Memorandum submitted by Ute Koczy, Member
of German Bundestag, Spokeswoman for Development Politics, Alliance
90/The Greens
In January 2007, I undertook a trip to Chad
and Cameroon on behalf of the Committee on Economic Cooperation
and Development of the German Bundestag. The aim of the trip was
to gain a first-hand impression of the situation on the ground.
Together with my colleague, Dr. Barbel Kofler (SPD), we wanted
to assess the extent to which the World Bank's commitment in financing
the Chad-Cameroon pipeline had helped to ensure that oil extraction
in Chad contributed to sustainable development in both countries,
thus benefiting the people.
World Bank Group estimates had assumed that
Chad would receive around $2 billion of direct income (an average
of $80 million per year) over the 25-year running period of the
pipeline. In actual fact, by the end of 2006, Chad had already
received $1.175 billion in direct and indirect revenues, and according
to a recent ESSO report, the government's oil revenues in 2007
alone will amount to another $ 1.3 billion.
The World Bank had always been keen to present
the Chad-Cameroon pipeline as a model project. It was intended
to serve as a beacon, in contrast to the numerous extractive industries
projects with negative impacts on developing countries. Yet the
sustained criticism and reports by human-rights and environmental
organisations of negative developments give rise to severe doubts
about this perspective. Our intention in undertaking the trip
in January 2007 was to gain additional information and report
on this.
The developments in Chad show that scepticism
against supporting a non-democratic system was right. The autocratic
President is using the oil revenue to build up armed force, which
in turn allows him to consolidate and maintain his power. By a
political agreement in August 2007, President Deby has managed
to postpone the next elections from 2007 to 2009, which gives
his government the opportunity to harvest oil revenues in the
two years (2007 and 2008) that are estimated to bring to highest
ever oil revenues.
Although oil exploration first took place in
Chad in the 1960s, oil production has only started with the completion
of the Chad-Cameroon pipeline in 2003. Today, more and more oil
fields are being developed. Both the International Finance Corporation
(IFC) and the IBRD participated in the financing of the Chad-Cameroon
Pipeline Project and thus are responsible for the start of oil
production in Chad. Without the World Bank Group's involvement,
it is unlikely that any Western oil company would have been prepared
to take the risk of building the pipeline. Now that the pipeline
has been built and oil is flowing, the World Bank no longer has
any means of exerting leverage on the government.
The security situation in Eastern Chad is worsening.
The current dramatic situation in Eastern Chad has lead to a UN
Security Council resolution and the mandate for a new EU peace
keeping mission. It has to be seen in the context of oil exploitation
and oil exploration activities in Southern Chad and the subsequent
oil revenues, which President Deby undeniably uses at least in
part for military measures against rebels.
I herewith submit our English trip report as
a written evidence to your parliamentary inquiry into the World
Bank and the UK Department for International Development's relationship
with it. Unfortunately, only the short version of the report is
available in English. The full version in German can be found
at:
http://www. ute-koccy.de/cros/default/dok/165/165314.tschad—und—kamerun.
htm.
Yours sincerely,
Ute Koczy, MP, Spokeswoman for Development Politics
BRIEF SUMMARY
OF REPORT
The Chad-Cameroon Pipeline Project, financed
and facilitated by the World Bank Group, was intended to serve
the economic interests of the companies concerned and those of
the governments, which are actually meant to work in the interests
of their people. The overarching aim of the World Bank's commitment
in financing the Chad-Cameroon pipeline was to ensure that oil
extraction in Chad contributed to sustainable development in both
countries, thus benefiting the people.
Unfortunately, hopes that living conditions
in Chad and Cameroon would improve thanks to oil revenues have
not been realised. Especially in Chad, the situation is dire.
The country, under President ldriss Deby, is run in autocratic
fashion and with no prospects of an administration likely to work
for the common good. The security situation in Eastern Chad is
deteriorating, implicating increased armed fighting and worsening
conditions for tens of thousands of refugees and internally displaced
persons.
In this context, huge oil revenues are especially
valuable to the President, who is able to use them to consolidate
his power. At the same time, they make Chad attractive to rebel
groups, who are fighting against Deby with increasing determination.
Our trip to Chad and Cameroon from January 19th
to 26th, 2007, disclosed a major gap between the hopes and ambitions
which were once linked with the building of the pipeline, and
what has actually been achieved and realised. People—especially
in Chad—are very disappointed that their situation has not
significantly improved, that numerous faults in new buildings,
in schools and water containers, have been noticed and that complaints
about environmental damage and pollution (such as generation of
high levels of dust), are not taken seriously.
Initially, World Bank leverage on the Chadian
government has lead to the establishment of the Petroleum Revenue
Management Program in Chad and the implementation of Law Nr. 001.
Both were elements of what the World Bank saw as "model project"
to guarantee good use of oil revenues for sustainable development.
However, increasing threat to President Deby's power posed by
rebel activity, together with the security of flowing oil revenues
to his government, led Deby to amend Law Nr. 001 and to terminate
the agreement with the World Bank on the use of oil revenue. This
shows how World Bank leverage is dwindling and how the initial
World Bank's optimism—believing to influence Chadian politics
favourably for the long term—was wrong.
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