Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 345as $2 billion in revenues for Chad (averaging some $80 million a year)and $500 million for Cameroon (averaging some $20 million a year).The private sector participants in the project are ExxonMobil, with40 percent of the private equity, Petronas (35 percent), and Chevron-Texaco (25 percent). The World Bank’s International Finance Corporation(IFC) is cofinancing the project. Revenue from the project willbe placed in special managed accounts, and priority will be given to sectorssuch as health and education. The Chad-Cameroon projectis therefore a test case for international collaboration to defuse the“curse of resources” by ensuring that a broad section of the populationbenefits from oil revenue. The pipeline will begin to come on stream inlate 2003 or early 2004.The Opportunity. The first proposals by Exxon (now ExxonMobil)to develop the Doba fields date back to the 1980s. Exxon’s initialpartners were Royal Dutch Shell and Elf Aquitaine (now part ofTotalFinaElf), but these companies withdrew in 1999. ExxonMobiloperates the project under the name EssoChad.Chad is one of the world’s poorest countries, and there is a cleareconomic rationale for a project that will increase the country’s revenue45–50 percent once the oil comes on stream (World Bank 2002).The extra funds are to be used for investments in health, education,environment, infrastructure, and rural development. However, Chad’srecord of political instability has discouraged investment. The countryhas a record of north-south divisions and conflict. This is roughlyanalogous to Sudan in that the north has a history of cultural andreligious links with North Africa and the Middle East, while the southis mainly Christian and has closer cultural affinities with neighboringSub-Saharan African states. North-south tensions have not been assevere as in Sudan but have nonetheless led to the emergence of aseries of southern rebel movements. These have now subsided, buttensions remain, and there is still a long-term risk of renewed conflict.President Idris Déby came to power by means of a military coup in1990 but has since emphasized the need for democratic reform. He ledthe way to democratic presidential elections in 1996 and again in 2001,returning to power each time. Despite some problems, the perceptionthat Chad is now significantly more stable has helped to justify theexpenditure needed to launch the Chad-Cameroon project. However,the political and social risks are far from eliminated.Political Risks. The Chad-Cameroon negotiations illustrate thestrong position that companies and external lenders typically enjoy atthe outset of a major project. There was no doubt that Chad neededthe revenues that the project would bring, and the government was