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Black Gold Rush: Nigeria's War & Peace

Sunday, November 1, 2009

 Nigeria is an excellent case study in the sharp contrasts of a globalizing world. A country still strongly defined by traditional cultural identities, it is also classified as an emerging market that is rapidly approaching middle income status. The capital city of Lagos is home to glitzy skyscrapers and well-armed street gangs.

The 8th most populous country in the world, Nigeria is a country composed of more than 250 ethnic groups, with over 500 languages spoken, and an almost even split between Muslim (Sunni), Christian (Catholic & Protestant), and indigenous religious practice; another example of the vibrant brand of multicultural pluralism that defines the face of democracy in the developing world. 

Nigeria is the largest U.S. trading partner in sub-Saharan Africa and possesses a diversified economy with strong sectors in energy, minerals, financial services, and space-based communications. The U.S. is the largest foreign investor in the country. In 2006, Nigeria became the first African country to pay off its foreign debt to the Paris Club, signaling its continued rise as a potential regional power.

Nigeria is a member of OPEC and is the world’s 8th largest exporter of oil and holds the 10th largest proven reserves. The country’s oil industry, situated in the vast Niger River Delta, is a major predictor of global oil prices. The recent announcement of easing violence in the country brought international oil trading back under $80/ barrel.

The Niger Delta uprising has been a poignant example of open-source insurgency. The Movement for the Emancipation of the Niger Delta (MEND) recently declared an “indefinite ceasefire” to encourage the federal government to offer serious peace talks. The organization is described by the BBC as a group of “shadowy oil rebels”: disenfranchised peasants living the swamps and jungles of the delta region, cut out of the oil bonanza, sparked an uprising with the help of private militias and gangsters. MEND pushed its agenda by sabotaging oil refineries, bombing pipelines, kidnapping foreign workers, and bunkering stolen oil that was sold on the black market.

But a new conflict transformation initiative, led by Nigerian President Umaru Yar’Adua , is rapidly restoring peace to the region. Since August, over 15,000 rebels have sought a government-sponsored amnesty, trading in their guns and ammo for a package of benefits; a daily food allowance, monthly stipend, retraining, social integration classes, and psychiatric counseling. Former rebels are comfortably housed in “transition centers” that are stocked with high-definition televisions that broadcast international soccer matches.

MEND commanders, (including rebel leader Henry Okah) departed the organization to join the amnesty program, weakening the leverage of the organization.  Last month the organization chartered an independent negotiating team (consisting of retired military officials and Nobel Prize winning writer Wole Soyinka) to broker talks with the federal government. The National Assembly is crafting legislation that will redistribute percentages of oil revenue directly to villages in the Delta.

Ironically, the  Nigerian government is funding peace with the same mechanism that triggered war: oil revenues. The country is preparing to deregulate the downstream sector of the domestic petroleum industry, a move that some experts suspect is designed to pay for the continued provision of aid to former rebels.

The U.S. already imports more oil from West Africa than it does from the Middle East. Preserving security in the region is a growing concern for U.S. policymakers. China is competing heavily in the region for access to oil. The Nigerian government recently announced that China was doubling its foreign investment in the country from $3 to $6 bn. Human Rights activists have complained that China’s laissez faire investment (see: Beijing Consensus) in Nigeria has encouraged rights abuses in the country.  

Although the two countries have a recent history of military cooperation, it should be remembered that the U.S. has also offered military aid to the country. Nigeria is also an active participant in U.S. programs like PEPFAR and the African Growth and Opportunity Act.  The ramifications of Sino-U.S. competition in the Niger Delta has economic consequences for Western multinational corporations (MNCs). Royal Dutch Shell, British Petroleum, Chevron, and Exxon Mobil have seen their production in the Delta severely affected by the conflict. Highly publicized corporate social responsibility programs, engineered in response to human rights advocates, represent significant investments of capital.

MNCs will be highly reluctant to yield their hard-fought resources to the Chinese government. Even without MEND a quiet, geopolitical “oil war” will continue as Nigeria profits from Sino-U.S. competition.

 

 

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