SKOPJE, Macedonia --
In developing countries, unconstrained "development" has led to inter-ethnic strife, environmental doom, and economic mayhem. In the post-Cold War era, central governments have lost clout and authority to their provincial and regional counterparts. As power shifts to municipalities and regional administrations, these bodies begin to examine development projects more closely, prioritize them, and properly assess their opportunity costs. The multinationals, which hitherto enjoyed a free hand in large swathes of the third world, are unhappy.
The outcome of this tectonic shift is a series of unrequited conflicts from Indonesia to Morocco. Some multinationals are in denial. They confront the local authorities that in turn legislate to prevent them from doing business. Others adapt, collaborate with the locals, establish foundations and endowments and invest in local infrastructure and preserving the environment. Most crucially, bribes that once went exclusively to central government officials are now split with local politicians. Sometimes, however, the consequences are more serious than the reallocation of backhanders. When a corrupt central government colludes with multinationals against the indigenous population of an exploited region, all hell breaks loose.
In Monday’s Part I of my two-part analysis of these conflicts, I considered the developmental problems of Nigeria. Part II will look at similar problems in the Western Sahara.
The ubiquitous Kofi Annan, secretary-general of the United Nations, is set to decide the fate of oil exploration off the disputed coast of Western Sahara by mid-February. U.S. chemicals and oil exploration firm Kerr-McGee, in conjunction with the French Total-FinaElf, signed much derided reconnaissance agreements pertaining to the disputed region with Morocco in October.
Morocco has occupied Western Sahara since 1975. It has moved hundreds of thousands of troops and civilians to the area in an effort to dilute the remaining indigenous population. The Moroccan government constructed a fortified wall along the entire border of the area, which was mined.
Morocco persistently obstructs the implementation of a referendum about independence it agreed to in 1991 with the Polisario Front movement, the government-in-exile of the local Sahrawis people established in a tent city in Algeria. The Sahrawi self-styled president wrote to the U.N. envoy, James Baker, and to President Bush, warning them of the consequences of this "provocation." The Sahrawis also demanded the European Union cancel the "illicit and illegal" contract between Total-FinaElf and Morocco.
The reconnaissance agreements are part of a concerted Moroccan policy, initiated by King Mohammed VI himself, to relieve the country of its wrenching dependence on oil imports. Morocco’s annual oil bill is close to $1 billion. In August last year, on his birthday, Mohammed announced a major discovery in Talsint, 60 miles from the Algerian border, that he designated "God’s gift to Morocco," This discovery has since been discredited.
More than 10 exploration licenses have been granted last year alone -- 25 percent of the total. The law has been modified to allow for a 10-year tax break and to limit the government’s stake in new oil ventures to 25 percent.
But major finds are the exception in an otherwise disappointing quest that dates back to 1920. Spain and Morocco both claim the waters opposite Morocco’s coast. The Moroccan government exchanged verbal blows with its Spanish counterpart after it granted prospecting licenses to a Spanish firm opposite the Moroccan coast.
As opposed to Morocco, Western Sahara is estimated to contain what the U.S. Geological Survey of World Energy calls substantial gas and oil fields. Upstream reports that attempts in the 1960s to find oil in collaboration with Franco’s Spanish government floundered. Gulf Oil, WB Grace, Texaco, and Standard Oil withdrew as political tensions increased. Other, lesser, American firms developed tiny fields there.
In the late ’70s both Shell and British Petroleum abandoned exploration, having reached the conclusion that extraction is justified only if oil prices climbed to $40 a barrel.
The Sahrawis quote U.N. resolution 46-64 (1991) that, "the exploitation and plundering of colonial and non-self-governing territories by foreign economic interests, in violation of the relevant resolutions of the United Nations is a grave threat to the integrity and prosperity of those Territories."
Thus, once again, oil companies find themselves supporting an oppressive and brutal -- but ostensibly stable -- regime against local communities with political and ethnic grievances. It seems to be a pattern. Oil companies cozied up to homicidal dictators in Burma, East Timor, Iran, Iraq and Nigeria, to mention but a few. As most Sahrawis are now in refugee camps in Algeria, they are unlikely to benefit from any potential find. Future oil revenues are likely to buttress Moroccan rule and enrich members of the Moroccan elite. The undisputedly Moroccan Talsint concession is co-owned, according to the British Broadcasting Corp., by relatives of the King and the chief of police.
BBC quoted the Operations Manager of Lone Star, a joint American-Moroccan Talsint exploration company, as saying: "Why should the people of Talsint get more money in their pockets? It’s just by chance they’re living on top of what appears to be valuable oil and gas reserves."
Such sentiments go a long way toward explaining why oil firms are so hated and why they so often contribute to instability, abuses, and poverty, despite their best interests. Perhaps they had better divert the millions they throw at local communities -- to educating their staff. Sometimes, development is best begun at home.
