[DEBATE] : Black Gold
Sean Jacobs
tintinyana at gmail.com
Sat Feb 16 19:53:03 GMT 2008
* LRB
* 7 February 2008
The Next Fix
Lara Pawson
* Poisoned Wells: The Dirty Politics of African Oil by Nicholas
Shaxson Buy this book
* Oil Wars edited by Mary Kaldor, Terry Lynn Karl and Yahia Said
Buy this book
* Untapped: The Scramble for Africa’s Oil by John Ghazvinian Buy
this book
African oil is sweeter and lighter than Middle Eastern crudes and in
recent years it has begun to look increasingly desirable. For political
reasons, it became especially attractive after 9/11, and today the US
imports more oil from Africa than from the entire Persian Gulf. But
there is competition: China now imports more than a quarter of its oil
from African countries and Angola has overtaken Saudi Arabia to become
its chief supplier. In Poisoned Wells: The Dirty Politics of African
Oil, Nicholas Shaxson argues that these developments are alarming.
While the people who live in Africa’s big oil-producing countries are
getting poorer and angrier, their leaders ‘have a rising tide of money
at their disposal’ and are ‘fit for mischief’. He warns of a ‘cosy
post-colonial complacency’ blinding Westerners to the fact that African
oil isn’t a threat only to the people who live in the countries where
it’s produced: it’s also ‘spreading poison deep into the fabric of the
international financial system and the rich world’s democracies’.
To tell his complicated tale of oil greed, dictatorship, tax evasion,
extreme wealth and extreme poverty, Shaxson draws on an eccentric cast
of characters: a former Trotskyite ex-Christian Nigerian who has become
a revolutionary Muslim and named his son Osama; a French spy with a
Resistance past; a disreputable clan of Corsican Gaullists, one of whom
is a Freemason known as ‘Monsieur Afrique’; a Moscow-born Israeli
businessman who holds Angolan, French and Canadian passports and whose
son owns Portsmouth Football Club; and a bookish magistrate from Norway
who attempts to take on the French establishment and wrecks her
marriage as a result.
Poisoned Wells concentrates on six states on the oil-rich Gulf of
Guinea and opens in Nigeria: from here Shaxson leads us along his own
career path as a journalist, first in Equatorial Guinea, then south to
Angola, back up into Gabon and down again to Congo (Brazzaville),
before a final visit to the tiny archipelago of São Tomé e Principe,
where oil is yet to be drilled. All the other states he discusses are
cursed by their valuable natural resource, which accounts in most cases
for more than 90 per cent of export earnings. Before the years of oil
dependency, Equatorial Guinea, a tiny country, produced 40,000 tons a
year of the finest cocoa, while Nigeria was the world’s second biggest
exporter; Angola was the fourth largest exporter of coffee. Today,
local agriculture has collapsed, life expectancy is low and child
mortality – like corruption, conflict and debt – is high. Most people
in these oil-producing states are becoming poorer. Nigeria is Africa’s
leading oil exporter and enjoys oil revenues of $350 billion, but more
than 90 million Nigerians now live below the poverty line. Equatorial
Guinea dropped ten places on the UN Human Development Index between
1990 and 2000, even though per capita income rose from $368 to $2000.
Shaxson provides some vivid glimpses into the misery of these seemingly
rich nations, but his real concern is to explain how and why they have
failed so badly. He is sceptical of the left-wing tendency to see the
problem in terms of ‘Big Oil’, arguing that ‘white people and their
companies no longer pull the strings in Africa.’ Given the growing
competition from China, Western multinationals couldn’t put an end to
the ‘resource curse’ that afflicts oil-rich countries even if they
wanted to. Shaxson also dislikes moralising critiques of African
leadership, and suggests that politicians there take their jobs more
seriously than many in the West imagine. The key culprits are the
‘corrupting, poisonous substance’ itself and ‘the system’, that
secretive world of tax havens, shell companies, pricing schemes and
shielded trusts which operates in the Square Mile, Geneva, Washington,
Paris, the Cayman Islands and other ‘Dracula zones’. This deterministic
view sits uneasily alongside the evidence, presented later in the book,
that seems to suggest it is a mistake to exonerate greedy businessmen
and politicians, whether they are Western or African.
Having being warned by a friend that he was about to visit the
‘queerest little place in Africa’, Shaxson first went to Equatorial
Guinea as a reporter in 1993. The country had just entered the oil age
and a small American wildcat company, Walter International, was already
pumping and exporting crude. It was also pumping tens of thousands of
dollars into the pockets of President Obiang Nguema’s son to pay for
his studies – and more – in Southern California. By the mid-1990s, Big
Oil was moving in. Mobil (now ExxonMobil) got lucky offshore and,
thanks to a deal struck by the previous operator, was making an
extraordinary profit. The World Bank described the contract as
‘excessively generous’ to the operating company and Obiang resolved
that any new oil deals would have to involve loans from the
contractors. In other words, oil companies started behaving ‘like giant
banks, lending money at implicit interest rates of up to 19 per cent,
and possibly more’; foreign bankers followed, inviting Obiang and his
circle to stash their new wealth offshore. This set in motion what
Shaxson sees as the cycle of addiction, typical of all the states he
considers: ‘Just as heroin addicts lose interest in work, health,
family and friends and focus increasingly on the next fix, so
politicians in oil-dependent countries lose interest in their fellow
citizens, as they try to get access to the free cash.’
In 2003, ExxonMobil and another US company, Amerada Hess, were reported
by the Los Angeles Times to be paying Equatorial Guinea’s oil revenues
into a special account controlled almost single-handedly by Obiang, at
the Washington-based Riggs Bank. In July 2004, when the Senate
Permanent Subcommittee on Investigations convened for hearings on the
matter, it transpired that the account had a balance of around $750
million. In total, Riggs had set up 60 accounts for Equatorial Guinea,
including ‘a shell company owned by Obiang in the Bahamas, whose
account took deposits in suitcases of cash in plastic-wrapped bundles’.
Staff at the bank hadn’t bothered to read the 2001 IMF reports that
detailed missing revenues in their client’s country or to comply with
money-laundering laws by establishing the origins of the cash. The
Senate found that US companies had been renting houses from Obiang’s
family, funding children from elite families to study abroad, and
paying huge sums into the bank accounts of individuals, including a
14-year-old relative of Obiang’s. And yet, to Shaxson’s dismay, it was
held that ‘these practices do not infringe the US Foreign Corrupt
Practices Act’ or amount to bribery under US law. Riggs, which was
taken over by the PNC Bank in 2005, was fined $25 million and the
accounts were closed.
The so-called ‘wonga’ coup attempt in Equatorial Guinea was mounted in
2004 and led to the arrest of Mark Thatcher in South Africa and the
jailing of the British mercenary Simon Mann in Zimbabwe. Shaxson toys
with the idea that the US (and possibly Spain and Britain) encouraged
the attempted coup. The US would have had good reason to welcome a
change of regime. Obiang’s son, Teodoro Nguema, owns an airline, a
large timber concession, and a rap record company in Beverly Hills, and
keeps ‘a stable of Lamborghinis, Ferraris, and other sports cars in an
underground garage in Hollywood’. He is also feared by American oil
companies, whom he accuses of ‘ripping off’ his country. They have
certainly done so: at the time of the failed coup, Equatorial Guinea
was recovering just 26 per cent of the value of its oil compared to 45
per cent (at the time) in Angola and 90 per cent in Nigeria. Were
Teodoro to succeed his father, who has ruled the country since 1979, he
might well decide to teach the Americans a lesson and look for new oil
partners. Now the Americans are all over Obiang; in 2006, Condoleezza
Rice welcomed her ‘good friend’ to Washington, much to the dismay of
Obiang’s opponents, who claim that torture is frequently used in
Equatorial Guinea.
Oil may be wrecking lives in Africa, but according to Shaxson it is
equally damaging – possibly more so – to Western countries, leading, as
he puts it, to ‘nothing less than the subversion of French democracy’.
To make his point Shaxson takes us into a ‘rabbit warren’ which he
enters in Libreville in Gabon, where he is collected from the airport
by a man wearing ‘aviator sunglasses’ and driven in a red sports car to
meet a mysterious French businessman called Alain Autogue. Autogue
escorts him to a fancy beach bar called Coco Loco. During the meal, the
young reporter is introduced to ‘a dazzling dirty-blonde woman in a
bikini’ who sips at cocktails while the two men talk. Shaxson is well
behaved and won’t even talk to her. He nonetheless accepts the mobile
phone that Autogue presses on him as a gift, and finds for the first
time in an African country that every time he uses it to ask for an
interview, the response is favourable. ‘I felt like Alice in an African
wonderland.’
Wonderland is about right: Shaxson scampers down a time-tunnel from
present-day Gabon to discuss the dreams of Jacques Foccart, ‘a master
manipulator’ employed by De Gaulle and known as ‘the White Sorcerer’.
De Gaulle set up Elf Aquitaine in order to try and crack the hegemony
of the Anglo-Saxon oil companies and Elf Gabon, one of its
subsidiaries, proved crucial. Foccart operated by creating tight
networks across Africa that served to bind the former colonies into
France. The success of the scheme depended on loyal African leaders,
such as Omar Bongo, who became president of Gabon in 1967 at the age of
31 and was never under any illusions about his country’s relationship
with the former colonial power. ‘Africa without France,’ he said, ‘is a
car without a driver. France without Africa is a car without petrol.’
Bongo, Africa’s longest serving leader, has held onto office by
ensuring that money and power are distributed among different ethnic
groups, but he has also relied on local traditions such as the Bwiti
secret societies. Knowing that Europeans would never be accepted into
these groups or even wish to join them, Foccart turned to the Western
equivalent – the Freemasons. Most top Elf officials were Masons and
Bongo was encouraged to establish his own lodges in Gabon in order to
foster solidarity with Elf. Bongo’s loyalty to the Gaullist party and
Elf was so strong that when Mitterrand came to power in 1981, the
Gabonese leader threatened to switch to US oil partners. In the end a
compromise was reached – Mitterrand agreed not to interfere with the
Elf networks – and the French left joined ‘the Clan’, as the
Franco-Gabonese elite was known.
It took another twenty years, and the biggest fraud investigation in
Europe since the Second World War, for the scale of Franco-Gabonese
corruption to come to light. The investigation did not tackle what
Shaxson calls ‘the wholesale bribery’ of African politicians or Elf’s
payments to African rebel groups, but it did reveal that Elf officials
were shamelessly enriching themselves and that French politicians were
accepting kickbacks. Even Roland Dumas, the head of France’s
Constitutional Court, was found to have Masonic links with Bongo. The
investigation also implicated the US banking system: in the 1970s
Citibank had accepted millions of dollars from Bongo and set up shell
corporations for him in several countries. Staff at the bank became
nervous; the account was eventually closed and the international press
lost interest, though, as one expert who testified to Eva Joly, the
Norwegian-born French magistrate, put it, ‘the US has become the
largest repository of ill-gotten gains in the world.’
You might commiserate with the Gabonese: one child in every seven is
malnourished, two-thirds of the population live in poverty and the
country is struggling to pay off $4 billion of debt. Yet Shaxson’s
sympathies lie with the French voters. ‘The real damage,’ he says of
the Elf Gabon affair, ‘was done to French democracy.’ Nine days after
becoming president, Nicolas Sarkozy met Bongo at the Elysée Palace; it
was the first meeting the new head of state held with a foreign leader.
Sarkozy’s minister of justice, Rachida Dati, a popular figure with the
press because she is a woman of Algerian and Moroccan descent, is a
former Elf Aquitaine accountant.
Shaxson was a little unnerved by Arcadi Gaydamak, the Israeli
businessman with the deck of passports, when they met in Moscow.
Gaydamak is in his fifties and does two hours of kung-fu every day. He
has freed ‘aid workers’ in Dagestan and rescued French pilots in
Bosnia. He’s also an influential financier whose role in rescheduling
$5 billion of Angolan debt, enabling the government to fund its war
against Jonas Savimbi, led the French justice system to issue an
international warrant for his arrest in 2000. Working alongside
Gaydamak on Angola were his friend Pierre Falcone, Mitterrand’s son
Jean-Christophe, and Jean-Bernard Curial, who advised the French
Socialist Party in the 1980s and was an old associate of the Angolan
president, José Eduardo dos Santos. Another key figure was Charles
Pasqua, who tried to run for the presidency in 2002. Sarkozy and Pasqua
have a long-standing relationship and, in Gaydamak’s view, ‘today,
French internal policy . . . is just a continuation of Angolagate. And
Angolagate is a pure product of French internal politics.’
Poisoned Wells provides many more examples of how French and US
policies are intertwined with Africa’s oil-producing nations. It’s a
thorough and engaging account, but there are inconsistencies. Early on
Shaxson states his intention to ‘expose Africa’s oil as a threat to
liberty, democracy and free markets’. Yet with the possible exception
of Gabon’s Bongo, the real power behind African oil is European and
North American. There is no doubt that African elites have taken full
personal advantage of it, but the detail of Shaxson’s book makes clear
how keen Western businessmen and officials have been to get their hands
on African crude.
Shaxson’s defence of what he calls the ‘normally functioning free
market’ is also puzzling. After several months on the Reuters oil desk,
he learned that the oil trade is all about information and secrecy and
that ‘corruption abounds.’ Currently ‘half of all the world’s
cross-border trade involves structures for concealing money’ and the
cost to governments – $250 billion a year – is double the entire aid
budget for the developing world. So why is he so eager to defend ‘the
normally functioning free market’ threatened by African oil? To develop
his own analogy, if African governments have become oil junkies, their
most dependable dealers are surely the oil companies and the foreign
bankers and accountants based in the City of London, Paris, Geneva and
Washington.
Oil Wars, edited by Mary Kaldor and others, came about after Kaldor was
invited to the BP Christmas party in 1998. She didn’t know why she’d
been asked until she started talking to the managing director. He
explained that because BP was getting some bad press for its
‘behaviour’ in Colombia, it had taken the decision to become a ‘human
rights company’. This prompted Kaldor and her fellow editors to explore
what such a commitment might amount to in practice – a task they seek
to combine with a look at the relationship between oil and war,
sketching solutions that might help policy-makers in oil-rich states
avoid conflict.
Using six case studies – Nigeria, Angola, Chechnya, Azerbaijan,
Indonesia and Colombia – Oil Wars explores the extent to which massive
rents from oil can destabilise states and contribute to conflict.
Typically, because governments in oil-rich states depend on oil for
taxable income, the wealth of local citizens ceases to matter. Untaxed
citizens, for their part, don’t have many ways of holding their
governments accountable; elites become richer and majorities become
poorer, and violence – expressed in terms of ethnic, religious or
regional difference – is almost inevitable. ‘Oil wars,’ the editors
conclude, ‘are rentier wars’ and might be prevented if rent-seeking
were restricted by the rule of law, democracy and transparency. There’s
nothing wrong with any of this, except that it’s not clear how this
transformation of oil-rich states into model democracies will come
about. In their concluding chapter, Kaldor and Yahia Said offer a
fanciful wish list of proposals that lays bare the inherent weakness of
Oil Wars: the editors’ apparent fear of upsetting the oil industry
executives who helped them formulate their policy recommendations. They
stress the importance of ‘multilateral’ approaches involving,
inevitably, never-ending ‘dialogue’ among ‘stakeholders’, who seem to
include everyone from people living on less than two dollars a day to
the leaders of the great powers.
Even when Oil Wars appears to make its case, it sometimes does so on
the basis of inaccurate information. In his chapter on Angola, Philippe
Le Billon says the country is currently producing 832,000 barrels of
oil a day: in fact it’s twice that amount. He also mentions Dos
Santos’s ‘commitment not to run in the next presidential elections’ as
a possible factor in the ‘institutionalisation of more democratic
politics’. There is barely a single analyst of Angolan politics who
believes the president will not still be in power after the next
elections.
A similarly ill-founded optimism informs John Ghazvinian’s Untapped:
The Scramble for Africa’s Oil. ‘Between the “scramble for African oil”
and the “paradox of plenty”, there is bound to be a happy medium,’ he
concludes. ‘And between the red roasting sun that cracks up its soil
and the Devil’s excrement that bubbles up from below, there might just
be – if we learn to look for it – a god for us all.’ But by
Ghazvinian’s own admission, people in the US ‘go through oil like it’s
water’, approaching their personal comfort as they’d approach an
‘extreme sport’. They don’t care where oil comes from so long as they
get it: the US consumes more than 20 million barrels a day (China is
the world’s second highest consumer at 7.3 million).
Unlike Shaxson, who has spent nearly 15 years trying to understand six
African countries, Ghazvinian spent six months charging through 12 to
prepare for this book. He kicks off in the world’s twelfth largest oil
producer, Nigeria, speeding by boat into the heart of the Niger Delta,
where 27 million people live within 27,000 square miles, making it one
of the most densely populated places on the planet. Initially vital to
British interests because of palm oil, the delta became even more
valuable when Royal Dutch Shell struck oil in 1956. The juxtaposition
of ‘Stone Age squalor’ with the oil companies’ multi-million dollar
air-conditioned facilities and vast pipelines sparked local protests,
but instead of investing in local communities the oil companies simply
paid village chiefs to bring their disillusioned youth to heel. The
chiefs kept the cash and the youth became angrier. A thousand people
die every year in the Niger Delta conflict, and foreign oil workers –
Ghazvinian describes them as ‘oilfield trash’ – are kidnapped with
increasing regularity. The curse, he concludes, is oil, and Africa’s
other producers are all watching ‘the behemoth Nigeria, and asking
themselves if they, too, will be so unlucky’.
There’s no magic to the curse of oil: it draws its power from the
consumer and no one shows any sign of overcoming their addiction.
Ghazvinian’s account of the Washington ‘petro-evangelists’ in the orbit
of the Bush administration who believe that the African oil industry
has become a key national strategic interest as a result of instability
in the Gulf – by far the best bit of his book – confirms this. ‘We have
to get it from somewhere,’ he writes. Indeed, but if petrol remains the
lifeblood of North America, why does Untapped end on such a fatuous
note of optimism?
Shaxson, by contrast, suggests raising taxes on oil and gas, which
makes sense until you think back to September 2000, when a price hike
in Britain almost brought the country to a standstill; no American
politician would attempt this. He also advocates ‘a few well-aimed
legislative strokes’ to bring an end to offshore secrecy, an ambition
that sets his book far ahead of the others, even if he admits that it
couldn’t work without an extraordinary level of political commitment.
His third and favourite idea is grassroots resource redistribution:
dividing oil revenues among the populations of Africa’s producer
nations and handing out cash to each citizen. African countries, he
argues, already distribute money on a comparable scale in the form of
civil service salaries. He omits to add that these wages are often
delayed for months, sometimes years. With or without international
pressure, it is hard to imagine governments in developing nations
agreeing to such a plan. In March 2007, the Angolan government informed
the IMF that its services were no longer required. Thanks largely to
Chinese loans, oil-rich African states are now in a position to
circumvent Western-dominated institutions.
Lara Pawson is the writing fellow at the Wits Institute of Social and
Economic Research at the University of Witwatersrand. She is working on
a book about Angola.
--------------------------------------------
Sean Jacobs
http://theleoafricanus.com
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