Thursday, May 22, 2008

Oil & Africa: Three Books

  • Untapped: The Scramble for Africa's Oil by John Ghazvinian

  • Poisoned Wells: The Dirty Politics of African Oil by Nicholas Shaxson

  • The Wonga Coup by Adam Roberts

  • In the film Blood Diamond when Danny Archer (Leonardo DiCaprio) is traveling in search of the coveted pink diamond along with Solomon Vandy (Djimon Hounsou), they encounter a lone villager in a deserted village. Terrified of Danny, the villager asks Solomon if he can ask the white man to not shoot him. Solomon smiles and tells the villager to not worry and replies that just like the other white men, Danny is also crazy for diamonds. The villager then gravely looks at Solomon and says that thankfully oil has not been discovered in their land, otherwise they will "have real problems."

    Equating discovery of oil with "problems" is one of the most accurate assessments, especially in today's time. Although it did not have to be this way. The Oil crisis of 1973, which showed the political power of oil for the first time, should have led the West to try harder for alternate sources of energy and cut down their dependence on oil. But nothing came of it. In America & Canada, the cars got bigger, the suburbs were spread out even more, public transportation suffered and the firm dependence on oil was set in stone. In North America, virtually every item is manufactured or assembled in nations with cheap labour and as a result, ships with giant containers float through the ocean everyday carrying precious goods. Food, clothing, electronics, etc are now all depended on oil to get them through international waters. If the price of oil goes up, then every single industry feels the rising cost.

    Unfortunately, this dependence on oil cannot be changed over-night. Alternative energy sources will take time, so in the meantime the scramble is on to find the next source of oil. While en route to Nigeria for starting the research for his book Untapped John Ghazvinian engages in a conversation with the airline ticket operator who inquires if John's trip to Lagos is for business or pleasure. After John mentions that he is going to Africa because of his book on oil, the operator is surprized to learn that there is oil in Africa. Just as John is explaining the abundant resources present there, the operator cuts him off by saying that they need to get the oil from somewhere.

    As John outlines that his journey to Africa is a journey to that "somewhere" to find out more about this source of oil which will help satisfy America's need. Both Untapped and Poisoned Wells cover mostly the same African countries (Nigeria, Gabon, Republic of Congo, Angola, Equatorial Guinea, Chad, Sao Tome and Principe) and overlap on similar material but their presentation style is different. Untapped follows the author from one country to another in each chapter, while in Poisoned Wells Nicholas Shaxson structures each chapter around a pivotal character's influence on an African nation's fortunes. While both books start off in Nigeria, Africa's most well known oil producer, Nicholas Shaxson talks about the musician Fela Kuti and uses the musician's voice to reflect upon Nigeria. Both books end while talking about the growing influence of China in Africa -- while John spends an entire chapter on China, Nicholas spends just the last page.

    Both authors admit that they changed their views from what they saw and learned. Initially when it came to oil, Nicholas Shaxson's anger was "...directed principally at African rulers or the oil companies from whose oily treats the rulers suckle." But after learning some of the dark plots which surround oil, his "revulsion is now directed less toward these actors and more in two other directions: first, towards oil itself -- the dirty, corrosive substance-- and, second, toward the system--the global financial architecture. In this regards, Shaxson offers some solutions which would decouple this awful cycle of oil, power & money which allows the crimes in Africa to continue.

    What is impressive about both books is the research the authors spent in trying to unravel how each African nation got to their current problems while trying to understand the complicated economic impacts that oil has on a nation. One of the most interesting aspects was the discussion of the negative influence oil had on a country.

    Oil is found, a few get rich, the rest get poor

    Some call it the oil curse but it is better known as "Dutch Disease". John Ghazvinian discusses this in good detail in Chapter 2 of Untapped. Essentially, when a country starts exporting a coveted natural resource (such as oil), it gets an influx of foreign currency (dollars, euros) as opposed to getting paid in its own currency. This artificially inflates its own local currency and makes it look like the country is swimming in money. With foreign money comes foreign imports and things that were locally produced are now replaced by foreign goods. As a result, the local economy suffers and industries such as agriculture are left behind. People are rendered jobless and in search of a better life, they head to the city in droves. Since there is no place to live in the city, they end up dwelling in make shift slums and find cheap labour.

    "And, in what is probably the bitterest irony of all, thanks to the collapse of the agricultural sector, life in the big cities becomes increasingly reliant on expensive foreign food, which is largely out of reach to these new arrivals from the hinterland, who find themselves dependent on government handouts and international food aid. In short, given a sudden infusion of foreign currency, a country that was once a regional breadbasket and net exporter of food can quickly turn into one that is unable to feed itself." Chapter 2, Pages 96/97 Untapped by John Ghazvinian

    This theory refers to developing countries but I believe the new money that oil generates in any city or country can cause immediate inflation and a mad rush for expensive foreign goods unless a nation can control the wealth generated by a resource. Nicholas Shaxson mentions the rare example of Norway who have learned how to properly handle their oil money whereas plenty of other nations indulge in personal glory and wasteful spending. At the end of the day, oil is a finite resource and one day it will run out. Nations that do not properly plan to use the oil money could find themselves in deep trouble when the oozing black liquid vanishes.

    Note: In his excellent book Planet of Slums, Mike Davis looks at the increasing amount of slums cropping up around the world. The urban growth of Lagos in the last few decades has been staggering and the timeline of the city's urban growth + increase in slum dwelling coincides with the glory years of Nigeria's oil boom in the 1970's.

    New oil vs New methods to get old oil

    John Ghazvinian highlights the fact that African oil is not a new phenomenon. "In reality, sub-Saharan Africa has been supplying a healthy flow of crude oil to the international market for decades. Nigeria made its first shipments of oil in 1958, two years before it had even declared independence from Britain, and the lush tropical forests of Central Africa have been drilled by French companies since the early 1950s." Untapped

    But previously, African oil was deemed too expensive to drill and explore. Plus the low price of oil in the 1980's did not make the African crude seem very appealing. But the following factors made oil companies look at African oil differently:

  • Changing political climate from late 1990s onwards

  • Oil companies want cheap oil and would like it without any relative difficulty. But since the mid 1990s onwards, plenty of oil producing countries became not so friendly places to get oil from. The crisis in Nigeria in the mid 90's is attributed towards causing oil to jump to $50 a barrel for the first time in history. And since 1990, the Middle East has been transformed drastically in terms of the political climate. Also recently, Venezuela has been trying to assert its political muscle using oil.

  • New offshore Drilling techniques

  • The Gulf of Mexico saw some major improvements in offshore drilling in the 1990s when new technologies could allow companies to drill upto a depth of 5,000 feet into the ocean to get oil. Suddenly, oil buried deep beneath the Gulf of Guinea was viable again.

  • Rising oil prices

  • The record profit of oil companies with the rising oil prices allowed them to start spending more money in research to get out of the ground or ocean faster.

    Given the above combination, the oil beneath the Gulf of Guinea seemed too good to pass up. Since the oil is buried in the ocean, it is free from some of the political problems faced on land in Nigeria -- the oil can be loaded directly onto ships heading for the U.S or Europe and this would avoid any problems while transporting the oil through troubled borders and armed gun-men wanting their share of the profits. The new oil rush in the African waters is just starting.

    My country, no, your country, but under my watchful eye

    Even though the colonial powers have officially left Africa, they cannot let go of their former colonies. Nicholas Shaxson examines some of these situations and highlights the French as one of the culprits in trying to maintain a hold on its colonies. In some cases, foreign nations are on friendly terms with a dictator because it suits their needs while in some cases, it is better for them if an elected leader is removed. The story of Equatorial Guinea's coup attempts might not be well known but they make for some fascinating reading.

    The Wonga Coup by Adam Roberts reads like a thriller probably because the events surrounding the two coup attempts were spawned from a fictional writer. It is alleged that the mastermind behind the first coup attempt in 1973 was the famous writer Frederick Forsyth. In 1973, these allegations were just rumours. But in 1974, when Forsyth’s novel The Dogs of War came out the rumours were turned towards suspicion. The story of the novel mirrors in almost exact detail what happened in the 1973 coup. Recently obtained material in 2005 might implicate Forsyth. When Adam Roberts interviewed Forsyth in 2006, Forsyth did not confirm or deny the rumours but said that Roberts can make up his own mind. Forsyth did confirm that in 1973 he went undercover in South Africa to collect information on coups and mercenaries. He claims that some of his data was mistakenly believed to a diary of a coup plot. One thing that can be confirmed is that the people involved in the second coup in 2004 used Forsyth's book The Dogs of War as a blueprint. Forsyth actually finds it amusing that his book was used as a plan and jokes that strange ideas can be hatched over beer.

    The influence of beer

    Adam Roberts begins The Wonga Coup by mentioning how the idea of the 2004 coup was first talked over plenty of beer. Also the idea's funding also lay in beer money as the architect of the coup, Simon Mann, came from a family which made money from a brewing company. The Polish writer Ryszard Kapuscinski often talked about the importance of a cold beer in Africa to combat the oppressive heat. One lasting image of Africa's portrayal features foreign expats, spies, mercenaries sitting in a bar sipping cold beer while discussing their political or financial plans. Even in Blood Diamond Danny Archer (DiCaprio) explains the African situation to Maddy (Jennifer Connelly) with the following words in a bar:"“over there it is bling bling, but here it is bling bang..".

    In the early years of Iraq's invasion, plenty of journalists wrote about experiences of drinking beer in hotel lobbies while waiting for the next big explosion or story to chase. In most cases, beer was used to pass the time before the next big story arrived but in the case of Equatorial Guinea, consumption of beer by a group of mercenaries may have led to a coup's origins.

    The full story, please!!!!

    When the media reports about crime in Africa, we are only told the obvious things -- who killed whom and in some cases by what weapon. Sometimes, some reports talk about how the weapons arrived in Africa in the first place but in most cases, the full story is never given. There are no weapons being manufactured in Africa, so they must have come from some nation. Did the foreign nation trade weapons for African oil? Why do nations continue to deal with rogue states? Oil, diamonds are obvious reasons, but what else? Who were the middlemen who conducted the weapons trade? Which nations did they come from? Are these weapons traders like Nicolas Cage’s character from Lord of War?

    If a Western nation's spy or former military officer is involved in an African nation's coup, then can the Western nation quietly deny involvement? What about Oil companies? In Untapped John Ghazvinian talks to some oil company representatives and engages them on the African situation. He gets some honest answers and some usual run of the mill answers about how foreign oil companies are not to blame for Africa's problems.

    The truth is that the world needs oil. It has to come from "somewhere". Oil companies will rush wherever they can sense oil and money to be made. In quite a few cases as mentioned in Untapped & Poisoned Wells, Western Oil companies made deals directly with dictators/rebels to get at the oil. So then is oil the problem? Is oil blinding all reason? Yes and a little no. Oil has become a problem today because the global economy is tied to it. But more than 70 years ago, that was not the case when gold was the universal currency. In the future, when all the oil has run out, then a new resource might take its place.

    For now, until there is oil under the ground in some part of the world, the following will always happen:
  • Elections will be rigged

  • Governments will be toppled

  • Wars will be waged

  • Money will change hands

  • And Finally....

    There Will be Blood!

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