Monday, February 27, 2006

Chad's Oil Riches, Meant for Poor, Are Diverted

Looks like the experiment of the World Bank trying to insure that the goverment of Chad uses its oil wealth for the benefit of its people is turning into a failure.

A $4.2 billion oil pipeline has generated $399 million for Chad since mid-2004, but the spending of the money has been seriously marred by mismanagement, graft and, most recently, the government's decision that a hefty share can be used to fight a rebellion.

And now the approach, once envisioned as a model for the development of other African countries, seems to be on the verge of collapse. In recent weeks, Chad seriously weakened a law that dedicated most of its oil revenue to reducing poverty and reneged on its deal with the World Bank. In response, the bank suspended all its loans to the country.

What is happening in Chad, a Central African country twice the size of France, is an important test of the idea that international institutions like the World Bank can influence governments of poor countries to spend newly tapped riches on their people instead of using the money to further entrench themselves in power.
The oil curse strikes again. The idea that oil money can help impoverished countries, that it can help the average people improve their standard of living, is highly suspect. But, as Wolfowitz points out, would things be better if the World Bank wasn't involved? Don't know, but I doubt it.

via New York Times

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