<nettime> Arms purchases in Chad an embarrassment

["Eveline Lubbers" <evel@xs4all.nl>]

This is a very good example of what can go wrong
if oilcompanies get the help of the Worldbank to
set up their pipeline project. Chad gov. bought arms
from first Worldbank money.

(I wrote about this subject some time ago, see my website
http://www.xs4all.nl/~evel when Shell was still involved in this
project: Chad a second Nigeria?)

--fwd-ed message:
this is a translation of an article which was published in a Belgian
daily, De Morgen. The article is pretty good and it was done after CEE
Bankwatch Network and FoE International sent letterS to the EIB about the
Chad-Cameroon project.

Regards,

Paul de Clerck
FoE Netherlands

Arms purchases in Chad an embarrassment for the World Bank

Chad's buying of arms has brought the credit policy of the World Bank, the
IMF and the European Investment Bank into question.

Brussels
By Hans van Scharen
The World Bank and the IMF have decided to freeze their debt
reconstruction programme for Chad, one of the world's poorest countries.
The decision, taken by the two Bretton Woods institutions, followed
confirmation by authorities in the African country that income from a
large-scale oil project was used to buy millions of dollars worth of
weapons. This occurred while the World Bank had assured many critics of
the oil project that ‘the money will be put to good use'. From the
beginning the plan to exploit three oil fields in the southern part of
poverty-stricken Chad had come under severe criticism from NGOs. They held
that oil exploitation and laying hundreds of kilometres of oil pipeline
through Cameroon to the Atlantic Ocean would cause more social and
environmental damage than good. Investigation revealed that the
environmental impact studies conducted were inadequate. NGOs demanded - 
and received  - guarantees from the World Bank that in any case the millions
earned in income would be used to benefit the population. This region is a
place of ethnic and political tensions. At 90 million dollars the loan
from the World Bank for the large-scale oil project may be rather modest
but is extremely important as it provides moral support to the consortium
of the oil companies Chevron, Petronas and ExxonMobil. ExxonMobil only
agreed to participate in the project, investing 3.7 billion dollars, if
the World Bank also took part. Several countries urged the World Bank to
set up an International Advisory Group (IAG) as a condition for its
involvement in the oil project. The intention of this IAG is to monitor
adherence to the agreements made. Chad agreed to the distribution formula
determining how oil income was to be spent and a bank account was opened - 
to be monitored by the World Bank.

Buying arms was definitely not part of the budget. Nonetheless, this is
exactly what the Chad government chose to do with its first millions in
profits. According to the World Bank the weapons were purchased with money
provided by a $25 million bonus paid by Chevron and Petronas after they
joined the consortium. With this purchase Chad broke its promise to
request permission from the World Bank before spending any income from the
oil project. The World Bank has expressed its dissatisfaction in several
ways. It has asked that further spending of oil funds (the remaining 40
per cent) be stopped. It has also requested transparency regarding all
government expenditures. The government of Chad has agreed to this. The
debt reconstruction programme has been temporarily frozen, until Chad has
met all required conditions.

In July 2000 the European Investment Bank (EIB), headed by Philippe
Maystadt, also approved a 160 million loan for the oil project. According
to a spokesperson for the EIB the resolution still must be signed before
it takes effect. A few weeks ago several NGOs wrote to Maystadt, strongly
urging him not to award Chad the loan. The argument from these NGOs, such
as CEE Bankwatch and Friends of the Earth International, against the oil
project is ecological and social damage, the stimulation of police
instability and misuse of profits. "The arms purchases show that the World
Bank  -  and thus also the EIB  -  are not capable of preventing such abuses",
according to Magda Stoczkiewicz of Bankwatch. "Maystadt promised that his
involvement would mean more transparency and openness at the EIB. We have
not seen evidence of this." However, the EIB states that both the European
Commission and the member states were in favour of the project.

The financial institutions view this oil project as a test case. They want
to show that the adage of modern development thinking works: large energy
investments and infrastructure works can truly help a developing country
to progress  -  if agreements are met and there is cooperation with NGOs.
This year the International Advisory Group (IAG) is to begin monitoring
work for the World Bank. NGOs are also watching closely. Given the
shopping habits of Chad this would seem to be a good plan.

(c) De Morgen 2001.
DE MORGEN 31/01/2001 P15


--
________________________________
Magda Stoczkiewicz
Accession project coordinator
CEE Bankwatch Network
Friends of the Earth Europe
29 rue Blanche
1060 Brussels
Belgium
phone: +32 2 5420188
fax: +32 2 537 55 96
email: magdas@foeeurope.org

------- End of forwarded message -------

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