Untapped: The Scramble for Africa's Oil
Untapped: The Scramble for Africa's Oil
by John Ghazvinian
With continued instability in the Middle East and the political difficulty of drilling on its own soil, it's not surprising that the US has been casting about for new sources of foreign oil. The problem is that most of the alternatives are no more dependable.
As John Ghazvinian writes in Untapped: The Scramble for Africa's Oil, the newest hot spot for exploration dollars, yuan and rupees, is sub-Saharan Africa. It has long been known that Africa is sitting on huge reserves, but it's only recently that prices have been high enough to make it economically viable to exploit. And when it comes to Africa, argues Ghazvinian, exploitation is a fact of life.
Although oil in one way or another has made much of the western world wealthy, it has had a far less benign effect on the sub-Saharan nations exporting it. All are wracked with corruption and mismanagement, and many are undergoing a breakdown of their societies. Far from being a ticket to a prosperous future, the discovery of oil has led to some dangerous economic illnesses, as Ghazvinian shows in a tour of 12 such African nations.
Many develop an economic condition known as 'Dutch disease', a phenomenon whereby a constant inflow of foreign currency - oil is sold in dollars, euros or yuan - disappears after the oil is gone. With a depreciated local currency and traditional non-oil industries left to languish during the boom times, a nation that was once an exporter is typically left to rely on foreign aid to survive.
Others become what's called rentier states, whereby a government derives most of its revenue from oil production. Besotted with the easy money, these governments no longer rely on internal tax revenue to fund their activities. The state, in other words, no longer relies on its people for support and often uses oil profits to buy off political opposition.
But, as Ghazvinian notes, many of the problems of sub-Saharan African states are due simply to mismanagement and corruption. Rather than spend money on infrastructure projects, leaders prefer to buy new weapons to keep their people in check. Untold millions are salted away in secret bank accounts or spent on wildly extravagant binges benefiting only the elite - typically a leader's family and friends.
Ghazvinian saves some of his fire for the oil companies. He accuses them of taking advantage of nations inexperienced in oil production by crafting deals in which they're shortchanged. They tacitly allow government repression, he argues, against those who would threaten physical assets and production.
Complicating the situation are the rising powers of the east. China and, to a lesser extent, India aren't constrained by many of the rules that ostensibly regulate western nations. Whereas a western oil firm may avoid a nation governed by a tyrannical leader, China's nationally owned oil company has no such compunction. In fact, writes Ghazvinian, it's one of China's competitive advantages. The Chinese arrive with money, offer some infrastructure projects to sweeten the deal, and stay out of local politics.
It would be tempting to dismiss Ghazvinian as another westerner shouting about the latest colonialist plot to rob Africa of her wealth, but the evidence for his case is plentiful. During a visit to Nigeria he meets villagers who live not far from the oil production fields but who subsist in utter squalor.
In Gabon, the nation became so rich, so quickly, on oil that it now faces a horrible future as the resource runs out. Gabonese have literally forgotten how or refuse to run the agricultural industry that used to sustain their nation.
S?o Tome, which used to be a little-known holiday destination for Europeans, is quickly becoming a paranoid dictatorship with constant political plotting by those who would capture power and the potential oil wealth. And in Angola, the 100 richest families enjoy a tide of oil money - 10 members of the presidential elite alone boast assets of more than US$100 million and the Angolan president is one of Brazil's richest men, thanks to overseas assets - while millions live below the poverty line and the government uses its share to battle separatists who cast a covetous eye at oil production.
In country after country, Ghazvinian shows, oil has been a curse, not a blessing, for its people. And although African oil is safer than that from the Middle East, it has economic, political and ethical minefields for the west.
Ghazvinian doesn't pretend there are easy answers - particularly when no one involved seems interested in finding answers - but Untapped should be required reading for any policymaker concerned with energy issues.