Watchdog Groups Rein In Government in Chad Oil Deal

By Douglas Farah and David B. Ottaway, Washington Post, Thursday 4 January 2001; Page A14

KOME, Chad—Konhodjingar Dolbe, chief of this mud-and-thatch hamlet, sat under a giant mango tree surrounded by village elders as he pondered what the pumping of oil might bring his dirt-poor people.

It could mean a lot, because we could do a lot with the money, Dolbe said, sipping strong, sweet tea and chewing on bits of meat. But we don't know what the future holds. There is no information regarding the pipeline or the money we will get. We support it if it benefits us. If not, we don't.

Dolbe is not alone in his ignorance. Despite the bitter international controversy that has surrounded a $3.7 billion oil project over the past three years, many of the villagers who will be most directly affected by the project know little about it.

The essential aspects of the project—the pipeline's route, safeguards against environmental damage and how the revenue it generates will be dispensed—were worked out in faraway Washington and European capitals. And the result was shaped more by foreign and Chadian nongovernmental organizations, or NGOs, than by Chad's authoritarian government or the peasants of this isolated area.

The NGOs—human rights monitors, environmental watchdogs, development groups and similar organizations—played a pivotal role in determining the final form of the mammoth oil pipeline undertaking. The project offers an example of the influence of NGOs that is perhaps unprecedented in a private-sector endeavor of such magnitude—while at the same time illustrating how NGOs operating at the global level and those based in towns and villages throughout the Third World often see issues in starkly different terms.

The venture, which became public knowledge in 1996, is the largest infrastructure project underway in Africa today. It is designed to extract 1 billion barrels of crude oil over 30 years here in southwestern Chad and pipe it across neighboring Cameroon to the Atlantic coast, 650 miles away. For three years, until the day in October when construction began, NGOs set the agenda—first opposing the pipeline, then using their influence to establish principles for oil companies operating in developing countries.

NGO demands even determined the level of compensation for any mango trees that villagers living along the pipeline's path may lose, while leaving the Chadian government little room for diversion of cash or other corrupt practices.

In Ndjamena, Chad's capital, a 12-hour drive from here along the only road, oil company officials readily attest to the impact NGOs are having on their business. We call NGOs the fifth branch of government here, said one oil company official. That is how much influence they have gained. I have never seen anything like it.

As influential as the NGOs proved to be, the pipeline project nevertheless highlighted the divide between such organizations based in industrialized countries of the Northern Hemisphere and those working in developing nations to the south.

In the case of the pipeline, groups in the United States and Europe first sought to derail the project over environmental and human rights concerns; their counterparts in the region saw hope that the pipeline might improve the lot of the impoverished people with whom they work. The chasm was bridged and a compromise reached. But how big-issue groups will cooperate with grass-roots groups in the future remains to be seen, and critics within the World Bank, oil companies and academia are starting to challenge the claims of NGOs to represent with moral certainty the interests of voiceless majorities in developing countries.

Largely an empty land, Chad is the world's fifth-poorest country, according to U.N. figures. Eighty percent of its 7 million people live on less than $1 a day. The existence of considerable deposits of oil—the country's only known mineral resource—has been known for 30 years. But little was done about it until 1993, when Exxon—now Exxon Mobil, the world's biggest private oil company—became interested in spending the billions of dollars necessary to exploit the black gold.

From the outset, there were persistent doubts about whether the project would go forward because of its high cost and complexity. Exxon's original two European partners dropped out suddenly last year, and only in May did the American giant find two others, Chevron of the United States and Petronas of Malaysia, to help share the risks and cost.

Exxon kept the project wrapped in secrecy. Environmental NGOs based in Washington learned only in 1996 that it was going forward. The following year, they launched an international campaign to kill the project, focusing their energies on the World Bank, which was considering requests from Exxon, as well as Chad and Cameroon, for financial and political support.

Korinna Horta, senior economist at the nonprofit group Environmental Defense, put together the first detailed analysis—and broad indictment—of the project in February 1997, claiming it was sure to result in environmental devastation and brutal human rights violations.

Organizations such as hers and the Bank Information Center, the Sierra Club and the Center for International Environmental Law made use of their Washington offices to extract closely held studies about the project from the World Bank and U.S. government agencies. They then relayed the information to their counterparts here in Chad and in Cameroon.

NGO leaders here say that had it not been for the activists in Washington, the pipeline plan probably would never have been revealed before the start of construction, because Chad's strong-arm leader, Idriss Deby, had sought to avoid public scrutiny of other large projects. Exxon, however, said that as early as 1993 it had begun one of the most extensive consultation efforts ever undertaken in Africa, which included holding 900 village-level public meetings in Chad and Cameroon to explain the project.

At first, NGOs in Washington and European capitals wanted the project halted altogether. But they discovered that Chadians generally viewed the project, with its promise of jobs and a huge jump in public revenue, as the chance of a lifetime to move out of abject poverty.

When we came in, we came in too forcefully, too directly, said a European NGO worker here. We were saying 'Stop the pipeline' in the name of the people, and the people were saying, 'Maybe we can have a better life. We want the pipeline.' So we had to step back and rethink our approach.

NGOs at Odds

The issues surrounding the project showed northern and southern NGOs that they had markedly different priorities. Those based in Washington and European capitals focused on environmental issues, such as the potential damage of the pipeline to rain forests in Cameroon and possible oil spills on precious aquifers in Chad, or on human rights abuses. But these proved to be secondary to most Chadians, and local activists have had to bend to grass-roots pressures here. Because the oil revenue for Chad is projected to be at least $2.5 billion over 30 years—enough to allow the government to double its spending—NGOs have turned their efforts to ensuring that the revenue is used to help the entire country and not siphoned off to the private bank accounts of senior government officials.

One Chadian human rights activist who sought to bridge the north-south NGO gap was Delphine K. Djiraibe, president of the Chadian Association for the Promotion and Defense of Human Rights and currently a fellow at the Center for International Environmental Law in Washington.

At the very beginning, we were all lobbying to stop the pipeline, Djiraibe said. I am still against the pipeline completely. But everyone kept saying, 'Try it; maybe it will help us,' so we had to look for ways to make the project better, not kill it.

The NGOs came up with a set of demands that they felt should be met before the project could go ahead, demands that easily could have killed the project in its infancy. These included a two-year moratorium on any decision by the World Bank and numerous local conditions—among them, establishment of a democratic government in Chad; an end to corruption in Cameroon; an exhaustive environmental impact study; better compensation for peasants who would lose land or trees along the pipeline route; and various monitoring mechanisms to track spending of oil revenue.

But the oil firms and the NGOs, through a grueling process of negotiation, reached agreement on what could be done, and under what circumstances. Horta, of Environmental Defense, said she still feels the project is a poisoned gift but that her group had decided to bow to the strategy dictated by the local NGOs.

What emerged from the NGO-World Bank dynamic was an agreement that takes an unprecedented step: denying a government discretion over how to spend its oil revenue. Instead, the oil money is to flow first into an escrow account offshore, from which loans are repaid directly to the lenders. The rest of the money is sent back to national banks, but with the accounts and spending overseen by a nine-member national supervisory board, four of whose members are NGO representatives. There is also an international advisory group watching over the process and reporting to the World Bank's president.

The Chadian government acceded to NGO and World Bank demands that 80 percent of the oil revenue be spent on health, education, infrastructure and rural development, giving Chad an opportunity—unique in its troubled history—to modernize.

An additional 5 percent will be returned to the areas where the oil is pumped, 10 percent will be set aside in a trust for future generations and 5 percent is earmarked for discretionary use by the government.

World Bank involvement, which NGOs initially sought to block, proved to be a crucial leverage point for them in their campaign to establish the new principles. Exxon Mobil could not have proceeded had it not obtained support from the World Bank. After a lengthy debate with NGOs, the bank in June decided to provide $93 million in loans to Chad and Cameroon—about 3 percent of the project's cost. That cleared the way for a $100 million loan from the World Bank-affiliated International Finance Corp. and $300 million from private lending institutions.

World Bank officials, after three years of squabbling with NGOs, acknowledge that the prickly process has resulted in some significant improvements in the project. It was NGO pressure that made it clear to us that we would have a really hard time going ahead without true transparency mechanisms, said Mary Barton-Dock, the World Bank representative for Chad. They kept pushing on revenue management, and I think we have a much better project because of that.

Whether the new transparency mechanisms will work is already being tested. In June, President Deby immediately spent $4.5 million in pipeline project revenue to buy weapons to fight a festering insurgency. His behavior drew condemnation from World Bank officials, while NGOs pointed to it as proof that Deby has no intention of complying with the guidelines.

On the other hand, NGOs succeeded in forcing the oil companies to retrace the pipeline's route to keep the number of displaced peasants—as well as its impact on rain forests and pygmies in Cameroon—to a minimum.

There were dozens of adjustments . . . in response to concerns raised by NGOs, said U.S. Ambassador Chris Goldthwait, who has taken an active role in getting the project underway. The NGOs, with their public discussions of things, attuned people generally to the need to be in touch with people in the region. . . . It really is a better project because of the attention it received in the early stages.

While the interest groups, lending institutions and oil firms congratulate themselves on their compromise, no one seems to have gotten the message across in this impoverished region that it will take three years before the pipeline is completed and revenue starts flowing for development projects.

‘Basics for a Good Life’

In dozens of interviews, residents said that all they've seen so far is that the oil company has built its employees a big base camp with electricity and running water. They complained bitterly about the sharply increased presence of Chad's feared paramilitary gendarmerie, a force implicated in several massacres during years of ethnic and political violence in this region.

In the hamlet of Miandoum, Chief Djasro Ugorombre Perre said he had heard of NGOs but that so far none had come to visit him or ask what he and his people wanted. Neither had the government, he said.

We are drawing up projects because we have heard there will be money, Perre said. If they put good people in charge of the money, then I think things can change. If they just send people who will steal, then our lives will not change.

Among the projects Perre has requested are electricity, running water, a primary school, a secondary school and a hospital. We don't want to ask for too much, Perre said. We just want the basics for a good life.

People have all their hopes in the pipeline. They think it will change everything, said Soumaine Adoum of SwissAid, a large NGO here. But that is not necessarily the way things will be.