Chad Oil Revenues Deal in Doubt

Exxon Mobil and the World Bank made a deal to put royalties from Chad's rich oil reserves into a "transparent account." Chad's government agreed that the money would help the poor with better health care, schools, and roads. Now, Chad's government has changed course. Steve Inskeep discusses the impasse over oil revenues with Nikki Reisch of the Bank Information Center, a watchdog group that focuses on human rights issues.

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STEVE INSKEEP, host:

Corruption is at the center of a dispute involving an African nation and an American oil company. Exxon drills for oil in Chad. It does so under a deal that was meant to keep government officials in Chad from stealing that country's share of the money. The World Bank financed a pipeline to get the oil to market, only if Chad put some profits in a special account to help the poor. This was hailed as a model for Africa until recent days when Chad's parliament decided to change the rules.

One person following the story is Nikki Reisch. She's the Africa program manager for the Bank Information Center which has been very critical of the entire deal and is in our studios. Welcome to the program.

Ms. NIKKI REISCH (Africa Program Coordinator, Bank Information Center): Thank you.

INSKEEP: The basics first here--how was it that this deal was intended to pull Chadians out of poverty?

Ms. REISCH: Well, in 2000 when the bank committed over $200 million through its public and private sector lending arms to the project, they did so on the condition that a system was created to direct revenues from oil to sectors like education and health and they did so because they had leverage over Chad, a relatively small and poor--not small, land-wise, but a relatively small in terms of its political power. So, they had the leverage at that time to put a condition on their support.

However, what's been a common critique of people on the ground in Chad has been that the government has no history of democratic governance and has no history of respect for human rights, so there was no guarantee that they would hold to those commitments. And, as we've seen play out in the last several months, they in fact, haven't.

INSKEEP: And the government there has said that they have their reasons for doing this. Correct?

Ms. REISCH: Right. Well, they're facing increasing tensions, not only from internal domestic rebellions but also tensions with Sudan, their neighboring country to the east. These security tensions then--increasing insulation of the government, loss of insiders from President Deby's regime, have led to a crisis where they're interested in getting their hands on more money for immediate use of security spending and other needs.

INSKEEP: Well, let's talk about the other realities of what people have done. The World Bank has withheld the money. Exxon has withheld the money even though there's a risk Exxon could somehow be shut out of the country. Don't they deserve some credit for that?

Ms. REISCH: Well, I think they do deserve credit for taking a stance and responding to demands that the Chadian government not be allowed to change these laws without any repercussions, but it's not clear how long they'll be able to continue this system of waivers.

INSKEEP: Speaking of someone who's visited Chad a number of times, can you just tell us--this program was in place for a number of years, millions of dollars did pass through these accounts--are the people of Chad any better off?

Ms. REISCH: I would say that there are very few, if any, discernable improvements in the lives of the Chadian poor. This is a country of over 8 million people, the majority of whom live on less than $1 a day and there are continual complaints about the impacts on the predominantly agricultural region of the south. Farmers down there have experienced negative impacts from the expansive infrastructure of the pipeline and haven't really seen benefits in terms of increased services, education and healthcare.

INSKEEP: Millions of dollars have gone through this account. Where have they gone?

Ms. REISCH: Over half of the money that has gone through the system and the oversight body has gone to infrastructure, to large road projects and others. People have speculated that this is largely because Deby's own family is connected to the largest infrastructure companies operating the country.

INSKEEP: The President--the long-time President (unintelligible)?

Ms. REISCH: That's right. People have suspected that. I think some of the other money has actually not been effectively used, partly because of a lack of ability to spend in the government ministries. But, if you're gonna do a project that hinges on using petrol dollars for poverty reduction, the government has to be capable of doing that and it has to have the political will to do that.

INSKEEP: Nikki Reisch of the Bank Information Center. Thanks very much.

Ms. REISCH: Thanks.

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