The “resource curse” strikes again

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Here’s a t-shirt, available for purchase online, and designed for the right-thinking college student or left-liberal activist.

It is decorated with a pious and glibly ignorant slogan that allows the confused wearer to regard himself as clever and subversive.

The slogan dates from early last decade. Back then a group of NGOs and celebrity activists, most with links to the U.S. Democratic Party via ‘progressive’ thinktanks, demanded the State Department declare Khartoum and its agents guilty of genocide (as Colin Powell obligingly did in 2004).

The G.W. Bush Adminstration was thus entreated to ‘do something about Darfur’ – usually involving sanctions or deployment of ‘peacekeepers’ – as it had in Afghanistan and Iraq.

One can only laugh, tragic though it all is.

The major exploration and production concessions in Southern Sudan and Sudan’s west (including parts of Darfur) are, just for now, held by several joint ventures: the Greater Nile Petroleum Operating Company, Petrodar and Petro Energy.

The dominant partner in each of these consortia is the China National Petroleum Corporation (CNPC); junior partners include the local firm Sudapet, Malaysia’s Petronas, India’s ONGC and Pakistan’s Sudapak.

CNPC operates the pipeline leading from the south to refineries in Khartoum and the export terminal at Port Sudan on the Red Sea.

Below is a USAID map of oilfields and operating concessions, by now slightly out-of-date:The ongoing referendum on South Sudanese secession will overturn this situation. The South Sudanese leadership has repeatedly declared ‘the necessity of revision of oil contracts’ between Khartoum and Asian producers.

US and European supermajors are the inevitable beneficiaries. Garang Diing Akuong, Juba’s Minister for Energy, spoke to Al Arabiya three days ago: ‘We are looking for companies from Europe and America. We are open to investment from all over the world – from the Middle East we wouldn’t mind.’

The South Sudanese energy ministry is being advised by representatives from the European Coalition on Oil in Sudan. That organization, based in the Netherlands, calls for ‘contract renegotiation’ in South Sudanese oilfields now that ‘the situation is different, [other] actors are in power and the stakes have changed.’

The group’s leader and advisor to Juba, Egbert Wesselink, openly favours the interests of Royal Dutch Shell, Total, Chevron and ExxonMobil against ‘the specter of state oil companies’ (CNPC in particular):

One new fear is that the home country governments of the [state-owned] companies will exercise diplomatic influence to undermine international efforts to secure peace and justice in the country, when such efforts contravene the interests of the Northern-dominated Sudanese government. China especially needs monitoring. Sudan is a major source of oil for China. As a veto-wielding member of the UN Security Council, China has sabotaged attempts to put pressure on Khartoum to end the Darfur genocide.

And elsewhere:

The pioneer companies Exxon and Shell were forced to bow out in 1984, after the outbreak of civil war. They eventually sold their rights in 1990, booking a $1 billion loss. Mid-1990s, the CNPC and Petronas Caligary from Malaysia, both fully state controlled, grasped this opportunity to invest in an oil-rich area that was out of bounds for the oil majors. They continue to dominate the scene. In 2003… ONGC from India stepped in, completing the prevailing position of Asian national oil companies in Sudan’s oil industry… And their Sudanese assets are highly profitable. They are not very likely to offer opportunities for newcomers to farm in on their existing assets. They are mostly state-owned and their investment decisions are made at a country level rather than a company level, making them resistant to shareholder activism… China, India and Malaysia have invested billions in the country, also outside the oil industry. They consider their relations with the country as economic, but also geo-strategic and energy-strategic successes that are worth defending.

Washington’s clutch of destabilizing measures (sanctions, ICC charges, arming of proxies in neighbouring states, military strikes, soft power, special envoys, peddling of influence with rebels, multi-party negotiations and brokered agreements, leading finally to the secession referendum) have finally levered open Sudan to investment by US firms.

The creation of a new state now presents ideal ‘opportunities for newcomers to farm in on’ existing concessions.

In 2010 Luka Biong Deng, Southern Sudan’s Minister for Presidential Affairs, announced a future review of all Khartoum’s contracts with foreign energy companies, on the grounds of excessive profit-taking, environmental despoliation and ‘a disregard for local communities’. Any alteration or nullification of contracts would remake ‘the competitive landscape for operators’, and thus open to European and North American majors ‘an avenue for investment and provide sought-after access to Sudan’s sizeable oil reserves.’

The cooperation of US commercial, intelligence, diplomatic and military elements in this enterprise has been plain to see. It is stated brazenly by US investment fund Jarch capital, which describes its strategy thus:

The Company considers investment opportunities in countries in Africa that are undergoing and may undergo sovereignty changes such as changes in international borders, and the creation of new countries out of current ones.

Personnel associated with The Company are experts on the geopolitics of these countries undergoing sovereignty change and establish key relationships with the leadership or potential leaders of the new states.

In recent years, Jarch has negotiated massive land deals throughout Southern Sudan. In 2009, the Financial Times reported that the company (on the board of which sits former State Department and Clinton Administration officials) had secured 400 000 hectares of land, in a deal with a notorious warlord, in oil-rich Unity province. The US company has courted military and civilian members of the secessionist Juba leadership, and claims (against official denials) that it already has secured concession rights in Southern Sudan. The company’s chairman, Phil Heilberg, is a curious figure, portrayed in Rolling Stone as a mixture of Cecil Rhodes and Tony Stark.

It is suggested that the State Department looks upon Heilberg and Jarch with disfavour, and that both are perhaps out of their league. At any rate, Heilberg’s network of associations make clear that the real players in Houston and Washington are operating quietly behind the scenes. The latter are more circumspect, but just barely so.

East Africa  – like much of the world, but especially its energy-rich regions – is thus the stage of a contest between the US and its rivals for raw materials, market share, territorial influence and military-strategic beachheads.

As the outflow of Chinese FDI inevitably expands, the US can no longer afford its old Open Door scruples and anti-colonial strictures. Suzerainty and direct territorial control are to substitute for competitive strength. Thus Washington’s recent appetite for the overthrow of governments, re-drafting of borders, creation of whole nations, and sequestering of energy reserves by military force.

Conventional economics journalism speaks frequently of a resource curse. By this it means the Dutch disease that supposedly afflicts countries with valuable natural-resource endowments: exchange-rate appreciation, hollowing out of domestic industry, vulnerability to swings in the terms of trade.

But there are more terrible consequences that could reasonably justify the term.

As Daniel Yergin wrote, oil has been the grand strategic prize for state elites ever since Winston Churchill, as First Lord of the Admiralty, ordered the conversion of Royal Navy vessels from coal power. Territories with proven oil reserves have subsequently been the objects of lustful lunges from Hitler through to Obama. The populations of such territories have indeed experienced their bounty as a curse. It is no accident that most of the world’s refugees today come from energy-rich countries subject to US chicanery and military intervention.

Among these, of course, are numbered former residents of Sudan, South Sudan and Darfur.

The curse will inevitably strike ever more wretched victims in the coming decades, as imperial powers stalk the earth, tussling over dwindling oil reserves. In these circumstances, not only marginal, high-cost wells and producers will become profitable. There will surely arise business opportunities for someone to produce and market t-shirts that read: If only [insert location of wearer’s country or region] didn’t have oil.

The designers (and wearers, if any) of the t-shirt picture above are mere idiots: ignorant but well-intentioned patsies. How to measure, on the other hand, the venality and cynicism of the forces arrayed in NGOs, activist groups, thinktanks and parliaments – those who know full well the economic and strategic importance of Sudan, Darfur and South Sudan, yet publicly advocate the intervention of Washington and the ‘international community’ as a disinterested humanitarian exercise?

Take the Australian Greens as representative. The party’s MPs have described ‘China’s behaviour in Sudan’ as driven by the ‘terrible imperative…the singular objective of cornering the world’s shrinking reserves of cheap oil.’ Yet the same terrible imperative seems not to apply to their own state; nor does their suspicion of diplomatic motives survive in that case. Party leader Bob Brown has been a noisy advocate for imposition of a no-fly zone over Darfur, oil embargoes, and the intervention of ‘peacekeeping forces’, including Australian troops. (The first two measures were, of course, applied to Iraq by the US and UK in the decade-long lead-up to the 2003 invasion, with Brown’s approval.)

Advocacy by the Greens and others of a ‘generous’ foreign policy, in preference to one based on calculated aggrandizement, has thus provided a convenient PR shroud under cover of which strategic goals could better be pursued, and Machtpolitik implemented.

The likes of Brown and his party, George Clooney and his NGO ilk, are the gentle humanitarian faces of a grotesque, unquenchable beast. In facilitating the carving up of Sudan, alongside the Chevrons and Shells, they have inflicted immense suffering on the local population. And they will do it again.

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5 Responses to “The “resource curse” strikes again”

  1. Nick Says:

    Utterly confusing and deceptive of me to have described the t-shirt’s slogan as un-ironic.

    Of course, the t-shirt’s statement is not meant sincerely as a rueful expression of regret at Darfur’s absence of oil reserves. What I meant was this: the slogan remarks on the supposed lack of interest shown by Great Powers in Sudanese affairs, due to an absence of strategic interests in the region (i.e. no energy resources). This is entirely wrong on both counts. The t-shirt’s creators have wrapped up naivety in the cloth of self-awareness. Failed irony, in other words.

    Decided I should clear that up, in case anyone thought I’d based this post on a misunderstanding.

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