Natural Resources and Violent Conflict - WaterWiki.net

88 swanson, oldgard, and lundeleast some of the discrepancy identified by the IMF may be due to badaccounting practices on the side of the government [but] . . . certainindividuals may have taken advantage of the smokescreen providedby slack financial management in order to divert funds into their ownbank accounts.”ChadMost reporting requirements for host governments are likely to beimposed internally, for example, by the country’s own parliament. Intheory, reporting conditions may be imposed by outside parties, for example,as a condition for assistance. However, countries with significantnatural resource–related revenue flows generally will be in a position toavoid such conditions because they have less need for the sort of loansrequired by other developing countries. As Ross (2001, p. 201) pointsout, “Conditionality works best when the recipient state is small, andits government relies heavily on international donors; or when a largergovernment is in crisis and has little choice but to accept the donor’sdemands. In most other cases, governments find ways to evade or counteractthe conditions they dislike.”The Chad-Cameroon Petroleum Development and Pipeline Projectmay be one of the few examples of conditionality on a natural resourcedevelopment project. The IMF and World Bank have placed oversightconditions on resource revenue flows in exchange for their assistancein financing the government’s portion of this project, which seeks todevelop oil fields in southern Chad for export via a new pipeline toCameroon’s Atlantic Coast.A number of companies reportedly had been looking at Chad’s oilpotential for several decades, but had been put off by the severe, longtermpolitical difficulties and economic mismanagement in the country.ExxonMobil finally agreed to invest on the condition that theChad government sign an agreement with the World Bank and IMFarranging for a large portion of the government’s oil revenues to go topriority development projects.According to the World Bank, the Law on the Management of OilRevenue, developed with World Bank assistance and passed by theChadian Parliament in 1998, establishes “clear guidelines for the allocation,control, and oversight” of oil revenue (World Bank 1999). Thislaw requires 10 percent of revenue to go to a future generations fund,while 80 percent of the remainder must be invested in health, education,and vital infrastructure. These flows are to be monitored byParliament, as well as an oversight committee that includes representativesof civil society (see box 3.6).