Tuesday 17 June 2003

Scramble for Africa

Fear of corruption and chaos in oil rush

Washington's determination to find an alternative energy source to the Middle East is leading to a new oil rush in sub-Saharan Africa which threatens to launch a fresh cycle of conflict, corruption and environmental degradation in the region, campaigners warn today.

The new scramble for Africa risks bringing more misery to the continent's impoverished citizens as western oil companies pour billions of dollars in secret payments into government coffers throughout the continent. Much of the money ends up in the hands of ruling elites or is squandered on grandiose projects and the military.

Tony Blair will today urge the oil industry to be more transparent in its dealings with Africa. Openness and accountability are essentials for stability and prosperity in the developing world, he will tell oil company executives and oil exporting countries at a meeting in Lancaster House in central London.

African countries own 8% of world oil reserves. An estimated $200bn (£125bn) in revenues will flow into African government treasuries over the next 10 years as new oilfields open up throughout the Gulf of Guinea. Oil will bring the largest influx of revenue in the continent's history, and more than 10 times the amount western donors give each year in aid.

But Ian Gary, author of a new report, Bottom of the Barrel, from the US aid agency Catholic Relief Services (CRS), warned yesterday: "Petro-dollars have not helped developing countries to reduce poverty; in many cases they have actually exacerbated it. In Nigeria, for example, which has received over $300bn in oil revenues over the last 25 years, per capita income is less than a $1 a day."

Despite the prime minister's backing for the extractive industries transparency initiative (EITI), aid agencies and MEPs say Britain has let oil companies off the hook by watering down plans to make publication of payments to third world governments mandatory.

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