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Fighting for Petrodollars: Authorities Beyond the State

October 21, 2012

With new countries in Africa discovering oil fields, the jury is still out to decide how oil can become a blessing for these countries. For many countries in fact finding oil was an economic curse rather than a blessing: it implies little job creation and so leaves people unemployed, it makes the economy volatile because of oscillation in the commodity prices. It offers furthermore room for economic rent: one gets money without producing anything. As a result, governments are not responsive to the local population and they do not reinvest the oil money into the local economy. The debate about oil curse frames the allocation of oil and oil money as the result of negotiation between greedy foreign oil companies and corrupt national governments. The loser in the game is the citizen of the state who does not get any value for the resources in the country. One possible remedy, as advocated by Joseph Stiglitzt, is to negotiate (or re-negotiate) contracts between oil companies and host countries in a way that forces oil companies to pay more so that a higher share of oil money stay in the country. Similarly, more transparent contracts should bound the oil company to pay more taxes when oil prices soar so that the windfall does not exclusively to the country. This solution is based on a number of assumptions:

i) there is an oil company on one side and the host government on the other side

ii) there is a central government who negotiates on behalf of citizens. Citizens do not fight directly to get a slice of the oil money.

iii) there is one State and there are Citizens.

A look at the oil economy in the Niger Delta in Nigeria shows that these assumptions have little bearing with reality.

Oil Companies vs. the State? To assume that government officials and oil companies officials will sit at different sides of the table to find a common ground go against the reality of many countries. In fact, in many cases government officials are or were oil companies officials. The cases of Shell in Nigeria is paradigmatic: as revealed by Wikileaks in 2010 oil company giant Shell had seconded employees to every relevant department in the government. Rather than overlapping between government and oil companies one could more appropriately talk of osmosis between multinational executives and Nigerian state. If oil multinationals are so embedded into the fabric of the national state is difficult to talk about two conflicting interests: the one of the state and the one of oil multinationals. One should rather talk of one set of interests and this make the renegotiations of contracts very unlikely to say the least.

Fighting To Get a Slice. The renegotiation of oil contract assumes to a certain extent that the central state is the only national actor trying to wrestle more control over oil. In many countries however the central state is not the only national actor who asserts its claims to petrodollars. Other, sometimes competing, authorities organize to get their slice and challenge a central government which is perceived to be corrupted by oil. As geographer Michael Watts explains, dispersed centers of power mobilize and enter into action to gain access to i) company rents and compensation revenues and ii) federal petro-revenues by capturing rents through the creation of new regional and local state institutions.[1] These groups therefore see both oil companies and the state as gatekeepers  of the oil money safe box. In asserting their claims to benefit from oil, they create centers of political power which are dispersed. In these dispersed centers the function of government defined as “a more or less calculated and rational set of ways of shaping conduct and securing rule[2] is exercised by authorities other than the state. Watts’ thesis is that there are different spaces in which the function of governing materializes. And this authorities are a function of the fight of national actors, other than the central government, to access  oil. Examples of such spaces are the chieftainship and the community, to which next section turns.

Spaces of Governing: Chieftainship and Community. As Watts illustrates, groups of youth began to spring up in the 1990s in the Niger Delta to challenge the local traditional royal authority as established by the colonial indirect rule. Their aim was to be more assertive and effective in benefiting from the oil present in their territories. Their relation with both oil companies and local government authorities – gatekeepers of the oil safe box – was on the face contradictory. These groups  were co-opted by oil companies to prevent the occupation and closure of oil flows;  at the same time they colluded with the traditional communitarian authorities to gain compensation from the oil companies. In other words groups of youth were the source of and the remedy to violent sabotage of the local oil networks (p. 64). They shaped conduct and secured rule in their territories in order to get a slice of the oil bonanza. Citizens, to use Stiglitzt’s lexicon, mobilized outside and in opposition to the state to access oil.

Another space where masses mobilized and governing was asserted by other authorities is the community as composed by ethnic subjects. Ethnic communities in the oil producing territories of the Niger Delta have in different ways fought for an access to federal petro-revenues. The source of petro rents was for the them the central federal government. They lobbied for the creation of distinct and separate entities defined by an (imagined more than real) homogenous ethnic composition. In turn, every community claimed the creation of an ethnic state to which the federal government would redistribute its petro-revenues. Political national subjects fought to get a slice of the oil pie.

All of these governable spaces – the chieftainship, the ethnic minority – are simultaneous, they exist at the same time and they work sometimes against each other [3]. One cannot therefore talk of one state negotiating on behalf of its citizens to ensure that they get the full value of the resources because there are other centers of authority which challenge, overlap and supersede the state in these negotiations.

And this leads us to the next assumption: the existence of a State and of Citizens. The next post will spell out why talking of a State negotiating on behalf of its Citizens does not mirror the reality of many states.


[1] Resource Curse? Governmentality, Oil and Power in the Niger Delta p. 54

[2] The Sinister Political Life of Community p. 107

[3] Resource Curse? P. 54

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