Petro-dollars could be a catastrophe, government critics warn

Mauritania, a land of desert nomads, will join the growing league of African oil exporters, when its first offshore oilfield starts production next year. But government critics, aid workers and diplomats are nervous that the impending flood of petro-dollars into this poor and sparsely populated country could spell disaster. They fear this new source of government revenue will simply benefit the ruling elite, fueling political instability and deepening social divisions, rather than promoting general prosperity and economic development. “Oil will be a catastrophe for Mauritania. We don’t have a middle class that will benefit from this influx of money and it won’t be allowed to develop either,” said Brahim Ould Ebety, a prominent lawyer, who has defended opposition activists accused of plotting against President Maaouiya Ould Taya. "People are either very rich or very poor," he told IRIN. Ebety is one of the few professionals who dares to speak out openly against the government and the authoritarian political system in this vast desert country. “This government does not listen to people’s needs nor work for the people’s needs,” he told IRIN. “That needs to change as does the reluctance to tackle corruption and issues of due diligence in this country,” the lawyer said, speaking in his dimly-lit office in the capital Nouakchott. Changes need to be made soon But time is running out if changes are to be made before the government starts receiving a regular income from offshore oil sometime next year. "Development of the Chinguetti Field began last year and it is expected to come on stream in mid-2006," said Teju Akande, an Oil Analyst at Wood Mackenzie, an energy research and consultancy company based in Edinburgh, Scotland. Wood Mackenzie anticipate that a second, larger offshore field called Tiof, will come on-stream approximately one year later. “By 2009 we estimate that combined production of the two fields will peak at 165,000 barrels per day,” Akande said. At current crude prices of around US$50 per barrel, that would be worth about $300 million a year in foreign exchange earnings - half as much again as Mauritania currently earns from exports of fish and iron ore. “Mauritania’s oil fields are small compared with the recoverable reserves from other West African deep water projects," Akande said. "We’re not talking another Nigeria or Angola, but when full capabilities come on stream it will be comparable to producers like Cote d’Ivoire and Equatorial Guinea.” However, with a population of just three million people and an annual gross domestic product (GDP) of around US$ 1.1 billion, oil money is sure to have a major impact - just as it has in Equatorial Guinea. There, according to figures from the International Monetary Fund (IMF), oil has fuelled a 40-fold growth of the economy between 1995 and 2005. In 1995, when oil production began, the economy of Equatorial Guinea was about one-tenth the size of Mauritania's. Now, it is over six times larger. But some revenue has already been received Even before the first barrel of oil is pumped out of the seabed off Mauritania's Atlantic coast, the first petrodollars have already started to flow in. In October 2004, Sterling Energy, an independent UK-based oil company, announced that it had struck a deal with Mauritania to share the revenues from the government's 12 percent stake in the Chinguetti field, which is forecast to produce 75,000 barrels per day. In return for this privelege, Sterling paid Mauritania a cash bonus of US$15.5 million and raised a $130 million loan to help the government pay for its share of the oilfield's development costs. However, diplomats and oil industry observers say there are no mechanisms in place to guarantee transparency in the government's handling of oil revenues, as there are in Chad and will be shortly in Sao Tome and Principe. Despite numerous attempts to contact the Ministry of Mines and Industry which is resonsible for petroleum development, IRIN was unable to obtain comment from the Mauritanian government. Fears of corruption "When it comes to this (oil) issue, it is practically impossible to find someone reliable within the government who is willing to speak out. It is a big problem that we have here," said one UN official working in Nouakchott. Aid workers, who asked not to be named, pointed out examples of corruption that they came across on a regular basis. “There are sacks and sacks of food aid on sale in the main market. And all of those houses in E-north,(a smart neighbourhood where large colonnaded houses are being built) - they’ve all been built with stolen development money,” one said. “The corruption in Mauritania really is unbelievable,” said another. “I’m supposed to be giving out free condoms, but I have to accept the fact that half of what I bring into the country ends up being sold out of pharmacies,” said another humanitarian worker. “Things are bad, but I can imagine it will only get worse when they get their hands on the oil money,” he said. “Politics is marked by corruption,” veteran opposition leader and former central bank chairman Ahmed Ould Daddah told IRIN. “It is politics for the group in power not for Mauritanian.” “If that does not change, if the government does not open up to dialogue with the political opposition, if they do not allow criticism and discussion and develop a system of justice in which we can have confidence, then oil will be a disaster - it will be a curse for Mauritania,” said Ould Daddah. Calls for dialogue Ould Daddah, half brother of Mauritania’s first president Moktar Ould Daddah, was recently imprisoned on charges of funding an attempted coup d’etat against Ould Taya, a former army colonel who has ruled Mauritania with an iron hand for 21 years. Last year, the government put on trial a total of 195 defendants accused of plotting three successive attempts to topple Ould Taya. The trial took place at a remote police barracks in the desert, some 50 km east of the capital, Nouakchott. Most of the defendants were soldiers accused of taking part in a bloody uprising in June 2003 which was eventually put down by forces loyal to Ould Taya. Others, including a number of civilian opposition leaders were accused of mounting two further attempts to topple the president in August and September 2004 which were nipped in the bud. The prosecution demanded a five years in jail for Ould Daddah, who was eventually aquitted and released in early February. Speaking from his headquarters of his Assembly of Democratic Forces (RFD) party in central Nouakchott, that is still draped with the banner calling from his release from prison, Ould Daddah stressed that dialogue was essential for Mauritania’s future peace and security. The opposition parties, which range in hue from pro-western liberals to Islamic fundamentalists, are petitioning for a national dialogue with Ould Taya and a new era of open-door government, but with little conviction that they will get it. “I have met President Ould Taya on two occasions, but only to shake his hand. In all his 21 years in power, I have never had a discussion with him,” said Ould Daddah, who looked thin after spending several months in prison. Ould Taya rarely makes public appearances, and according to lawyers and journalists, selected foreign reporters have been paid handsomely to visit Mauritania in order to write favourable articles about the president and his country. Indeed, one local journalist told IRIN that these are the only kind of interviews the president is comfortable with. “Ould Taya has a problem in expressing himself - he is not used to speaking with journalists. If he has a decision he hands it to his spokesman to make the announcement,” the journalist said. Widespread pessimism Few have any illusion that anyone but Ould Taya takes all the important government decisions. “The government is not a team - it does not work together to obtain results," Ebety, the outspoken lawyer, said. "They are simply enforcing the orders of the President,” he added. “The head of state is totally cut off from reality - that is a big problem - he is surrounded by his supporters and allies,” Ebety said. Ould Taya came to power in a military coup in 1984. Elections in 1992, 1997 and 2003 were marred by allegations of voter intimidation and electoral fraud. “There is no possibility for a change of government through the electoral system in Mauritania as things stand now,” said Ould Daddah. The veteran opposition leader said he condemned violence unreservedly, but he warned that without dialogue and efforts to truly democratise the Mauritanian political system, tensions would only mount. “The opposition does not want violence, but it’s like physics, if you block all the escape routes the pressure will build until it explodes,” he said.