Chad: Escaping from the Oil Trap

This briefing is also available in French.

OVERVIEW

Since 2003 the exploitation of oil has contributed greatly to the deterioration of governance in Chad and to a succession of rebellions and political crises. The financial windfall – in 2007, 53 million barrels earning the government $1.2 billion – has increased corruption, stoked domestic dissent and led to rebellions supported by neighbouring Sudan. The revenues have also allowed President Idriss Déby to reject political dialogue with his opponents and to respond to the threat from Sudan by overarming his military forces. The hope aroused by the discovery of oil has given way to generalised disenchantment. To escape this vicious circle and establish the conditions needed for durable stability, the government must work to establish a national consensus on the management of oil revenues. Its principal external partners – France, the U.S. and China – must condition their support for the regime on such a consensus.

Chad’s petroleum project was bedevilled by numerous controversies that almost blocked its realisation. Beginning in 2000, however, the involvement of the World Bank allowed the project to move forward. It was an apparent role model for development, because the mechanisms for managing oil revenues seemed to guarantee an effective fight against poverty. These mechanisms specified that the revenues were to be dedicated primarily to improving the lives of Chad’s present and future population.

In 2004, less than a year after the exploitation of oil began, the closing of the nation’s political space for the benefit of President Déby aggravated dissension within the Chadian power structure and increased tension throughout the country. This situation led to several attempted coup d’état by close collaborators of the president, who subsequently joined the rebellion fighting the government. Weakened by the armed opposition supported by Sudan, Déby decided in January 2006 to modify the initial system of management of oil revenues in order to make more funds available to buy arms.

In reaction, the World Bank suspended its programs. Far from forcing the government to backtrack, this motivated it to put in place regulations that removed any oversight by the bank of the management of oil revenues. The rivalry among Western countries and China over Chad’s petroleum resources has limited the bank’s room to manoeuvre.

The increase in oil prices in 2007 generated enough resources for the regime to undertake large public works projects. Advertised as a way to modernise the country through oil revenues, these projects led in 2008 to a budget deficit that is likely to persist. Moreover, the opaque awarding of public works contracts increased cronyism and corruption. The government also gradually reduced the role of the committee that had been established to involve civil society in the management of oil revenues, the Committee of Control and Supervision of Oil Revenues (CCSRP in French). By changing the membership of the CCSRP in 2008, the government limited its ability to control the use of the revenues.

In sum, oil has become a means for the regime to strengthen its armed forces, reward its cronies and co-opt members of the political class. This has further limited political space for the opposition and helped keep the country in a state of political paralysis that has stoked the antagonism between the regime and its opponents. As a result, there is recurrent political instability that is likely to ruin all efforts to use oil for the benefit of the country and its enduring stability. For the people who have not seen their lives improve and who are subjected to increased corruption, oil is far from a blessing. Given the current situation, the following measures should be taken to extricate Chad and its external partners from the petroleum trap:

• The government should include the question of how to use oil revenues in the domestic dialogue started under the accord of 13 August 2007. It should organise a round table including the political opposition, civil society and representatives of the oil-producing regions. The principal recommendations of the round table should be included in the follow-up mechanisms for the accord.
• The government should strengthen internal control and oversight mechanisms of oil revenues. The CCSRP’s regulations should be revised to stipulate that its members will meet full time, like other independent state bodies, such as the Supreme Court or High Council for Communication. This change is needed to improve the CCSRP’s efficiency and technical proficiency. The ethics and justice ministries should systematically apply its recommendations and investigate problems it brings to light.
• The government should regularise its procedures, so that the great majority of government contracts are let on the basis of competitive bids and not by bilateral agreement. Such a change is indispensable for fighting corruption and for eliminating the opaque awarding of contracts as a source of unjustified enrichment. There should also be an audit of the various public works now being built.
• The government should ensure an improvement in the technical abilities of civil servants. Petroleum revenues should be used to establish a program supported by civil society to train them on a continuing and regular basis.
• To replace the International Consultative Group (GIC in French), whose mandate expired in June 2009, an independent, multidisciplinary body composed of representatives of Chadian and international civil society should be created and receive financial support from the World Bank. Its role would be to undertake studies, make recommendations and give technical support to the CCSRP.
• France, the U.S. and China should collectively support an inclusive Chadian national dialogue in order to create the conditions likely to lead to enduring stability. They should make their support for Déby contingent on the proposed reforms and measures cited above. The three countries, but in particular China, which is present in both the Chadian and Sudanese oil sectors, should also weigh in more heavily in favour of stabilising relations between N’Djamena and Khartoum and of halting support by each country for rebels in the other country.