A potent cocktail of poverty, crime and corruption is fuelling a militant threat to Nigeria’s reliability as a major oil producer. Since January 2006, fighters from a new group, the Movement for the Emancipation of the Niger Delta (MEND), have fought with government forces, sabotaged oil installations, taken foreign oil workers hostage and carried out two lethal car bombings. MEND demands the government withdraw troops, release imprisoned ethnic leaders and grant oil revenue concessions to Delta groups. The Nigerian government needs to forge far-reaching reforms to administration and its approach to revenue sharing, the oil companies to involve credible, community-based organisations in their development efforts and Western governments to pay immediate attention to improving their own development aid.

The root causes of the Delta insurgency are well known. Violence, underdevelopment, environmental damage and failure to establish credible state and local government institutions have contributed to mounting public frustration at the slow pace of change under the country’s nascent democracy, which is dogged by endemic corruption and misadministration inherited from its military predecessors. Nigeria had estimated oil export revenues of $45 billion in 2005 but the slow pace of systemic reforms and the lack of jobs, electricity, water, schools and clinics in large parts of the Delta have boosted support to insurgents such as MEND. Militants appeal to the kind of public disaffection that prompted ethnic Ogoni leader Ken Saro-Wiwa to protest the military-led government and Royal Dutch/Shell before his execution in November 1995.

A decade later, the potential consequences of this conflict have escalated in both human and economic terms across a swathe of territory 30 times the size of Ogoniland. Nigerian and international military experts have recognised that the crisis requires a negotiated political resolution. Any attempt at a military solution would be disastrous for residents and risky for the oil industry. Most facilities are in the maze of creeks and rivers that are particularly vulnerable to raids by well-armed militants with intimate knowledge of the terrain. But inaction risks escalating and entrenching the conflict at a time when tensions are already rising in advance of the 2007 national elections.

MEND increasingly serves as an umbrella organisation for a loose affiliation of rebel groups in the Delta. It has not revealed the identity of its leaders or the source of its funds but its actions demonstrate that it is better armed and organised than previous militant groups. Observers warn that a worst-case scenario could lead to a one to two-year shutdown of the oil industry in the Delta, where most of Nigeria’s 2.3 million daily barrels of crude oil originate.

Illegal oil “bunkering” – theft – has accelerated the conflict and provided militant and criminal groups with funds to purchase arms. Another source of funding are the discreet payments oil companies make to militant leaders in return for “surveillance” and protection of pipelines and other infrastructure. This practice, frequently cloaked as community development, has fueled conflict through competition for contracts and by providing income to groups with violent agendas. Oil companies also pay allowances, perks – and sometimes salaries – to “supernumerary police”, as well as regular duty police and soldiers deployed to protect oil installations. Security forces consider these plum postings and are alleged to use excessive force to protect company facilities and their jobs.

President Olusegun Obasanjo’s government has begun important reforms but these must be deepened if peace is to succeed. Yet, his government has downplayed the seriousness of the insurgency. Senior officials have dismissed the militants as “mere” criminals and defended security crackdowns that have embittered locals, making it easier for armed groups such as MEND to gain new recruits. In an effort to deflect growing public impatience, government officials have demanded oil companies spend ever larger amounts on community projects. Oil industry officials counter that, after taxes and royalties, the federal government collects the vast majority of earnings on a sliding scale – 90 per cent of industry profits when oil prices are above $60. The companies rightly place the primary responsibility for political solutions to the crisis – including increased development – on the government but they also chafe at the suggestion that their own development strategies have failed.

Transparent and participatory development schemes can foster hope and accountability in Delta communities.Development efforts led by the European Commission and Pro-Natura International provide models for an approach that could reverse the cycle of poverty and violence – but only if their scale is significantly broadened to include a wide range of groups in oil producing areas. Government must also tackle corruption by making development initiatives more transparent. Otherwise, even dramatic increases in spending will be wasted.

Dakar/Brussels, 3 August 2006