ExxonMobil’s dark empire

Steve Coll’s new book, Private Empire: ExxonMobil and American Power, is out and Democracy Now! has an extensive interview with him about Exxon’s dirty dealings from Indonesia to Nigeria and Chad.

Here’s an excerpt from the interview about ExxonMobil’s involvement in Chad:

Chad, of course, is a benighted country—today about 181st out of 187 countries in the human development index kept by the United Nations indicating quality of life. Life expectancy there is still below 50 years. But it has oil. And its authoritarian leader, to put it politely, Idriss Déby, decided to try to develop this oil, even though Chad was landlocked and didn’t have any national capacity to build an oil company, so they invited in Exxon and the World Bank. And they undertook this experiment, really without precedent, to require Chad to use its oil profits for the good of its people, spending on education, health and social development. And Exxon was a participant in this and described it as potentially a new model to address the resource curse in Africa, where countries that are rich in minerals but try to develop through the sale of those minerals often fail to serve their people very well. So this was a kind of a grand experiment. And it failed.

It failed in 2006 when Déby decided that he needed more guns to fend off rebels who were challenging his regime. And what the book describes, again through State Department documents and others that came out during the research, was that the reason Déby was able to get out of this deal that he had made, promises that he had made to use oil money to service people, was that oil prices rose, and ExxonMobil came to him and said, “We’re about to pay you more than $500 million a year in taxes, because we’re now in the money. And you can use that money to get out of your World Bank agreements and free yourself from these onerous requirements that you spend your money on health and education.” And that’s what happened. And in fact, in this case, ExxonMobil fought with the Bush administration, which wanted this deal to remain in place, and ExxonMobil basically, without calling any attention to itself, provided the means for Déby to abandon the agreement.

The most amazing thing about the Chad story is that the World Bank bought into this farce. When the World Bank attempted to put pressure Chad to honor its poverty reduction pledges (before Chad had paid down its loans), Chad threatened to “turn off the spigot”. The U.S. State Department took Chad’s side in the dispute and the World Bank backed down. Once the loans were paid off the World Bank had no influence whatsoever and that’s when the Bank publicly withdrew its support from the project (a meaningless gesture at that point).

The Daily Beast also reviewed Coll’s book and interviewed him. There’s an interesting Chad bit there, too:

“If you and I were Southern Chadians and we wanted a reason to fight a guerrilla war, winning control of these oil fields would be pretty substantial motivation,” Coll says. “[ExxonMobil] is so much more important than the United States government to the people of Chad, or the people of Akwa Ibom state in Nigeria, or the people of Equatorial Guinea, or Angola. It really is like the 19thcentury East India Company.” In 2006, ExxonMobil transferred to the government of Chad and its dictator, Idriss Déby, $774 million. The entire U.S. budget for aid—food, AIDS amelioration, counterterrorism—was in the neighborhood of 1 percent of that. “So, if you’re Idriss Déby, who do you care about?”

Back to the World Bank — of course one reason that ExxonMobil wanted the World Bank on board was to insure that Deby would not attempt to nationalize the country’s oil industry. That would have been unlikely in any case, but as I pointed out in Cameroon: Pipeline to Prosperity?, the World Bank loans limited Deby’s ability to take over oil operations or sabotage the project in any way.

Coll refers to the huge amounts of money flowing into Chad in several places. Although Chad has earned billions from the Exxon’s Doba fields operations, it’s important to remember that Chad actually got a lousy deal (all totaled, royalties and taxes, Chad collects between 30-40% on its oil). The biggest earner in Chad is — by far — ExxonMobil. Logically, the ratio should be reversed (as it is in many countries), with Chad collecting 70% on its oil.

The World Bank did not work to get Chad or Cameroon better terms. Why not? As one Bank official told me, that’s not the role of the bank.

More on this book soon…


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