Oil, Environment and Crisis Economics
http://www.pambazuka.org/images/articles/327/44280_nigeria_niger_delta… Bassey examines the factors behind the economics of oil and conflict in the Niger Delta and concludes that the violence in the Delta is “a boom for merchants of crisis capitalism”.
Simple lessons are not necessarily easy to learn. For example: oil is a non-renewable and limited resource. The fever our planet is suffering—global warming or, more accurately, climate change-- cannot be allowed to run its course. To do so would be to allow the global transformation of this planet, with even greater inequity than now exists between North and South, rich and poor, frail and strong.
Oil and conflicts appear to be twins in today’s world. When people think of oil, in general terms, what comes to mind is ‘progress’. Thus, people speak of oiling the wheel of progress. Today, however, much is being seen of oil as greasing the wheels of conflict. And this is very much the case in the Niger Delta.
The crisis we are witnessing needs to be viewed both in economic and political terms as a major for profit venture. Understanding it through this filter is crucial to our seeing why we appear trapped in intractable murky waters and it will also help us construct bridges over which we may come out of the malaise.
In answer to a question on what the likely consequences of the continued exploration of oil in the Niger Delta by oil corporations would be I had to recall first and foremost that the lure of oil is its cheapness as well as its easy yielding in the refining processes. What we mean is that oil is a cheap source of energy. It is cheap partly because its extraction in the Niger Delta and much of the tropical world is carried out in ways that pay scant attention to environmental costs. Thus the consequence of continual exploration and exploitation of the Niger Delta is that the poor people continue to subsidize the costs of crude oil by the losses they suffer in environmental services, quality of life and extreme environmental degradation. The result is, and will continue to be, deepened conflict as opportunistic groups as well as gangs find space to extract financial gains from the system; and ultimately as the people will eventually struggle to regain their sovereignty over their environment and resources.
The Niger Delta situation, rather then being resolved, appears to be getting more intractable. Meetings, programmes, commissions and what have you are being held or set up, yet the problems are growing more legs. As we examine the economic mechanics fuelling these tensions, it is worthwhile for us to have an overview of the local and global scenario exerting influence over related events here and globally.
Profiting from Crisis: the economics of war
The path of crude oil development has been strewn with skeletons and soaked in human blood across the world. The ongoing case in Nigeria is a glaring example. The case of Angola is still fresh in memory. In 1999, as the first barrels of crude oil were shipped from Sudan, so did the war between government forces and those of the Sudanese People’s Liberation Army escalate. When we turn our eyes to the Middle East we see the raw situation of war waged for profit and resource appropriation and control.
The issue of the profitability of disasters has been expertly exposed by Naomi Klein in her new book. She states that “With resource scarcity and climate change providing a steadily increasing flow of new disasters, responding to emergencies is simply too hot an emerging market to be left to the nonprofits – why should UNICEF rebuild schools when it can be done by Bechtel, one of the largest engineering firms in the U.S.?” She also asks the question, “Why deploy UN peacekeepers to Darfur when private security companies like Blackwater are looking for new clients?” In a 2005 article with the title Allure of the Blank State she articulated the advancement of preventive war as normative behaviour by the government of President George W. Bush.
It should be instructive that at a time when oil fields have become hotbeds of conflicts and insurgency, that is precisely when oil companies are making record breaking profits. This boom is also enjoyed by those involved in weapons trade, deconstruction/reconstruction, private soldiers and the like. In the month of October 2006 when the highest Iraqi civilian casualties of 3,709 were recorded, a market analyst stated that Halliburton’s quarterly profit was “better than expected.” By the last quarter of 2006 this company had enjoyed an inflow of up to $20 billion from the Iraqi war alone.
Writing on the Niger Delta situation, a researcher declared that, “the low level of accountability is also attributed to weak electoral administration and process, and a pervasive undemocratic political culture which not only serves the interest of the political class but also encourages the personalization of state resources by those who wield political power, a bureaucratic culture of secrecy and impunity, which nurtures an already entrenched abuse of power by the political and administrative class.”
Its manifestation is ubiquitous and its pinch is directly felt by the peoples of the Niger Delta who have become nothing short of pawns on the chessboards of political manipulators. The manifestations are seen on the boardrooms of corporations, shareholder dividends, and in the proverbial excess crude funds in the case of Nigeria. The ‘excess crude’ euphemism is a concept by which the political executives in Nigeria purposely base revenue projections on estimates far below the market value of crude oil in order not to be caught off guard by a slump in price, and probably also to skim off the ‘excess’ funds that must come where there are positive differentials, as always is the case. With current price of oil pushing beyond $90 per barrel, and with the current Nigerian national budget based on a $40 per barrel benchmark, political actors at various levels are already angling to share the ‘windfall’ which often have been seen as nothing but the ‘loot’, utilized without accountability. We note that for 2005 and 2006 budgets the benchmark was $30/barrel of crude oil and for 2008 the proposal stands at $53/barrel/
The Nigerian State: trapped in the barrel
One activist posited that the Nigerian government is a victim of disaster capitalism and that the new government is caught in the web of supremacist gangs engaged in the business of kidnappings and abductors of oil workers and children and parents of politicians. In a phrase, while both the government and oil companies are the beneficiaries of the crisis raging in the oil fields through huge profits and so called windfalls, both are equally vulnerable. Both face the challenge of access to oil fields and with time, not even the offshore installations will be so secure. This will come to pass unless steps are taken to look away from short term profits and to work for security of the environment, livelihoods and the rights of the people to live in a way that is favourable to their development.
Moreover, deep seas and far off offshore locations do carry special financial risks besides the physical ones. It will get to a point where oil prices will be so high that not even the producing countries will be comfortable with it. The costs spiral may in the long run assist in the finding of alternatives to crude oil and when that happens, unprepared nations like Nigeria will be in a quandary.
It appears the only real addition to our oil resources are with regard to the bitumen deposits to the west of the Niger Delta. Bitumen has a huge environmental downside. Like tar sand, the extraction of bitumen releases much more Green House Gases than the extraction of crude oil does. It also potentially has a heavier environmental footprint. The potential of replicating a violent mineral belt here is very real.
Oil Companies
Oil corporations are huge beneficiaries, and may even be said to be instigators, of the crisis related to the industry. The surge in global awareness about peak-oil and climate change, all-time-high price of oil as a result of conflicts in Nigeria, Iraq and disturbances in Turkey, Pakistan, Iran, etc can become rather unsettling. Add to this the indication that government is likely to renegotiate the contracts with the oil companies. These are all worrisome signals to a cartel that has always had its way and that is quite happy with business as usual as long as they hold the right end of the stick. If government goes through with the renegotiations, it is hoped that at the end of the day the companies will no longer have the lame excuses by which they heap blame on the government for not putting up the money to stop gas flaring, among other things.
It can only be in a state where impunity reigns that a corporation can leave a court order unchallenged for two years, not obey it and not be sanctioned over it. This is the case with a High Court judgement delivered on 14 November 2005 in which Shell was ordered to stop gas flaring in Iwerekhan community. The judgement has not neither been challenged nor vacated and yet the flaring continues unabated. An unwillingness to accept judicial decisions is a clear case of provocation, a clear attempt to ignite a fire where there ought to be none.
January 2008 has been set as the deadline for routine gas flaring to be ended in Nigeria. The oil companies have made some efforts at compliance. Only one of the majors has announced that they would be unable to meet the set target date. That is Shell. They state in their Sustainability Report 2006 that they would end gas flaring everywhere in the world by 2008 except in the Niger Delta where they claim that some of the locations are either inaccessible or it would mean shutting down production if the gas flares are to be shut off. Another indication that the flares out date may not hold is the recent announcement by the Federal Government that a fine of N12, 700 or $100 will be imposed for every million cubic feet of gas flared after the set date.
The government stated that oil companies would only be allowed to flare gas from their oil fields after reaching an agreement with the Federal Government to pay $100/Mscf. Moreover, from January1, 2008, oil companies who make false declarations will be fined $500/Mscf. The official who made the announcement added that “no excuse will be tolerated from any oil firm flaring gas without the approval of the Federal Government. Going by the state of preparedness, experts including officials of the World Bank are looking as far off as 2011.
Apart from being human rights monstrosities, gas flares are known to cause a cocktail of diseases and untimely deaths. Diseases associated with gas flares include cancer, respiratory illnesses and blood disorders.
The ‘benefits’ of disaster capitalism to oil companies include:
• Operating behind military shields as they have always done. This way the state apparatus of coercion does the dirty job and the oil companies involved can claim they were not a party to the assault.
• Refuse to pay adequate taxes unless publicly pressured.
• Make false declaration on the amount of reserves they have in Nigeria, get punished elsewhere and stay happy and quiet in Nigeria with no questions asked. False declaration ultimately is nothing but an exercise in self delusion.
• Be found guilty of bribing Nigerian officials by investigators outside Nigeria, whereas no questions are asked in Nigeria where governments make plenty of noise about fighting corruption.
• Declare that oil spills are caused by sabotage even where there is no evidence to support such claim. And based on these spurious claims, such spills are left unattended to.
Niger Delta Communities: beaten by all sides
The usual assertion that Nigeria suffers from a resource curse may not be true because the resource that we are endowed with is a blessing rather than a curse. Resource wealth does not necessarily have to subvert development. One would agree however that the scramble for the wealth does subvert our collective ability to resolve the conflicts into which we are immersed. And this is primarily because of the privatisation of public funds generated through the exploitation of these publicly held resources.
The crisis situation can best be seen as a result of interplay of a web of interrelated factors, and not the result of a single determinant. As an analyst put it, “While most of the attention is often placed on local actors: the state/political elites, militia groups/warlords, and weak and inept bureaucracies, very little attention is paid to the role of external and transnational actors and the lack of transparency that shrouds the extent of their involvement in these conflicts.
High Tide
Let us conclude by stating that much of the violence experienced in the Niger Delta has been inflicted without any shot being fired. For example, whenever the word restiveness is mentioned images of rampaging Niger Delta youths come to mind. A cursory look at the other geopolitical zones in Nigeria will reveal that youths are just as restive in those parts as they are in the Niger Delta. Secondly, whenever there is a pipeline tragedy consequent upon a fire or an explosion, most reports jump to the conclusion that pipeline vandals were responsible. By these ingrained constructs, the region is now known as a volatile region where the unthinkable become the expected.
It is time for us to calmly re-examine ourselves and strive to uncover the truth. It is time for the Niger Delta to show the way in a collective drive to reconstruct our regional as well as national psyche. This will start by our people understanding that the violence in the Delta is a boom for merchants of crisis capitalism. The gun runners, the kidnappers, the ballot thieves and those engaged in illegal bunkering differ very little irrespective of whether some of them are tagged Excellencies or Honorable. In one short phrase, it is time for us to regain our sovereignty and to ensure that our ballots decide who holds the reigns of our government, who makes decisions and how and when we want our resources extracted. We propose here that as climate change pushes the world towards a cataclysmic brink, a major move is to tackle the trend at the root cause. It is estimated that temperatures in West Africa may rise by up to 4 degrees Celsius and that sea level rise is expected to lead to a loss of over half of the land of the Niger Delta by 2050. There will be an increase in vector-borne diseases as well as severe dislocations. With the downward march of the desert, environmental refugees from the south and from the north will put extreme pressure on the middle belt and raise new levels of crises.
We recommend that Nigeria halts all new oil field prospecting and no further auctioning of oil blocks. If we follow the example of the demands of Ecuador with regard to oil exploitation in the Yasuni national park this will not mean a reduction in our national income. Ecuador is demanding that they should be compensated for keeping the oil in the ground. The argument is that by that action the release of Green House Gases are blocked at source since the fossil fuel is not brought up for use. This is true carbon sequestration and deserves to earn carbon credits instead of the fictional approaches used to exploit an unsuspecting and at times gullible world.
In conclusion, we wish to state that keeping the oil in the ground will plug the holes of exploitation, violence and profiting from degradation and dehumanizing activities. We say NO MORE OIL BLOCKS until and unless it is with the express consent of the people. Our life and our future are in our hands.
This is an edited version of a paper delivered by Nnimmo BASSEY at the Niger Delta Roundtable held at Ibom Hall, Uyo, on Thursday, 1 November 2007
* Nnimmo Bassey is the Executive Director of the Environmental Rights Action, ERA/Friends of the Earth Nigeria with head offices in Benin City, Nigeria.
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