Poisoned Wells: The Dirty Politics of African Oil

Poisoned Wells: The Dirty Politics of African Oil

by Nicholas Shaxson

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Overview

Each week the oil and gas fields of sub-Saharan Africa produce well over a billion dollars' worth of oil, an amount that far exceeds development aid to the entire African continent. Yet the rising tide of oil money is not promoting stability and development, but is instead causing violence, poverty, and stagnation. It is also generating vast corruption that reaches deep into American and European economies. In Poisoned Wells, Nicholas Shaxson exposes the root causes of this paradox of poverty from plenty, and explores the mechanisms by which oil causes grave instabilities and corruption around the globe. Shaxson is the only journalist who has had access to the key players in African oil, and is willing to make the connections between the problems of the developing world and the involvement of leading global corporations and governments.

Product Details

ISBN-13: 9780230605329
Publisher: St. Martin's Press
Publication date: 05/13/2008
Edition description: First Edition
Pages: 288
Product dimensions: 6.10(w) x 9.06(h) x 0.78(d)

About the Author

Nicholas Shaxson is a journalist who writes regularly for the Financial Times, The Economist, African Energy, and the insider newsletter Africa Confidential. He is an associate fellow with the Royal Institute of International Affairs (Chatham House) in London, and a world authority on the politics and economics of the oil-producing nations of the Gulf of Guinea. He has been covering the African oil trade for the last fifteen years.

Read an Excerpt

Poisoned Wells

The Dirty Politics of African Oil


By Nicholas Shaxson

Palgrave Macmillan

Copyright © 2007 Nicholas Shaxson
All rights reserved.
ISBN: 978-0-230-61084-2



CHAPTER 1

FELA KUTI HOW THINGS FELL APART IN THE OIL BOOM


I first came across the Nigerian musician Fela Kuti at a London concert in the late 1980s, and the experience unsettled me. Not that I had no experience of Africa: I was born in Malawi in southern Africa, where my mother had worked as garden supervisor for President Kamuzu Banda and my father for Britain's overseas development effort as a specialist in tropical soils. My childhood memories are pleasant and even thrilling: dodging hippos in our little sailing boat and fishing for chambo on Lake Malawi; listening to hyenas laughing at the moon; and a hunter in my bedroom at night, waiting for a leopard that had killed our dog Judy and got into our rabbit hutch, and that my parents caught sunbathing on our compost heap (my sister and I were grounded until he shot it). But despite my African childhood, I didn't feel a connection to exotic, brash Nigeria.

When I saw Fela in concert I was a university student thrashing uncertainly in seas of political correctness, and his rude, sexually suggestive antics with female dancers, as I stood in the audience beside fearsome student feminists, made me squirm in my tender white-boy shoes. I found his music too harsh at first, but as the night wore on the hypnotic Afrobeat wormed into my head. It was intoxicating.

The late Fela Anikulapo-Kuti, the Black President, the King of Afrobeat, is probably Nigeria's most loved citizen of all time. He has been compared to Bob Marley, James Brown, Bruce Lee, Elvis Presley, Muhammad Ali, Mick Jagger, Bob Dylan, and many others—though none of these comparisons quite pins him down. This wiry musical Hercules and African spiritualist called himself Abami Edo—"the weird one"—and he would smoke turnip-size joints and put on white face paint before enthralling crowds with mesmerizing stagecraft, which he called his "underground spiritual game."

"Man, we walked in the room, and the smoke knocked us down," Bootsy Collins, the bassist for the American funk legend James Brown, said of Fela's band after touring Nigeria in 1970. "When I heard that, it was like, 'Man, this is IT.' ... We were telling them they're the funkiest cats we ever heard in our life.... I mean, this is the James Brown band, but we were totally wiped out. That was one trip I wouldn't trade for anything in the world." The Brazilian musical superstar Gilberto Gil said that meeting Fela changed his life, and made him feel like a tree replanted.

Fela was also a sexual tornado who said he liked to enjoy the pleasures of at least two women per day. Journalists reported him emerging for interviews from his bedroom in his underpants, with semen still dribbling down; and once he married all 27 of his dancers in a single ceremony. "Cocaine I stop am after I discover say e dey kill prick!" Fela told one interviewer in the pidgin English that is widely spoken in his native Lagos. (He reverted to his favorite natural aphrodisiac N.N.G., Nigerian Natural Grass.) Fela had referred to women as "mattresses," and rejected condoms as un-African. "That thing, I don't touch it," he told one Nigerian interviewer. "Condom means Ko Do Mi.... Ko Do Mi is Yoruba for You Are not Fucking Me. See?" When he died of AIDS in 1997, more than a million people came into the streets of Lagos to mourn his passing.

Fela taunted the politicians with songs like "Coffin for Head of State," "ITT (International Thief Thief)," and "VIP (Vagabonds In Power)," and he suffered endless court appearances, police beatings, and torture. During the 1970s, the decade when punk rock became the cutting edge of counterculture and protest in recession-prone Europe and America, and petrodollars began to cascade into the Nigerian treasury, Fela led a more deadly, desperate form of protest on behalf of ordinary Nigerians who were facing the emergence of a vicious, predatory new oil-rich elite.

I have chosen to write about Fela partly because he illustrates the indefatigable spirit of this remarkable, bellyaching country, which has two to three hundred ethnic groups and perhaps 130 million people, a sixth of Africa's population. Its religious divisions pit more Muslims than there are in any Arab country except Egypt against similar numbers of Christians and followers of African religions, forming what the Kenyan-born thinker Ali Mazrui called the grand laboratory of the new triple heritage: a giant western, Islamic, and traditional African melting pot. These divisions complicate the question of how to share the oil money, which makes up more than 97 percent of Nigeria's exports today.

Fela's long career, which reached its heights during the 1970s oil boom and the subsequent hangover of the 1980s, also offers essential context for this book. Around 2003 the world began to see a new oil price boom; to understand what this new bonanza means for Africa's energy producers we should look at the last boom. Fela's is a wholly African story; the British, French, Americans, and other foreigners who have helped shape Nigeria only get passing mention here. I will turn to them a bit later on.


Elderly Nigerians will tell you how much better life was in the early years after independence in 1960. "We still had a good civil service inherited from the British," remembers Philip Asiodu, who was Nigeria's top oil man during much of the boom. "It functioned well enough. Codes of conduct were followed, without any glaring corruption or destruction. They talked about people taking 5 percent, 10 percent; these were two or three ministers in each political party, as fundraisers, mostly not putting their hands in the till. They had a vision for running Nigeria properly. The 5 percent, the 10 percent—it did not distort the programs or affect the officials' authority."

Even if this is too rosy a view of the past, a comment by the author Karl Maier illustrates how far Nigeria has fallen since then, nearly $400 billion of oil money later. "It is as if [Nigerians] live in a criminally mismanaged corporation," he wrote, "where the bosses are armed and have barricaded themselves inside the company safe."

The award-winning Nigerian writer Chinua Achebe offers a clue that goes a long way to explain the trouble with Africa's oil nations. There is nothing basically wrong with the Nigerian character, land, or climate, he said. Then he penetrated right to the heart of Nigeria's predicament: "A normal sensible person will wait for his turn if he is sure that the shares will go round; if not, he might start a scramble."

Nigeria is a bit like the queue that Achebe suggests. A functioning queue is really two queues: a physical one and a mental one. Disrupt the physical queue—by nudging a truck through it, say, or dousing it with a fire hose—and if the mental queue remains intact, then order will reemerge, in the same way that stable countries recover from economic shocks or terrorist attacks.

But there is a more damaging way to disrupt a queue: push in at the front. This assaults everyone's belief in it, and if it happens enough, the scrambling starts and it will collapse. There is then no easy way to rebuild it, no matter how much you shout.

Take the analogy further. Imagine the queue consists of, say, Americans, French, British, Chinese, and others (pick your prejudice), just as Nigeria is divided between Yorubas, Hausas, Igbos, Ijaws, and others. The pushing-in is getting worse, and you think you notice that the culprits are mostly from the group that you hate. Your faith in the queue will collapse faster, and you will hate the other group a bit more. Now imagine that your whole family has sent you to represent them in this line for food, which is too scarce to go around. You will jostle even more aggressively, the scramble will intensify, and the strongest and slipperiest characters, and those who can form alliances with their own people to thwart the other groups, will stand the best chance of getting to the front. This image helps me understand better the contrast between the hospitality and generosity you find in African homes, and the venality of many African rulers. Most corrupt people act like that only because they know everyone else is.

You see the scrambling and indiscipline everywhere: real lines degenerating into free-for-alls, or drivers forcing themselves selfishly into traffic and blocking everyone, are a version of this lack of trust and respect. Politicians think that if they don't grab what they can, someone worse will get it, so even if a dollar's worth of road repair saves a thousand dollars in broken axles, the holes remain unfilled.

As the citizens of this ethnically and religiously fractured nation have jostled, then scrambled, for what they can get of the oil money, long-term planning, shared nationhood and trust in each other—the keys to Nigeria's economic development—have dissolved. This splintering of the national good is really what corruption is. Later in the book I will propose a way of restoring some of this trust.


In the early years of independence, Fela studied at the Trinity College of Music in London. Another student remembered him as "a stunning extrovert [who] regularly held court among the bedazzled students, whom he often left speechless." Fela's landlady charged him for making extra noise with his trumpet, so he just made more noise. When the police were called, Fela called a London bobby a "foolish bastard." He was thrown into a police van, but was soon back at his studies.

The British had handed over a country with three regions: the North, roughly corresponding to the hegemonies of the mostly Muslim Hausa-Fulani; the West, dominated by Yorubas; and the predominantly Igbo East. The North produced grains and groundnuts, the West grew cocoa, and the East produced palm oil. Each pulled its own weight in the federation, more or less, and this mitigated political tension. But oil, which had been discovered in 1956, was beginning to grow in importance. As it grew, the relationship changed fundamentally, as regions now had to compete for their share of the cake from an oil-fed center. Oil-producing areas said that they should get the most, the more populous regions argued that they should take precedence, while the poorest felt that they were most deserving. It was a huge, endless, unwinnable argument. Before long, regionally based political parties were clashing. Though the fighting was not obviously about oil, it was on everyone's minds.

Nigerians talk of a "National Question," which has many variants but is essentially this: how can the federation best be configured to hold its bickering groups together? Over time, in the spirit of old British divide-and-rule policies, Nigeria's rulers first split the regions into states, then split the states, again and again. Each new state had its own minorities who felt that the dominant groups in their state were snaffling the cash, so they pushed for their own smaller states, to get more of the cake for themselves. (Today there are 36 states.) Each new subdivision had new configurations of minorities, so the bickering continued, only in more decentralized ways.

By 1966, oil made up a third of Nigeria's exports, and some Igbo officers, resentful that federal spending was skewed (they thought) to favor northerners, mounted a bloody coup, vowing to fight corruption, tribalism, and the enemies of progress: "the ten percenters, homosexuals, feudal lords, etc." Many Nigerians saw this as an Igbo power grab, and an army general, Yakubu Gowon, launched a successful countercoup six months later. So Igbos in the East, hoping to carve out their own zone and grab the oilfields, decided to secede from Nigeria altogether.

In a last-ditch move to undermine eastern unity, the government split the federation into 12 states in 1967. But it was of no use: three days later the Igbo general Emeka Ojukwu declared an Independent Republic of Biafra, triggering civil war.

"It wasn't really a war for oil—I think it would have happened anyway," remembers Sola Odunfa, the veteran BBC reporter who accompanied Nigerian troops into Biafra for the Daily Times. "But oil encouraged them."

France hoped to wrest this oily gem away from the dreaded Anglo-Saxons, so President Charles de Gaulle sent the Biafran rebels planeloads of weapons, while Britain backed the Nigerian government. I remember being haunted for months by a vivid television clip from this war—I saw it while I was a teenager, quite a long time afterward—showing several federal soldiers manhandling a civilian, who was pleading for his life and repeating, "I am not a Biafran soldier! I am not a Biafran soldier!" They then pushed his head down into some bushes and shot him dead in front of the camera.

Perhaps a million Nigerians died in the three-year war, which remains today the most obvious example of oil's destabilizing push-pull effect: first, oil pushes Nigerians apart as they fight each other for the cash; then, it pulls them together again as they seek to remain connected to the oilgorged federal center.

After the war, General Gowon promised a policy of "no victors, no vanquished" and ushered in a period of postwar optimism, as oil output was reestablished.

By now Nigeria's leaders, fresh from military victory, angry at western support for apartheid South Africa, and marveling at Iran's efforts to wrest control of their industry from the companies (and also at the humbling of the American superpower in Vietnam), were feeling bold. At a time when it was fashionable for developing countries to "occupy the commanding heights" of their economies, Nigeria decided that the time had come to confront the secretive Seven Sisters, which they suspected used offshore accounting tricks to veil their real profits and cheat the Nigerian tax man.

"The Seven Sisters ... were a monopoly, a cartel, and they effectively dictated the price of oil," the oil man Philip Asiodu said. "The miracle of the Japanese and European recoveries after World War II was predicated on this cheap oil. The oil companies owned the assets, and we were aware that if the companies spent $100 million on procurement, they spent $95 million of that outside Nigeria. Ours were legitimate dreams."

First, Nigeria ramped up the price of its oil and raised tax rates, then increased audit requirements on the companies and even made them incorporate themselves locally, so that they were subject to Nigerian jurisdiction.

The companies closed ranks, hoping to form a united front to resist the African upstarts. But the world was changing. Charles de Gaulle's foolish support for Biafran rebels meant that French oil interests were reduced to pleading, and to accept humiliating new terms. And the maverick Italian oilman Enrico Mattei, who hated the Sette Sorrelle (Seven Sisters—a term that Mattei is credited with coining) had, before he died, presented his group, ENI, as being a more flexible, fair-minded alternative. ENI had already offered the Iranians three-quarters of the revenues from production in Iran, instead of the half that the Sisters were paying, and it was happy to accept new terms in Nigeria, too.

The Sisters' united front was crumbling. Nigeria unilaterally took over a 60 percent controlling stake in several of their large exploration and production licenses. The companies, Asiodu said, lobbied ferociously against this, and even got military officials to apply pressure on him to stop the reforms. "I told the companies that it was not our philosophy to make them have a loss, and I would quite understand it if they wanted stop operating in Nigeria," he said with a chuckle. "That was not what they wanted to hear."

Nigeria's oil production was soaring, too, having risen from 150,000 barrels per day in 1968 to one and a half million by 1971, then exceeding two million in 1973: more than twice as much as the United States was then importing from the Persian Gulf.

The stream of petrodollars became a river. Then, with the Yom Kippur war and the OPEC oil embargo of 1973, it became a tide as world oil prices quadrupled from $3 to $12 per barrel in just three months. (Later, with the fall of the Shah of Iran in 1979 and the Iran-Iraq war, prices rose to nearly $40, worth nearly $100 in today's prices.) The effect on Nigeria was staggering: by 1975 oil made up 95 percent of exports, and between 1970 and 1980 its annual export earnings rose from 1 billion dollars to 26 billion.

It changed everything. The politicians promised to harness the oil in a great leap forward, and well-connected Nigerians scrambled for government contracts to build bridges, flyovers, railways, and so on, in an orgy of post-war construction. The defense ministry handed out a rustling torrent of cement import contracts, and soon a fabled armada of ships arrived, loaded with the world's cement. At one point in 1975, 400 ships were waiting, collecting demurrage charges. Some even registered with the Nigerian authorities, then sailed elsewhere on business while collecting the demurrage payments. Nigeria erected import tariffs to encourage local manufacturing, which did not make local industry more competitive, but instead generated profits for tricksters. In a famous moment of frankness, the military ruler General Gowon conceded that Nigeria's problem was not the money, but how to spend it.

Salaries went up. "The whole place was awash with cash," the BBC's Sola Odunfa remembers. "People got nine months' salary arrears paid. Ohboooooy! Shops were full. People were buying radios, fridges; you saw people on motorbikes with televisions on their heads. Just crazy. Everyone had money and wanted to spend. Champagne, watches, cars, or—if they were too poor—just motorcycles. There was no time to think; it was spending, without productivity. We did not yet see that boom would become doom. Some say that era destroyed us. The corruption—it felt like it exploded from nowhere."


(Continues...)

Excerpted from Poisoned Wells by Nicholas Shaxson. Copyright © 2007 Nicholas Shaxson. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents

Introduction: A Paradox of Plenty in the New Gulf * Fela Kuti: How Things Fell Apart in the Oil Boom * Pedro Motú: A Morph to Another World * Abel Abraão: Wielding the Oil Weapon * Omar Bongo: Taking the Red Pill * Eva Joly: Elf Africaine and the Rabbit Warren * André Milongo: Golden Eggs * Obiang Nguema: What Caring Neighbors Do * Fradique de Menezes: Battening Down the Hatches * Arcadi Gaydamak: Between Global Borders * Dokubo-Asari: Corroding the Soul of a Nation * Global Witness: Hooligans and Rock Stars * Conclusion: Drawing the Poison

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