[A-List] Oil Boom, Politics Shape Africa's Future

[Yoshie Furuhashi]

<http://www.businessweek.com/ap/financialnews/D8Q2TF101.htm>
June 30, 2007, 12:08AM EST
Oil boom, politics shape Africa's future
By EDWARD HARRIS
BW Exclusives

PORT HARCOURT, Nigeria

Europe's great powers once scrambled for dominance across vast,
underdeveloped African lands rich in raw resources, including the
scarlet palm oil used to grease the first cogs of the industrial
revolution.

A century later, a new group of nations are competing for a different
valuable, viscous material, with Sub-Saharan Africa closing in on the
Persian Gulf as the prime overseas supplier of oil to the last
remaining superpower.

As China and India increasingly prospect for resources here, terrorism
concerns rise and the U.S. military seeks a permanent military
presence in Africa, the continent has its greatest international
influence in decades. Whether Africa can use its newfound might to end
its longtime blight is a separate issue.

"There's a new dynamic in play" for African nations, says Antony
Goldman, an independent risk-analysis consultant based in London. "And
the challenge for those countries is how to manage that."

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An AP analysis of U.S. oil import figures shows the stakes.

In 1993, the earliest year for which there are full figures, the main
African oil producing countries -- Nigeria, Angola, Cameroon, Chad,
Equatorial Guinea and Gabon -- shipped about 494,000 barrels per day
of oil to the United States, data from the official Energy Information
Administration show. That's about 7 percent of total U.S. imports. In
the same year, the Persian Gulf nations averaged 1.6 million barrels
per day, or about one quarter of all U.S. imports.

By 2006, sub-Saharan African oil constituted about 18 percent of all
U.S. imports, or about 1.8 million barrels per day; the Persian Gulf
made up 2.2 million barrels per day, or 21 percent of total daily
imports.

But the oil producers are among the sickest countries in Africa. While
poorer nations such as Senegal, Mali, Liberia, Burundi, Ghana and
others have made democratic advancements, the oil countries are still
mostly run by weak, or illegitimate leaders.

Angola is emerging from one of the continent's longest-running civil
wars. Chad, which has only been exporting oil for a few years, is in
the depths of one. Chad's crude reaches African export terminals in
oil-rich Cameroon, whose president has been in power for a quarter of
a century.

Next door is Equatorial Guinea, where per-capita gross domestic
product boosted by oil revenues is among the highest in the world,
while its ranking on the United Nations human-development index is
near the bottom.

And then there is Nigeria, where the challenges facing Africa, and
particularly its petroleum producers, are on desperate display.
Nigeria is Africa's biggest producer of oil and among the top three
outside suppliers of crude to America.

Among the first Europeans to arrive here centuries ago were slave
merchants and traders seeking palm oil, which women still produce in
Nigeria's crude-rich Niger Delta by crushing bright-crimson, palm-tree
kernels on potholed roads outside massive oil installations that belch
smoke and flames.

Crude oil was first exported from Nigeria in 1958, two years before
independence from Britain. Despite the hundreds of billions of dollars
of oil revenues -- there was another massive oil boom in the 1970s --
the country's 140 million people remain desperately poor. Some 70
percent of the population live on less than $2 per day, U.N. figures
show.

Much of the oil money has been stolen by corrupt leaders or misspent
on wasteful government boondoggles. In Nigeria alone, the World Bank
estimates about $300 billion of government oil funds can't be
accounted for. By contrast, oil-rich Norway has about that same amount
in a government-controlled fund where the petroleum surpluses are
kept.

Norway sits atop the U.N.'s 2006 human development index, which groups
social indicators like literacy and infant mortality. Nigeria is among
the worst performers, at 159 out of 177 countries surveyed.

The late Nigerian dictator Sani Abacha is estimated to have salted
billions of dollars away in overseas bank accounts, with about $730
million in Swiss accounts having been returned. In Nigeria, basic
infrastructure rotted. Today, none of Nigeria's main oil refineries
are operable, leaving one of the world's top oil producers completely
reliant on fuel imports. In the oil region, vines climb up abandoned
on-ramps to superhighways planned, but never completed.

Meanwhile, military leaders or weak corrupt administrations racked up
tens of billions of dollars in loans, including many by Western
countries or their funding bodies in hopes of setting up friendly
bulwarks against Communism in Africa.

But that dynamic began to shift in the late 1980s, as the Cold War
ground to a halt. The easy loan money stopped flowing, and markers
were called in. Overseas governments began insisting good governance
be linked to aid.

While few Africans lived in multiparty democracies in the 1970s, most
do today. But in many of those countries that hasn't translated into
better daily existences for the people.

Corruption still keeps governments from acting accountably, as has
happened in Nigeria's southern oil delta, where electricity is fitful,
pipe-borne potable water virtually nonexistent.

The little government spending there has been has been ineffectual.
The few new streetlights here in the heart of the oil city of Port
Harcourt are solar powered -- an apparent admission by town planners
that no electricity will soon reach the lamps.

Most people live in teeming slums, including John Isah-Aaron, a
32-year old fisherman who's constructing his new home next to open
latrines on a riverbank in the vast wetland region where militant
attacks have cut oil output by nearly one-third.

"Look, here is where we bathe, and also where we toilet," he says,
gesturing at the befouled riverbanks. "We're very poor."

The movement toward democracy encouraged by the West since the end of
the Cold War hasn't made much improvement in his life, he says.
Nigeria's civilian leaders have proved as corrupt as the military
junta they replaced.

"They're saying democracy is government for the people, by the people.
But we're not seeing any dividends," he said recently in his village,
which is just outside a compound run by the Italian oil-company Agip.

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Nigeria's oil industry, like those of many other African countries, is
primarily run by Western energy concerns. The companies who operate
crude-pumping operations and share the proceeds with Nigeria's federal
government include Anglo-Dutch Royal Dutch Shell, France's Total SA,
Eni SpA from Italy, and US-based Chevron Corp.

But increasingly, China and India have been moving in, too. Chinese
and Indian companies won big in a recent round of bids for exploration
licenses, for example, and have become big consumers.

Much of Africa's estimated 5.5 percent economic growth last year was
attributed to China's near-insatiable demand for the continent's oil,
gas, timber, copper and other natural resources. Economic growth for
sub-Saharan Africa is expected to reach near 7 percent in 2007,
according to the IMF.

Two-way trade soared 40 percent to $55.5 billion last year, and
Beijing says it believes that figure will rise to $100 billion by
2020.

At the same time, the United States is also ramping up its influence
in Africa. After the terrorist attacks on Sept. 11, 2001, diminishing
reliance on oil from the Middle East has become a stated goal of the
U.S. government.

Washington recently announced it intended locate a permanent military
command for Africa on the continent.

"There clearly is an energy component in this," said Navy Rear Admiral
Bob Moeller, who's helping arrange the new command.

"Overall, Africa is growing in global strategic importance and setting
up this command allows us to help them help themselves in enhancing
security in their countries, and across the continent writ large," he
told the AP in a recent telephone interview.

Analysts say the post-Sept. 11 focus on terrorism, combined with high
oil prices around the globe, gives Africa a new shot at ending decades
of disease, wars, corruption and, above all, the poverty that drives
it all.

Africa can use its oil-fueled influence to play more powerful nations
off each other. It can lobby for more-favorable trade deals, increased
direct assistance and better loan rates. Africa is also lobbying for a
permanent seat on an expanded U.N. Security Council.

The West may not always see Africa's power as productive -- Sudan has
been able to stave off pressure over the war in Darfur because of
support from China, an oil customer.

Already, Africa is paying down or having its debt written off from
Western lenders, with many countries turning to China instead for
funding that critics say comes without any demands for governmental
transparency.

While graft, poorer educated populaces and inter-community strife
still typify many African nations like Nigeria, those countries are
looking better each day for the West compared with other oil-rich
nations, like Iran and Venezuela. Africa can no longer be ignored,
analysts say.

"Before, on a day-to-day basis, places like Nigeria seemed like a bad
bet," said Goldman, the London-based analyst. "Now people would prefer
the day-to-day problems of Nigeria compared with those of the Middle
East."

Peter Pham, a professor of international relations at James Madison
University in Harrisonburg, Va., said, "Africa can no longer be safely
ignored ... that era of benign or not-so-benign neglect is over."

Oil will get the attention of policy makers, but Africa's security has
become a national security issue for the U.S., said Pham.

"If 9/11 taught us anything, it's that weak nations can cause
threats," he said. "There's an interest in building up the capacity of
African states to handle their own problems, provide services for its
people."

It all adds up to a rare moment of potential influence for Africa, he
says, but only if African leaders can at last end their own
self-enrichment at the expense of their people.

"It's a question of whether African leaders rise to the occasion,"
said Pham, "or if it just becomes another moment to support
themselves."

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Associated Press researcher Monika Mathur in New York contributed to
this report.

-- 
Yoshie