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Daniel Sherrell Highland Park High School Angola UNCTAD-Development of African Oil Resources The discovery of vast oil resources in Africa within the last 20 years has presented the ailing continent with one of its first real hopes for a bright future. Amidst the constant trials of war, famine, disease and poverty many African nations have risen to become some of the largest oil producers in the world. Many large, oil-hungry nations are increasingly turning to Africa for much of their fuel imports. This large-scale increase in oil revenue for multiple African countries should have spelled increased economic prosperity and stable infrastructure for Africa but if anything this oil has acted as a curse against the continent. The African states producing the oil have completely failed in turning revenues into sustainable economic growth. For example, Nigeria has enjoyed more than 30 years of oil “wealth” yet its per capita GDP remains at approximately $1000, making it only 209th in the world.6 The main cause of this discrepancy between vast resources and negligible wealth in Africa is the fact that corruption is rampant in both the international oil companies and the individual African governments. The large foreign oil companies make unfavorable contracts with African nations while many corrupt African officials line there own pockets with oil money that should be going to national infrastructure. The United Nations Conference on Trade and Development must find a way to ensure that the money for Africa’s vast oil resources actually helps Africa with its numerous social, political and humanitarian difficulties, and doesn’t line the pockets of foreign businessmen or disappear in endless corruption. The Conference must take action soon because as it deliberates, the continent of Africa is being robbed. The nation of Angola lies at the very heart of this African oil issue along with many other nations like Nigeria, Libya, Algeria and Egypt. The country could help spearhead the initiative to effectively develop Africa’s oil resources and act as a model in its implementation because it is one of the only countries that faces so many challenges and yet has so many hopeful possibilities for dealing with these problems. For the past two decades Angola has been destroyed by a brutal civil war that just recently ended in 2002.2 As it stands now 70% of the Angolan population lives below the poverty line, roads in the countryside are ruined, the railway system had been demolished and the agricultural base of the country is in tatters. Even so many economists see Angola as a country ripe for change. It has quickly become sub-Saharan Africa’s second-largest producer of oil (trailing only Nigeria) with oil production expected to reach 2 million barrels per day by 2008.5 Angola also has a relatively small population (roughly 13 million) which that the oil wealth per person is much higher than in Nigeria and other countries.2 Unprecedented amounts of oil money are flowing into Angolan government coffers but one non-governmental group, London-based Global Witness, says that $8.4 billion in public oil money from 1997 to 2001 remains unaccounted for.3 But Angola serves as a symbol for the rest of the oil-producing African nations in that so far none of this oil revenue has actually benefited the Angolan people. This is why Angola is so deeply invested in helping to find a solution to the problem for all of Africa, a solution that very well may be the continent’s ticket out of perpetual poverty. The main problem that needs to be dealt with is this situation is the corruption that takes place on many levels. Probably most detrimental to the cause of helping to develop Africa through its oil are the international oil conglomerates who have been consistently implementing exploitative business policies that help themselves and hurt Africa. Instead of constantly conflicting ideals, there needs to be a symbiotic relationship between these companies and the African countries they are dealing with. Companies like Shell, BP, Chevron, and Mobil among many others have thrown money at the countries for their oil instead of cooperating in a more meaningful, development-oriented way.5 Many of these large companies have underbid local African firms; have refused to hire many African workers; and have undermined local efforts to increase transparency and good governance by paying bribes and attaching no conditions or oversight to aid money. Local ethnic groups are often offended by the “invasion” of these oil companies and their drilling machines onto their land and some have retaliated, as in Nigeria recently where the Movement for the Emancipation of the Niger Delta have kidnapped foreign oil workers, sabotaged pipelines and even attacked offshore oil rigs. They also have low environmental standards and little oversight and are thus destroying some of the world’s most unique ecosystems.6 The other main source of the corruption is within the African governments themselves where oil money is often allocated to supporting oppressive military regimes instead of supporting the African people. Angola proposes a multi-faceted solution to this problem that will hopefully free African oil from the clutches of corruption and help the continent to start supporting itself effectively. First of all Angola believes that it should be UNCTAD’s duty and responsibility to set down a set of international laws that would hold international oil companies up to certain standards and ensure they weren’t practicing exploitative business. These laws should include that all oil companies contracting with one or many African countries for their oil resources must 1) publish a completely transparent report of all their dealings with African states or local communities, 2) provide a certain percentage of their jobs to local African workers, 3) establish mutual partnerships with otherwise combative ethnic groups to provide their communities with schools, clean water, jobs etc. in return for drilling on their land, and 4) live up to set environmental standards. These laws should be enforced by annual U.N. audits. Similar audits have worked recently in Nigeria where they revealed hundred-million dollar discrepancies between the amounts of taxes the foreign oil companies say they paid and what the Nigerian government says it received.1 Another way to attack this problem is by implementing a wide array of programs similar to China’s aid-for-oil programs. These measures, similar in concept for a debtfor-nature swap, let the company or country involved increase their production in African oil fields in return for the construction of schools, hospitals, roads and for the forgiveness of debt. Angola believes that any country or company interested or already contracting with African countries for their oil resources should be required, with said country’s permission, to implement an agreement similar to the Chinese aid-for-oil programs in which the developed country provides the African country with long-lasting infrastructure in the form of large-scale debt relief or broad public works projects, not just sporadic, under-funded hospital facilities as an inadequate gesture of spurious good will. UNCTAD should encourage some of these programs to include the creation of country-wide systems of small, cheap medical facilities in the rural areas of these countries which need medical care the most and yet get the least. China has recently become a major factor in this debate since its number of oil partnerships with African countries has been growing exponentially. China’s influence has been both good and bad for Africa. The country has, in its insatiable thirst for oil to fuel its rapidly growing economy, has partnered with multiple African countries, including Angola, in the creation of roads, bridges, dams, schools, and hospitals. It has also contributed 1, 500 troops to the peacekeeping force in Africa, sent doctors over to help fight disease, and cancelled $1o billion in bilateral debt from African countries. On the other hand Chinese companies have been some of the most accused for corrupt business practices that are detrimental to development.7 Angola believes that success of UNCTAD in effectively helping to develop African oil resources will depend greatly on how well it works with China which will soon become the biggest foreign influence in the continent. The Conference has to hold China and its companies to the same healthy business standards as everyone else while continuing to support their immensely helpful public aid projects. To find an inspiration and model on how to manage a wealth of natural resources successfully, one need look no further than to Angola’s close neighbor, Botswana. Botswana has been blessed with a wealth of diamonds beneath its soil. The country has been immensely successful in using the revenue from the exportation of this precious stone to become one of the fastest-growing countries in the world and the richest in subSaharan Africa.4 The country has achieved this by adhering to sound macroeconomic policies, implementing economic liberalization policies, tackling its corruption problems and making a concerted effort to diversify its economy. If other countries follow Botswana’s example and apply it to their oil resources, there is hope that the future of Africa will see steady, long-term, sustainable economic growth. Bibliography 1. “Audit Shows Lost Nigeria Oil Taxes” April 12, 2006. BBC News. Online. Internet. Available: http://news.bbc.co.uk/2/hi/business/4902474.stm 2. “Background-Angola” African Oil Politics. Online. Internet. Available: http://africanoilpolitics.blogspot.com/ 3. Donnelly, John. “Oil Wealth Helping Few of Angola’s Poor” December 11, 2005. Boston Globe. Online. Internet. Available: www.boston.com/news/world/africa/articles/2005/12/11/oil_wealth_helping_few_of_ang olas_poor/ 4. “Economic Success Story” WITFOR 2005. Online. Internet. Available: http://www.witfor.org.bw/about_botswana/economic_success.htm 5. Gary, Ian and Terry Karl. “Bottom of the Barrel-Africa’s Oil Boom and the Poor” June 2003. Catholic Relief Services. Online. Internet. Available: http://www.crs.org/get_involved/advocacy/policy_and_strategic_issues/oil_report_one.cf m 6. Miller, Andrew. “Oil and Development in Africa” Harvard Political Review. Online. Internet. Available: http://hprsite.squarespace.com/oil-and-development-inafrica/ 7. Pan, Esther. “China, Africa, and Oil” January 26, 2007. Council on Foreign Relations. Online. Internet. Available: http://www.cfr.org/publication/9557/