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Unless you're the sort of person who dresses up as a sea turtle to protest G20 conferences, you've probably never heard of the Chad-Cameroon oil pipeline. Under review since 1994, construction on the pipeline finally began in late 2000, financed largely by the World Bank and managed by a consortium of supermajors led by ExxonMobil. The basic concept was to connect the sludgy, low-quality oil reserves of Southern Chad with the rest of the world's petroleum markets; Cameroon was only included because it was in the way between the oil wells and the ocean a strategic partner.

Since its inception, the project has been condemned by a wide range of anti-globalization critics for a number of reasons, including the environmental impact, the displacement of native populations, the fact that the World Bank is once again catering to the desires of Western multinationals at the expense of local industries, and the fact that Chad is a fragile, impoverished dictatorship without the basic infrastructure or stability to handle the influx of enormous amounts of petrodollars. To ameliorate concerns, the World Bank commissioned a bunch of environmental impact studies, set up a bunch of NGOs to deal with displaced natives, got a bunch of guarantees from the governments involved, and set up a development-geared escrow account in Chad to make sure pipeline revenues were fairly distributed. To put it another way, they did their usual dog-and-pony show.

The pipeline went live in late 2003, and almost immediately proved the globalization critics right. The environmental impact was far more severe than anticipated, the drilling footprint was far larger than predicted, the displaced persons went uncompensated, and worst of all, Chad was transformed from a typical third-world backwater into a fractured and failing petro-state. Chadian president Idriss Déby almost instantly reneged on the escrow accounts and spent all the money on guns, as did several nascent rivals, and the country descended into low-scale civil war. So brazen was his contempt for the agreements he had signed that then-World Bank President Paul Wolfowitz was forced to completely withdraw from the entire arrangement in 2006. But by then it was too late; the oil was flowing, the wells were drilled, and the entire affair was now in the hands of ExxonMobil.

So why did the World Bank do it? Greed? Influence-peddling? Were they, perhaps, unaware of the risks the project faced? Hardly. Your average World Banker can't even wipe his ass without commissioning a feasibility study, an environmental impact assessment, a policy discussion framework, and a post facto independent evaluation to ensure that the project's goals have been met.


Regarding the last one, this is exactly what the World Bank did with the Chad-Cameroon oil pipeline, and the report just came out as an online pdf last week, which can be found here. It's a whitewash, of course, but in it one can find the true motivation behind the project, if you know what to look for. Unfortunately it's 177 pages long, with 12 annexes and graphs, cites about 100 references from the finance, petroleum, and economic development sectors, and is about as easy to read as Henry James. But don't worry, I live and work in the development world, I used to trade ExxonMobil stock on the regular, I can locate both Chad and Cameroon on a map, and I read The Ambassadors. Which means I can translate for you. Let's begin.

The fundamental development objective of WBG support for the Chad-Cameroon oil development and pipeline construction program begun in 2000 was to reduce poverty in Chad and improve governance through the best possible use of the oil revenue, in an environmentally and socially sustainable manner. Despite the technical and financial success of the pipeline project, linked largely to the high price of oil, this fundamental objective has not been achieved. Indeed, the oil revenue windfall was associated with a resurgence of civil conflict and a worsening of governance.

Translation: The operation was a success, but the patient died anyways.

The evaluation concludes that the principal reason for this disappointing outcome was the lack of government ownership, with repeated violations of the basic agreements.

Translation: Not our fault; we had no way of knowing that Idriss Déby, a tin-pot tyrant with the blood of four wars on his hands, would act in bad faith. After all, he is only #17 on Parade's list of World's Worst Dictators.

For Chad, however, NGOs and others (including within the WBG) were particularly worried that the oil revenue would not be allocated to pro-poor and pro-development expenditure, owing to the governance weaknesses in the country—indeed, that the oil revenue itself could aggravate these weaknesses and possibly lead to renewed conflict after several years of comparative stability.

Translation: OK, maybe we had some inkling that this would happen, but damn the eyes of all our critics!

[T]he program led to a remarkable increase in financial resources available to the Chad government, from an annual revenue of about $112 million in 2000 to over $2 billion in 2008, almost 90 percent of it from oil.... The macroeconomic, development, poverty reduction, governance, and institutional development outcomes were disappointing and there is as yet no evidence of the hoped-for positive improvements. While major improvements in poverty reduction, human development or governance are unlikely to appear in a few years, it would not be unrealistic to expect some movement in a positive direction. On the contrary, various indicators of governance show a deterioration.

Translation: Apparently, duodecupling the tax revenues of a fragile African dictatorship leads to increased corruption. We needed four economists and a statistician to come to this conclusion. Also, check out Chad's pre-petroleum tax revenues of $112 million per year. A moderately successful US hedge fund manager makes more than this.

The main oil development and pipeline construction project was a physical, technical, and financial success. The oil revenue accruing much sooner and in higher amounts than anticipated was a major factor underlying the program’s failure to achieve its development objectives in Chad. The management arrangements devised for a comparatively limited amount of oil revenue cracked under the weight of the much larger revenue that materialized. The larger revenue also generated temptations and competing claims that were in part associated with the re-emergence of political instability and violent rebellion. The slow efforts at capacity building were undercut by the more rapid inflow of oil money. And the oil revenue much greater than the total of foreign aid sharply altered the initial leverage calculus of the program.

Translation: We also had no way of knowing that a bunch of traders at Goldman Sachs were gonna quadruple the price of oil. This meant we had inadvertently turned Déby into an overnight petrobillionaire, and suddenly negotiating with this formerly docile aid parasite was like negotiating with Daniel Plainview.

However, given the complexity of this program and the diversity of outcomes, the standard evaluation approach of assessing outcomes against the stated objectives needs to be qualified by considering the possible counterfactuals. With the rapid increase in oil price after 2000, it is virtually certain that the oil would have been developed and the pipeline constructed even without any WBG involvement, albeit perhaps one or two years later. If so, the environmental and social provisions and the external monitoring arrangements would not have been as thorough as those under the program. Also, it is probable that the revenue allocations to the priority sectors would have been lower than they have actually been, and it is certain that the support institutions such as the Collège and the advisory groups would not have been put in place. In this sense, WBG involvement made a positive contribution.

Translation: This is the most important paragraph in the entire document, and if it's not immediately clear what they're saying go back and read it again. Do you see what they are seeing? Do you?

They are saying: "We had to get to the oil before the CHINESE did!" (If you did see this, you may award yourself an "A" in Developmental Economics from Sketches of Africa Correspondence College, a non-accredited intsitution.) This is the retroactive justification for their entire involvement in this project. Because you know, the Chinese have a terrible environmental and human rights track record. Unlike, say, ExxonMobil.

Also, I love this example of development doublethink, where in the first paragraph they blame the high price of oil for the project's failure and in the second paragraph they cite the high price of oil as a reason for its absolute necessity.


Everything above is from the executive summary. Moving on to the meat of the report, there are a bunch of juicy details regarding environmental and development follies:

A first harbinger of misunderstandings and doubtful government commitment had come in August 2000, soon after Board approval, when a large part of a $25 million initial bonus from the consortium to the Chad government was used for purchase of military equipment.

Translation: No translation needed.

The original projections were that oil exports would begin at end-2004; direct revenue would total about $250 million in 2005-08; and indirect revenues in the form of taxes would start in 2014. In fact, as Table 2 shows, oil exports started in October 2003; direct revenues to Chad totaled $2.5 billion in the five years 2003-07 (and $1.9 billion in 2008 alone); and tax revenues began to accrue eight years earlier than foreseen, in 2006. This large discrepancy was due mainly to the difference between the projected oil price of $15.25/bl and the actual average price of $65/bl. in 2004-07. 20 In total, during 2003-08, Chad’s government revenue from oil was almost $4.4 billion—17 times what had been projected and almost twice as much as non-oil revenue from all sources.

Translation: We never, in our wildest dreams, believed that this would make so much money. God if only we had asked for an equity stake instead of just debt collateral! There's an ocean of oil under our feet! We'd be rich I tell you! Rich!

Data on poverty and human development are few, many out of date and some unreliable. It is nevertheless useful to provide the available data and look at some intermediate outcomes. [...] The picture is mixed, and there is no clear evidence that, overall, human development in Chad has either improved or worsened since 2000.

Translation: Well at least we didn't hurt anyone. Not that we can tell, anyways.

Also noteworthy, according to the 2008 PRSP, is a substantial increase in school enrollment, for both boys and girls, to a gross enrollment rate of 88 percent, among the highest in Africa. However, the PRSP acknowledges that the quality of teaching has deteriorated: 42 percent of classrooms are in poor condition, curricular materials do not meet educational standards, and most importantly, three out of four primary school teachers are non-credentialed, community parateachers. (Although parateachers can have a very valuable role in primary education, they must receive adequate basic training. Also, for a time the government failed to pay them, although salary arrears have recently been reduced to eight months.)

Translation: Q: When is a school not a school? A: When it is built by the World Bank.

Production levels were disappointing leading to an expansion from the initial three to six oil fields, earlier than anticipated. EEPCI has started an infill drilling program, which could lead to the possibility that about 700-800 wells will be drilled in the OFDA, against the 300 planned originally.

Translation: Oh and ExxonMobil decided to double the number of oil wells they were gonna drill. As Robert Moses once said, and as Exxon understands very, very, very well: "Once you sink that first stake, they'll never make you pull it up."

Waste management continues to be a challenge for the project, especially at Kome. Volumes of waste are considerably higher than estimated due to the lack of infrastructure and markets for scrap metal etc. in Chad. Hazardous waste incinerators frequently break down and waste is being stored in drums.

Translation: Or simply on the ground, as needed.

The EMP identified the Bakola Pygmy and Bantu settlements in Southern Cameroon as vulnerable to the impacts of the pipeline construction. The decision about where to locate the pipeline took these settlements into account. However, to mitigate potential long-term indirect adverse impacts associated with constructing and operating the pipeline in Pygmy and Bantu-inhabited areas between Lolodorf and Kribi, an Indigenous Peoples Plan was developed.

Translation: Who's down with IPP? Yeah you know me!

The IPP contained background information on Bakola Pygmies and the interdependent Bantu communities in the immediate vicinity of COTCO’s easement between Lolodorf and Kribi, along with results from community consultations. The objective of the IPP was to provide long-term benefits to the project-affected Pygmy population via assistance to programs and projects that address health, education, and agriculture in the region. In addition, due to the Bantu’s historical association with the Bakola Pygmies in the Atlantic Littoral Forest, the IPP addresses some health issues of Bantu groups. Hence, the IPP included an organizational framework for developing and implementing IPP programs in basic literacy, education, hygiene assistance, improved water supplies, and agriculture. Six hundred thousand dollars (360 million FCFA) of COTCO’s $3.5 million (2,100 million FCFA) capital contribution to the Foundation for Environment and Development in Cameroon (FEDEC) was earmarked and managed to fund IPP-related programs.

Translation: OK, this is a very subtle point here, and worthy of some discussion. The most important thing to understand is that a Bakola forest pygmy, living a traditional lifestyle in the jungle, hunting pigs and gathering mushrooms and whatnot, translates to exactly $0 GDP per capita. What this means from a development perspective is that you can herd him off his land, build an oil pipeline through it, put him on an artificially constructed reservation, and give him a sweatshop job making wallets for a dollar a day and still claim it has positive developmental impact. This is because GDP/capita analysis makes no sense at all when you are talking about subsistence lifestyles; these people are just not involved in the cash economy in any way. Similar arguments were used in the development of the American West, which is why if you believe Bureau of Indian Affairs statistics, the Winnebago Indians living on a reservation in Nebraska are wealthier now than when they had free access to all the fish in the Wisconsin lake that bears their name (currently hosting a Bassmaster Elite pro bass-fishing tournament.) This is a neat trick you can use on any undeveloped population: "Before these people had no money, but, now that we've kicked them out of their houses and given them a government stipend, they have some money, ergo, they're better off."

The level of participation of some Pygmy communities in FEDEC-supported programs is considerably lower than expected, and there appears to be some tension between Pygmy leadership and the implementing organization, RAPID.

Translation: Don't you little fuckers understand? We're helping you, goddammit!

However, it should not be concluded from this experience that the WBG should not intervene in supporting extractive industries because doing so carries reputational risks and success is unlikely. Indeed, despite the disappointing overall outcomes on the development and governance side, WBG involvement contributed to a notable increase in expenditures in social sectors and environmental and social protection within the confines of the project better than they would have been otherwise.

Translation: And the coup de grace? We learned nothing from this experience, and would do it again in a heartbeat.



Well, that's it. There's about 20 more technical points of discussion I could go into, but this is already the most boring post in the history of this blog. I wish I could say I enjoyed slogging through this report, but the truth is that, like the World Bank, I learned nothing, and only had my worst fears about development confirmed at every point. This is an experiment I won't repeat, to save both the sanity of my readers and myself. Besides, I'm too busy being fitted for my new sea turtle costume.