Behind the Lines

The Resource Curse Lives

Too late to avoid the predicted damage, the World Bank pulled its financial backing from the controversial Chad-Cameroon pipeline in September.

The Bank had touted the pipeline as an innovative new solution to the “resource curse” — the tendency of oil and mineral revenue not to improve the economy of poor countries and often to entrench dictators. In return for the financial assistance, Chad agreed to spend most of its royalties on fighting the immense poverty in the country.

The project was controversial from the outset [see “Fueling Strife in Chad and Cameroon,” Multinational Monitor, May 1997], with environmentalists and development groups in Chad and around the world saying it would worsen poverty, deepen corruption, fuel military strife, injure local communities and damage the delicate ecosystem the pipeline transverses.

The 665-mile pipeline, constructed by a consortium led by ExxonMobil, carries the 170,000 barrels of oil a day that Chad produces to terminals in Cameroon on the Atlantic Ocean.

Critics’ fears about oil revenues and the project proved well grounded. The profits of more than $1 billion a year did little to improve the well-being of poor people in the country. According to UNICEF, child mortality in Chad rose from 1990 to 2006, and 37 percent of children are underweight. Only 25 percent of adults are literate.

The World Bank did not respond to repeated requests for comment. In a statement it said, “Chad failed to comply with key requirements” of the agreement. “The Bank therefore concluded that it could not continue to support this project under these circumstances.”

The Chadian government paid $65.7 million to close its debt to the Bank.

However, the World Bank did not entirely withdraw from the pipeline project — its private investment arm, the International Finance Corporation, still has $100 million invested in the ExxonMobil consortium running the pipeline.

KBR’s Bribery

KBR chief executive officer Albert “Jack” Stanley obtained nearly $6 billion of work in Nigeria for a joint venture consortium. It turns out he achieved this success by paying $182 million to agents to bribe top Nigerian officials.

KBR was a Halliburton subsidiary until being spun off in 2007. In September, Stanley pleaded guilty to channeling millions of dollars in bribes to the Nigerian government in the 1990s in order to win high-profile contracts to build liquified natural gas facilities. Hand-written notes found during the investigation indicate that bribes may have reached former Nigerian dictator Sani Abacha.

Stanley’s plea agreement calls for him to receive a seven-year prison term — the longest ever for the bribing of foreign officials. Stanley, who was appointed to the top position at KBR by Dick Cheney, agreed to fully cooperate with investigators and prosecutors as they continue investigating other allegations of corruption. He has also agreed to pay $10.8 million in restitution — equal to the amount of money he received in kickbacks from a consulting company involved with the bribe scheme.

KBR would not comment on Stanley’s plea, citing the ongoing investigation. However, “KBR does not in any way condone or tolerate illegal or unethical behavior,” says Heather Browne, KBR spokesperson. “The company stands firm in its unwavering commitment to conduct business with the utmost integrity.”

Halliburton spokesperson Diana Gabriel says the company is cooperating with the authorities but that it would be “inappropriate” to comment on the ongoing investigation.

Among the facts detailed in the case against Stanley were “cultural meetings” held by Stanley and co-workers in which they discussed which agents to use as go-betweens for their bribes. At least two consulting firms were hired to funnel millions of dollars for “marketing” and “advisory” services.

Liberia Labor Victory

Workers on Firestone Tire’s Liberian rubber plantation — the world’s largest — signed an historic collective bargaining agreement in August. The agreement marked the successful conclusion of negotiations between the company and the first independent and democratically elected union to represent the plantation workers.

For more than 80 years, workers on Firestone’s plantation in Liberia were forced to meet exceedingly high quotas for paltry wages of $3 a day, before the new contract was signed, according to the Washington, D.C.-based International Labor Rights Forum (ILRF). In order to meet those quotas, workers brought their families to work with them, frequently removing their children from school to do so.

Workers toiled without adequate safety gear and were forced to carry 150 pounds of latex for miles. Workers and their families are housed in crowded shacks without running water, electricity or indoor bathrooms, according to ILRF.

“Firestone has an 82-year history of exploitation in Liberia,” says Tim Newman, campaigns assistant for ILRF. “For the workers to sit at the table with Firestone is historic.”

The agreement comes after years of international campaigning, brutally repressed strikes and a lawsuit by ILRF. However, Newman notes, the agreement is just the “first step to really changing conditions at the plantation.”

The new contracts include a 24 percent increase in wages and a 20 percent reduction in daily quotas. The wage increases will be retroactive to January 2007. The contracts also lay out an “improved housing standard” and guarantee every house will have an indoor bathroom or “safe and sanitary latrine” by the end of 2011.

Other benefits include transportation to bring the latex tapped from rubber trees to collection stations, which workers previously had to carry in buckets for miles, and the building of three new high schools on the plantation.

“Firestone has paid the back pay agreed to in the new contract,” says Tina Gaines, spokesperson for Firestone, “and continues to implement the various elements of the new agreement.”

The agreement will also encourage better labor standards throughout Liberia, according to Newman. “It has been really energizing for the labor movement as a whole,” he says, because other companies look to Firestone as a basis for their own labor practices.

Forest Rights in Ecuador

Ecuador’s vast environmental preserves now have inalienable legal rights. In a September referendum, Ecuadorian voters backed a new constitution for the country, which includes the right for nature to “exist, persist, maintain and regenerate its vital cycles, structure, functions and its processes in evolution.” The new constitution grants legal standing to any person defending those rights in court.

“By recognizing ecosystem rights, Ecuador’s constitution has fundamentally changed how nature is treated under law,” says Mari Margil, associate director of the Community Environmental Legal Defense Fund, a public interest environmental law firm which assisted the Ecuadorian government to develop and draft the new provisions.

In a country where multinational corporations have wrecked havoc on fragile ecosystems, the new constitution now states: “In the cases of severe or permanent environmental impact, including the ones caused by the exploitation of non-renewable natural resources, the State will establish the most efficient mechanisms for the restoration, and will adopt the adequate measures to eliminate or mitigate the harmful environmental consequences.”

Critics of the measure worry the government will not enforce these new principles, but Margil says the new environmental rights do not depend on government action alone. “The new Ecuador Constitution contains provisions such that if the government of Ecuador fails to enforce these ecosystem rights, the people of Ecuador can do so themselves,” she says. Margil points to language in the article that reads, “Any individual, people, community or nationality may demand the observance of the rights of the natural environment before public bodies.”

The Community Environmental Legal Defense Fund is now working with leaders in Nepal as they draft their first constitution, and the organization hopes other countries will soon follow Ecuador’s lead. “Folks around the world are watching Ecuador now,” Margil says.

Lao Livelihoods Drying Up

As Laos seeks to become the “battery of Southeast Asia” through numerous hydropower projects, local communities and the environment along the Mekong River are paying a high price, according to a September report by the Berkeley, California-based International Rivers.

Lao rivers have a projected 18,000 megawatts of exploitable hydropower potential — enough to power between 14 million and 18 million houses in the United States. Laos already has six large dams in operation, seven under construction, and at least 12 more in planning and development phases.

The already-constructed dams have forced tens of thousands of Laotians to be resettled without adequate compensation; and villages have lost vital fisheries, agricultural land and drinking water, according to the report.

While electricity exports currently account for about 10 percent of total Lao exports, dam-affected communities are seeing their livelihoods dry up, according to the International Rivers report.

One proposed dam, the Sekong 4, would cause an estimated $6.25 million a year in fisheries losses, which could affect nearly 200,000 people in Laos and an unknown amount of people in neighboring Cambodia.

“At this stage the big dams don’t develop Laos; they destroy Lao rivers and resources, which so many Laotians depend upon,” says Aviva Imhof, campaigns director at International Rivers. “The dams are causing way more harm than good, and the programs need to be re-evaluated.”

“The government and the companies that have built the projects so far have not put sufficient resources or time into restoring livelihoods,” Imhof says, “so people are basically left stranded without anything — with no recourse and no resources to sustain their families.”

— Jennifer Wedekind