Nigeria: The Connection

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February 4, 2008: It's more common to hear gunfire in the Niger Delta, especially near oil production installations. The gangs are bolder and better armed, and are increasingly taking on the troops and security guards protecting the oil facilities. Shell Oil, the company that has run the production and shipment of oil in the delta for half a century, is pessimistic about restoring half a million barrels in lost production. Shell is running out of ideas. They tried using the stick (more security), then they tried using the carrot (hiring the gangs to guard facilities and do some maintenance work). But there are too many criminal gangs to pay off. Moreover, gang rivalries often result in continued attacks even if one gang is given a security contract. The theft of oil (by just tapping into pipelines) is too big a business, especially with the sharp rise in the price of oil in the last five years. The gangs get more for their stolen oil (which is smuggled to neighboring countries and sold to oil brokers who get the stuff into the global market). That enables the gangs to buy more guns, speedboats and barges (to haul oil) and hire more unemployed guys who are eager to steal more oil. The army and navy are barely holding their own in trying to protect oil facilities in the delta. On top of all this, some of the gangs have a political agenda as well, and want political power, so they can steal oil money with a wire transfer, rather than by punching holes in pipelines. Government attempts to negotiate with the gangs are hampered by the fact that no one gangs speaks for all of them, and the main goal of the gangs is making money, not politics.

An eighth governor has been arrested and charged with corruption in office. Currently, nearly all of the 36 state governors face prosecution for corruption when they are out of office (and lose their immunity from prosecution). Most of the corrupt politicians belong to the PDP, which backed the election of the current president, Umaru Yar'Adua. Ominously, the Yar'Adua has removed the chief anti-corruption investigator from office. The Ministry of Justice has interfered with corruption investigations and Yar'Adua is under tremendous pressure from political allies to provide protection from prosecution for corruption. The corruption is so widespread in Nigeria, that any effort to curb it is going to arouse a lot of opposition from a lot of powerful, and wealthy, people.

The newly elected president won on his pledge to go after corruption. The president has asked that the law be changed so that state governors are no longer immune from prosecution while in office. This has allowed governors to loot freely, then flee the country, if need be, shortly before their term expires. The president is caught between his campaign promises and the demands of his close political allies. It's unclear which way this is going to go. In most cases, it's not a good idea to bet against corruption.

Nigeria is another example of how natural resource wealth can be a curse. The billions in oil wealth require little from the locals. Most of the technology, and many of the technicians, are imported. The politicians of nations without much of a democratic tradition (that is, civil society and accountability of officials), quickly realize that they can steal most of that wealth. As long as they share it out with their tribe, and members of the police and armed forces, they will never be held accountable. This scenario has played itself out in dozens of countries. Indeed, it's rare that oil wealth benefits the country it comes from. This generally happens only in developed nations. Norway being a recent example. Norway discovered oil a decade after Nigeria, and pumped about as much, but did much more for Norwegians with the resulting revenue, than did Nigeria. There was very little corruption in Norway, and that made the difference.

For a long time, countries like Nigeria officially denied that corruption was a problem. But after half a century of vast oil income, and no social progress, it's pretty much impossible to deny the connection. Now the problem is doing something about it.

 

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