Analysis: Oil and inter-ethnic tension-I

By SAM VAKNIN, UPI Business Correspondent

SKOPJE, Macedonia, Jan. 28 (UPI) -- "Sustainable Development" is a worn out cliché -- but not where it matters most, in developing countries. There, unconstrained "development" has led to inter-ethnic strife, environmental doom and economic mayhem.

In the post-Cold War era, central governments have lost clout and authority to their provincial and regional counterparts, whether peacefully, like devolution in many European and Latin American countries, or less so, as in Africa. As power shifts to municipalities and regional administrations, these bodies begin to examine development projects more closely, prioritize them, and properly assess their opportunity costs. The multinationals, which hitherto enjoyed a free hand in large swathes of the third world, are unhappy.


The outcome of this tectonic shift is a series of unrequited conflicts from Indonesia to Morocco. The former is now a federation of 32 provinces, each with its own, often contradictory, laws, taxes and licenses. They tend to ignore promises made by the central government -- and the central government tends to live and let live. Some multinationals are in denial. They confront the local authorities that in turn legislate to prevent them from doing business, as in the case of Mexican cement company Cemex, described in The Economist.


Others adapt, collaborate with the locals, establish foundations and endowments and invest in local infrastructure and in preserving the environment. Most crucially, bribes that once went exclusively to Jakarta-based officials are now split with local politicians.

But sometimes the consequences are more serious than the reallocation of backhanders. When a corrupt central government colludes with multinationals against the indigenous population of an exploited region, all hell breaks loose.

In Part I of my two-part analysis of these conflicts, I will consider the developmental conflicts in the oil producing regions of Nigeria. In Part II Tuesday, I will look at similar problems in Morocco.

Nigeria is an explosive cocktail of more than 250 nations and languages with different and often hostile histories, cultures, enmities and alliances. It is decrepit. Its people are destitute and unemployed, the crime rate is high, human-rights groups have criticized the army and police, the authorities are powerless, corruption rampant and famines frequent. Most of its oil -- Nigeria's only important export -- is produced in the Niger Delta, home to the Ogoni and Ijaw ethnic minorities. The Ijaw are also actively suppressed and massacred in Bayelsa state.

When the Ogoni protested against the environmental ruination wrought by oil drilling, nine of them were hanged in 1995. But this brutality did little to quell their complaints, including the fact that almost none of the $7 billion to $10 billion in annual oil proceeds was reinvested in the region's economy. This largely economic conflict, brewing since 1993, has now, inevitably, become interethnic and inter-religious. It is now an integral part of the national politics of a Nigeria fracturing along ethnic and religious fault lines.


Multinational oil firms in Nigeria have a strong interest to maintain a functioning political center, with law, order and a respected, multi-ethnic police force. Yet, in their efforts to stabilize Nigeria, they have shot themselves in both feet, repeatedly.

All previous regimes in Nigeria, civilian and military, enjoyed the tacit support (diplomatic and financial) of the big oil multinationals, among them Agip, Mobil, Chevron, Royal Dutch/Shell, and Elf Aquitaine (now Total-FinaElf). The oil companies maintain their own armies, "security forces" -- including helicopters and heavy armor. They rarely openly intervene in local protests and conflicts. But their pronounced silence in the face of numerous massacres, unlawful detentions, murders, beatings and other human-rights abuses by the very army and police with whom they often share their equipment and manpower forced Human Rights Watch to issue this statement: "Multinational oil companies are complicit in abuses committed by the Nigerian military and police." Oil multinationals are also a major source of corruption in Nigeria.

Moreover, many observers conclude that the multinationals' claims to have bettered their ways by applying adequate environmental protection against frequent oil spills and dumping of industrial waste -- improving public health, observing human rights standards, and developing better relations with affected communities -- are nothing but elaborate spin doctoring.


The creation of the dysfunctional Niger Delta Development Commission by the government in 2000 only enhanced this perception. Armed guards, employed by oil companies, continue to wound or kill young protesters. Non-governmental organizations impotently complained to the World Bank about the decision of the Bank's International Finance Corporation, to establish the Niger Delta Contractor Revolving Credit Facility in conjunction with Shell. The IFC did not bother to talk to a single local community about the plan, which is supposed to provide Shell's Nigerian sub-contractors with credit intended to relieve poverty. Shell, of course, is utterly distrusted by the Delta's residents.

Essential Action and Global Exchange has issued a seminal report titled "Oil for Nothing -- Multinational Corporations, Environmental Destruction, Death and Impunity in the Niger Delta" (January 2000). They describe gas flaring, acid rain, pipeline leaks, health problems, loss of biodiversity, loss of land and other resources, malnourishment, prostitution, rape and fatherless children. Oil companies, according to the report, refuse to compensate the locals or clean up; they break their promises, lie to the Western media and finance agents to provoke protesters and break up peaceful demonstrations.

But this may be going too far. American oil firms and Royal Dutch/Shell (though not their Italian and French counterparts) have collaborated fully with NGOs since the public outcry following the execution of Ken Saro-Wiwa, a prominent Nigerian environmentalist and author in 1995. Activists in the Niger Delta often resort to kidnapping, smashing oil installations and even attacking offshore rigs. Security guards are a necessity, not a luxury.


Shell alone has poured $200 million into the local economy, administered by its "development teams" in collaboration with recipient communities. The Economist reports that less than a third of the 408 projects have been a success. Micro-credit schemes run by women did best. Some of the projects were the outcome of extortion by kidnappers, others were dreamed up in corporate headquarters with little regard to local circumstances. But Shell is trying hard.

The Nigerian government asked the Supreme Court last year to rule how offshore oil revenues should be divided between the federal authorities and the 36 states, of which only six, in the southeast, produce oil. The 1999 constitution calls for 13 percent of all onshore oil revenues to be allotted to the states. But it is silent about offshore oil, the bulk of Nigeria's production. Northern states have already threatened to withhold agricultural produce from the south should the Supreme Court plump in favor of the oil producing states. Justice, in this case, may well provoke the disintegration of Nigeria.

Latest Headlines


Trending Stories


Follow Us