ExxonMobil and Chad’s Authoritarian Regime: An ‘Unholy Bargain’
IN FOCUS, 19 June 2012
by Joyce Hackel – The World
The West African nation of Chad is poor. Really poor. Life expectancy is under 50 years. In fact, Chad residents scrape the bottom of the barrel on most every indicator on the Human Development Index, overall ranking 183rd out of 187 nations. That’s despite vast oil wealth, including about $750 million per year in taxes and royalties from the oil giant ExxonMobil.
How can a country be so oil rich, and dirt poor?
In his new book “Private Empire: ExxonMobil and American Power,” Pulitzer prize-winning author Steve Coll examines ExxonMobil’s “outsized-influence” in impoverished countries.
Coll offers a case study of a “grand experiment” in Chad that started in 2001. The “gamble” was funded by the World Bank, and spear-headed by an Exxon Mobil-led consortium. It bankrolled the develop of oilfields in southern Chad in 2001, but conditioned the financing on agreements from Chad’s government to use the revenues to combat poverty.
Several years into the project, Chad’s leader Idriss Deby backed out and the deal collapsed.
“ExxonMobil’s tax and royalty payments were so gargantuan, he could just afford to buy his way out of the compact,” Coll says.
Coll says if ExxonMobil is going to do business in places where corruption is rampant, it should conditions its participation on transparency.
“This is not Saudi Arabia or Kuwait where per capita income is $20,000 a year. And while the country suffers from all sorts of deficits it is not grinding its people into poverty and exclusion the way Chad’s government is.” Coll says, “There has to be part of the world – and Chad would represent it – where standard operating procedures are just not acceptable.”
Alan Jeffers, Exxon Mobil’s Media Relations Manager, disagrees. He says the firm takes corporate social responsibility seriously, but isn’t going to participate in nation-building.
“If the question is: are we only going to operate in countries that Steve approves of, I think the answer is going to be ‘no,’ ” Jeffers says. “We cannot be expected to be the United Nations. That would not be true to our shareholders. There are non-governmental organizations that we work with all the time who have that as their core function.”
Asked what countries in Africa ExxonMobil has refused to do business in, Jeffers replies, “I don’t have any response to that question Marco. We are in the business of finding and developing energy and there are obviously laws that we have to abide by and we do that, and we do that in the most ethical and most transparent way we can.”
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Marco Werman: I’m Marco Werman and this is “The World”, a co-production of the BBC World Service, PRI, and WGBH Boston. One company sits at the very top of the list of Fortune 500 Companies – ExxonMobil. It’s profits last year tallied forty billion dollars, more than the grossed domestic product of many countries, and the company’s reach is global. In the new book “Private Empire: ExxonMobil and American Power”, author Steve Coll examines the oil giant’s operations around the world. We’re going to focus on one country in West Africa – Chad. Coll describes ExxonMobil’s presence in Chad as a sort of throwback to Africa’s colonial period.
Steve Coll: Five hundred and fifty different installations, a fenced main operating headquarters, shacks around the edge of the fence with prostitutes and and beer sellers and market makers of different types, employees that go into the ExxonMobil compound for thirty-day shifts and are not allowed to leave during that time. The African employees I met referred to it as Guantanamo with tongue in cheek. And, of course, they make good salaries and enjoy a relative life of privilege compared to many other Chadians in the south, but the comparison to the 19th Century I think is apt in part because of the just outsized influence that ExxonMobil has in a place like Chad, of course a very poor country. A hundred and eighty first out of a hundred and eighty seven in the Human Development Index. In the global table of quality of life indicators life expectancy is still under fifty years in Chad. And yet ExxonMobil is delivering to the authoritarian government led by Idriss Deby, in the mid 2000s, roughly seven hundred million dollars a year in taxes and royalties. That compares, for example, to US aid in Chad of maybe ten million all-in. So if you’re Idriss Deby and you look across the capital and you see the US embassy on the one hand and the ExxonMobil country representative office on the other, it’s obvious which one represents American power in your country.
Werman: I mean the point you make with Chad is that ExxonMobil thought it might be able to ensure the country’s oil revenues would somehow the benefit the population, but, as you pointed out, it didn’t. Chad is still at the bottom of the index on indicators. Why did that not happen?
Coll: Well, it was an unusual gamble by ExxonMobil. Normally they just keep their heads down and try not to get involved in politics or social experiments, but here was a case where the only way they could develop the oil in landlocked Chad was if the World Bank and other governments on the board of the World Bank got involved in what was a grand experiment to try to beat the Resource Curse which is the pattern in which poor countries that lead their development with resources and mining and oil generally end up no better of except for their elites getting Swiss bank accounts. And the way they were going to beat the Resource Curse was to develop this unusual compact in which Chad’s government agreed to direct a big chunk of the oil revenue they received to social spending, health, education, infrastructure. But five, six years into the project, Idriss DEby decided that he needed guns more and at that point ExxonMobil’s tax and royalty payments were so gargantuan that he could afford just to buy his way out of the compact, and so the whole experiment collapsed. The Bush administration confronted him, the World Bank, led by former Deputy Defense Secretary Paul Wolfowitz, tried to prevent the deal from collapsing, but ExxonMobil’s sort of royalty payments and tax payments were just so great that it overwhelmed this kind of paper agreement to do better.
Werman: I’m wondering though are there any examples of African governments that benefited from ExxonMobil oil production and then did progress democratically?
Coll: No. Not yet. The totality of ExxonMobil’s presence in West Africa I’m afraid has been destabilizing, especially in these weakest of countries, Chad, Equatorial Guinea. The price of oil production makes the presidential palace a kind of bank that’s just waiting to be robbed by coup makers or guerrilla forces. It induces subversion because if you can capture the presidential palace, the next morning you’ve got a Swiss bank account with thirty million dollars in it.
Werman: So what more responsible role could Exxon play do you think?
Coll: They have to go beyond the standard parameters of corporate responsibility in countries that are as poor as these. They define their charity in these countries narrowly. They make some useful contributions to malaria eradication, health, infrastructure, but they very adamantly refuse to be engaged on anything that smacks of nation building, investing in the country’s educational system, coercing the government to improve its performance on all of these social indicators. They fear that if they become too active they will alienate the very dictators on whom they depend for their contracts. But this is an unholy bargain, and I think in the world we’re moving into, it’s just not sustainable. Corporations are not going to be able to persist without resistance from both local citizens and also global human rights organizations and others.
Werman: What more specifically do you think they could be doing in Chad?
Coll: I think that they could be leaders of the revival of the goals that were inscribed in the World Bank’s original compact. They have the discipline and the operating culture to actually set targets and see those pursued in a serious rigorous way. I think the . . .
Werman: In other words, they would say to the government, “Look, we’ll do business here, but by the end of next year we want to see thirty infirmaries and forty schools”?
Coll: Yes, “And we want to partner with you to make sure that those infirmaries and schools have actual nurses and teachers in them that are trained to an international standard. And we’re going to take the risk of being visible because this is just not acceptable. This is not Saudi Arabia or Kuwait where per capita income is twenty thousand dollars a year. And while the country suffers from all sorts of deficits, it is not grinding its people into poverty and exclusion the way Chad’s government is.” There has to be part of the world, and Chad would represent it, where standard operating procedures are just not acceptable.
Werman: Steve Coll’s new book is “Private Empire: ExxonMobil and American Power”. Steve, great to speak with you. Thanks a lot.
Coll: Thank you for having me.
Werman: We wanted to hear what ExxonMobil has to say about Steve Coll’s challenge to the company to rethink it’s responsibility toward impoverished countries like Chad, so we called Alan Jeffers, ExxonMobil’s Media Relations Manager.
Alan Jeffers: We take corporate social responsibility very seriously. We invest a lot of time, effort, and money. And many of the people in the company who have regular day jobs producing oil and gas have night jobs in the communities in which they work and live in.
Werman: But in the case of Chad, if we just take the case of Chad, that isn’t the case. I mean things are worse off. People are worse off today than they were before ExxonMobil went in. I’m just wondering what you make of Steve Coll’s challenge that ExxonMobil only engage with governments like the one in Chad that are not transparent, unless those governments agree to meet targeted goal, for example, building schools and infirmaries. I mean would ExxonMobil actually commit itself more deeply to than kind of relationship?
Jeffers: We absolutely support transparency and oppose corruption. “If the question is are we only going to operate in countries that Steve approves of, I think the answer is going to be no.” The core of this book tells a story about a company that, if your listeners read the book, you’ll see our commitment to safety and discipline and really just doing what it is our job is to do and do that ethically and honestly and opposing corruption. We cannot be expected to be the United Nations. That would not be true to our shareholders. There are non-government organizations that we work with all the time who have that as their core function and we support many of those organizations
Werman: So tell me which countries in Africa has ExxonMobil ruled out doing business in?
Jeffers: I don’t have any response to that question, Marco. We are in the business of finding and developing energy and, you know, there are obviously laws that we have to abide by and we do that, and we do that in the most ethical and transparent way we can.
Werman: Let me just ask you a very basic question. I mean why is such an enormous corporation like ExxonMobil, number one on the Fortune 500, you’ve got so many options, why do business with countries with corrupt governments?
Jeffers: Whose measure of corruption? I mean you go into a country and you produce the resources and you work with non-governmental organizations and governmental organizations to have the best outcome for the people of the country and for the surrounding area.
Werman: Alan Jeffers, Media Relations Manager for ExxonMobil Corporation. Thank you very much.
Jeffers: Thanks for having me.
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