitors to the area. In poor rural areas where the loss of a
small patch of land or a fruit-bearing tree can endanger a family's
survival, farmers have already lost houses and fields to prospecting
work, construction of the base camp and other project activities.
The farmers say they have received ° inadequate compensation.
The fact that the oil consortium's Chadian government supporters
are the traditional enemies of the region exacerbates the situation.
"The risk of renewed conflict is clear. All the seeds
have been sown and all the ingredients are there to plunge us
again into horror," explains the Chadian human rights activist.
Downstream from the oil fields, in Cameroon, political tensions
also run high, though the manipulation of ELF and its allies appear
likely to keep a lid on a potentially explosive situation. Le
Floch-Prigent, the former head of ELF who is now facing corruption
charges in French courts, told the French magazine L'Express that
he had to "convince the Americans discreetly that the pipeline
had to traverse the Francophone part of Cameroon." The French-speaking
part of Cameroon is more controlled by allies of Cameroon's president
Paul Biya, who has been able to hold on to power for the past
15 years as a result of French intervention and with ELF's support.
The English-speaking part of the country, near the Nigerian border,
is an opposition stronghold. The pipeline route reflects a French
military logic, according to the French La Lettre du Continent.
A good road will run along the pipeline, providing rapid access
to French forces should France's political allies lose their grip
"There is not going to be a solution on governance in
the near future. People are desperate, but want to avoid civil
war. The French are behind supporting the status quo," explains
a Cameroonian scholar who prefers that his name not be used. "The
regime decentralizes problems, but not resources, very effectively.
Resources are to be completely controlled by the center. That
is the politics of the pipeline." Under present political
circumstances, the project will do little but prop up an unpopular
and corrupt regime, which even the World Bank cites for insufficient
commitment to alleviating poverty.
The World Bank acknowledges the risk that the oil project
will contribute to civil unrest in Cameroon and especially Chad.
"For any country to go forward there are risks" says
Avi Hoffman, a senior investment officer in the IFC's Oil, Gas
and Mining Department. "We have to take these risks if we
want a positive outcome."
"We see this as an important project for the countries
to establish relations with the international community,"
explains Hoffman. "There will be developmental impact through
the construction of roads, the creation of jobs and transfer of
This approach is diametrically opposed to the Bank's new professed
approach to development. After 50 years in the development business,
World Bank researchers have concluded that social sector investments
provide the largest poverty alleviation benefits. A recent World
Bank news release says, "All potential investment projects
should be examined to determine if they might be carried out by
the private sector, allowing reallocation of Bank funds to expand
Bank support for the social sectors."
In the case of the Chad/Cameroon oil and pipeline project,
money that could be invested in poverty programs is instead to
be spent on corporate welfare. According to World Bank calculations,
a basic Central African health care package -including neo-natal
care in a region with staggering child and maternal mortality
rates-would cost about $12 per year per person. The $370 million
that the World Bank is investing in the pipeline, both through
IDA and the IFC, could provide health care to Chad and Cameroon's
combined 20 million population, with more than $100 million left
over to fund educational programs in both countries.
"President Wolfensohn's speeches highlight that tackling
poverty is our mission," says a World Bank staffer, who requests
anonymity. "We should be tackling poverty in a direct fashion
and not trying to do it through large multinational companies
in the hope that something will trickle down to the poor. That
trickle-down approach is discredited at this stage."
"What we need are small-scale programs that respond to
local aspirations," says Samuel Nguiffo. "Real change
involves decentralization, devolving power to the people at the
base. Without this, the situation in Cameroon will always be a
mess," he adds, voicing the view of many non-governmental
organizations in the region.
If the World Bank is at all serious about President James
Wolfensohn's call to create an institutional ethos with a "sense
of humanity- and social impact" at its core, it should find
new partners for its work in Central Africa. Exxon, Shell and
ELF are not in the business of devolving power, redistributing
wealth or dismantling of corrupt and brutal governments.
Corporations & the Third World