Affordable Housing Institute : US

[Resuming from yesterday’s gripping Part 1.]

 

 

“As I was saying before we were so abruptly interrupted,” Holmes resumed, “in the case of the Chad Pipeline the World Bank funded the endeavor using a lock-box transaction structure.  The bank believed that the security measures ought to make the investment produce the desired results — poverty alleviation and economic development.  Democracy was never a stated objective.  Miss Wysham is cudgeling her own straw men.”

 

In October 2003, oil from the pipeline started flowing from the Cameroon terminal. By December 2005, the conflict in neighboring Sudan spilled into eastern Chad. Deby began forced military recruitment of young soldiers to resist this latest perceived threat to his power.

 

Chad’s frontier with Sudan is Darfur.

 

“Little though I like apologizing for dictators,” Holmes commented, “such a posture is not entirely unreasonable, even for tyrants.  Here is yet another, more statesman-like, letter-writer.”

 

The Chad-Cameroon oil pipeline was meant to be different. It was the largest private sector investment in Africa in a decade when its principal backer, ExxonMobil, invited the World Bank to help design it properly.  Central to the effort was a law assigning most of the oil revenues to reducing poverty in Chad.  Last December, the country changed the law to include spending on defence.  The World Bank promptly shut down its operations in Chad and blocked the overseas account holding the money. This was a sound decision, even though some thought it an overreaction — as if bankers were expected to invite defaulters on mortgages for a friendly drink.

 

“‘Some’ will always object to anything, will they not?  What does Miss Wysham say?”

 

The question now is: Will the World Bank learn from this boondoggle for which it is directly culpable?

 

There is always someone who demands that boondoggles be stamped out.

 

“That is quite undeserved,” Watson said.  “Had the bank not made the loan, the people of Chad would undoubtedly be worse off than they are today, and if one adopts a policy of lending only to the spotless, one will have a very short client list indeed.”

 

Four months later, the bank backed off when Chad’s president, Idriss Deby, threatened to close the pipeline altogether. The geopolitics was understandable: rebels supported by Chad’s neighbour, Sudan, had invaded the capital that month, and few people wanted the Deby government overthrown while it was hosting 200,000 refugees from the Darfur region next door.

 

“And our friend at the bank?” asked Watson.  “What should he do now?”

 

 

The political impact and moral consequences were poisonous. Direct military assistance would have been better than allowing the government a free hand with the oil revenues. Like Nigeria’s success in improving its public finances, this damp squib of a showdown in Chad had continent-wide implications — but, in Chad’s case, of a negative kind.

 

“That is easy to say if one is on the sidelines,” said Holmes.  “The man in the arena must make the decision.”

 

 

It is not the critic who counts, nor the man who points how the strong man stumbled or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood; who strives valiantly…who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who, at best, knows the triumph of high achievement; and who, at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.

 

“I can hardly believe that bringing a multinational force into a central African conflict could have led to anything other than their becoming the target of all factions, a convenient whipping-boy.  However one characterizes the matter, the pipeline has been built, and is even today Chad’s principal poverty-alleviation asset.  Further, 70% of the funding will still go for poverty alleviation, a far cry from the 100% that Chad’s despot sought.” 

 

N’DJAMENA, Chad — Chad needs to step up efforts to combat poverty and peacefully resolve conflicts to ensure the nation’s oil wealth benefits its people, World Bank President Paul Wolfowitz said during a visit to one of Africa’s newest oil producers Thursday.

 

Under the accord signed last Thursday, Chad will commit 70% of its budget spending to priority poverty reduction programs, and provide for long-term growth by creating a stabilization fund as well as setting aside money to be used after the oil fields run dry. There are an estimated 26 years left in the production life of the oil fields.

 

The poverty reduction programs cover health, education, agriculture, infrastructure, environment, rural development, land mine removal and good governance.

 

“I think it is a very important agreement and I think we found a way to accomplish our common objective of ensuring that the resources of this country are dedicated most of all to alleviate poverty in this country,” Wolfowitz told journalists in Chad.

 

“I would say our worldly philosophers have done rather well with the resources they had available.”

 

“We do not know if it will end well, but at least it has not yet ended badly.”

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