Global Policy Forum

By Ken Hackett*

If Iraq's oil belongs to the Iraqi people, why don't Africans receive the same assurance of ownership over oil in Africa? The fate of Africans in oil-exporting states captures the most extreme instances of misery amid rich natural resources. Despite massive earnings from oil in Nigeria, for example, the percentage of people living in poverty has doubled in the past decade. In petroleum-rich regions, millions suffer from hunger and the HIV/AIDS pandemic. Black gold fuels wars and conflicts, tightening the grip of poverty and corrupt regimes.

Still, the Bush administration courts leaders of countries like Cameroon and Angola, underscoring those nations' role in an agenda to reduce U.S. dependence on Middle East oil. Now, as we formulate and effect policies for oil management in Iraq, we have a unique opportunity to reverse the curse of poverty and despotism tied to oil development elsewhere in the world. It is a pivotal time for Iraq and, perhaps more urgently, for Africa. Indeed, Africa is fast becoming one of the largest oil exporters to the United States. Already we import 17 percent of our oil from sub-Saharan Africa; in a decade, nearly a quarter will come from the region. More than $50 billion -- the largest investment in African history -- will be spent on African oil fields in the next seven years.

A new report by Catholic Relief Services conservatively estimates that sub-Saharan African governments will receive more than $200 billion in oil revenues over the next 10 years, enabling them to vastly improve lives through investment in health, education, water, roads and other vital necessities. But Africans will see no such improvements so long as oil revenues continue to be piped into governments not held to account by their own people. Unquestionably, much of the onus for alleviating poverty falls on oil states themselves. But influential forces, particularly oil consumers like the United States and other Western nations, oil companies and international financial institutions, also share the responsibility.

Today, secrecy so shrouds the dealings between oil states and foreign oil companies that it is difficult to track how money is used or who benefits. Efforts are under way, however, to make corporations and governments more accountable. One is the "Publish What You Pay" campaign. Spearheaded by international humanitarian, development and human rights groups, the campaign calls for oil, gas and mining companies to publish taxes, royalties and other payments to all national governments.

Disclosing the money trail is an important first step that will empower citizen groups and other watchdog organizations to pressure states to channel revenues into development efforts. The disclosure requirement can also serve as another mechanism the International Monetary Fund and the World Bank can use so governments abide by poverty-reduction plans and corporate partners in oil projects run more transparent operations.

In the case of oil development in Chad, the World Bank and the IMF have required that the government enact policy changes designed to bring about greater transparency and sound revenue management. The World Bank, operating under its mandate to alleviate poverty, is attempting to use its assistance to promote good governance policies and, therefore, better outcomes for oil in Chad. But the initiative has shortcomings. Oil is expected to begin flowing in July, marking the birth of Africa's newest petro state. Yet programs to build the capacity of the Chadian government to manage social and environmental impacts and the influx of sudden wealth lag far behind.

This project is further evidence of the need for a multipronged approach, one that also requires the United States and other Western governments to exert their political influence on oil states and corporations. As home country to some of the world's largest oil corporations, the United States has the responsibility to ensure those companies conduct ethical and transparent operations. Our diplomatic standing makes it possible for us to lead and support viable international efforts for transparency in oil revenue payments to developing countries, as well as to encourage constructive roles for the World Bank and the IMF. Such a commitment would ensure that as we promise Iraq's oil belongs to the Iraqi people, we can also promise that Africa's oil is for the African people.

About the Author: Hackett is the executive director of Baltimore-based Catholic Relief Services. Later this month the international relief and development agency will be releasing the report "Bottom of the Barrel: Africa's Oil Boom and Prospects for Poverty Reduction," studying oil development in West Africa.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.