How oil damages development

By Jeremy Scott-Joynt
BBC News Online business reporter



The charity Christian Aid has joined the ranks of groups highlighting the misuse of oil and other resource revenues in developing countries.

Oil, the group says in a new report, has brought developing countries more harm than good.

Its numbers indicate that oil wealth has tended to bleed away into the pockets of officials, soldiers and other elites, warping a country's development and far too often leaving its citizens in poverty.

The group wants oil companies to be more transparent in such payments, and some governments including the UK have pushed for voluntary disclosure.

Privately, some oil executives say that they want to put the numbers out in the open. But unless everyone agrees, anyone going public will simply lose deals to their less scrupulous rivals.

A number of countries have been singled out in recent months and years for failing to make sure their citizens benefit from their resources.

Angola

Angola's oil wealth is a relatively recent phenomenon.

The presence of oil in a developing country makes life worse, not better, for the people who live there

Christian Aid report


More details on the report
The offshore fields only became economic to drill in the past decade or so, but the stampede among Western oil firms is well under way.

Unfortunately, not all are sharing in the benefits.

The International Monetary Fund (IMF) currently has investigators in Angola, on the trail of almost $1bn which the IMF believes vanished from state coffers in 2001 alone.

The money, the IMF suspects, was diverted from oil sales into the pockets of senior government, business and military figures. It amounts to $4bn in all over five years.

The behaviour would seem to mark a continuation of habits built up during the country's 27-year civil war, which only ended last year with the death of Unita rebel leader Jonas Savimbi.

Throughout the war, oil revenues paid the government's bills, while smuggled diamonds did the same for Unita.

Sudan

Sudan's civil war, in contrast, still rages between a Muslim-dominated government in Khartoum and mainly Christian and Animist southerners who say they are systematically discriminated against.


Oil has done little to help Sudan's people avoid famine
Oil again plays a part, with both sides selling stakes in the fields under their control.

The peace talks are stalled largely because neither will give any ground on the question of mineral rights.

And all the while, international oil firms continue to pump.

Democratic Republic of the Congo (DRC)

More than two million people have died in "Africa's World War", as the conflict that has ravaged the DRC for the past half-decade is known.

Six other countries' armed forces have been involved, and a UN Security Council expert group has accused most of them of profiting from the Congo's riches.

The country has been a magnet for the greedy for a century and a half - first the Belgians under King Leopold, and then - after independence - anyone willing to pay the right money to President Mobuto Sese Seko and his cronies.

Mobuto was deposed in 1997, but the war raged on, and the UN report says that some senior officials and soldiers from some of the other countries involved - notably Uganda, Rwanda and Zimbabwe - have planned their troop deployments in part to protect diamonds, oil, timber and minerals they covet.

The fighting in the resource-rich, north-east province of Ituri alone has displaced half a million and killed 50,000.

Nigeria

Nigeria is Africa's biggest oil state, and the continent's sole member of the Opec cartel, but its population have yet to see much in the way of benefits.


Nigeria's dictators robbed the country of billions
Successive military leaders have diverted billions of oil money into bank accounts around the world.

The late Sani Abacha, for instance, has had $1.6bn linked to him alone, and investigators are sure that he squirreled much more away elsewhere.

Meanwhile, the Niger delta, where much of the oil production takes place, is widely polluted, and its people put down by a military widely believed to have sometimes acted at the behest of the oil companies.

In the 40 years since exploitation started, the number of Nigerians on less than US$1 a day has grown from 27% of the population to 66%, the World Bank says.

These examples are all African. But the problem is worldwide.

Kazakhstan

President Nursultan Nazarbayev is a wealthy man - and he's only getting more wealthy, if the suspicions of a US court are borne out.

The court is investigating allegations of a $78m slush fund for Mr Nazarbayev and a handful of other senior officials, built up by a US bank chief in exchange for oil consulting business.

Where the money originally came from is still open to debate, but the investigation is looking into alleged involvement by the oil companies themselves.

One senior ExxonMobil executive is already facing tax evasion and conspiracy charges for having allegedly taken a $2m kickback when he negotiated then-Mobil Oil's $1.05bn purchase of the Tengiz oil field in 1996.

Saudi Arabia

The Kingdom has the largest proven oil reserves in the world - and they all, officially, belong not to the nation but to the royal family.

The largesse of former years meant that the benefits were, to some extent at least, spread around in the form of heavily subsidised education and healthcare.

But times are not what they were in the home of black gold.

The money is flowing less freely these days thanks to falling prices and mismanagement, and the feuding between the hundreds of princes in the House of Saud - King Fahd, now in his dotage, has long been sidelined - hardly helps matters.

Unemployment is shooting up, benefits are falling, and the level of unease and even unrest in the secretive kingdom is growing.

And yet the feudal nature of Saudi Arabia means most of those with their hands in the purse have a vested interest in the status quo.