Chad's oil wealth

On August 11, 1960, Chad won its independence from France. What followed were decades of instability and conflict in the central African nation. The population was very hopeful that this would change when Chad became an oil-producing nation back in 2003.

At the time, the government introduced a law that 80 percent of oil proceeds be earmarked to battle poverty. Revenues were supposed to go to local communities, health and education. Doba, the provincial capital of Chad's oil-rich south, today boasts a new market and is building a university. Residents were promised better schools and hospitals.

"You can see the results of oil production everywhere in the region," said Doba's governor Ganda Mayoumba. "The living standards in the population are steadily improving. But there's still a lot to be done."

Oil giant ExxonMobil - or Esso as it's called in Chad - operates the major pipeline in the area. Granted, Esso has financed the local health center in Miandoum, located in the middle of the oil region. But it has to get by without electricity or running water.

Schooling in this area still takes place in straw huts - though the oil revenues were supposed to help build new schoolhouses. Christine Ndeindounga, the headmaster of a local school, said she just doesn't know why these development projects haven't happened.

"We have a right to them. It must be simply neglect," Ndeindounga said. "They talk and talk, but when they leave, nothing has changed here. By now, we feel quite discouraged."

International backing failed

Chad is one of the poorest countries in the world. It is ranked 175th out of 182 countries on the 2009 United Nations Development Program (UNDP) Human Development Index. This mechanism is a comprehensive measure of life-expectancy, health and education recorded by the UNDP.

Originally, oil was supposed to help change this. The World Bank agreed to help finance the 1,070 kilometer-long oil pipeline to the Atlantic coast under the condition that Chad would reserve a portion of oil revenues for the fight against poverty. But the government did not stick to its end of the deal.

Chad's autocratic president Idriss Deby, who came to power on the back of a coup in 1990, began making attempts to seize more control over his country's oil wealth. In 2006, parliament repealed the law that required the government to consult with churches, trade unions and NGOs about how to distribute the money earmarked for the nation's poor. Deby said his government needed more freedom to use the money to get its finances in order.

In response, the World Bank announced that it would stop lending money to Chad and froze the bank account which housed the country's oil revenues. It completely pulled out of the project in 2008.

Taking care of business

Deby also sought to gain power from oil companies. He accused ChevronTexaco of the US and Malaysia's Petronas, which together controlled 60 percent of the oil production, of not paying taxes. Many observers said by trying to expel the two companies from Chad, Deby was attempting to seize the oil companies' assets. Ultimately, Deby's government settled for some $280 million in tax payments and the two companies continued their work.

But western media have reported that Deby wanted more control over his country's oil revenues not only to make his government solvent again. He also planned on using the money to buy weapons in order to fight rebels in the east and north of the country.

Chad and Sudan have been engaged in a proxy war through rebel groups for years. In 2008, Deby's government was almost toppled as rebels approached the capital of N'Djamena. Tens of thousands of people have become refugees as a result of the intermittent violence, most of them located in the eastern part of the country which borders the highly volatile Sudanese province of Darfur.

More transparency necessary

With Deby's priorities focused on state finances and war, the people of Chad are seeing little in the way of development. In addition, as the oil companies buy up land to increase production, old tensions between farmers and cattle breeders are starting to simmer again. A drought has driven many cattlemen from northern Chad to the south. With more people competing for diminishing land, the possibility of violence is a growing threat.

Although the local residents do receive compensation for their lost land, it often goes toward alcohol, which creates conflict within families.

"The fact that suddenly so much money came to the region changed the behavior of the people," said Hoinathy Remadji, an ethnologist from the Center for Research in Anthropology and Human Sciences in N'Djamena. "The concept of marriage has weakened a lot. Even though cases of divorce are relatively rare in rural communities, the oil and these huge sums of money are causing marriages to tend to break up fairly quickly now."

The European Union has called for projects aimed at increasing transparency and democracy in Chad as a means to diffuse the situation there.

"The use of oil revenue has to become much more transparent," said Gilles Desesquelle, the EU representative in Chad. "The public money absolutely has to be administered better."

Yet the EU has earmarked 311 million euros ($408 million) in development aid to be paid directly to Deby's government over a five-year period through 2013. And France, the old colonial power that Chad separated from 50 years ago, continues to support the country's autocratic government. More than 1,000 French soldiers remain stationed in N'Djamena, Deby's seat of power.

Author: Marie-Ange de Pioerron, Spencer Kimball
Editor: Sabina Casagrande