Book: Private Empire: ExxonMobil and American Power

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Sixteen

 

“Chad Can Live Without Oil”

 

Scores of oil platforms had spread across the red clay ravines and subtropical bush of southern Chad by 2006. There were by now 368 wells in all, scattered across just over twelve thousand square miles. Each rig pointed at the sky like a thirty-foot rocket prepared for launch. In the dry seasons heat baked the ground to an amber shade and blown dust caked the equipment. When the rains came, low clouds hung in wisps around the metallic caps topping the derricks. At the main production facility at Kome, known within ExxonMobil as Kome-5, some of the Africans who worked behind the tall fences illuminated by safety lights, and who found their lives constrained by ExxonMobil’s extensive rule making, facetiously referred to the compound as Guantánamo. The joke’s suggestion of exclusion captured a larger truth about ExxonMobil’s operations in Chad. Since it was not feasible for the corporation to devise solutions to all of the problems of a very poor country, the logic of ExxonMobil’s systems management argued for engineering Chad and its pathologies out of the equation to the greatest extent possible. ExxonMobil’s one thousand expatriate workers and managers rotated in and out of the country on twenty-eight-day tours without ever interacting with the world outside their compound chain-link fences, which were nine feet high and topped with a barbed-wire anticlimbing barrier. In addition to Kome-5, there were 9 ExxonMobil camps across southern Chad, as well as 450 oil production areas and 50 construction sites. The corporation’s expatriate workers and managers flew on commercial or chartered flights into N’djamena’s international airport, transferred without leaving the grounds to an ExxonMobil shuttle plane, flew to the corporation’s private airport at Kome, and then checked into barracks or bungalows within the fenced perimeter. For the next four weeks they could neither drink alcohol nor leave the facility. The corporation’s roughly five thousand Chadian employees followed the same rules. Those who worked in Kome-5 checked through the employee security gate for twenty-eight-day shifts and could not leave but for approved emergencies, unless they were prepared to give up their lucrative salaries. It was like being entombed, one of the Africans remarked.

Inside the Kome-5 complex, ExxonMobil employees enjoyed twenty-four-hour electricity, high-speed Internet service, satellite television programming, refrigerated and packaged food, and as many other amenities of middle-class Houston as it was possible to supply by airlift at reasonable cost. Immediately outside the fence stood a shantytown known locally as Quartier S’Attend, “the Quarter of Waiting.” It had sprung up as a settlement for hopeful Chadian laborers when the oil field construction work began. After the initial building slowed, the settlement became an iniquitous way station for Chadians entering or leaving “Guantánamo.” Its stalls were stocked with bottles of the potent millet home brew “billi-billi,” or the even more potent “Argue.” Prostitutes from Cameroon staffed the back rooms. In the bush beyond the quartier there were small villages where the homes were constructed from kilned brick and thatched straw, with tall, conical roofs shaped like a farm wife’s sun hat. Oxen, pigs, donkeys, horses, and shirtless children wandered through sandy lanes. Here there was little reliable electricity.

“Public relations efforts have fallen short of the locals’ expectations and a growing resentment is building towards the oil project and its workers,” noted an embassy cable written about six years after the World Bank, ExxonMobil, its corporate partners, and the government of Chad had agreed to a radical plan to ensure that the country’s oil profits were not stolen or wasted.

The oil region presented a booming industrial economy behind the ExxonMobil fence but little sign of sustainable progress outside. Rather than engineering social and economic change to improve the conditions of most ordinary Chadians, the bank experiment had created conditions under which ExxonMobil could produce and sell oil the way it did everywhere else, in a setting where that might otherwise be impossible. Without the bank, the corporation could not have easily profited from its reserves in Chad, but whether the bank succeeded with its broader development goals was fading as a material concern for ExxonMobil. Chad’s geology had proved challenging, project costs had ballooned over budget, and oil production remained lower than originally forecast. But rising global oil prices cured these business ills. During 2005, the corporation’s oil sales from Chad reached the point where it had recouped the costs of construction and investment; the project was now profitable and even susceptible to Chadian taxes at a 60 percent rate, over and above a 12.5 percent royalty ExxonMobil had paid on gross oil sales to Déby’s regime from the beginning.

The security of ExxonMobil’s operation and investment remained a worry, however. ExxonMobil and its partners recognized “that the oil fields in southern Chad are of strategic interest to any group seeking to overthrow the regime,” the embassy noted to Washington. As in Indonesia, ExxonMobil protected its oil field perimeter with a forward defense. In southern Chad there were very few armed rebels; President Idriss Déby had brutally wiped out an incipient guerrilla movement as ExxonMobil prepared to construct its oil wells. By 2006, the groups that most threatened President Déby operated from Sudan, many hundreds of miles away. Still, the desert could be traversed quickly: Rather than sit behind its fences and wait for some unexpected rebel group wearing bandannas and wraparound sunglasses to arrive in pickup trucks toting rocket-propelled grenades, ExxonMobil employed about twenty-five hundred unarmed private security guards in southern Chad and equipped them with white sport utility vehicles and portable radios. The Jeeps conspicuously patrolled the roads around Kome and bumped through villages, watching for outsiders. With ExxonMobil’s encouragement, camouflaged soldiers from the formal Chadian gendarmerie shouldered automatic rifles and maintained checkpoints and encampments along the roads to and from the oil area, prepared to seal off the region in the event of trouble.

American intelligence officers picked up and passed to ExxonMobil reporting that “suspected extremists” had surveilled the oil fields; afterward, the security officer at the U.S. embassy was invited by the corporation to inspect the facility to assess its vulnerabilities. He found it wanting. There were holes in the fences and the Chadian paramilitaries protecting the region were found “either in their T-shirts and flip-flops playing cards and eating or sleeping in their tents.” The facility was “totally unprepared for any level of terrorist attack. . . . The Gendarmes often go months without pay. . . . What is provided [by Chad’s government] lacks numbers, motivation, discipline and training. Their morale is poor and their equipment is not good.” Locals complained that the police preyed upon them. For its part, after its travails in Indonesia, ExxonMobil was doubly sensitive about allowing local forces guarding its facilities to shoot aggressively at attacking guerrillas. The corporation’s Chadian executives told the U.S. security officer that they were more likely to shut down and evacuate Kome than defend it, if Chad failed to do the job. In the worst case, since they had already made their money back, they just might “sell what remains to the Chinese.” To defend ExxonMobil, the assessing officer suggested that the United States “should consider providing to the local police and Gendarmes . . . basic to advanced firearms training as well as instruction in police and patrol tactics to counter any terrorist threat.”

A small leadership and analysis team from ExxonMobil Global Security supported the local guard force from the capital, N’djamena. The team worked from a compound of bungalows and offices that made up the corporation’s country headquarters on the Avenue Charles de Gaulle. They were former police and retired military men. They built an intelligence-collection operation separate from and in many ways better sourced than that run by the small Central Intelligence Agency station in the nearby American embassy. ExxonMobil enjoyed privileged access to Déby and his military and intelligence advisers because, in 2006, the corporation and its partners would transfer to Déby some $774 million, whereas U.S. government aid, all totaled, including the counterterrorism assistance provided by the C.I.A., was in the neighborhood of 1 percent of that amount. That equation had changed little since the World Bank–sponsored oil project began; Déby’s aides hardly required calculators to understand where their interests lay.

Statisticians at ExxonMobil’s upstream division headquarters in Houston helpfully prepared PowerPoint slides for use by the U.S. embassy––slides that emphasized the outsize benefits of the corporation’s activities in Chad for the United States: one thousand American jobs per year during the construction phase of the Chad oil project; two hundred expatriate jobs for Americans in the country generating about $70 million in total revenues; a projected 24 million barrels of direct oil exports to American refineries annually; and more than $1 billion in profits returned to American shareholders over about six years. American diplomats in N’djamena transmitted statistics, fed to them by ExxonMobil’s country manager, in cable after cable to Washington. In N’djamena, ExxonMobil’s security officers used their influence and inside access to Déby’s security regime to school themselves like political science scholars in the region’s alphabet soup of liberation armies and quasicriminal gangs, and they monitored reporting inside Déby’s palace for emerging threats, particularly any mutiny that might reach the south, target ExxonMobil directly, or otherwise call for an employee evacuation plan to be activated. The Global Security team continually planned, mapped, and exercised evacuation routes into Cameroon by road and air.

The salaries earned by the corporation’s local guards poured into a corrupt, inflation-wracked regional economy. Before oil the south was a region of marginal subsistence farming. Sorghum and cotton were staple crops. The rains were erratic, and the roads to market could be impassable when wet. The construction and employment boom that followed ExxonMobil’s arrival flooded the area with cash. Farming families that might previously have earned $125 in a year received as much as $7,500 in one-time payments for land rights. Food prices spiked; the cost of a sack of staple millet doubled. World Bank development specialists encouraged schemes of micro lending to local households in the hope that this temporary influx of capital could be converted to self-sustaining entrepreneurship, but too many borrowers absconded or blew their funds on motorbikes and billi-billi. Labor contractors connected to Déby’s administration brokered construction jobs in the oil fields and skimmed off what a Chadian court later determined to be $7.5 million in wages, money that never reached the workers who actually built the derricks. (About half that amount was later paid out to four thousand workers in a settlement; the stolen money was never traced.)

At times, depending on the ambassador, the U.S. embassy in N’djamena provided optimistic assessments to Washington. ExxonMobil is “regarded as a model company, particularly in respect to continuing good community relations and environmental consciousness,” one cable reported. The corporation has “upheld American standards in terms of worker entitlements to wages, safety and health.” But ExxonMobil’s disciplined systems and investments did not resolve the country’s weak governance, corruption, poverty, or unmet aspirations. “The influx of oil revenue has created little improvement, frustrating heightened expectations,” a confidential U.S. State Department-led fact-finding team reported in early 2006. “Many Chadians told the interagency team they were ‘better off before the oil.’”

Armed with advice from consultants in poverty reduction and corporate responsibility, ExxonMobil allocated modest sums to local projects in the south intended to demonstrate Irving’s commitment to global citizenship. Among other things, the corporation constructed a water storage tower in a village about a twenty minutes’ drive on rutted roads from the Kome fences. In a decision that seems unlikely to have crossed Lee Raymond’s desk during the latter part of his tenure, ExxonMobil’s regional managers installed solar panels to generate the electricity needed to pump well water into the newly constructed village tank. Thieves ripped the panels out, however, and soon all that remained was the storage tower and the metal rails that had once held the solar panels in place. Theft at ExxonMobil’s properties was rampant; the corporation lost $500,000 worth of equipment in 2006 alone. Kome-5’s security doors were a favorite target; locals made beds from them. Popular disenchantment increased when local officials imposed what was regarded as an “Esso-imposed 6 p.m. curfew” in response to the looting.

During the hopeful days when the World Bank and Exxon had planned the Chad project as a pioneering experiment in nation building and social engineering, Exxon erected a health clinic in Kome. When the Chadian government also requested a nurse, medicine, and equipment, the corporation refused—it locked up the building until Chad hired its own health care workers to staff it.

ExxonMobil’s managers in Chad took justifiable pride in the $16 million in annual wages, training, education, and exposure to global norms in health and education that the corporation provided to the Chadians in its direct employ. The knock-on benefits of these improved lives would be substantial, if hardly enough to right Chad. Yet ExxonMobil considered the construction of deeper social and physical infrastructure in the country to lie outside of its responsibilities. That was why the corporation had so purposefully recruited the World Bank into the high-risk Chad oil project in the first place. When ministers in Chad’s government or local human rights activists begged ExxonMobil to build a health clinic or lay a road, the corporation typically demurred, explaining that oil production was its core competency and that it intended to follow the letter of its contract. As oil production grew and Idriss Déby did not become a better president, and Chad’s social and health indicators failed to improve significantly, ExxonMobil’s executives privately blamed the World Bank. The bank had simply not done what it promised to do when it endorsed and funded the 2000 plan to manage oil revenue for the greater good of Chadians, ExxonMobil’s managers argued. There was some truth in their complaints. ExxonMobil operated on time and under budget in a way that a sprawling, multinational bureaucracy such as the World Bank never could. The oil company’s criticism assumed, however, that the experimental governance goals embraced by all of the project partners—including ExxonMobil—had been realistic in the first place. By 2006, this no longer seemed a defensible claim. Irving prided itself on its realism. The most honest assessment was that the two main parties to the Chadian oil project had always been ExxonMobil and its partners and shareholders on the other side, and Déby and his kleptocratic clansmen on the other.

In Doba, the flat market town nearest to the oil fields, a revenue-sharing scheme supported by the bank endowed the local government with tens of millions of dollars. The political chiefs did build a school, but generally favored grandiose construction projects over health and education services. They spent $4.4 million on a soccer stadium in Doba that could seat twenty thousand, notwithstanding the lack of a professional soccer league of any significance. School, road, and hospital building projects went forward more encouragingly, but when they were finished, the buildings stood empty for lack of nurses, doctors, and teachers. Local construction budgets and expenditures were grossly inflated by the skyrocketing costs of materials and the large number of skimming hands involved. Unmowed grass soon bent like wheat across the soccer stadium’s field. Young mothers in the area still died in childbirth at rates comparable with the era before oil. “It’s not easy to hide the sun with your hands; the money is there in large quantities,” remarked Boukinebe Garka, a member of a national commission meant to help supervise oil revenue. “But it is not being spent very well.”

As Idriss Déby’s government grew wealthier, the president also became more vulnerable to mutiny. Like his acquaintance Teodoro Obiang in Equatorial Guinea, Déby increasingly looked like a nervous dragon sitting on a pile of treasure, waiting to be assaulted by coup makers. In 2003, Déby had pushed for alterations to the constitution that would allow him to become president for life, and he succeeded in abolishing term limits by 2005, a betrayal of Chad’s shaky democratic parties that had further isolated Déby politically. He had come to power by force years earlier, backed by Sudan’s secret police, and so it did not require a paranoid imagination to think that he might only go out by a similar method.

Sudan, to the east, was engulfed by violence in the province of Darfur, which bordered Chad. Marauding Arab militias loyal to President Omar Al-Bashir waged a scorched-earth campaign through Darfur’s villages and towns after 2003. At least 300,000 people died and about 2.5 million fled their homes. About 240,000 Sudanese civilians crossed the border into Chad and crowded into camps, where they were formally recognized by the United Nations as international refugees. At first, Déby tried to play a balancing role in the Darfur crisis, mediating between his former patron, President Bashir, and his newer patrons in Washington. By 2005, however, Déby perceived that the Darfur conflict might threaten his grip on power. Many of the non-Arab rebels battling Sudan’s government belonged to Déby’s own Zaghawa tribe. Bashir had been urging Déby to bring these rebels under control—to prove, in effect, that he was a friend of Sudan’s. Suppressing the rebels was beyond Déby’s means, but in any event, he needed the Zaghawa networks for his own security. In 2005, he aligned himself with Khalil Ibrahim, the powerful Islamist leader of a Darfur rebel faction. Once he did that, Déby made plain to Khartoum that he had changed sides, defaulting on his historical debts to President Bashir.

In reply, Sudan’s security services offered vengeful support to Mahamat Nouri, the head of a Chadian rebel group, the Front Uni Pour le Changement, or the “United Front for Change.” Déby picked up intelligence that a Nouri-led rebel invasion from Sudan’s territory, for the purpose of removing him from power, could come at any time.

Déby’s defenses to the east and around the capital were weak. His Ministry of Defense paid out about 70,000 salaries, but only about 20,000 of those “soldiers” possessed uniforms and occasionally turned up at their jobs, while only about 4,000 were armed, trained, and prepared for combat. Moreover, if Déby ever ran out of the cash he required to pay his tens of thousands of ghost military salaries, he would invite mutiny—this threat was a constant drain on his cash flow. Mercenary Algerian, Ukrainian, and Mexican pilots on rotating contracts flew the ramshackle planes and helicopters in the president’s tiny air force. The professional French-manned garrison and air force training mission at N’djamena’s international airport offered a much more convincing defensive deployment—but only if, in the heat of a crisis, the French government decided that it was in its interest to have its soldiers shoot at Déby’s enemies, a highly uncertain prospect.

Such was Déby’s predicament late in 2005: He feared an imminent rebel invasion aimed at overthrowing his regime, but he lacked adequate means to defend his palace. The absurdity, from his perspective, was that at the very moment this threat loomed, he was becoming richer than many of his neighboring dictators—or “authoritarian leaders,” as Washington sometimes preferred. Under the 1988 oil production contract, as world oil prices rose and ExxonMobil recouped the costs of its initial oil field investments faster than expected, the revenue flowing to Déby also soared; it now exceeded all previous projections. His government took in $300 million in 2005. Yet Déby could not spend his own money freely because of his good governance compact with the World Bank. He was banned from buying as many guns, desert vehicles, and attack aircraft as he felt he needed to defeat Bashir’s rebel proxies. Déby had gone along with the surrender of some of Chad’s sovereignty to the World Bank back in 2000 because it was necessary to get the country’s oil flowing. He was not going to surrender his office to a foreign invader to preserve the plausibility of some Westerner’s utopian ambition. “It was very hard to explain to Chadian opinion that we must buy weapons,” recalled Mahamat Hissène, a minister in Déby’s cabinet. “So we did not develop real power to respond to attacks coming from outside. . . . Unfortunately, in front of us, we don’t have politicians, we have technicians. The World Bank and I.M.F. sent us technicians who don’t care about the security of the country.”

Late in 2005, Déby at last announced that he would introduce amendments to Chadian law that would break his government’s bonds with the World Bank. By doing so he threatened to upend the nation-building compact and international financial rules that had prevailed, however raggedly, long enough to reward ExxonMobil for enduring high political risk in Chad. Just as the corporation reached breakeven and its local profits began to gush, Déby’s desperation for money and guns threatened to bring the whole project down.

Ron Royal, an engineer with many years at the corporation, managed ExxonMobil’s country office in N’djamena. In addition to his security team, a handful of expatriate and Chadian public affairs advisers—lobbyists and analysts—advised him. Royal reported in turn to the Africa division in Houston. Until the crisis that erupted that autumn, Royal’s job had been merely grinding and thankless. Idriss Déby paid little attention to the details of his country’s oil contracts or operations; one American embassy cable described him as “terribly ill-advised and grossly uninformed” about oil. As a result, Déby’s minions—cabinet ministers, labor union allies, governors in the south, and other assorted rent seekers—felt free to harass ExxonMobil at every turn, seeking money to skim or for other advantages. In addition to the chronic thefts from ExxonMobil facilities, Royal had to respond to wildcat strikes, court cases arising from labor disputes, public protests, complaints by environmentalists, delays and threatened fees imposed by immigration officials who issued visas, customs delays, and other challenges. Chad’s politicians and labor leaders might be poor and some of them might be unsophisticated, but they had been schooled in obduracy and provocation by French colonialists, which made them formidable. A typical matter in Ron Royal’s in-box was the announcement, during 2005, by the Chadian civil aviation authorities that because ExxonMobil had overlooked a certain legal provision, the corporation would have to immediately start paying the country’s struggling state-owned airline $150,000 a month in royalties for the right to avoid having ExxonMobil workers fly on the Chadian airline’s planes. Chadian officials also were deeply suspicious about the relatively low prices the country’s sour, heavy oil attracted on world markets. Some of their worries seemed irrational—it was as much in ExxonMobil’s interest as in Chad’s to receive the highest possible per-barrel price. Yet the wide gap—more than $20 per barrel—between the price of Chad’s oil and the prices for more attractive, benchmark blends of oil that were published in world newspapers raised suspicions with Déby and his aides. ExxonMobil flew some of Déby’s oil advisers to Fairfax, Virginia, and London to show them how ExxonMobil bought and sold oil on the world market, and how it negotiated to win the best possible prices for Chadian barrels from shipment to shipment. Even this show-and-tell had limited impact: Afterward, one of the Chadian delegates, Abdelkarim Abakar, remarked to an American diplomat that the “visit solidified the question of why Doba crude was priced so low when the price of oil in the international markets was priced at such a high level,” and he argued that if ExxonMobil “was truly willing to communicate openly” about the issue, “it would have organized this visit a long time ago.”

Ron Royal and his team met regularly with American diplomats in N’djamena, including Marc Wall, the ambassador, who had succeeded the part-time novelist Chris Goldthwait. Wall was a career diplomat, a thin, professional, silver-haired man with extensive experience in troubled countries. Normally, Royal did not ask the embassy to lobby on ExxonMobil’s behalf with Déby or his aides; ExxonMobil took care of its labor, security, and government lobbying hassles on its own. That changed during the first weeks of 2006. The crisis Ron Royal and ExxonMobil faced that winter was instigated from Washington. Its principal architect was the World Bank’s new leader: Paul Wolfowitz.

In his previous position as deputy secretary of defense, Wolfowitz had been an intellectual leader and a passionate defender of the Bush administration’s decision to invade Iraq and overthrow Saddam Hussein. In 2005, as the war descended into chaos, and as its costs in blood and treasure to the United States rose precipitously, Wolfowitz left the Pentagon. He arrived at the World Bank in a complex political and psychological position: He was deeply unpopular in many parts of the world, unrepentant about Iraq, and yet he seemed eager to demonstrate his commitment to poverty alleviation and liberal development goals. Presented in his first months on the job with the conundrum of Idriss Déby’s defiance of World Bank principles of good governance, Paul Wolfowitz decided to make an example of him.

When he reflected publicly on Africa, Wolfowitz grouped its countries into three broad categories: About a third of the continent’s nation-states seemed to be hopeless basket cases, including Sudan, Somalia, and Zimbabwe. About another third, endowed with oil and other natural resources, were doing better, but were struggling with the resource curse—Angola, Equatorial Guinea, and Chad were examples. Another third were becoming successful, registering positive economic growth rates for ten years or more—Botswana, for example, and also previously failed states such as Mozambique and Rwanda. Wolfowitz felt the World Bank had an opportunity to promote a more nuanced picture of Africa’s economy. The continent’s negative image “wasn’t helped by large rock concerts that talk about what a miserable, failing place it is,” he remarked. He did not blame Bono or U2 for this image problem; he blamed dictators like Zimbabwe’s Robert Mugabe. Chad’s ruler was nowhere near as bad as Zimbabwe’s, but no good would come from appeasing Déby on the matter of his arms purchases, Wolfowitz concluded.

Chad has a sovereign right to decide how to spend its oil money, Déby argued to Wolfowitz over the telephone on the night of January 5, 2006.

Their conflict had reached a climax. Wolfowitz was threatening to freeze the money ExxonMobil and its partners deposited in Chad’s Citigroup accounts in London—an action he could take by invoking the bank’s rights under its pipeline lending agreements. Even though the amount the bank had lent to Chad was relatively small—less than the annual oil revenue Déby now received—under the loan terms, the bank could seize Déby’s oil funds.

Wolfowitz told Déby that he accepted that Chad was sovereign. However, Chad’s sovereign government had entered into certain contractual commitments with the World Bank to spend oil revenue on the health, education, and welfare of Chad’s people. It was in the interests of Chad’s sovereign government, Wolfowitz argued, to show the world that it was an honorable party to the agreements it had made.

They talked through French translators that night for two hours. Neither of them budged. The next day, Wolfowitz announced that the World Bank would withhold new loans to Chad; a freeze on its bank account would follow if Déby still refused to compromise.

Wolfowitz tipped Déby into a rage. His aides told Ron Royal at ExxonMobil that if Exxon went along with the World Bank any longer, Chad might order the corporation to shut down all oil production.

Royal met with Ambassador Wall at the U.S. embassy. Closure of Chad’s fields “would be catastrophic,” he said, and would likely set off a chain of loan defaults. ExxonMobil wanted a cooling-off period and had asked the World Bank for time to negotiate a compromise, but the bank had responded with a letter to Irving, declining ExxonMobil’s request.

Royal revealed to Wall for the first time that ExxonMobil was on the verge of profitability in Chad, and that, therefore, the corporation “was now in an income tax-paying position.” Given rising world oil prices, ExxonMobil and its partners might soon hand over to Déby’s regime between $80 million and $200 million in initial tax payments—enough, perhaps, for Chad to pay off the World Bank altogether and extricate itself from its commitments to social investments.

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. 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, 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.

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.

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.

In 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.”

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.

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.”

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.

The 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. 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.

Unlike 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.”

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.

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.

On August 17, 2006, Ron Royal invited Ambassador Wall to a new office building ExxonMobil had opened in the capital. He noted that Déby had recently restored diplomatic relations with the People’s Republic of China and that Chinese oil executives were lurking around the capital. The ExxonMobil manager said he feared the American corporation’s presence in the country might be threatened now by Chinese competition. The Chevron tax dispute seemed a symptom of rising troubles and could have knock-on effects on ExxonMobil’s production and sale of Chadian oil. Déby’s regime had indicated, for example, that it might soon try to reopen the convention under which ExxonMobil operated.

Given the “highly tense environment,” Royal told Wall, ExxonMobil would seek a meeting between President Déby and Rex Tillerson.

Déby soon announced that he was throwing Chevron and PETRONAS out of Chad. “A revolution has begun,” Déby announced to a government-organized crowd of a thousand people in the capital. “We are only receiving the crumbs that are called royalties. . . . This is a flagrant injustice.”

This would be a limited sort of revolution, however, he explained. “One company has not failed in its obligations,” the president said. “I’m speaking of ExxonMobil, with whom we will continue to work.”

Two days later, a young United States senator from Illinois arrived on an American military charter at N’djamena’s airport. Barack Obama, in office less than two years, was on his way back to the United States from travel to Kenya, Somalia, and Chad’s eastern refugee camps. Obama had not been in national office when the World Bank’s experimental project in Chad was born. His interest in the country derived from his interest in the Darfur crisis. Déby’s ambassador in Washington had met with Obama before he traveled and had recommended to Déby that he make time to meet the senator personally when Obama passed through the capital. They scheduled a thirty-minute courtesy call at the airport.

Obama took his seat and thanked Déby for his cooperation with the United States on Darfur and counterterrorism.

Déby in turn thanked Obama for visiting Chad and for his interest in Darfur. The crisis had profoundly affected Chad, he said. Cross-border raids into his country from Sudan continued. The April 13 raid on his capital had been an effort by Sudan “to destabilize the country, bring in a regime favorable to Khartoum, and inflict harm on Sudanese refugees in Chad.”

They talked in some detail about negotiations under way to settle or at least stabilize the conflict in Darfur. Déby rarely let a meeting with an American official go by without emphasizing Chad’s needs and shopping lists. He told Obama that while their countries enjoyed cooperation on counterterrorism, “Chadians still required equipment, and had submitted requests in the past year to U.S. authorities.”

“If a request was submitted, then the Pentagon would be reviewing it,” Obama assured him.

Déby then raised the subject of his threats to throw out Chevron and his problems with the oil companies.

“I am trying to ensure that Chad benefits from oil production,” Déby told Obama. “The Chadian people cannot benefit from the country’s oil as long as Chevron and PETRONAS refuse to pay the taxes they owe. They claim they have a legal basis for not paying income taxes,” but the agreement they signed was not approved by the National Assembly and did not have the force of law.

By deciding to confront the oil companies, Déby continued, he was seeking only to reduce the “economic inequality” between the companies and Chad.

“I can’t speak for the United States or Chevron,” Obama replied. Still, he continued, “two principles need to be considered: that the Chadian people should benefit from the country’s natural resources, and that contracts need to be observed.”

Obama said that Chad “could benefit from foreign investment, but if the rules of the country’s business environment changed, foreign investors would be more hesitant to enter Chad’s economy.” He said he hoped the dispute could be resolved and that Chad “would develop a business environment where contracts were respected.”

Déby was accustomed to this sort of lobbying by now. No matter the party membership or political ideology of American visitors, when it came to oil, diplomats and politicians always seemed to emphasize their belief in the rule of law and the sanctity of contracts.

The two men spoke much longer than scheduled. After about ninety minutes they ended their meeting and went outside to hold a press conference, to speak mainly about Darfur. Afterward, Obama flew back to Washington. At the time, Déby’s advisers gave little thought to their president’s encounter with the junior senator from Illinois. “Nobody in Chad really understands the situation in the United States,” recalled Hissène. As for Obama, “Nobody was betting on him at the time.”

Déby flew to Paris to meet with Chevron’s chief executive, David O’Reilly. Their talks stalled, but Déby expressed an interest in meeting with one of Chevron’s international negotiating consultants, Andrew Young, the former U.S. ambassador to the United Nations. Young, on behalf of a consulting firm called GoodWorks International, flew into N’djamena. With his help, Chevron negotiated an agreement that would clarify its tax obligations and those of PETRONAS. As part of the deal, the oil companies agreed to make a onetime payment in 2006. The oil companies paid President Déby’s government a single lump sum of $281 million. A Chevron negotiator privately told the American embassy that the settlement was “not the worst, but not the best.” Chad’s oil would continue to flow; Chevron and ExxonMobil would continue to sell it.

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