Chad Backs Out of Pledge to Use Oil Wealth to Reduce Poverty - New York Times

Chad Backs Out of Pledge to Use Oil Wealth to Reduce Poverty - New York Times: "ACCRA, Ghana, Dec. 12 - When the World Bank said more than five years ago that it would help Chad build a $4.2 billion pipeline to export the oil discovered in the southern part of that landlocked, deeply impoverished nation, it seemed an opportunity to give the lie to the resource curse that is the painful experience of virtually every oil-rich African nation: that oil wealth typically creates more problems for poor countries than it solves.

In exchange for World Bank loans to build a 670-mile underground pipeline through Cameroon to export its oil, the Chadian government passed a law requiring that almost all of the money it earns on oil exports be spent for poverty reduction and that 10 percent be put aside as a 'future generations fund,' to leave something behind once the estimated one billion barrels of oil have been exhausted.

But in October, Chad's government abruptly announced at a meeting with the World Bank in N'Djamena, the capital, that it plans to alter that law and funnel more money into its general budget and increase spending on security.

Under the new proposal, the future generations fund would be scrapped and military spending would be added to the list of 'priority sectors' that until now focused on spending in areas like agriculture, housing, health care and education.

'These are fundamental changes to the agreement Chad made on oil revenue management,' said Ian Gary, an expert on oil at Oxfam America who has written several research reports critical of the Chad oil industry.

The changes, he said, make it far less likely the people of Chad will see any benefit from the billions of dollars Chad's oil fields are likely to pump into the economy, which in turn undermines the antipoverty rationale of the World Bank's role in the project."...