THE RHETORIC may be flying, with outbursts over “a fool’s agreement” and “neo-colonialist and imperialist behaviour,” but most observers believe the oil row between the Chadian government and the World Bank will end in a face-saving compromise, according to the IRIN news agency. The current stand-off began in December when Chad’s parliament passed an amendment to the law governing how oil revenues can be spent, prompting the World Bank to suspend $124m in loans and cut the flow of petrodollars to the landlocked, impoverished country. “Sooner or later they will be obliged to find an agreement. The world can’t afford for Chad to become a failed state and President Idriss Deby knows it,” said one Western diplomat. “He will likely be punished by the World Bank, but it will more discreet than official.”
The Chad-Cameroon oil pipeline, which cost $3.7bn, was vaunted as a model for making African resources work for the African people: 10% of revenues was to be set aside for future generations, and 80% of what remained was to be used on priority sectors like education and health. However, the recent changes to Chad’s laws abolish the trust fund, double the amount of revenues flowing directly into the Treasury to 30%, and add security, justice, and territorial administration as priority sectors, meaning a smaller share of the income for schools and clinics.
In a country that was ranked the most corrupt in the world last year by Transparency International, much of the furore has focused on spending priorities, but there is one element of the legal changes that most observers agree is decidedly a good thing: whereas the original agreement covered only three oilfields, the amended law extends it to any operations that come on stream in future. “The original law was introduced in 1999, four years before our oil even hit the market. It was a leap into the unknown,” finance minister Abbas Mahamat Tolli told IRIN in an interview in Chad’s capital, N’djamena. “Today, knowing the realities on the ground, we realized the law needed revising.”
Chadian realities, however, include a wave of army defections, rebel groups announcing they have regrouped in the east with the aim of toppling Deby, and the president’s declaration of a “state of belligerence” with neighbouring Sudan. Then, there are also presidential elections this year, where Deby is allowed to stand for a third term thanks to an amendment to the constitution. And, chief among the international community’s concerns, 200,000 refugees from war-torn Darfur are sheltering in camps along the eastern border.
Chad’s parliament, where Deby’s party holds an overwhelming majority, approved changes to the oil revenue law on 29 December; the World Bank announced on 6 January that it was suspending loans. Five days later, Deby signed-off on the amendment, and within 24 hours, Bank President Paul Wolfowitz ordered a London-based transit account frozen. Now, diplomats and analysts say, the two sides are going to have to figure out a way to find a compromise so that both can claim victory. “Chad and the World Bank both have a lot at stake, they definitely would not like the whole thing to come down on them,” an African diplomat said.
One solution might be a year’s moratorium on the future generations fund; another is that any new oilfields would be exempt from the future generations rule; or there may be horse-trading about what constitutes a priority sector, whereby security is added, but justice and territorial administration are not. In an effort to start to defuse the situation, Chadian government officials held three days of meetings in Paris with representatives from the World Bank, which the global lender described as “constructive”, and a delegation from Washington is expected to visit N’djamena soon, but not everyone is confident of a quick and neat resolution. “Deby’s a double-or-quits sort of man,” said Ibni Oumar Mahamat Saleh, one of Chad’s main opposition leaders. “And the damage has been done. It’s given the idea that our country is one where the law is not respected. Why would investors come now?”