Chad: Escaping from the Oil Trap

Posted in Africa | 31-Aug-09 | Source: International Crisis Group

Nairobi/Brussels, 26 August 2009: If the Chadian government wants to avoid further impoverishment and destabilisation of the country, it must reform its management of oil revenues.

Chad: Escaping from the Oil Trap,* the latest briefing from the International Crisis Group, examines the exploitation of oil revenues. Since 2003 they have contributed greatly to the deterioration of governance in Chad and to a succession of rebellions and political crises. The regime uses the revenues as a means to reward its cronies, co-opt members of the political class, and acquire the military means enabling it to reject genuine political negotiations. This has further limited space for the political opposition and civil society and helped keep the country in a state of political paralysis, stoking the antagonism between regime and opponents.

"There is recurrent political instability that is likely to undermine efforts to use oil for the benefit of the country", says James Yellin, Crisis Group's Central Africa Project Director. "For the people who have not seen their lives improve and who are subjected to increased corruption, oil is far from being a blessing".

The increase in petroleum prices in 2007 provided the D├ęby regime with sufficient resources to undertake large public works projects. Advertised as a policy to modernise the country through petroleum revenues, these projects led in 2008 to a deep and structural budget deficit that is likely to persist over the long term. Moreover, the opaque awarding of public works contracts increased cronyism and corruption.

To escape this vicious circle and create the conditions needed for durable stability, the government must work to establish a national consensus on the management of oil revenues. Stronger control and oversight over the oil revenues management mechanism should be put in place in order to address the plague of political patronage and favouritism. The emphasis given to military solutions for the resolution of political problems must stop. The political dialogue which started in 2007 should help create this national consensus, with the political opposition, civil society and representatives of Chad's oil-producing regions.

"The hope aroused by the discovery of petroleum has given way to generalised disenchantment", says Daniela Kroslak, Crisis Group's Africa Program Deputy Director. "The principal external partners of Chad - France, the United States and China - need to condition their support for the regime to the creation of a national consensus on the management of oil revenues".

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