Why sharing oil wealth is no simple matter

Friday February 20 2009

Libyan leader Muammar Gaddafi. His proposal faces stiff opposition from top Libyan officials, among them the Central Bank Governor, Mr Farhat Omer Ben Gdara, and Prime Minister Al-Baghdadi Ali al-Mahmoudi. Photo/FILE

Libyan leader Muammar Gaddafi. His proposal faces stiff opposition from top Libyan officials, among them the Central Bank Governor, Mr Farhat Omer Ben Gdara, and Prime Minister Al-Baghdadi Ali al-Mahmoudi. Photo/FILE 

By HENRY OWUOR

Oil and the wealth that comes with it is a source of conflict if not shared properly.

In Nigeria’s Delta region and Angola’s Cabinda enclave, local residents have demanded their own share of the profits from the ‘‘black gold’’ mined from their land.

The same can be said for Gabon, Equatorial Guinea and Chad.

But, even diamonds and timber have caused conflicts especially in Sierra Leone and in the Congo.

In Africa, one of the most comprehensive efforts at sharing a country’s natural resources was in the peace agreement signed between North and Southern Sudan in 2005 under which both regions were to share the proceeds from oil mined in the South, with the Government of Southern Sudan getting 48 per cent of all oil earnings with two per cent going to residents of the area where oil is mined.

In Chad, under a wealth-sharing deal, 70 per cent of oil revenue is to be set aside for development projects, but the bad news is that most of the money ends up buying arms, despite the fact that Chad is one of the poorest countries in the world, ranked 170th out of the 177 countries in the Human Development Index.

Even outside Africa, there have been attempts at sharing oil wealth. In Iraq, in 2007, an agreement was reached on sharing the oil wealth among the Sunnis and Shi’ites plus the Kurds in whose region most of the oil is found.

This is where Libya’s Muammar Gaddafi comes in. Under a plan the veteran leader outlined on the anniversary of his rise to power last year, Gaddafi said that he would hand out the country’s $30 billion earnings from oil directly to the masses.

To effect this plan, Colonel Gaddafi has decided to dismantle all ministries except Foreign Affairs, Defence, Internal Security and Justice.

Under the plan, each of Libya’s five million citizens would get his or her own share of the more than $30 billion earned from oil sales per year.

Colonel Gaddafi’s intentions were made clear in a speech on September 1, 2008, the 39th anniversary of his rise to power.

He said: ‘‘Libyans should be ready to receive a share of oil revenues starting from the beginning of next year. You always accuse the Popular Committees (ministries) of corruption and poor management. These complaints will never end so everyone should have their share of oil revenues in their pocket.’’

But, come January 1, 2009, this was not to be after Gaddafi faced opposition from top Libyan officials, among them the Central Bank Governor, Mr Farhat Omer Ben Gdara, and Prime Minister Al-Baghdadi Ali al-Mahmoudi, who saw the plan as risky.

Colonel Gaddafi himself warned last year that he foresaw chaos in the initial stages of the oil plan “until society learns to take care of its own affairs rather than rely on corrupt administrations.’’
Gaddafi says that failed ministries cost Libya $37 billion a year.

Libya’s oil wealth, or the amount of the precious liquid under its sands, is estimated at 40 billion barrels.

This is the largest amount of oil any country has in Africa. Libya also has massive gas reserves.

Compare Libya’s case to Nigeria. In the past, an anti-graft chief Nuhu Ribadu estimated that corruption and mismanagement ate up about 40 per cent of Nigeria’s $20 billion annual oil income.

Gaddafi, who took over early this month as the chairman of the African Union, no longer wants to exhort his people to greatness from banners, billboards or murals.

The veteran leader who took power in a coup way back in 1969, is for a sweeping reform of Libya’s bureaucracy.

Prior to his latest proposal, Gaddafi had created an oil Investment Authority with capital worth more than $40 billion. The firm manages government investment in agriculture, real estate, infrastructure and shares and bonds.

As Gaddafi’s proposal takes shape, Libyans began meeting this week to discuss ways of sharing the billions.

Among questions raised was how the money would be banked and how to import goods.

But, sure that he was on the right path, Col Gaddafi said: “Libyans, this is your historic opportunity to take over your oil wealth, power and full freedom. Why do you want the chance to slip away from you?’’

This year marks Gaddafi’s 40th anniversary in power. It is a year in which he has declared that he wants to create the “United States of Africa’’.

At a summit set for July this year, Gaddafi may finally see his dream come true should the 53-member AU agree to create a special authority that would run this continent with its own president and vice-president and ministers covering portfolios such as health, education, foreign affairs and even defence.

The question is how far Gaddafi will go in opening the gates of his state to other Africans as he battles entrenched corruption by sweeping away government structure.

As he battles to dismantle government bureaucracy, Gaddafi says that ‘‘decent people do not take up government positions because of a widespread belief that all officials are corrupt.’’

At 66 years, Gaddafi has been a pioneering figure. He is the only African leader who does not hold any post and rules through a jamahiriya or the masses who have formed committees that advise the government.

Gaddafi has in the past said that “Libya must destroy in order to rebuild.’’

Way back in 1986, Ronald Reagan tried to kill Gaddafi in an air raid describing him as the “mad dog of the Middle East.”

At that time, Gaddafi also threw a few punches and was blamed for a number of attacks, among them a bombing at a Berlin nightclub that killed American soldiers.

Two years later, there was the bombing of a Pan-Am plane over Lockerbie, Scotland, for which Gaddafi was blamed.

Now, having paid each of the 270 families $10 million after it admitted responsibility for the bombing Libya has no sanctions and has restored diplomatic ties with Western nations among them the US.