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02/2006
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[ Oil pipeline ]
World Bank suspends cooperation with Chad
At the beginning of January, the World Bank suspended all disbursements to Chad until further notice. It also announced that Chad would receive no new loans for the time being. The Bank is reacting to Idriss Déby, Chad’s president, after his government changed the law on the use of oil export revenues. In 1999, the World Bank had approved of co-funding the $4 billion construction of a pipeline from landlocked Chad to the coast of Cameroon. The decision was made on the condition that Chad invest 80% of the oil revenue in areas such as education, health and agriculture; an additional 10% were earmarked for a “future generations’ fund” for when oil reserves run dry.
The law change, in principle, allows the government to expand the list of priority areas at wish. One option, for instance, would be security matters. Furthermore, the amendment has scraped the fund for future projects, freeing up the money for the general budget.
The World Bank is obviously disappointed by the Chadian government’s line of action. Paul Wolfowitz, World Bank president, said: “We have a responsibility to ensure that money generated from this oil project is used to help meet the needs of the poor people in Chad.” He regretted that the government had not reacted to offers of dialogue. Rather, according to a report by the German newspaper Süddeutsche Zeitung, President Déby accused the World Bank of acting like a colonial power and ignoring his country’s financial needs. The German government supports the World Bank stance. Heidemarie Wieczorek-Zeul, Germany’s Development Minister, stated that negotiations on future development cooperation between Germany and Chad have been discontinued for the time being.
Critics of the Chad/Cameroon Pipeline doubted right from the start that the government would live up to its agreement with the World Bank. Shortly after opening the pipeline, Déby used the first proceeds to purchase weapons and a new presidential jet. Nancy Birdsall, president of the Center for Global Development in Washington, wrote in a column for the Los Angeles Times that “in Chad, the corruption should have been obvious early.” She recommended that the World Bank link investments in oil or mining projects to the condition that the Bank supervise revenue distribution for a period of 10 years.
According to the World Bank, Chad has had revenues of $399 million since beginning oil production. Of this sum, $245.6 million had been set aside for poverty reduction and 36.2 million for the future trust. The suspended World Bank funds amount to $124 million. (ell)
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