Book: Private Empire: ExxonMobil and American Power

Previous: Six. “E.G. Month!”
Next: Eight. “We Target Oil Companies”

Seven

 

“The Camel and the Jackal”

 

On New Year’s Day, 2000, about two months after he arrived in the capital city of N’djamena to serve as United States ambassador to Chad, Chris Goldthwait sat down to write a letter home to friends entitled “Is It Hopeless?” He was referring to Chad. Certainly it was a troubled place. Goldthwait was a senior officer in the Foreign Agricultural Service and a part-time novelist. He had been posted overseas before, but never as a full-fledged diplomat; the State Department dispatched him to Chad as part of an effort to recruit ambassadors from outside of its own ranks. During his first weeks in the country, he took the embassy boat, which had been acquired to allow the ambassador and his colleagues to escape to neighboring Cameroon in the event of coups or other violent unrest, out on the wide Chari river to look for hippopotamuses. He found a few, but he was more entranced by the families living in adobe brick huts—premodern-looking dwellings supported by mats and poles, their tin roofs “held down against the wind by concrete blocks or big stones.” Goldthwait was single and entering the twilight of his professional life; he was a self-contained man, ready to travel and inspect his vast assigned territory. It didn’t take him long to discover that “all aspects of life are starker here than at home—greed, poverty, hatred, disease, death, honor, friendship and love.”

If Chad’s history was “our standard for judgment,” then there was little evident cause for encouragement. To seize the territory for the French empire, two colonial captains invaded from Senegal late in the nineteenth century. They left a trail of burned villages and decapitated bodies before their African troops mutinied and murdered them. After independence, a succession of coups, rebellions, incursions from neighboring Libya, French interventions, and American cold war–inspired covert maneuverings left Chad’s eight million people in the grip of Hissène Habré, who arrested, tortured, and murdered several tens of thousands of his countrymen. One of Habré’s French-trained generals, Idriss Déby, eventually overthrew him; the dictator fled to exile in Senegal with as much gold as he could load onto his escape plane. Like his predecessor, Déby trusted only his northern tribal kinsmen and “lavished upon them the lion’s share of governmental largesse and responsibility,” Goldthwait noted. “It has meant that a government with meager resources, degenerating early after independence into corruption, has come to be viewed mainly as a patronage system.”

Chad’s borders on international maps mark a landlocked expanse almost twice the size of Texas and breathtaking in its internal diversity. Its people speak 128 distinct dialects. The country’s southern forests and agricultural lands, bordering Cameroon, receive as much rainfall as the American East Coast. In the north, nomads roam with camels and cattle through parched dunes and rocky crags. There are fewer than eighty miles of paved roads in the entire nation. Chad’s poverty ran even deeper than Equatorial Guinea’s.

Life expectancy at the century’s turn was just forty-six years, according to the United Nations Development Programme; less than half the population was literate and only a third of school-aged children were enrolled in classes. The economy suffered from “poor to non-existent infrastructure, chronic energy shortages, high energy costs, a scarcity of skilled labor, limited understanding of the English language, a high tax burden, and corruption,” according to a formal U.S. embassy assessment cabled to Washington. Five of Chad’s six neighbors—Libya, Niger, Nigeria, the Central African Republic, and Sudan—were politically unstable. Idriss Déby, like coup makers worldwide, had promised reforms when he came to power, but he had settled into a self-protecting regime made up of relatives and cronies with apartments in Paris, ruthless palace guards, half-loyal regional militias, and a training contingent of about a thousand French troops and airmen on standby at N’djamena’s airport. Déby had some skills: He was a thin, composed man with a general’s sense of military maneuver and a tribal sheik’s instincts for political balancing. Still, although the Chadian elites in the precarious capital spoke a “perfect French,” Chris Goldthwait wrote, “there isn’t anything behind it in the way of knowing what to do to solve problems.”

Hopeless? The arriving American ambassador chose to believe otherwise. Democracy movements had swept even the poorest African countries during the 1990s. National economies had been growing across the continent, even in the midst of civil violence. By the time Goldthwait landed, Chadians had become “marvelous at saying what they know we want to hear from them about democracy, development, national reconciliation, etc.—sooner or later they will start to believe some of it themselves.” He wrote to his friends:

 

So no! It isn’t hopeless, only incredibly difficult. More difficult than the miracles of development in East Asia. More difficult than the recovery of the District of Columbia in our own country. More difficult than the challenges facing South Africa or other African lands. But the people here will face the challenge because they have no choice. Is there anything we can do to help them?

 

ExxonMobil employed considerably more geologists than political scientists. The complexity of Chad that attracted their attention involved the subterranean formations of the Chari river floodplain, particularly around the Doba basin. Exxon’s local subsidiary—Esso Exploration & Production Chad, Inc.—had started exploration and development work in the basin in 1977. Its engineers confirmed significant deposits at Bolobo. The oil there was thick and sour, meaning that it was infused with sulfur and thus less valuable than the “light and sweet” crude blends that attracted the highest prices on global markets. (Those lighter blends were easiest to refine into gasoline and other fuels.) The viscosity of Chad’s oil presented production challenges, as did the diverse and inconsistent strata of rocks and water beneath Chad’s eroded land, which complicated efforts to pump oil to the surface.

The scientists who puzzled over Chad’s subsurface worked mainly out of Houston, in the upstream division of ExxonMobil charged with buying, developing, and producing oil and gas. After the merger, to reduce head count and improve flexibility, Raymond oversaw a reorganization that moved many of these scientists into “skills” groups that could deploy worldwide, like geology special forces teams, to support local business units and projects. Their ability to accurately assess oil reservoirs improved year by year as faster computing and improved graphic and imagery software allowed for more accurate visualization of underground geology than in the past. There was a basic Geophysics skills group, with obscure-sounding subunits such as the Gravity Magnetics Group. There was a skills group called Geological Operations that brought scientific expertise to well and pipeline engineering. There were scientists grouped together to work on New Field Development and Mature Field Development, as well as a group specializing in Stratigraphy, a field of geology that studies how complex layers of rocks and sediments such as those beneath Chad’s Doba floodplain change over time, influenced by water and weather. One of the most important scientific groups based in Houston was called Formation Evaluation. These were the specialists who bought, captured, and analyzed seismic and other data about where undiscovered oil and gas formations might lie beneath land or ocean floors. As Houston struggled to define an economically viable plan to lift Chad’s thick, dispersed oil to the surface, its stratigraphers wrestled with geological problems tens of millions of years in the making.

Then there was the challenge of transport, even if Chad’s oil could be coaxed to the wellhead. There was no profitable market for large volumes in Chad’s neighborhood. The oil would have to be piped hundreds of miles overland to the Atlantic Ocean and then shipped to refineries in Europe or the Americas.

During the cold war, despite his torture rooms, Hissène Habré had maintained cordial ties with the United States, which regarded him as a regional counter to Libya’s leader, Moammar Gaddafi. The Reagan administration trained elements of Habré’s notorious security service and provided the regime with tens of millions of dollars of military aid each year. When Habré visited Washington in June 1987, Reagan assured him, “Chad now knows it can count on its friends.” The American president took note, too, of Chad’s economic problems, particularly its recent “locust plagues.” Exxon’s oil discoveries offered relief from such trials. Bolstered by the Reagan administration’s alliance, Exxon outflanked French oil companies, negotiated with the dictator’s aides, and, in 1988, produced the Convention for Exploration, Exploitation and Transportation of Hydrocarbons in Chad. It provided for a thirty-five-year compact among Chad’s government, Exxon, and two partners; Exxon would be the lead operator, and eventually, the corporation secured Chevron and PETRONAS as partners. The terms were favorable to Exxon and its partners in comparison with typical contracts elsewhere: Chad would receive a 12.5 percent royalty on all oil produced, plus taxes equal to 50 percent of the consortium’s net profits, which could rise to 60 percent if world oil prices soared. Chad’s take of less than two thirds of revenue after expenses compared to rates closer to 90 percent in Nigeria.

The generous terms were required, the oil companies insisted, to compensate for the exceptional risks they would endure in Chad. No political order in the country was likely to last for thirty-five years. Exxon’s negotiators addressed this conundrum not just by negotiating for favorable royalties; they also inserted into the 1988 contract what was known in the oil industry as a stability clause. Article 34, entitled “Applicable Law and Stability of Conditions,” placed the terms of the convention beyond the reach of any Chadian law that might be enacted by any government of the future. The clause protected Exxon against political risk. That Exxon had the power to carve out rights trumping any future law passed by any future Chadian regime was perhaps not surprising in this instance; Exxon’s 1988 net profits of $5.3 billion exceeded by several times the size of Chad’s entire economy. Article 34.3 declared:

 

During the term of this Convention the State guarantees that no governmental act will be taken in the future, without prior agreement between the Parties, against the Consortium which has the effect either directly or indirectly of increasing the obligations or amounts payable by the Consortium or which adversely affects the rights and economic benefits of the Consortium provided by this Convention.

 

The language binding Chadians to Exxon’s “rights and economic benefits” was strikingly broad—it could even be interpreted to mean that future governments in N’djamena might be prevented from broadening civic freedoms or permitting unions to organize if such changes raised the oil consortium’s costs. More realistically, the stability clause provided a strong defense against any future Chadian coup maker’s inclinations to raise taxes on Doba oil production. The contract was unambiguous about the parties’ relative sovereignty: “In case of contradiction or inconsistency between this Convention and the laws and regulations of the Republic of Chad, the provisions of this Convention shall prevail, unless the Parties decide otherwise.” When Déby presented the contract to his cabinet for approval, recalled Salibou Garba, then the country’s minister for post and telecommunications, the president declared, “You don’t have time to read this—and they need it in Houston.” Even Déby “did not take time to go through it,” Garba said. “Only later did he realize that the terms were not as favorable as he wanted.”

Rosemarie Forsythe, who rose to run ExxonMobil’s global political department out of Irving, had been a precocious child. She graduated from Indiana University at the age of sixteen after studying the classics, Russian literature, and political science. She overcame the psychological burdens of prodigy and grew into a calm, professional woman with a knack for making herself useful in large organizations. Fascinated by Russia and its neighbors, she joined the State Department in 1987 and then moved to the National Security Council, where she became a traveling specialist in the political affairs of the new republics born from the Soviet Union’s dissolution. In the late 1990s, Forsythe left government to work for Mobil Oil as a political adviser, based in London. After the Exxon merger, she was summoned to build the combined corporation’s political department at the Irving headquarters. She came to function as ExxonMobil’s chief political risk analyst. She filtered and synthesized political assessments flowing to Irving from the corporation’s far-flung field offices. She adjusted gradually to ExxonMobil corporate culture with some of her sense of irony intact; she told friends that the oil corporation’s system for maintaining confidential information was far more severe than anything she had seen while holding a top secret clearance at the White House. (ExxonMobil so guarded its internal estimations of country-by-country oil reserves, for example, that when executives talked about that subject with outsiders, they used the published estimates of rival BP rather than reveal their own.)

Forsythe worked in a modest-size office on the ground floor of the Death Star; she enjoyed a window looking onto the campus’s green lawns. Each April, when ExxonMobil conducted an annual multiyear strategic planning exercise, she integrated global and demographic forecasts into the plan. She also advised Lee Raymond and the Management Committee about the international political dimensions of investment and technology decisions.

Chad presented an emblematic case of the challenges Exxon faced abroad. Much of the oil and gas ExxonMobil could hope to acquire and book as equity reserves by the year 2000 lay in weak states—countries that were too poor, underpopulated, or badly governed to produce and control their oil on their own. Many of these weak states lay in Africa.

In her presentations to ExxonMobil’s Management Committee, Forsythe showed PowerPoint slides that divided the world’s governments into three categories: democracies (blue), authoritarian regimes (yellow), and transitional governments (red). The latter were characterized by political instability. One slide showed that in recent decades the percentage of the world’s known and estimated oil located in unstable countries had doubled to about half. (By comparison, much of the world’s natural gas reserves lay in authoritarian nations, particularly Russia and Iran.) Forsythe’s work also showed how demographics in the red and yellow countries—particularly the “youth bulges,” or the growing generations of young people swelling in the Middle East—suggested that even more instability in oil-producing regions could be anticipated. (Large numbers of teenagers tended to create havoc wherever they lived; her forecasts anticipated the Arab Spring many years before it arrived.) Forsythe also produced maps showing global piracy problems and threats to shipping lanes.

An implication of her analysis was that if a company like ExxonMobil wanted to continue to replace the hundreds of millions of barrels of oil reserves it pumped and sold each year, and to show Wall Street that its booked reserves were holding steady, the corporation would be drawn more and more into poor and unstable countries, and it would have to find ways to operate successfully in such places. As Vice President Cheney had once remarked when he ran Halliburton, “The good Lord didn’t see fit to put oil and gas only where there are democratically elected regimes friendly to the United States. . . . We go where the business is.”

Exxon hired a former career foreign service officer with long experience in Africa, Simeon Moats, to serve as an Africa desk officer in the corporation’s Washington office. Moats consulted with former colleagues at State and at the National Intelligence Council to stay abreast of Chadian affairs. Lee Raymond’s Africa team also brought in Herman “Hank” Cohen, an assistant secretary of state for African affairs during the George H. W. Bush administration. He was hired as a consultant to train Exxon managers about the political and cultural issues they might face in Chad. Exxon ran the Chad project out of an office in Paris and hired French nationals and French-speaking Canadian executives to supervise its operations in N’djamena. Many of the engineers and managers who did the day-to-day work in the oil fields, however, were English-drawling Americans dispatched from Houston. Cohen set up classrooms in Houston and New Jersey; his students were “all white males,” as he recalled it. He developed a syllabus to instruct them “about the nature of the Chadian government, how it worked, how to get along with them,” and perhaps even more challenging, “how to get along with French people.” Cohen had known Idriss Déby during the anti-Libyan campaigns of 1987, when Déby served as Chad’s chief of army staff; Cohen remembered him as “a tribal warlord, basically,” who drank too much and who struggled to share power and wealth adequately even with members of his own tribe. Cohen warned Exxon’s executives that there “would be a challenge to his rule at some point.”

The possibility of a coup d’état was not the only political risk the corporation had assumed in Chad. As with climate change and the management of corporate security in Aceh, Lee Raymond’s decision to explore for oil in such a poor African nation had involved Exxon in a burgeoning global contest of ideas, this one concerning the social and political consequences of oil production in very poor countries. Rosemarie Forsythe’s slides for the Management Committee implied that more and more of the world’s oil happened to be located in unstable countries, more or less coincidentally. A growing body of academic research suggested that oil production was likely a cause of their instability.

Exxon’s exploitation of Chad’s oil involved both engineering audacity and big thinking about how to relieve poverty in Africa. To reach global markets, Exxon formed a consortium to build a 660-mile pipeline across Cameroon’s forests to the town of Kribi, on the Atlantic Ocean. From there it would pipe the oil an additional 7 miles to an offshore marine terminal. To ensure that the project met global standards for the management of oil revenue and involved credible plans to relieve Chad’s poverty, Exxon enlisted the World Bank, the Washington-headquartered institution funded by rich countries to support economic development in poor countries. During the mid-1990s, Exxon and the bank conceived an unprecedented plan: In exchange for loans from the World Bank’s finance arm, Chad’s government would be pressured to accept covenants requiring that it spend most of the royalties and taxes it received from oil production on health services, education, economic infrastructure, and other poverty alleviation programs. To ensure that Idriss Déby or others in his government did not cheat, the plan would require that Exxon route Chad’s oil money through special bank accounts in London controlled by the World Bank.

For a cautious company run mainly by engineers, the Chad project’s terms amounted to an extraordinary venture by Exxon into social engineering and nation building. There was something about the starkness of Chad’s poverty that seemed to attract Exxon’s engineers; they talked about the country as a place that could be entirely remade. “We have the opportunity of applying this model on a clean slate,” explained Tom Walters, the corporation’s vice president for oil development in Africa. “There was no prior history of development to deal with.” Foreign missionaries of an earlier era imagined that they might improve Africa by imbuing its people with Christian values of work and rectitude. Exxon’s managers believed they might improve Chad’s government by demonstrating through their own example the benefits of corporate discipline and principled consistency—the gospel of the Operations Integrity Management System. “A big part of what we think we can bring is a lot of the ethical behavior that we can portray to the government,” Walters said. “We have been working with this government now for a good ten years. . . . And we do not back down, and I think that education is going to have dividends over the long haul.” Rex W. Tillerson, who was rising to prominence as a leader in the corporation’s international division, described the project as “a clean sheet of paper” where Exxon had “the opportunity to put things in place perhaps the way you’d like to see them carried out from the very beginning.”

The corporation’s ambition in Chad stood in contrast to its modest local development projects and political quietude, bordering on complicity, in Equatorial Guinea. The difference had more to do with oil market geography than with any deep-seated desire within ExxonMobil to reform Chad. The corporation’s Equatorial Guinea properties lay offshore and could be shipped to markets without much need for ExxonMobil employees to involve themselves in the country, except to go and come from the airport. As long as Obiang’s rule was stable, ExxonMobil could keep a low profile and pump oil. In Chad, the corporation’s oil was stranded inland. Constructing a pipeline to the Atlantic Ocean inevitably meant the political visibility and risks of the project would be elevated. Land acquisition, population resettlement, cutting down trees, and environmental protection plans were sure to attract local and international scrutiny from the start.

By recruiting the World Bank as a partner, Exxon’s leaders shrewdly insulated themselves from many of the project’s most daunting reputational risks, particularly those arising from the objections of environmentalists and nongovernmental organizations. The World Bank’s technocratic experts in poverty alleviation and development—not the oil corporation—would design and implement the plan to manage Chad’s oil revenue as a public trust. “The notion that ExxonMobil should be telling the Government of Chad how to spend its money—like Shell telling the U.K. government how to spend its money—wouldn’t go down well,” Lee Raymond observed. The World Bank, however, had the mandate.

“The biggest thing this company can bring to some of these countries is the opportunity to see capitalism and the free market work,” he said on another occasion. “Am I comfortable with everything the government of Chad does? No. Am I comfortable with the concept that we’re now going to give the Chadian people an opportunity to improve their lot through economic development? Extremely comfortable.”

The project’s New Jerusalem ambitions reflected the World Bank’s evolving priorities. President Clinton had appointed James Wolfensohn, a multitalented Australian investment banker, cellist, and fencer, as the bank’s president. Wolfensohn inherited an institution under increasing criticism from European board members and antipoverty campaigners for its reliance on the financing of large infrastructure projects—dams, highways, and the like—that did little to stimulate private investment or meet the human needs of poor people. Wolfensohn traveled the world seeking new ideas to address these concerns. The Chad revenue-management plan presented an opportunity to experiment with a new conditional-lending model. It became “the child of James Wolfensohn,” recalled Jane Guyer, an anthropologist who advised the bank. Exxon seemed an unlikely corporate partner for a nation-building project of such visibility and ambition. Lee Raymond, however, had confidence in Wolfensohn. In his earlier career as an Australian merchant banker, Wolfensohn had worked with Raymond on some of Exxon’s oil and gas deals. Later, as Exxon’s chief executive, Raymond looked at the Chad property and realized there were only three choices: Do nothing with the oil, which would be unfortunate; ship it north, through Libya, which looked impossible, politically; or sign up to the World Bank’s plan to improve governance and raise living standards in two very poor countries. Why not try?

Exxon’s plan for Chad offered to break the pattern of oil-related corruption and violence; it offered a way to use public development funds to stimulate private economic activity in Africa; and it seemed to offer a credible reply to the bank’s critics. Persuaded that it had a choice between the bank’s terms and no oil revenue, Chad’s parliament passed Law 001 in 1998, and Déby signed it the following year; it pledged 10 percent of the country’s future oil revenue to a “future generations” fund, and 80 percent of the remainder to “priority sectors” such as education, health, agriculture, and the environment. In addition to parliament, a “college” of civil society groups would provide oversight of these investments.

The plan offered an answer to the “resource curse,” a syndrome described by economists and political scientists. The curse referred to evidence that when poor countries became suddenly rich in oil or minerals, they could often expect to go backward rather than forward. In 1993, the British economist Richard M. Auty published Sustaining Development in Mineral Economies: The Resource Curse Thesis. (His work drew on earlier economic analysis about the “Dutch disease,” which referred to the distortions that took place within the Netherlands’s economy after a major natural gas discovery.) Essentially, the resource curse described a condition within governments similar to what happens to many individuals after they win the lottery. When nations became enthralled by the short-term riches offered by a finite national resource, capital and talent often migrated away from more productive and self-sustaining economic sectors such as agriculture. In 1997, the American political economist Terry Lynn Karl applied these insights to oil development in poorer countries; her book, The Paradox of Plenty: Oil Booms and Petro-States, used the example of Venezuela to show that weak governments made rich by oil were prone to corruption and underinvestment in agriculture. These countries also sometimes attracted violence among internal factions competing for control of the engorged national bank vault. Philippe Le Billon of the University of British Columbia reviewed twenty separate studies of the resource curse and found that while “oil broadly correlates with higher risk of conflict,” countries with high wealth per capita faced less danger, even where, as in Saudi Arabia, corruption was pervasive. The highest risk scenario, Le Billon found, was one involving “onshore production, institutionally weak central government, generating low rents per capita, with high level of dependence on the oil sector.”

That described Chad. Even before the Doba oil flowed, a southern rebel group, the Armed Forces for a Federal Republic, known by its French acronym as F.A.R.F., sprung from nowhere to challenge Idriss Déby’s regime for control of the region around the Exxon fields. Déby violently suppressed the F.A.R.F. and its suspected supporters. “The Chadians came in and were quite rough, but they terminated it,” recalled an oil industry security adviser who monitored the campaign. Exxon stood by as the oppressive violence occurred; security was the responsibility of Chad. “There were regular exchanges between embassy and Exxon officers when human rights abuses occurred” during Déby’s counterinsurgency campaign, noted a State Department cable, but these meetings did not consider “actions Exxon could possibly undertake in reaction to the abuses.”

By the late 1990s, the resource curse thesis had become conventional wisdom among liberal-leaning development economists and policymakers, including some at the World Bank. As a decision about Exxon’s oil project neared, antipoverty groups with long experience in Africa, such as Oxfam and Catholic Relief Services, argued that the World Bank was moving too hastily. Their researchers agreed in principle that ordinary Chadians deserved the benefits of their oil wealth, but they doubted that the fragile, violent, embryonic half democracy over which Idriss Déby presided could offer the oversight of oil revenues imagined by the bank. These nongovernmental researchers chafed at optimistic assessments published by the bank, which seemed to them to ignore recent events such as Déby’s suppression of the F.A.R.F. “You really have to examine: What is the nature of the state?” said Ian Gary, who monitored the deal at the time for Catholic Relief Services. “You can’t just see what you want to see.”

The Chad compact also suggested a double standard for Africa. The World Bank and the Clinton administration did not question the right of Saudi Arabia to use its oil revenue to enrich a corrupt royal family. They did not seek to control social spending in the new oil-producing states of Kazakhstan or Azerbaijan, despite the myriad ways those governments failed to serve their people. Why single out Chad? Why single out Africa? “The oil project is frankly the only hope on the horizon for the nearly eight million people of Chad,” argued Donald Norland, a former American ambassador to the country who used some of his retirement years to campaign for the oil project. “It seems particularly unconscionable, therefore, for outsiders surrounded by modern comforts to oppose the project and thereby condemn the people of Chad to a kind of pristine poverty.”

It seemed Idriss Déby sent a cousin, Tom Erdimi, to Houston, where Erdimi took an office at Exxon’s upstream division and worked as Déby’s liaison to the corporation. Erdimi helped to manage and push Déby’s negotiations with the bank. The president also appointed Ahmat Hassaballah Soubiane as his ambassador to Washington. Soubiane was a political activist who believed the oil project would be good for Chad in the long run, but who doubted his own president’s sincerity. As the negotiations reached a climax, Déby continued to resist the World Bank’s oversight terms. He “talked about a plot against the sovereignty of Chad” and urged his ambassador to fight. Privately, however, Soubiane “felt very strongly” that the bank and its “instruments of control and surveillance” would help protect his country against “Déby’s desire to do whatever he wanted with the oil revenues.” Soubiane worked to bring Déby around to a compromise.

In the spring of 2000, Soubiane met on a Saturday with James Wolfensohn at the bank’s headquarters, five blocks from the White House. They argued about Déby’s stubbornness. Soubiane promised to push his president harder. He described how Chadians had come to see the international arguments about their country’s oil. Northern nomads in Chad tell a creation story, “the camel and the jackal,” he explained: The camel was created first, followed by the jackal. The jackal then noticed that the camel was a weaker animal and so it followed wherever the camel went, waiting for it to fall down dead. “Chadians remain skeptical and they believe that Chad’s oil has become the camel,” Soubiane said. “The jackal, since the beginning of the world, has been waiting to watch it fall down.”

Treasury Secretary Lawrence Summers made the Clinton administration’s policy decisions about World Bank projects; he took advice from Timothy Geithner, who then ran Treasury’s international division. After two years of interagency reviews, Geithner and Summers were united in their support for Exxon’s plans. “Clearly, the project has significant risks,” Summers wrote to the U.S. Catholic Conference, a religious group that had questioned the project. “However, the Bank and borrowers have made a serious and credible effort to deal with these inherent risks, to incorporate lessons learned from failures of the past, and to set a higher standard.”

The World Bank at last approved the deal. Déby’s political party organized a mass gathering in the streets of N’djamena. The president appeared before the crowd and accepted his people’s congratulations. “The city burst into celebration,” Chris Goldthwait wrote home. “It was to a degree organized, but there was genuine feeling in the crowd that gathered at the parade grounds opposite the Presidential Palace. And there was spontaneity in the horn-honking motorists who sped around town. The President walked over . . .…relaxed and clad in a polo shirt for the evening warmth. The most important economic project in the country’s history would go forward.”

At an inauguration ceremony, Déby seated the ExxonMobil delegation in front of the diplomats before the stage; “the Saudi charge, always sensitive to such matters, complained.” But Goldthwait felt that he “couldn’t fault the Chadians this little breach of protocol—they know where their bread is buttered.”

ExxonMobil’s oil deal in Chad signaled the shifting sovereignties of a rising era in which formal governments were losing relative power. A warlord running a teetering state surrendered prerogatives of his office in exchange for the private capital and cutting-edge technology he required to strengthen his reign. A multilateral lending institution brokered the agreement and afterward contracted with the London office of a global bank, Citigroup, to manage and control most of the revenues due to the warlord’s government. Oxfam, Catholic Relief Services, Global Witness, and other worldwide antipoverty campaigners organized conferences at which they taught Chadian civil society activists how to secure their rights. ExxonMobil, having conceived and financed the oil project in the first instance, and having achieved its business aims after more than two decades of effort, now moved to produce oil on a schedule of its choosing and under contract terms that enshrined its rights ahead of those of the Chadian government.

The United States embassy in N’djamena transmitted a “Sensitive” cable to Washington that candidly described its position in relation to ExxonMobil, when the embassy sought to advance American policies on human rights:

 

Exxon has been an operator in Chad for almost 30 years now and is self-sufficient working in this environment. To date they have not come to us for advice on how to confront particular human rights situations or how to advance specific political agendas. . . . It is our impression that on a number of fronts, they would probably prefer to keep a certain distance from the embassy. . . . Our experience has been that Exxon has not felt the need to request the presence of senior embassy officials during meetings with government officials.

 

And why should it be otherwise? ExxonMobil’s investments in the Chad-Cameroon oil project would amount to $4.2 billion. Annual aid to Chad from the United States was only about $3 million. “Only this pittance, in one of the ten poorest countries of the world,” Chris Goldthwait wrote.

As Exxon’s work around Doba expanded, Goldthwait traveled through the oil area and marveled at “just how much control the government [of Chad] has ceded to Esso over what happens in the south, almost a loss of sovereignty!” The company “calls the shots” in four of the country’s most populous administrative regions, he noted. Oil personnel managed security by suggesting travel routes and accompanying Chadian military and paramilitary patrols; they controlled local roads and ran their own satellite radio network reaching to the capital; and their spending on employment and construction in and around their oil fields dwarfed that by Chad’s government and foreign donors. Goldthwait observed: “Esso coordinates every step of the way with central and local authorities, but insists on what it needs; Esso rules the south.”

William Foltz, a Yale University professor of African studies and political science, and the author of Arms and the African, visited N’djamena and delivered a lecture; Goldthwait went along to listen. The ambassador had been reading and reflecting on Le Mendiant de l’Espoir, or The Beggar of Hope, a novel by an imprisoned Chadian writer, Ali Abdel-Rhamane Haggar, who described the “root divisions” of Chadians, particularly “tribalism and corruption.” Foltz set Chad’s travails into the wider context of Africa’s transition from an earlier postcolonial era of periodic coups to “today’s much bloodier fighting in civil war,” a transition aided by the availability of weapons, the spread of dislocated refugees, and the ability of African governments to sell off resources to “finance the purchase of more weapons.” As he listened, Goldthwait jotted down other factors that the professor had not mentioned: “Ethnicity, a tradition of fighting, the fact that people have very little to lose, corruption, lack of results from government’s actions, lack of faith in democratic institutions.”

“The gap that bothers me the most,” Goldthwait wrote home, “is in our development model for a country as poor and isolated as Chad. We know what works at the grassroots to help farmers or herders take the first small step beyond subsistence. . . . And we can identify a handful of critical big-ticket infrastructure needs like paved, all-weather roads or reliable supplies of water or power. But this leaves a huge void before the country achieves sustainable economic growth—and we don’t know how to bridge it.”

Shell and the French oil giant Elf Acquitaine originally joined ExxonMobil in the Chad project. Then an Elf chief executive, Loik Le Floch-Prigent, was indicted on embezzlement and international bribery charges; he was accused of skimming corporate funds and using some of them to pay off African and other overseas officials to win oil deals. (“It was like that before me,” Le Floch-Prigent claimed. “And my successors are doing it as well.”) Lee Raymond and his Dutch senior aide, Rene Dahan, once dined with Le Floch-Prigent in Paris and walked away shaking their heads. “I’m not doing that again,” Raymond barked at Dahan. ExxonMobil had its flaws, but outright crookedness was not one of them.

The scandal weakened Elf, led ultimately to a merger with Total, and forced ExxonMobil to find new partners in Chad. The Chad project had by now lasted three decades without producing a barrel of oil; it had turned out to be “a good example of long-term persistence, but a bad example of getting things done quickly,” as Harry Longwell, Raymond’s upstream lieutenant, put it dryly. The corporation finally roped in Chevron and PETRONAS of Malaysia as new nonoperating partners.

Chevron paid Déby’s government a “signing bonus” of about $25 million. The payment was not subject technically to the World Bank’s rules, but Déby had rashly pledged in public that he would apply the bank’s formula to all of his revenue. He changed his mind. There were rumblings of armed rebellions in the west, along his chronically troubled frontier with Sudan, near Darfur. Déby felt he needed to shore up his regime’s defense; he invested about $4.5 million in new military equipment before 2001 was out.

After years of absence from Chad following the cold war’s end, the Central Intelligence Agency reestablished a station in N’djamena around the time that ExxonMobil decided to go forward with the oil project. The threat of terrorism gradually drew its officers back. Even before the September 11 attacks, Al Qaeda menaced Africa. Osama Bin Laden, the group’s emir, lived in Khartoum, Sudan, between 1992 and 1996. He funded violence in Somalia and Ethiopia and built up cells in Kenya and Tanzania. The vision of pan-Islamic risings Bin Laden articulated reached the lightly governed regions of the Sahel, including northern Chad. From Sudan, Al Qaeda financed weapons shipments across the desert to sympathizers in Libya and Algeria. The reopened C.I.A. station in N’djamena was partially intended to address this threat. The station was “declared” to Déby’s government, meaning that the intelligence officers posted to Chad were known to their counterparts in the Chadian security services. The station evolved into a security liaison operation through which the United States could covertly provide training and equipment to counterterrorism units created by Déby for that purpose.

After the September 11 attacks, the C.I.A. and the Pentagon’s Joint Special Operations Command no longer faced budget constraints; they charged into African capitals long neglected. At first, the coordination between the agency and the Pentagon in Chad and elsewhere in the Sahel was lacking. Deeply compartmentalized secrecy was the operational norm at both the C.I.A. and within the Special Forces. In the early months of 2002, the C.I.A.’s Africa division sometimes learned what the Pentagon was up to only through the reports of its paid local agents. The Pentagon lacked the language skills—particularly French—to set up new Special Operations liaisons with host governments like Chad’s without using translators. The translators would then be recruited as spies by the host government, so its leaders could keep track of what the Pentagon was planning. The C.I.A., running its own security liaisons, would hear about the Pentagon operators through the same translators. Once, in Ethiopia, local prostitutes were videotaped servicing American clients—the clients turned out to be Special Forces operators who were in the country without the knowledge of the local C.I.A. station, which then had to smuggle the Pentagon personnel out of the country before they were arrested. Gradually, the coordination improved. General Stanley McChrystal, a graduate of West Point, took charge of the Pentagon’s Joint Special Operations Command, which ran the operations against Al Qaeda in Africa. During the same period, after the September 11 attacks, C.I.A. director George Tenet appointed Mel Gamble, a longtime operations officer who had served in South Africa, Nigeria, Kenya, and Liberia, to run the Africa division in the C.I.A.’s Directorate of Operations. McChrystal and Gamble worked together on a series of covert counterterrorism initiatives in Chad and elsewhere in the Sahel.

“Terrorism was a rising star,” recalled Karen Kwiatkowski, then a lieutenant colonel working on Africa policy at the Department of Defense in Washington. “Oil, as the price increased, was a rising star.” It was natural for those, like her, who were charged with crafting Africa strategy at the Pentagon to take their cues from the White House. “And certainly,” she recalled, “we knew what Cheney liked. . . . We didn’t understand the oil economy. What we knew is that these are ways to make your department more relevant to the national mission and the national priorities.” The Pentagon, seeking funding and relevance, assumed that the Bush administration would support a focus on counterterrorism and oil supply security.

The National Intelligence Council had forecasted as the Bush administration arrived in office that West African oil would make up 25 percent of American imports by 2015. In the first years after September 11, there was a gathering sense within the intelligence and defense bureaucracies that instability in the Middle East required paying greater attention to oil-producing regions elsewhere. At a 2002 symposium entitled “African Oil: A Priority for U.S. National Security and African Development,” Walter Kansteiner, the Bush administration’s assistant secretary of state for African affairs, told the audience, “As we all start looking at the facts and figures of how many barrels a day are coming in from Africa, it’s undeniable that this has become a national strategic interest for us.”

In Chad, the Africa division of the C.I.A. instructed the station chief to tell President Idriss Déby, in effect, “All the [oil] money that’s coming in—you have to do a better job of helping your people.” Yet Déby might be forgiven for believing that oil and terrorism mattered more to Washington than good governance.

Soon after McChrystal took charge of the Joint Special Operations Command, elements of an Algerian-based Al Qaeda affiliate, the Salafist Group for Preaching and Combat, crossed Chad’s northern border and entered the country. The C.I.A. and the Pentagon turned to Déby for military assistance. The Pentagon’s European Command used reconnaissance aircraft to pinpoint the Islamist cell’s location. The C.I.A. station chief asked Déby to send in his own ground forces to attack. The overall message was, as one individual involved put it, “If you can help us on this, we’ll help you in a lot of ways.”

In the political economies of African strongmen, the World Bank was potentially useful; the C.I.A., on the other hand, was where the world really turned. Salibou Garba, the Chadian opposition leader, believed that by 2002 or 2003, as ExxonMobil’s oil began to flow in earnest and as counterterrorism rose as an American priority, Idriss Déby had concluded that his own security must be his overriding priority. His cooperation with the C.I.A. could reinforce his rule by making him indispensable to the Bush administration’s global counterterrorism campaign. The World Bank’s priorities of governance and social investment offered no comparable benefits and might cause him to lose his political grip if pursued too vigorously. “He was like a driver who ran over a pedestrian and just kept driving,” Garba said.

As he prepared to depart his ambassadorship after an extended tour, Chris Goldthwait tried not to dwell unduly on “the Great Frustration,” as he called it, which arose from the fact that he could point to relatively few concrete achievements from conventional development aid or diplomacy that would help ordinary Chadians—particularly agricultural projects, in which he had long specialized. “The U.S. government isn’t really a player in Chad’s economic development,” he wrote. “Beyond the general strictures of our Africa policy, the U.S. has one specific interest in Chad, the oil project, and one more amorphous one, regional stability. . . . Frankly, I could do a lot more and keep a lot busier running around town to see folk. But to what point? More cables won’t help anyone back in Washington.”

He held on to hope for the many striving Chadians he had come to know on his travels across the country. “From a purely economic view, the future is now,” he wrote in his last letter. “The oil project has been producing. . . . Per capita income is growing 10 percent annually, solely on the basis of local spending by the consortium. Cell phones and Internet connections are booming. New construction is visible all over N’djamena.

“The great lingering question is whether the government of Chad will indeed adhere to the oil revenue management plan and whether the income will benefit the people. I’d say the odds are good, but it’s still a crapshoot.”

ExxonMobil judged the risks it had taken to pump oil in Chad to be a success: “On target to reach full production status as scheduled.” The corporation had so far drilled 115 oil wells in its southern zone; it had paid out millions of dollars in compensation to local farmers for land rights, and it continued to dole out about $25 million in wages to local employees annually, a large infusion of cash to the country’s economy. ExxonMobil “has had and will continue to have significant positive economic impacts in Chad,” the corporation declared.

These were still early days; hope was in the air. A few years on, the World Bank’s assumptions about Chad’s potential as a socioeconomic experiment would be more fully tested, and the distribution of costs and benefits from oil production would be clearer.

Previous: Six. “E.G. Month!”
Next: Eight. “We Target Oil Companies”