Private Empire: ExxonMobil and American Power (48 page)

Royal met with Déby and warned him that “dismantling oil operations and forcing the World Bank to leave” would “jeopardize the reputation of the country and the possibility of foreign investment.” He also told Déby for the first time that Chad would soon receive a tax windfall—if the president allowed ExxonMobil to keep pumping oil. Déby was surprised—he asked for specifics, but remained noncommittal about any compromise. Royal contacted Wall again and told him that he feared a “melt-down” and a final collapse of the entire Chadian oil project—six years and several billion dollars of investment, so far.
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Royal proposed various plans by which ExxonMobil might win support from the Bush administration to defy Wolfowitz’s hard line. Under Royal’s plans, ExxonMobil would pay Déby royalties while international talks proceeded. The oil company would put some of this cash directly into Chad’s treasury
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defying and undermining Wolfowitz’s freeze.

Ambassador Wall took up the case. He met with Déby and found the Chadian president “taken aback” by Wolfowitz’s “decisive actions.” Wall perceived that the United States had many interests in Chad besides the World Bank’s development goals: the economic benefits and jobs associated with oil production, counterterrorism, the care of refugees from Darfur, and the need for Chad’s cooperation in bringing the Darfur conflict to an end. The ambassador tried to promote the idea that it would be in the interest of both Déby and the World Bank to reach a settlement.
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By now ExxonMobil had made its own choice clear: It was more interested in the survival of Chad’s oil production than it was in the World Bank’s experiment in nation building. If Déby found a way to pay back his bank loans, and also stuck to the letter of his oil production contract, ExxonMobil would stay with him, according to State Department cables and ExxonMobil managers involved. The corporation wanted to keep its options open: “Esso is seeking to stress its neutral position vis à vis the dispute between the [World Bank] and the [government of Chad], as it is not a signatory to the agreement,” Wall reported to Washington. ExxonMobil described its general approach to troubled African countries where it produced oil by emphasizing that the corporation was merely “a guest . . . and as a guest we’ve got to show respect. . . . It’s not up to us to go into a sovereign country and tell them how they ought to be governing their people.” That was an Orwellian defense in this case, because the Chad oil project had been made possible for ExxonMobil in the first place precisely because the corporation had supported the World Bank’s plan to control the uses of Chad’s oil funds. Yet by declining to sign the final bank agreement, ExxonMobil had positioned itself so that it was no longer accountable—as the bank’s deal with Déby fell apart, the corporation stood aside. If anything, the corporation was subtly encouraging Déby to defy Wolfowitz. “We like the format we had,” Andre Madec, an ExxonMobil global community relations executive said. But he refused to criticize Déby for his decision to balk.
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Robert Zoellick, the Bush administration’s deputy secretary of state, telephoned Wolfowitz and talked with him about the violence in Darfur and the gathering rebel attacks on Chad, sponsored by Sudan’s notorious intelligence service. Wolfowitz said he felt he could still work out a compromise with Déby.

He was wrong; Déby refused to accept the bank’s new proposals, which were designed to maintain social spending but allow some more defense spending.

I
n pickup trucks and sport-utility vehicles, toting automatic rifles, the self-declared soldiers of the Front Uni Pour le Changement struck N’djamena on April 13. Gunfire resounded in the capital but Déby’s loose-knit defenders proved just stalwart enough to chase the rebels back toward Darfur. Chad’s rebels had been thwarted, but only temporarily. As a World Bank analysis put it, “The government brought the situation under control through the course of the day, but the situation has remained tense. . . . The tension is likely aggravated by the new petroleum resources, which have raised the stakes associated with power, and by the paucity of tangible results associated with oil revenues to date.”
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Déby was again furious. He organized a “popular” rally of his supporters in the streets of N’djamena. He declared that if the world would not back him, he would defy the world: He threatened to expel all two hundred thousand refugees from Darfur and shut down all oil production in Chad by the following Tuesday, if the World Bank did not immediately meet his demands. “You have just been eyewitnesses to the attacks by Sundanese mercenaries,” Déby’s prime minister, Pascal Yoadimnadji, declared in a communiqué issued to all of N’djamena’s ambassadors. “We regret to state that the International Community closes its eyes to the inimical behavior of the Government of Khartoum. . . . This is a particularly laughable situation. The oil is Chadian. Its exploitation must first of all profit the Chadian people.”

ExxonMobil drew down to six core staff in N’djamena, including Ron Royal, who stayed on; others of his staff withdrew from the rebel raid to the relative safety of the oil fields in the south.

Royal met Déby’s prime minister on the evening of April 14. He suggested openly that Chad get out of its social investment obligations to the World Bank by paying off its loans. At that point, ExxonMobil “would be free to pay royalties directly” to Déby’s regime, bypassing Wolfowitz’s strictures. The prime minister asked if ExxonMobil might be willing to lend Chad the money to pull off this maneuver.

Déby asked Ambassador Marc Wall to visit him the next day. Wall had been overseeing evacuations by American Peace Corps volunteers and other aid workers spooked by the rebel attack. The ambassador drove with his deputy, Lucy Tamlyn, to one of Déby’s private residences in the capital, safely secluded from the presidential palace, a rebel target.

Wall found the president in the company of his new wife, Hinda Déby Itno. They spoke in French and took their places; Tamlyn took notes.

Wall acknowledged Déby’s successful defense of the capital. “Washington is deeply troubled by the current turn of events in Chad,” he said sympathetically.

Déby said he had sent a letter to President Bush “asking for understanding of Chad’s predicament.” Even now, he continued, Sudan’s government had unleashed a new convoy of sixty rebel trucks filled with armed men toward Chad’s eastern city of Abeche. His military problems were far from over. “I have spoken repeatedly to the international community, but the international community has failed to respond. A small country such as Chad cannot at the same time face an armed invasion as well as shelter refugees.”

Half of the rebels captured after the raid on N’djamena were Sudanese nationals, Déby said. The United States had publicly condemned any efforts to seize power in Chad by force. His implication was clear: Why then would the United States stand by and allow such an invasion to succeed, given that ExxonMobil was here and that Déby was cooperating on counterterrorism and Darfur?

Wall asked about Déby’s threat to shut down the ExxonMobil oil consortium on Tuesday. Déby had declared he would close the pipeline if ExxonMobil did not start making its payments directly to Chad’s government, rather than through the London accounts controlled by the World Bank.

“This is not a topic for discussion,” Déby answered unequivocally. “It’s our money. The money belongs to the Chadian people.” He added that he needed the ExxonMobil royalties to pay his troops.

Wall said that if Déby shut down oil production, he would deprive Chad’s government of future payments.

“Chad can live without oil,” Déby said.
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He agreed, however, to wait until the end of April before issuing his order to shut down production. The president’s bargaining was transparent. He was angry, yes, but he was also seeking leverage with the Bush administration.

“We are not cowboys,” Déby added. But the World Bank “has pushed our back to the wall.”

His oil threat galvanized the Bush administration’s attention. Don Yamamoto, a State Department envoy, flew into N’djamena on April 24. Yamamoto was a principal deputy assistant secretary of state, barely higher ranking than Ambassador Wall, but he was nonetheless the most senior American official to visit Chad in years. He carried with him a letter from Secretary of State Condoleezza Rice.

Wall rode with Yamamoto to the presidential palace. Spruced up with the help of oil revenue, the palace had marble floors, clean carpets, Greek columns, and painted murals that told of Chad’s strength in colorful allegory. Chadian special forces soldiers in U.S.-supplied camouflage and desert head scarves protected doorways and leaned against the walls. In Déby’s reception room a presidential portrait graced one wall; there were ornate white leather chairs with oversize, thronelike armrests.

Tamlyn and two other embassy diplomats completed the American delegation; Chad’s foreign minister, the country’s internal security director, and two note takers flanked President Déby.

“Chad currently has the full attention of the United States,” Yamamoto began. He thanked Déby for agreeing to postpone the shutdown of the oil pipeline. He mentioned the letter he was carrying from Rice. The envoy unfolded a French translation and read it aloud. Its essence was that the secretary understood Déby’s situation was a very difficult one and that the United States remained committed to a successful partnership with him.

Déby said that he would like to convey his gratitude to Secretary Rice. Chad wanted “a good relationship with the United States.” As to his troubles with the World Bank, “We’ve been looking for a resolution for a year and a half.”

“I know the challenge Chad faces in maintaining stability,” Ambassador Wall assured him. “Our suggestions are all designed to find a way forward for a more stable future for Chad.”
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They struck an agreement in principle on April 26. The upshot was that Déby would have greater freedom to spend money on his military and ExxonMobil could keep pumping oil.

Ron Royal told Ambassador Wall and the visiting envoy, Yamamoto, that he and ExxonMobil headquarters in Texas were “extremely appreciative” of the Bush administration’s efforts.

T
he World Bank project now lay exposed as a failed experiment. The bank’s presence in the oil deal had ensured that Déby allocated somewhat more funds to domestic development than he likely would have otherwise, and it probably created more space for Chadian opposition parties and civil society than Déby would have otherwise allowed. Several thousand Chadian families in the south benefited from education and incomes by working inside the ExxonMobil compound. Otherwise the project had not achieved its goals: It did not create a template for international management of resource wealth in poor countries; it did not prevent Déby from diverting funds to cronies and defense spending; it did not reduce corruption; it did not create political or social stability; and it had not yet improved Chad’s abysmal poverty indicators. In 2000, when the project was approved by the Clinton administration, Chad ranked 167th out of the 174 nations assessed by the United Nations Human Development Index, a table of quality of life indicators, and the U.N. estimated that Chad’s average life expectancy was forty-seven years. In 2006, after six years of reform experimentation and several years of oil revenue, Chad ranked 171st out of 177 nations assessed, and its average life expectancy was forty-four years.
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The oil project did, however, allow ExxonMobil and its partners to generate several billions of dollars of top-line revenue, to forge a path to profitability just as world oil prices spiked, and to embed themselves with Déby’s regime, positioning the corporation for additional oil deals beyond those covered by the original bargain. Nobody was held accountable for the experiment’s failures; the project’s successes belonged to Déby, ExxonMobil, and its consortium partners.

U
nlike the World Bank’s representatives, ExxonMobil’s rotating country managers in Chad managed President Déby’s expectations successfully. “They were the first to help us,” said Déby’s adviser Mahamat Hissène. “Every time we had problems with them, they expected to sit down and discuss it. We understand they have more experience than us. We understand they are here to make benefits. We think our benefits are linked.”
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Déby’s goal after his confrontation with Wolfowitz was cash in hand; he needed funds right away to pay more military salaries, and he wanted to buy Russian-made Sukhoi attack aircraft and helicopters that could blast Sudanese rebels in pickup trucks from the air. ExxonMobil agreed to accelerate the timing of payments Chad was due under its original contract, without altering the basic revenue-sharing terms. Déby might be borrowing against his own future—precisely the opposite of the World Bank’s goal for the country—but from ExxonMobil’s perspective, that was his sovereign decision as a party to their contract.
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Chevron and PETRONAS, the project’s minority partners, interpreted their tax obligations to Chad differently from ExxonMobil. As Déby received large payments from ExxonMobil in 2006, and as he sorted out a temporary understanding with the World Bank, he was surprised to learn that Chevron and PETRONAS believed they owed him nothing at the moment, because they had yet to recoup certain costs and investments. Chevron cited a mysterious agreement dating to 2000 that the corporation claimed relieved it of certain tax burdens; Déby and his aides claimed to have never heard of the document. Déby did not take the news of Chevron’s defiance calmly.