Chad's Oil Riches, Meant for Poor, Are Diverted - New York Times

Chad is a very important test case for the World Bank, and with potentially devastating consequences for the poor in Chad and of course relevant to us in the U.S., as oil importers ...

Chad's Oil Riches, Meant for Poor, Are Diverted - New York Times: "Such is reality under a World Bank-supported program that was supposed to harness this impoverished African nation's oil wealth for the benefit of its poorest citizens. A $4.2 billion oil pipeline has generated $399 million for Chad since mid-2004, but the spending of the money has been seriously marred by mismanagement, graft and, most recently, the government's decision that a hefty share can be used to fight a rebellion.

And now the approach, once envisioned as a model for the development of other African countries, seems to be on the verge of collapse. In recent weeks, Chad seriously weakened a law that dedicated most of its oil revenue to reducing poverty and reneged on its deal with the World Bank. In response, the bank suspended all its loans to the country.

What is happening in Chad, a Central African country twice the size of France, is an important test of the idea that international institutions like the World Bank can influence governments of poor countries to spend newly tapped riches on their people instead of using the money to further entrench themselves in power.

The proposition is particularly challenging as oil prices surge, because now nations like Chad can attract investors who make few or no demands on how the profits are spent."...

frica is in the midst of an oil boom, with countries that have already struck oil aiming to double production by the end of the decade.

Billions of dollars have been invested in new production capacity, much of it to feed a thirsty American market. The United States already gets about 18 percent of its oil from sub-Saharan Africa, a share that will rise in coming years and could outpace imports from the Persian Gulf, experts say.

But the United States also faces fierce competition for Africa's oil from countries like China, Taiwan, India and Malaysia.

From Angola to Nigeria, Gabon to Sudan, riches from oil have often ended up in the pockets of the ruling elite, inciting conflict over the spoils. In Congo, the off-again-on-again fight over a very similar issue, that vast country's mineral riches, has killed four million people, more than any conflict since World War II. Most died of disease and hunger as wars over diamond and copper mines raged.

Chad has been ranked with Bangladesh at the world's two most corrupt countries by the corruption watchdog Transparency International. The hope that Chad would chart a more humane path fractured when its Parliament voted recently to soften the oil revenue law, allowing the money to be diverted.