"Sustainable Development" is a worn out cliché - but not where it
matters the most: in developing countries. There,
unconstrained "development" has led to inter-ethnic strife,
environmental doom, and economic mayhem. In the post Cold War era,
central governments have lost clout and authority to their
provincial and regional counterparts, whether peacefully (devolution
in many European and Latin American countries) - or less so (in
Africa, for instance). As power shifts to municipalities and
regional administrations, they begin to examine development projects
more closely, prioritize them, and properly assess their opportunity
costs. The multinationals, which hitherto enjoyed a free hand in
large swathes of the third world, are unhappy.

The outcome of this tectonic shift is a series of unrequited
conflicts from Indonesia to Morocco. The former is now a federation
of 32 provinces, each with its own (often contradictory) laws,
taxes, and licenses. They tend to ignore promises made by the
central government - and the central government tends to live and
let live. Some multinationals are in denial. They confront the local
authorities and the authorities, in turn, legislate to prevent them
from doing business (as in the case of Cemex, the Mexican cement
company, described in "The Economist"). Others adapt, collaborate
with the locals, establish foundations and endowments, invest in
local infrastructure and in preserving the environment. Most
crucially, bribes that once went exclusively to Jakarta-based
officials, are now split with local politicians.

But sometimes the consequences are more serious than the
reallocation of backhanders. When a corrupt central government
colludes with multinationals against the indigenous population of an
exploited region - all hell breaks loose.

Consider Nigeria and Morocco.

A. Nigeria

Nigeria is an explosive cocktail of more than 250 nations and
languages with different (and often hostile) histories, cultures,
enmities, and alliances. It is decrepit. Its people are destitute
and unemployed, the crime rate is ghastly, the army and police are
murderous (as are numerous civilian "vigilante" groups), the
authorities powerless, corruption rampant, famines frequent. Most of
its oil (its only important export) is produced in the Niger Delta,
home to the Ogoni and Ijaw ethnic minorities. The Ijaw are also
actively suppressed (and massacred) in Bayelsa state.

When the Ogoni protested against the environmental ruination wrought
by oil drilling - nine of them were hanged in 1995. But this
brutality did little to quell their complaints, including the fact
that almost none of the $7-10 billion in annual oil proceeds was re- invested in the region's economy. This largely economic conflict
(brewing since 1993) has now, inevitably, become inter-ethnic and
inter-religious. It is now an integral part of the national politics
of a Nigeria fracturing along ethnic and religious (Christian vs.
fundamentalist Islamist) fault lines.

Multinational oil firms in Nigeria have a strong interest to
maintain a functioning political center, with law, order, and a
respected, multi-ethnic police force. Yet, in their efforts to
stabilize Nigeria, they shot themselves in both feet, repeatedly.

All previous regimes in Nigeria - civilian and military - enjoyed
the tacit support (diplomatic and financial) of the big oil
multinationals, among them Agip, Mobil, Chevron, Royal Dutch/Shell,
and Elf Aquitaine (now Total-FinaElf). The oil companies maintain
their own armies ("security") - including helicopters and heavy
armor. They rarely openly intervene in local protests and conflicts.
But their pronounced silence in the face of numerous massacres,
unlawful detentions, murders, beatings, and other human rights
abuses by the very army and police with whom they often share their
equipment and manpower, forced Human Rights Watch to issue this
unusual statement: "Multinational oil companies are complicit in
abuses committed by the Nigerian military and police." Oil
multinationals are also a major source of corruption in Nigeria.

Moreover, many observers conclude that the multinationals' claims to
have bettered their ways by applying adequate environmental
protection (against frequent oil spills and dumping of industrial
waste), improving public health, observing human rights standards,
and developing better relations with affected communities - are
nothing but elaborate spin doctoring.

The creation of the dysfunctional "Niger Delta Development
Commission" by the government in 2000 only enhanced this perception.
Armed guards, employed by oil companies, continue to wound, or kill
young protesters. NGOs impotently complained to the World Bank about
the decision of its arm, the International Finance Corporation
(IFC), to establish the Niger Delta Contractor Revolving Credit
Facility in conjunction with Shell. The IFC did not bother to talk
to a single local community about a scheme, which is supposed to
provide Nigerian sub-contractors of Shell with credit intended to
relieve poverty. Shell, of course, is utterly distrusted by the
denizens of the Delta.

"Essential Action and Global Exchange" has issued a seminal report
titled "Oil for Nothing - Multinational Corporations, Environmental
Destruction, Death and Impunity in the Niger Delta" (January 2000).
They describe gas flaring, acid rain, pipeline leaks, health
problems, loss of biodiversity, loss of land and other resources,
malnourishment, prostitution, rape, and fatherless children. Oil
companies, says the report, refuse to compensate the locals, or
clean up, break their promises, lie to the Western media, finance
agents provocateurs to provoke protesters and break up peaceful
demonstrations.

But this may be going too far. American oil firms and Royal
Dutch/Shell have collaborated fully with NGO's since the public
outcry following the execution of Ken Saro-Wiwa, a prominent
Nigerian environmentalist and author in 1995 (though not so their
Italian and French counterparts). Activists in the Niger Delta often
resort to kidnapping, smashing oil installations, and even attacking
off-shore rigs. Security guards are a necessity, not a luxury.

Shell alone has poured $200 million into the local economy,
administered by its "development teams" in collaboration with
recipient communities. "The Economist" reports that less than a
third of the 408 projects have been a success. Micro-credit schemes
run by women did best. Some of the projects were the outcome of
extortion by kidnappers - others dreamt up in corporate headquarters
with little regard to local circumstances. But Shell is really
trying hard.

The Nigerian government has asked the Supreme Court in 2001 to rule
how should off-shore oil revenues be divided between the federal
authorities and the 36 states (only 6 of which, in the southeast,
produce oil). The 1999 constitution calls for 13% of all onshore oil
revenues to be allotted to the states. But it is mum about offshore
oil (the bulk of Nigeria's production). At the time, northern states
have threatened to withhold agricultural produce from the south
should the Supreme Court plump in favor of the oil producing states.
Justice, in this case, may well provoke the disintegration of
Nigeria.

B. Morocco

The ubiquitous Kofi Annan, Secretary General of the UN, decided, in
mid February 2002, the fate of oil exploration off the disputed
coast of Western Sahara. A US chemicals and oil exploration firm
(Kerr-McGee), in conjunction with the French Total-FinaElf, have
signed much derided reconnaissance agreements, pertaining to the
disputed region, with Morocco in October 2001.

Morocco has occupied West Sahara since 1975. It has moved hundreds
of thousands of troops and civilians to the area in an effort to
dilute the remaining autochthonous population. A fortified wall was
constructed along the entire border and it was mined. Morocco
persistently obstructs the implementation of a referendum about
independence it agreed to with the Polisario in 1991. The original
inhabitants of this region, the Sahrawis, have set up a government
in exile in a tent city in Algeria. The Polisario, the Sahrawis
freedom movement, is weakened by decades of warfare and diplomatic
failure. The Sahrawi self-styled "president" wrote to UN envoy,
James Baker III, and to President Bush, to warn them of the
consequences of this "provocation". The Sahrawis also demanded from
the EU to cancel the "illicit and illegal" contract between Total- FinaElf and Morocco.

The reconnaissance agreements are part of a concerted Moroccan
policy to relieve the country of its wrenching dependence on oil
imports. Morocco's annual oil bill is close to $1 billion. Late King
Mohammed VI himself was behind this strategic move. In August 2001,
on his birthday, he announced a major discovery (since discredited)
in Talsint, 100 km. (60 miles) from the Algerian border (he called
it "God's gift to Morocco"). More than 10 exploration licenses have
been granted in 2001 alone - 25% of the total. The law has been
modified to allow for a 10-year tax break and to limit the
government's stake in new oil ventures to 25%.

But major finds are the exception in an otherwise disappointing
quest which dates back to 1920. Spain and Morocco both claim the
waters opposite Morocco's coast. The Moroccan government exchanged
verbal blows with its Spanish counterpart after it granted
prospecting licenses to a Spanish firm opposite the Moroccan coast.

As opposed to Morocco, Western Sahara is estimated to contain what
the US Geological Survey of World Energy calls substantial gas and
oil fields. "Upstream" reports that previous attempts to find oil,
in the 1960's, in collaboration with Franco's Spanish government,
floundered. Gulf Oil, WB Grace, Texaco, and Standard Oil withdrew as
political tensions increased. Other, lesser, American firms
developed tiny fields there. Later, in the late 70's both Shell and
British Petroleum abandoned exploration, having reached the
conclusion that extraction is justified only if oil prices climb to
$40 a barrel.

The Sahrawis quote a UN resolution (A/res/46/64 dated December 11,
1991) which says that "the exploitation and plundering of colonial
and non-self-governing territories by foreign economic interests, in
violation of the relevant resolutions of the United Nations is a
grave threat to the integrity and prosperity of those Territories."

Thus, once again, oil companies find themselves supporting an
oppressive and brutal (but ostensibly "stable") regime against local
communities with political and ethnic grievances. It seems to be a
pattern. Oil companies cosied up to homicidal dictators in Burma,
East Timor, Iran, Iraq and Nigeria, to mention but a few. As most
Sahrawis are now in refugee camps in Algeria, they are unlikely to
benefit from any potential find. Future oil revenues are likely to
buttress Moroccan rule and enrich members of the Moroccan elite. The
(undisputedly Moroccan) Talsint concession is co-owned, according to
the BBC, by relatives of the King and the chief of police.

The politically incorrect Operations Manager of Lone Star, the joint
American-Moroccan Talsint exploration company, was quoted by the BBC
as wondering (about the internally displaced people of
Talsint): "Why should the people of Talsint get more money in their
pockets? It's just by chance they're living on top of what appears
to be valuable oil and gas reserves."

Such sentiments go a long way towards explaining why oil firms are
so hated and why they so often contribute to instability, abuses,
and poverty, despite their best interests. Perhaps they better
divert the millions they throw at local communities - to educating
their staff. Sometimes, development is best begun at home.