Sahel nation poised to join club of oil exporters

Mauritania, a country in the throes of political change, is about to become Africa’s newest oil producer and government officials are pledging it will not become Africa’s newest victim of oil wealth woes. On 17 February, oil is to be pumped for the first time from the Chinguetti offshore oil field in the Atlantic Ocean, about 70 kilometres from the capital, Nouakchott. The field is expected to produce 75,000 barrels per day over about 10 years, according to Australia’s Woodside, the oil project’s operator. “Sound management of our natural resources is a national responsibility,” the head of Mauritania’s transitional junta, Ely Ould Mohamed Vall, said in an address to the nation last weekend. “It is a moral imperative for every citizen,” added Vall, leader of the Military Council for Justice and Democracy (MCJD), which seized power in a bloodless coup in August 2005. But across Africa the exploitation of oil has engendered conflict, corruption, environmental degradation and deepening poverty – the so-called “resource curse.” And some in this impoverished desert country worry that they are in for the same. “This resource will follow the same path as other sectors like iron, fisheries, or gold which have profited but a small minority,” the Mauritanian newspaper La Calame argued recently, denouncing the “big rip-off” of oil. Fishing is one of Mauritania’s main industries, but its rich waters are fished largely by European countries under licensing agreements and many Mauritanians say income from those agreements stays in the hands of a few. The transitional MCJD is reportedly pushing for a better deal for the country as officials renegotiate fisheries agreements with the European Union - an effort one analyst says might be a sign the transitional government is committed to the fair use of resources in general. Boost for the people? Commenting on an ongoing row over contracts signed by Woodside and the former government, Vall said at the weekend that some amendments were drawn up solely in the company’s interest, “to the detriment of Mauritania.” Government officials say the previous agreements in part pose grave risks to the country’s maritime resources, decrease Mauritania’s share of oil revenues and reduce tax income. The obligation to manage a nation’s natural resources “cannot be breached by the current government or by a future government,” Vall said. As a way to preserve some oil wealth for the future whoever lands in power, Mauritania is setting up a special fund. “Surplus oil revenues not already allocated in the budget will be put aside for an intergenerational solidarity fund,” according to Habib Ould Hemet, MCJD secretary general. Such pledges have fallen off before. A similar trust fund in Chad - developed as part of an agreement with oil project sponsor the World Bank – was recently scrapped by the Chadian government. The Mauritanian people, however, could use a boost from equitably shared oil revenues. Abject poverty is rampant in the Sahel country of about 2.9 million, where over half the population lives on subsistence agriculture and livestock. The country’s wealth – which historically has stayed in the hands of an elite few – comes mostly from iron ore, fish and foreign aid. Petrodollars and power Some observers worry too that the new oil wealth could undo the junta’s intentions to hand power back to civilians. “Doubts grow about military ruler Ely Ould Mohamed’s promise to cede power after parliamentary elections in November. Military regime bolstered by oil cash and gas exploration,” the newsletter Africa Confidential said in its forecasts for 2006. Olly Owen, Africa analyst at London-based research group Global Insight, said it will be critical to see whether the MCJD sticks to the timetable it has set for elections. The junta has said it will hand over power to an elected civilian government, pledging to hold parliamentary and presidential elections by March 2007. “When leaders see that oil money start to flow, that’s a huge temptation,” Owen said. Analysts are encouraged that Vall and other top officials have declared their commitment to the Extractive Industries Transparency Initiative – a mechanism for improving transparency and accountability in the use of natural resources – but say it’s just a first step. Global Insight’s Owen said an endorsement of EITI is important in that it shows willingness to ensure transparency in the use of a nation’s resources, but there must be a mechanism for enforcing its principles for it to really count. “It’s a seal of approval. But it doesn’t mean a great deal unless it turns into national legislation.” Ian Gary, policy advisor for extractive industries with Oxfam America, said accountability will depend on the political transition. “The transparency aims of the EITI are useful only in a democratic environment.” He added that a key challenge for any new oil producer is creating an oil ministry and other government mechanisms that function. International donors will be watching. Under a government reform program monitored by the International Monetary Fund one of the main areas of reform will be “the establishment of a transparent and efficient mechanism for the collection and management of oil revenue,” according to a 31 January IMF statement. One oil expert says the Chinguetti facility’s production is just the beginning. “Mauritania has only just begun its oil exploitation,” said Ismael Abdel Vetah, a consultant in Nouakchott. “In the coming years the country could reach 200,000 barrels a day.” But for skeptical Mauritanians this might simply mean too much of a bad thing. With the onset of oil production an expression has become common among Mauritanians: “We don’t have the profits from fish - only the odour. So we fear worse with petrol, which smells even worse.”