Nigeria And The Multinationals’ Intention: Oil Interest Or Social Influence?

Political will includes both a will to exercise self restraint and willingness to take politically risky decisions. Leaders are important for their value as role model. Especially in hero-worshiping cultures like Nigeria’s, people tend to follow individuals more closely than institutions. Such liked to see leaders acting as role models by their modest way of life. Conversely most of the leaders in Nigeria have adopted lavish style of living and are widely believed to be corrupt. Successive four governments in Nigeria after 1976 were dismissed on charges of corruption. List of allegation against rulers from every side of the divide is very long and widely perceived to be true. This environment that ‘everyone is corrupt’ is fatal to prospects of any successful anti-corruption effort.

Not only the leaders themselves are corrupt but also they are always willing to compromise anti-corruption efforts for political expediency. This lack of political will proves fatal to credibility of any anti-corruption agency. In the past, there has been an alignment between the wishes of the Nigerian government and those of the multinationals: both wanted to correct market failures. More recently, though, another set of problems is confronting development: government failures. EFCC is faced with same credibility crisis.

Anti-corruption mechanisms in Nigeria have consistently failed one after the other. Present set up, National Budget Office is doomed to same fate. Especially after promulgation of Economic And Financial Crime Commission, EFCC, it is very much written on the wall. After reconciling with the big fish there seems to be no moral justification to continue catching small fry. It is heart rending to see another anti-corruption mechanism in this country failing to bring any semblance of good governance. Starting with Anti-Corruption Bill we have consistently tried to arrest corruption but have miserably failed every time. An insight into all these attempts for controlling corruption would reveal that anti-corruption efforts have always been attached to political motives. Almost all important anti-corruption literature recommends the presence of exceptional political and managerial will to promote and maintain anti-corruption reform.

For the fact that crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply, Nigerian authorities goofed. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.In 1972 the price of crude oil was about $3.00 per barrel and by the end of 1974 the price of oil had quadrupled to over $12.00. The Yom Kippur War started with an attack on Israel by Syria and Egypt on October 5, 1973. The United States and many countries in the western world showed support for Israel. As a result of this support several Arab exporting nations imposed an embargo on the countries supporting Israel. While Arab nations curtailed production by 5 million barrels per day (MMBPD) about 1 MMBPD was made up by increased production in other countries. The net loss of 4 MMBPD extended through March of 1974 and represented 7 percent of the free world production.

“Black gold” often brings hardship and misery to the societies where it is found. Petroleum-producing countries are plagued by corrupt and authoritarian governments, lopsided and unsustainable economic development and violent conflict. Foreign powers and their huge multinational oil companies often maneuver for control of the oil fields through clandestine operations or outright military intervention. In addition, disaffected rebels challenge governments in hope of winning a share of the lucrative oil revenues. Environmental damage by oil extraction can spark protest movements, which are frequently met by violent repression. Boundary disputes between states over oil reserves represent yet another link between oil and violence. As worldwide oil and gas production peaks and consumer demand continues to rise, prices soar, making conflicts for this increasingly scarce resource even more likely in the future.

The present meteoric rise in oil prices is not the first time the oil interests have conspired to manipulate the market. The reason I say “Oil Interests” is because the manipulation is not limited to the oil companies only. The Players also include the present Administration, the weapons’ industry, OPEC and non-OPEC oil producers, vested interests in the National Assembly which rely on campaign contributions, etc. Increased oil prices have many benefits to all the winning players.

President Umaru Yar’Adua’s request for an N444 billion supplemental-spending bill, at least N200 billion of which is for the civil and infra structural development of Niger Delta, has met with surprisingly stiff opposition. Opinion polls indicate that the president’s approval rating stumbled after Nigerians learned that the burden of paying for modernizing and repairing the infrastructure of violence-torn Niger Delta would have to be shouldered by Nigerian taxpayers, rather than the Niger Deltans themselves. The opposition to this plan is heightened by problems here at home: the slow recession recovery, still-too-high unemployment, and an already record N200 billion of federal deficit spending.

In the run-up to the insurgent in the region, administration officials had consistently argued that Nigeria’s oil revenues would pay for the costs of reconstruction. That financing plan, which draws from the assets of the region to pay for their own economic rehabilitation, seems no less sensible today than it was six months ago. The Niger Delta is not a poor region — at least not for long. It is a resource-rich country, with the highest levels of oil reserves of any nation in the world other than Arabian nations. With an estimated 100 billion barrels of known reserves, and probably much more than that is technologically recoverable from these rich desert fields, the discounted present value of the oilfields could easily approach $1 trillion. But these assets only have value once they are linked to a dependable infrastructure of roads, bridges, pipelines, and security.

This begs the question: Why should Nigerian citizens have to pay one additional penny for this regions development when we have already paid tens of billions of dollars for the economic rigidity of the nation with a huge unconstitutional operation and more preciously, thousands of our own citizens’ blood?

Skeptics say that using the oil money to pay for the development of Niger Delta is no longer a practical option, because region’s oil revenues are way down. It is true that the combination of the crises and economic sabotage has left the oil fields in poor condition and has brought production levels far below prewar levels. But this situation of disrepair is temporary. Once there has been a return to reasonable civic order in the region, oil production will increase dramatically and this nation will once again be flush with petrodollars. It could become like Saudi Arabia: one of the richest nations in the world.

As such, we would propose a fairer way to pay for infrastructure development in the region than the president’s plan. First, the money for developing the Niger Delta area should not be given, but rather loaned, to excess crude revenue through the government, or better yet, through a financial intermediary, such as the World Bank, or the International Monetary Fund. These loans should be collateralized against the future profits of the Niger Delta oilfields. A formula which dedicates 50 percent of the oil profits to the repayment of these loans, could mean that within 10 to 15 years the debts would be paid off in full (depending in part on what happens to the world price of oil). Better yet, if the government decides to privatize the oil fields through a public offering, some percentage of the sale proceeds should be dedicated to debt repayment. We would even go a step further; a substantial portion of the actual insurgent costs could and should be reimbursed to the government from this oil money, because the ultimate beneficiaries of this war were the Niger Delta people.

Making the loans through the World Bank or IMF would have the benefit of avoiding the spurious charge that the hidden agenda of this administration was to secretly take control over the region’s oil fields. But in this case the government would not get a penny of the oil revenues for development purposes. The loans would be made by multilateral institutions and would be repaid to them.

This straightforward plan for financing this development process is said to be complicated by the nation’s foreign debts. Major creditor countries, including Nigeria-proponents France, UK, and Germany, as well as various Arab states, insist that the Niger Delta’s oil revenues secure Nigeria’s debt. Estimates of the amount of debt are between $100 and $150 billion, well above the entire cost of development. While these debts are likely to be renegotiated, the region’s stake-holders and the government have adopted the questionable position that the development bill and debts are valid and will be paid. That is a mistake. To not repay the loans sends a signal to the rest of the world that they will pay a hefty price for engaging in commerce with corrupt, brutalistic, and illegitimate regimes. It would be a horrendous policy if Russia, Germany, and France were repaid for financing insurgence, while Nigerian taxpayers are not reimbursed for liberating and developing the region. The influence of international oil corporations in the Niger Delta is best illuminated in light of the country’s past. The main protagonists of the first violence were the government and the militant group .The conflict was largely one of succession; a result of continual economic and political neglect of the south by the northern government. . The insurgent further devastated the region, particularly the south, leaving estimated thousands of Nigerians dead and double that amount displaced.

Written by
L.Chinedu Arizona-Ogwu
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