Global Policy Forum

By Norimitsu Onishi

With no luck at all, the Spaniards and then the French long searched for oil in the waters around this tiny nation, half of which sits on the Central African mainland and half on an island in the Atlantic.

Then suddenly in 1996, after Spanish and French oilmen had left, the Americans struck liquid gold. The discovery was so unexpected that the State Department, in a cost-cutting measure, had closed its embassy in Equatorial Guinea several weeks earlier and had begun handling relations with this economic backwater from its embassy in neighboring Cameroon.

The embassy has yet to reopen, but American investments here are now estimated at nearly $5 billion. The figure would rank this obscure nation fourth in American investments in sub-Saharan Africa, behind only more familiar places like South Africa and the two oil giants, Nigeria and Angola.

"They said there was no interest and no possibility of finding oil in Equatorial Guinea," Cristobal Manana Ela, the country's minister of mines and energy, said of the earlier exploration companies. "But we were very optimistic about our geology. We knew it was logical that if Nigeria was producing, Cameroon was producing and Gabon was producing, here in Equatorial Guinea we could be producing."

Here in the capital, which is groaning under the weight of an influx of foreigners, there is heady talk of Equatorial Guinea -- population 465,000 -- becoming a Kuwait of Africa. There is also an acute awareness that the same term was applied decades ago to countries like Gabon, which despite a small population and huge oil reserves remains dependent on foreign aid because of mismanagement and corruption.

So Equatorial Guinea stands at a crossroad: significant oil production started two years ago, and it will be two more before the government's coffers begin filling with piles of cash unimaginable until now.

People in Africa and the West will watch closely what the government does with its money, and how the oil companies, especially Exxon Mobil, the main producer, operate here. The scrutiny will be greater than it has been elsewhere because Equatorial Guinea's oil production comes when governments and human rights organizations in the West have rallied around the reality that Africa's riches -- diamonds or oil -- have seldom improved the lives of average Africans and often enriched only corrupt African leaders and their Western partners. Indeed, African oil has perhaps never been as politicized as it is now, as suggested by the fierce debates about the World Bank's endorsement of a $3.7 billion pipeline between Chad and Cameroon.

In an interview, Mr. Manana, who was accompanied by Gabriel Nguema Lima, the secretary of state at the Ministry of Mines and Energy and a son of Equatorial Guinea's president, Teodoro Obiang Nguema Mbasogo, said the government had already held a conference to examine how and why its neighbors had squandered their oil dollars, "to evaluate what to do not to have the same thing happen here."

An international development official who has been in Equatorial Guinea for three years said there had been some positive changes.

"The government and the country are much more open to the outside than when I first arrived here," the official said. "But so far there have been few positive effects on the lives of Equatorial Guineans. That has been the case for all of Central Africa. A country's natural resources are regarded as the patrimony of the head of state. We'll have to wait and see if things will be different here."

The outside interest will be a big change for Equatorial Guinea, which long remained severely isolated for a number of reasons. Its capital lies on an island connected to the mainland only by irregular flights, most of them aboard rickety second-hand Soviet-era planes. As the only sub-Saharan country to have been colonized by Spain, its Spanish-speaking citizens are surrounded by people who speak French or English.

And then its first post-independence president, Francisco Macias Nguema, ruled with a brutality comparable to that of tyrants like Idi Amin of Uganda, driving a third of the population into exile. He was overthrown in 1979 and executed by a government led by his nephew, the current president, Mr. Obiang.

Mr. Obiang cautiously opened up the country, building links to France and French-speaking African nations. But there is still little political openness, and other legacies of the country's isolation survive. In Malabo, there is not a single newsstand.

The country's leaders would have probably continued ruling quietly, unnoticed by the rest of the world, had it not been for the oil found in 1996. In 1997, gross domestic product shot up 76 percent, according to the African Development Bank, and has kept climbing by two digits since then. Today, Exxon Mobil pumps 112,000 barrels a day. A new $560 million platform started production last month, even as another American company, Triton Energy, announced a big find. Other American companies are expected to arrive this year to search in unexplored waters.

Ken Keag, the director general here of CMS Energy, a Houston oil company, described the oil companies' interest in Equatorial Guinea as intense. "It's not unreasonable to imagine Equatorial Guinea producing one barrel per person per day in a few years," Mr. Keag said, alluding to production of half a million barrels a day.

CMS Energy, which pumps a modest 9,000 barrels a day, and two other American companies are building a $420 million methanol plant here scheduled to be completed next year. As an indication of how ill prepared Equatorial Guinea was for all this new investment, the plant's builders have had to be completely self-sufficient. They have built a camp to house about 800 foreign workers because of the severe shortage of hotels and housing in Malabo; they have their own electrical power and their own fresh water filter and sewage treatment systems.

On weekdays, this city of Spanish colonial buildings now buzzes with car and pedestrian traffic. It is nothing on the level of a typical African capital but enough that every day recalls the activity seen only on payday before the oil boom.

More than anything the city buzzes with the intangible, the promise of oil and its potential benefits. "Bar Internet," said the sign on a hole in the wall here with plenty to drink but not one computer.

Only a few people in the government and the oil companies know how much money Equatorial Guinea has earned so far from oil, and they are not saying. Mr. Manana, the mines and energy minister, pointed instead to the improvements made in the last two years in Malabo: the new paved roads and a new electricity plant that provides reliable power for most residents of Malabo, whose population has topped 50,000 since the oil boom started. Before being the host for a conference of Central African nations last year, the government built a convention hall and 17 villas for visiting dignitaries.

But there are other developments the government shies away from publicizing: the new presidential wing at the airport, a shiny glass structure with a dozen parking spots that sits incongruously on the side of a simple airport made up essentially of a runway and a small building. A drive through the rich neighborhood known as Little Spain shows construction workers busy on new villas -- houses that pale in comparison with the villas of, say, Nigeria, but dwarf the shanties in the slum of Newbuil across town.

Newbuil, whose name is short for "new building," is a sprawling collection of wobbly houses jammed together beside open gutters. The neighborhood was created some four decades ago to house mostly Nigerians who had come to work on Equatorial Guinea's cacao plantations. It enjoyed a certain seedy reputation -- to describe someone as a "Newbuil girl" or "Newbuil guy" still amounts to an insult.

Newbuil's dirt streets were muddy from the rains on a recent Friday. Still, there were signs that the oil money had begun trickling down. Antennas rose from aluminum roofs, above houses in which there had been no television sets until a year or two ago. "There were no traffic lights before and now we have electricity 24 hours a day," said Nicanor Obama, 22, who was selling medication by the pill at the Botiquin drugstore in Newbuil. "It is a development that should accelerate."

But the arrival of a greater variety of goods at the main market, especially second-hand clothes with "Nike" and "Adidas" tags from Europe, had taken away business from Emil Epee, a tailor. Voicing a simmering resentment that most were still afraid to express, Mr. Epee said: "All I know is that I have to eat, and it is you who are eating our oil money. We are not eating any of this oil money. The only money I eat is from my clothes. It's our oil, but it's you Americans who are eating our oil."

Whether those feelings become more widespread will surely depend on how wide the distance between Newbuil and Little Spain becomes.

Politically, the reforms have been mixed. Most people acknowledge that years of repression have given way to greater freedom. Soldiers do not harass ordinary people as openly or frequently as they once did.

"People can walk freely," said Isabel Tonka, 25, who is a member of the Bubi ethnic group, the indigenous people of this island, which is now dominated by Bantu people from the mainland. "It is not like before. I can go to my village and come back to Malabo without hassle."

Raimundo Evemba Melenga, the director of a private publishing group, and others recalled applying for a permit to start a newspaper. The application languished for two years, Mr. Evemba said, so they submitted an application for another newspaper. To their surprise, both applications were approved by the government a few months ago.

"We have published several times since then without any government interference," Mr. Evemba said of the two newspapers, Tiempo and La Opinion, which locals and foreigners in Malabo said have been sharply critical of the government.

But opposition leaders said that in other ways the government's control had grown tighter. Before oil was discovered, the government often yielded to foreign pressure to allow some degree of political openness, said Placido Miko Abogo, the secretary general of the Convergence for Social Democracy party and the country's best-known opponent of the prevailing political order.

"Now that they have money, they don't care what the outside thinks," Mr. Miko said. "Oil has made them more arrogant, more intolerant."

The government argues that municipal elections last month, won overwhelmingly by the president's party, were free and fair. Foreign observers agreed, but pointed out there was no real political opposition.

Truly independent parties boycotted the election. Mr. Miko said others were bought by the ruling party. "There's a lot of oil money that the government can use simply to buy people off now," he said. "It's a new strategy, but the end is the same. We are returning to a situation with only one political party."