World Bank OK With Blood For Oil

It has been a year since the horror of the bloodshed in Sudan’s Darfur region–with over 200,000 dead in three years–began leaking across the border into Chad. It has also been a year since a simmering conflict boiled over into a full-scale confrontation between World Bank President Paul Wolfowitz and Chadian President Idriss Deby. Are the two connected? In a word, yes. Here’s how.

In 2004, oil began to flow through the World Bank-financed Chad-Cameroon pipeline. The $3.7 billion project is the second largest private investment project in sub-Saharan Africa; oil discovered in Chad’s Doba region in the 1960s would not have finally reached the marketplace but for World Bank finance. The reason: Chad is a war-torn country, the fifth poorest in the world and among the world’s most corrupt. World Bank support meant guarantees of risk insurance for the oil companies involved–Exxon, Chevron and Petronas–in the event of a civil war or other disruptions to the oil supply.

The historic agreement between Chad and the World Bank–announced with much fanfare and in defiance of civil society’s warnings–had explicitly stated that 80 percent of all revenue from the sale of the oil would be directed at poverty alleviation, health care, education and a “future generations” fund.

Although publicly, the Bank declared the project to be proceeding as planned, a U.S. government interagency review conducted in the first six months of the project indicated that 60 percent of the $25 million signing bonus awarded to the government of Chad had been spent “outside of established budget procedures”–in other words, pocketed by government officials or spent on such things as arms–and that “Chadian governance was weakening, civil conflict and risk of famine were increasing and parliamentary elections appear to have been postponed.”

What started as a trickle of funds being spent “outside of established budget procedures” became a deluge six months later: In December 2005, Deby began forced military conscription of young men to resist an incursion from the east, i.e. Sudan. Deby argued that this was a simple matter of self-defense. The truth is slightly murkier than this.

Deby has remained as “president for life” since he first seized power as the leader of his own rebel army in 1990. His enemies abound, and include members of his own family and ethnic tribe, some of whom reside in western Sudan. A variety of rebel factions have been able to establish bases in Sudan’s troubled Darfur region, as well as in eastern Chad.

Competition for power between the rebel groups and Deby’s government began to escalate shortly after the oil began to flow in the World Bank-financed pipeline, in part because oil resources were not being shared outside Deby’s political base. A coup attempt in April 2006 launched in Chad’s capital city of N’Djamena was foiled largely thanks to French troops surrounding the presidential palace.

Millions of dollars intended for development were clearly going astray, and when Deby began blatantly violating the World Bank agreement in December by spending revenue on forced conscription and arms, Wolfowitz had to take action. So, in January 2006, the World Bank suspended its $333 million loan to Chad.

Chad’s oil minister, Hassan Nasser, responded in kind: He threatened to stop the 170,000 barrels a day flowing through its pipeline unless the Bank reversed its decision.

Publicly, the standoff seemed to allow both men to save face. But quietly, in a visit to N’Djamena in July, Wolfowitz and Deby came to a new agreement. This accord allowed for most of the oil revenue to be spent on Chad’s “administration” and “security,” and all money earmarked for a future generations fund to be eliminated. Essentially, this new agreement meant Deby could invest the entire revenue from Chad’s oil fields into bullets and guns. In the stroke of a pen, with no press to herald the change, all of the years of posturing by Bank officials and efforts by civil society groups for development proceeds from the oil revenue had been reduced to a cynical deal: give us the oil, and do with your revenue what you will.

Some argued an exception should be made to the bank accord. Sudanese Janjaweed, on a killing spree in Darfur, were threatening Chad’s stability. Chad needed to protect itself. Perhaps. Or was it that Deby was simply solidifying his iron-fisted control over a country with little public support, while hiding behind the self-righteous banner of self-defense? Would this violence have ever erupted if the oil had not begun to flow in Chad? It may never be entirely clear. But, one year later, indisputable is the fact that World Bank money intended for poverty alleviation is instead being used to buy bullets and guns to fight in one of the most brutal battles being fought in the world today.

It is also painfully clear, as the blood spills on both sides of the Chad border, that the consortium of international oil companies and their allies at the World Bank are being careful to make sure nothing stops a drop of oil from flowing to global markets.

A fragile peace agreement brokered between Chad and Sudan on December 24 seems to be holding–for the moment. Regardless, those of us who pay taxes support the World Bank, and are thereby helping finance Idriss Deby’s brutal regime. Thanks to the World Bank, we may have plenty of oil in our tanks, but we also have blood on our hands.

Daphne Wysham is a fellow at the Institute for Policy Studies in Washington, D.C. and co-director of the Sustainable Energy & Economy Network.