Oil in Chad: The Fragile State’s Easy Victory over International Institutions
Oil in Chad: The Fragile State’s Easy Victory over International Institutions
Tchad : quels risques après la mort d’Idriss Déby ?
Tchad : quels risques après la mort d’Idriss Déby ?
Commentary / Africa

Oil in Chad: The Fragile State’s Easy Victory over International Institutions

In numerous countries, the exploitation of oil has generated debate about its economic, social and geopolitical consequences. For several years, research has shown a negative correlation between oil exploitation and socioeconomic development, governance and the revival of conflicts in oil-producing countries. Management of oil financial windfall is often opaque and enriches elites who enter into partnerships with oil companies. The economic problem associated with oil exploitation (known as the “Dutch disease”) is coupled with the political problem of the development of a “rentier” state—a rich but fragile entity that despite its growing wealth has socioeconomic disparities. Norway seems to be the only country that has been able to avoid the black gold curse, and its management of oil revenues has been used as a model for economic growth and sustainable development.

Chad’s petroleum project has faced a number of controversies. International observers were concerned with the potential creation of a “rentier” state and its negative impact on governance when the fragile state began oil development in 2003.[fn]The Fund for Peace 2010 rating (www.fundforpeace.orf) listed Chad next to last (before Somalia) in the failed state index.Hide Footnote In response to the international community’s call for sustainable development and alleviation of poverty with oil revenues, the government of Chad agreed to prioritise those objectives and worked with the two main international donors, the World Bank and the European Union, and oil companies to enact strict mechanisms for managing future oil revenues. The World Bank and the European Union were delegated the task of supervising implementation and adherence to the mechanisms. Chadian civil society was also expected to check that the use of the oil revenues was strictly for the alleviation of poverty. Due to the apparent consensus on the management of oil revenues, the various participants in the Chadian oil project tried to comply with the mechanisms based on the Norwegian model in a Sahelian country.

After a public show of accepting the oil revenue management mechanisms, however, the Chadian government radically veered away from compliance. The Chadian government’s noncompliance was made possible through the complicity of the oil companies who feared replacement by Chinese competitors. The Chadian government easily and strategically dismantled the agreed-upon governance system to take complete control of oil revenues.

A short-term consensus: From partnership to interference

The World Bank and the European Union’s financial involvement (via the European Investment Bank) was initially seen, not just as a guarantee, but also as a mandatory moral caution to dispel doubts about the nature of the partnership between the Chadian government and the oil consortium that was to exploit the Doba oilfield (ExxonMobil represented by its Esso filial, Petronas Malaysia and Chevron Texaco). In return for their investments, particularly in pipeline construction, the two international organisations required good governance of oil revenues. An oil governance law inspired by the Norwegian model was adopted on 11 January 1999 by the Chadian parliament stipulating the principle of fair and transparent allocation of oil revenues. A part would be saved for future generations, a part would go to an effective fight against poverty, and five percent of the oil revenues would go to the state’s budget. A financial agreement between the World Bank and the Chadian government required the transfer of the revenues to a Citibank account in London to ensure that the money would be spent for the benefit of the impoverished population and future generations.

The European Union lent around €150 million for pipeline construction. It imposed clauses to prevent the Chadian government from directly selling its petrol on the international market and tasked the oil consortium with preventing the Chadian government from bypassing them as a control on the oil revenues. The European Union feared public moral censure if Chadian crude oil profits were used for purposes other than fighting poverty.

Confronted with a growing armed opposition supported by Sudan, the Chadian government suddenly brandished the principle of national sovereignty to challenge the agreed-upon control system. Chadian authorities invoked “the current threats on future generations” (referring to the Eastern rebellion) and demanded the immediate use of oil revenues that were to be reserved for future generations and the addition of defense to the priority sectors originally listed. After amending the oil governance law, the shifting of oil money to the military effort had the expected outcome of defeating the rebellion in 2009.

In reaction to the changes in the original system for oil revenue management, the World Bank announced, on 12 of January 2006, the suspension of all its aid programs in the country and a freeze on oil revenue payments to Chad. Far from forcing the Chadian government to backtrack, the World Bank’s action motivated the government to threaten the oil consortium. Immediately after the World Bank’s decision, the Chadian government ordered the oil companies to directly pay oil revenues to the state or face suspension of their activities. The government also issued an ultimatum to the World Bank that it would close Doba oil production if the sanctions were not revoked. Concurrently, Chad restored diplomatic relations with Beijing and brought Chinese players to the oil game. In January 2007, the China National Petroleum Company (CNPC) bought the assets of Encana, a Canadian company, which allowed it to obtain exploration permits in the Bongor region of southeastern Chad. Capitalising on this opportunity, Chadian authorities gave the CNPC a building permit for a second pipeline to link the Mougo oil site to the future Djemaya oil refinery.

Using nationalist rhetoric, Chadian authorities removed the international institutions’ control over the management of oil revenues. The Chadian Minister of Economy and Planning declared on 7 January 2006: “The World Bank talks about the originality of this law (…), as if Chadian people were ’cobaye‘ for its experimentation of a new type of management or governance[.]”[fn]Chadian minister of economy and plan press release, 7 January 2007. AFP, 8 January 2006.Hide Footnote After taking back control over oil revenues, Chadian authorities now had total control over the resources to carry out their own policies. They ended their partnership with the international institutions and offered to pay in full before the due date the loans forthe pipeline construction. Faced with either accepting full repaymentor a long and uncertain dispute with the Chadian state, the World Bank accepted the loan repayment in 2008 and thus withdrew from a contentious and potentially reputation-damaging investment. The World Bank reactivated its aid programs in 2009. After unsuccessfully trying to leverage political pressure on Chad and given the lack of cooperation from the oil consortium, the European Union, in 2010, abandoned further attempts to convince Chad not to make a deal on crude oil commercialisation. Unlike the European Union, the oil consortium quickly accepted Chad’s commercialisation of part of its crude oil. Meanwhile, the Chadian government initiated arbitration against the European Union. Following the example of the World Bank, the European Union accepted the repayment of the loans and ended the quarrel.

Since then, the World Bank has been completely unwanted in the oil sector. In April 2010, the Chadian government prevented a civil society workshop in Doba in thesouth of Chad, to which the World Bank’s representatives had been invited. The authorities didn’t appreciate this initiative and Doba’s governor justified the decision by saying that the World Bank “is not anymore a Chad partner in the oil sector”.[fn]According to the press release published by the workshop organizers, this quote was made by Doba’s governor who was expressing the views of the internal and territorial affairs’ minister. See press release on the local oil permanent Commission, 22 March 2010.Hide Footnote

The easy dismantling of the internal control mechanisms

The initial transparent management of oil revenues requires that the Comité de contrôle et de suivi des resources pétrolières(CCSRP) endorses the expenditure of oil revenues. The CCSRP was created as a Chadian independent entity composed of state representatives, civil society members and representative bodies. Before authorising the expenditures, the CCSRP has to check if the requests submitted by the government were in conformity with the priority sectors listed by the oil governance law. The committee is composed of a Supreme Court magistrate, a member of parliament, a senator, the National Treasury Director, the National Director of the Bank of Central African States (BEAC), and four civil society representatives. They were appointed for three-year terms and are eligible for a second term. They were all appointed by their peers, except for the National Treasury Director and the BEAC national director who were appointed by presidential decree.

In 2007, invoking the periodic rotation within the CCSRP, the Chadian government removed the Chadian labour representative and two of the civil society representatives, and substituted them with more compliant peers. Other modifications were brought to the CCSRP’s mechanism through decree. Initially, the Chadian government had fifteen days to examine the CCSRP’s reports before their publication. Now, the report examination period was extended to thirty days without any official explanation. The government now has plenty of time to modify the reports to make them conform to its interests. These changes in the CCSRP composition and functioning have neutralised all rigorous internal control, and rendered the CCSRP’s reports and recommendations a simple matter of formality.

What can we learn from the Chadian David’s victory against the international Goliaths?

The failure of the Chad oil governance system was strictly political. The system was applauded as a role model of development when it was created. Created through a consensus of the World Bank, the European Union, the private sector and the Chadian government, it quickly imploded after the unilateral about face of one of the “partners.”

The ease with which a poor and fragile state like Chad disowned the oil governance arrangement and imposed its views on the great powers of the private sector, oil companies, and development aid, the World Bank and the European Union, is perplexing. The World Bank and the European Union seriously underestimated the political risk of the Chad petroleum project. Understandably, the international institutions did not want to deprive a developing country of its revenues. They also neglected the possibility of a reconfiguration of interests to the benefit of the Chadian government and overestimated the commitment of the oil companies to good governance. In the end, the oil companies were the weak link. They did not want to risk denial of new concessions, and, moreover, the Chadian government threatened that it would work with Chinese competitors. This was enough to make them radically change their strategy, taking Chad’s side against the multilateral institutions concerning the commercialisation of crude oil.

More generally, the World Bank and the European Union did not understand the regional and international dynamics. They failed to anticipate the new opportunities created by the rebellion and rising competition amongst Western states for oil resources which allowed Chad to advance its interests outside of the oil governance system. These two factors were enough to obtain the acquiescence of Western countries, namely under the auspices of the World Bank and European Union. They did not hesitate to sacrifice the good governance principle to maintain regional geopolitical balances and control over crude oil. The easy victory of the Chadian David against the international institutions Goliath reveals the post-Cold War realpolitik: democracy and good governance are no longer sacrificed to fight against communism but for the “containment” of radical Islam and control over crude oil. However, this new version of the old policy still leaves the same victims: the population, who are condemned to long-term poverty.[fn]Chad is one of the least developed countries in the world, with a life expectancy of only 51 years-old, a poverty rate of 59% and a literacy rate of 25%.Hide Footnote

Chadian Army members are seen during an operation against rebels in Ziguey, Kanem Region, Chad on 19 April 2021. The Chadian army announced late Sunday that it has killed more than 300 rebels in the northern part of the Central African country. Abdoulaye Adoum Mahamat / Anadolu Agency
Q&A / Africa

Chad: What are the risks after Idriss Déby’s death?

The death of Chad’s President Idriss Déby has plunged the country into uncertainty, causing concern among many Chadians and in neighbouring states. Crisis Group looks at recent events and examines the main risks facing the country.

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What has happened?

According to official reports, Chad’s President Idriss Déby Itno died on Tuesday 20 April around 1am after clashes between the national army and the Front for Change and Unity in Chad (FACT) not far from Mao, in the country’s central Kanem region. After 30 years in power, Déby had just been re-elected for a sixth consecutive term in office. His death was announced at 11am on national television by the army’s spokesperson, General Azem Bermandoa. Some observers have expressed doubts about this version of events and suggest alternative, unconfirmed hypotheses about the circumstances of Déby’s death. One prominent story refers to a gunfight breaking out after failed negotiations with FACT members.

That President Déby was present on the battlefield is not unusual. He took power in 1990 in a coup d’état deposing President Hissène Habré, for whom he had served as head of the army, and he consistently used his military credentials to buttress his political power. His armed forces successfully fended off rebel attacks in 2006 and 2008, and most recently in 2019, thanks to support from the French army. The late president himself was frequently on the front lines. In April 2020 for example, he led a counteroffensive against a Boko Haram faction that had just killed nearly 100 Chadian soldiers on the shores of Lake Chad. Déby’s presence on the ground allowed him to mobilise and motivate his troops, and to present himself as guarantor of the nation’s security. His death is thus a cause for concern for many Chadians and creates a climate of uncertainty in the country.

Who are the rebels who have entered Chad?

The rebels are members of FACT, a Chadian military-political group based in Libya reportedly consisting of around 1,000 to 1,500 fighters. General Mahamat Mahdi Ali set up FACT in 2016 in Tanoua, in northern Chad, after a split from another rebel group, the Union of Forces for Democracy and Development (UFDD) led by Déby’s former defence minister, Mahamat Nouri. Originally from Salal, in the central Bahr el Gazal region, Mahamat Mahdi Ali, who studied in France, joined several armed movements in Tibesti, Darfur and Libya. He claims to be fighting for a change of power in Chad. Many rebels have followed similar paths, leading to several incursions into the country, mainly from the north and east. A number of rebel Chadian groups were chased out of neighbouring Darfur after the rapprochement between Chad and Sudan in 2010, and they took advantage of the downfall of former Libyan President Mouammar Gaddafi in 2011 to establish a presence in Libya, using it as a base for frequent cross-border raids into Chad.

FACT launched its recent offensive at a critical time for the country. The movement’s rebel forces made their first incursion on 11 April 2021, Chad’s election day, in order to exploit electoral tensions and as a call to other opponents to join their cause. In mid-April, their public statements summoned “members of the democratic opposition, civil society and the Chadian people to continue their pressure on the regime” to support the armed struggle. Civil society organisations and opposition parties have not followed this call, and have instead issued a communiqué urging each camp to observe a ceasefire.

On 11 April, FACT fighters travelling in heavily armed vehicles moved through the sparsely populated desert region of Tibesti. On 15 April, Chad’s air force launched a first round of air strikes against the rebels in Zouarké. In parallel, several other rebel groups, including the Union of Resistance Forces (UFR) and the UFDD, also based in Libya, stated their support for FACT – without, however, joining the fighting on the ground. On 17 April, the first major battle between FACT fighters and Chadian soldiers took place north of Mao, over 300km from N’Djamena. The Chadian authorities claimed to have killed 300 rebels and taken 150 prisoner. On the evening of 18 April, FACT’s leader Mahamat Mahdi acknowledged that he had lost some fighters and had made a tactical retreat further north while preparing a new round of attacks. At the same time, however, sources close to the opposition indicated that fighting was ongoing and the Chadian army was suffering significant losses, including some high-ranking officers. In a FACT communiqué, President Déby himself appeared on the list of wounded.

What is the link between Libya (from which the rebels launched their incursion) and recent events in Chad?

The rebels’ incursion into Chad from southern Libya comes as the latter’s peace process has been making significant strides. Last October, the two Libyan military coalitions – one led by the Tripoli-based authorities and the other by Field Marshal Khalifa Haftar, commander of the Libyan National Army (LNA) based in eastern Libya – signed a ceasefire agreement. In March, these rival factions agreed to set up a new interim national unity government. A pillar of the ceasefire agreement was the call for the departure of foreign armed forces, including those from Chad, which have served as proxy forces and were financed for years by the various Libyan military coalitions. Despite being presented as a priority, this part of the agreement has barely been implemented. Although some Chadian rebel groups have tried to join forces since February 2021 to prepare for possible future problems they could have with Libyan authorities, they have not yet faced any concerted pressure to leave the country. International actors are paying more attention to the mercenaries backed by Russia and Turkey.

FACT was able to launch its incursion into Chad because it has superior firepower and equipment compared to other rebel Chadian groups. It was able to accumulate these arms in part as a result of its aligning with Haftar’s forces. FACT rebels also probably took possession of armed vehicles and heavy artillery that Haftar’s foreign backers had supplied before his march on Tripoli in 2019. According to a report by the UN Panel of Experts on Libya, FACT’s forces did not take part in the fighting but were responsible for protecting military installations in central Libya in 2017 and in the south of the country after Haftar’s forces seized control of them in February 2019. It is therefore plausible that FACT was able to put together an arsenal while in contact with the LNA. Haftar’s forces have not issued a public statement on FACT’s incursion into Chad, but in private they deny any links to this group. Either way, recent events in Chad again show that arming foreign forces in Libya has potential consequences for the stability of the entire region.

Recent events in Chad again show that arming foreign forces in Libya has potential consequences for the stability of the entire region.

What does Déby’s death mean for Chad’s neighbours?

The leaders of various neighbouring countries have expressed their condolences and deep concern at the news of Déby’s death. Chad has been relatively stable in a very precarious regional context. The country has also been a linchpin of the struggle against jihadist groups in the Lake Chad basin – where it intervened after 2014 at the request of its Nigerian and Cameroonian neighbours to fight against Boko Haram factions – and in the Sahel region. The death of Chad’s president is a hard blow for the G5 Sahel, a regional organisation set up in 2014 for security and development cooperation. Chad plays a leading military role in this coalition, and Déby was its standing president. The country also contributes more than 1,400 UN peacekeepers, currently deployed in Tessalit, Aguelhok and Kidal in Mali, and in February it sent a 1,200-strong detachment as part of the G5 Sahel joint force to the highly unstable tri-border area between Burkina Faso, Mali and Niger. The current situation has raised concerns over the future of these forces, and whether they will return to Chad to help address problems on the domestic front. Such a repatriation could have repercussions on how Chad’s allies deploy in the Sahel, particularly for the French.

What is the current situation in Chad and what risks does the country face?

Immediately after President Déby’s death, the army established a new Transitional Military Council in charge of ensuring an eighteen-month transition, pledging to later hold “free and transparent” elections. Led by the late president’s 37-year-old son, Mahamat Idriss Déby, a general in charge of the army's elite unit (the General Directorate for State Security or DGSSIE), this council has fifteen members who have all occupied senior posts in the security services. These include the chief of the general staff, Abakar Abdelkarim Daoud, the director of military intelligence, Taher Erda Taïro, and former public security, territorial administration and army ministers. The council swiftly suspended the constitution, dissolved the National Assembly and the government, adopted a transitional charter, ordered a curfew, closed land borders and restricted air travel. However, after some days of hesitation, it has already backtracked on some of these directives, explaining that it needs to make “some clarifications”. For the time being, existing members of government remain in office to deal with routine business, and the borders have been reopened.

Political opposition figures and a section of civil society are highly critical of the Transitional Military Council. They are concerned about its defiance of the constitutional requirement that the National Assembly’s president oversee the transition, and about the takeover of power by the army. The former president’s supporters, in contrast, consider the council to be the only way to cope with exceptional circumstances, maintain peace and ensure the country’s defence during troubled times.

The council has reacted to criticism by seeking support. It has held meetings with members of the National Political Dialogue Framework (CNDP) and influential political party leaders, including Albert Pahimi Padacké, the runner-up in the recent presidential election. It has also pledged to set up a transitional government in the coming hours or days. It remains to be seen whether this proposed government will incorporate Chad’s full range of political groups and views, and whether those invited will agree to take up their positions. Many political leaders and members of civil society have already categorically rejected what they call a “military coup d’état”.

Chad finds itself in a very delicate situation.

Chad finds itself in a very delicate situation. Political and military groups have already made it clear that they do not view the military council as legitimate. “We plan to continue the offensive”, said FACT’s spokesman Kingabé Ogouzeimi de Tapol. Although FACT has suffered significant human and material losses, President Déby’s death has undoubtedly spurred on his armed adversaries. The Military Command Council for the Salvation of the Republic (CCMSR), another Chadian rebel group operating out of Libya, has announced its support for FACT. According to some sources, the two groups may lead a joint offensive on Chadian positions. Renewed fighting could therefore break out in the coming days, either in provincial areas or near the capital N’Djamena, posing a risk for the civilian population.

Other issues hang in the balance. Tensions could spill over onto the streets and lead to a standoff between some civil society organisations and political parties on one side, and the new military authorities on the other. Although Chadian observers report that Idriss Déby’s son enjoys a good reputation and the respect of his soldiers, many wonder whether he will have sufficient authority to lead the army on various fronts, both within Chad’s borders and abroad.

Within such a volatile context, a ceasefire is the top priority.

To ensure a peaceful transition, it will be important to find areas of common ground between the military council and its opponents. Within such a volatile context, a ceasefire is the top priority. International actors with influence in Chad should push the various parties toward these objectives.