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When US Indulges In Blackmail

by Open-Publishing - Monday 13 June 2005
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When US Indulges In Blackmail
Tony Nwosu
June 09, 2005

A few days ago, the Joint Development Authority (JDA) released the winners of latest licensing round of oil blocs in the Joint Development (Economic) Zone (JDZ) owned by Nigeria and Sao Tome and Principe, on behalf of the two countries. The JDA administers the economic zone in the Gulf of Guinea, said to be very rich in oil deposits. At the end of the exercise, many Nigerian companies were successful in the various consortia that won the blocs. The boldness of Nigeria companies to venture into the more challenging deep-sea exploration and drilling appears to suggest that Nigeria may have learnt a great lesson from its mistakes with its on-shore oil.

The development seems to visibly excite players in the oil industry in Nigeria, which had been battling the mainly United States- owned oil majors to respect its drive for local content and give significant roles to local professionals in the organisations. Expectedly, the move did not go down well with oil and political interests in the United States. Fazed by their failure to undermine bilateral cooperation between Nigeria and Sao Tome and Principe, the media establishment has resorted to a campaign of calumny.

Barely 24 hours after the endorsement of the winners in Abuja by the Presidents of the two countries, the Washington Post published an editorial damning the whole exercise. Relying on an alleged story by an unnamed Nigerian media, the report insinuated that the "allocations of exploration rights there (JDZ) smells bad". It held further that a "firm run by a politically-connected Nigeria seems favoured to win an auction over a U.S company that bid substantially more". To substantially underscore the motive of the editorial, it alleged that the first payment for the auctions were paid into a Nigerian bank instead of an international bank. In the estimation of the paper, payment into a Nigerian bank "violated the anti-corruption best practice". Just for these reasons, the newspaper predictably cast serious doubts about the outcome of on-going efforts to reduce corruption in Nigeria.

I doubt if any body expected anything different from the US. Its imperialist reflexes remain very sharp, especially in the wake of the serious transitions in the world, which are challenging the US’s sense of entitlement to the best resources in the world, especially cheap oil. Indeed, it is not surprising that the seemingly influential Washington Post responded with the full weight of its arrogance. It would seem that the newspaper had prepared scripts, waiting for the outcome of the auction. The idea, as is clear to all, is to discredit the process as soon as it emerged that the US oil majors did not win 100 percent as in the past.

From the start, the United States has been rankled by Nigeria’s unmistaken determination not to compromise or trifle with its interest in the Gulf of Guinea, which naturally is its sphere of influence. The designs of the United States in the area, conveyed aptly in the controversial decision to station warships there, is what makes the U.S media and government describe it as "one of the most ungoverned territories in the world". This arrogant and condescending assessment is not supported by facts, but it serves a purpose. It makes the case of the US government, which at the end of the year, is a hunt for cheap oil. This is a great fallacy, which does not stand in the face of truth.

It is not difficult to recall that in 1982, Nigeria had established very close ministers, top relations with the island. Negotiations for bilateral relations were shortly concluded. It was in the process of the interaction that a plane carrying government officials and bureaucrats plunged into the Atlantic Ocean, killing all.

Nearly two years ago, Nigeria single-handedly returned the President of Sao Tome and Principe to power after he was overthrown by the military. It is clear from the above that a territory so close to the Nigerian coast, on a sea, which is a forward exit of the Nigerian Navy to the world, cannot be an ungoverned territory. It is only so to the United States because it has no respect for the sovereignty of other countries, regardless of their size and influence. That aside, there is nothing in "geology or engineering" that says only US companies are the sole custodians of competence in the oil or any industry. Various Nigerian professionals and corporations in the petroleum, power and telecommunication sectors are showing that given the right political environment; they could do better than any multi-national company.

In spite of these, American corporations sees the contrary by the suggestion that the companies that won the bids, were only successful on account of their political connection to the Presidential Villa. This argument is as puerile as it is ignorant. In the oil industry, it is difficult to cut corners. How does a company that lacks the relevant competence and technology drill in the deep water which sometimes could be as deep as 5000 metres? It is practically impossible. It is possible to reward cronies by giving them oil lifting, importation and other contracts in the oil sector. It is difficult not to acknowledge that in the past these were the major sources for which Nigeria had become notorious. But with the extensive divestment of government interest in the downstream sector of the oil industry, most of the operations are driven by market forces. Again, it is difficult to allocate oil blocs to an individual or company that has no competence in the technology-dependent oil industry. As the JDA recommended, all the companies have competence, or have access to whatever may be lacking in their repertoire right now.

Secondly, in the records of the JDA, all the blocs were awarded not to individual companies but to consortia. This means that even the local companies are just part of a consortia, which have very reputable and internationally acknowledged operators. To say that local companies have got the blocs is as ignorant as it is self-serving. As a leading newspaper in the United States, one expects the Washington Post to know better.

Beyond this, there is a point that must be clearly made. There is no law in Nigeria that precludes companies owned by politicians from applying for contracts. Even if we say that these companies were rewarded for political reasons, which is not the case, it is hard to understand what is wrong with that. We know that even in the United States, access to contracts and concessions are not open to anybody. A case that lends itself is the procurement contracts in Iraq. Nearly all the companies that won the contracts are known to be owned, promoted or championed by persons with close links to the Bush Administration. Blinded by the greed for Africa’s cheap oil, US media will not see anything wrong with that. But in Nigeria that is considered a breach of transparency or corruption. For a moment, let us also ask: will any US government award a contract to a Nigerian company, even if it is acknowledged as more competent than its competitor owned by citizens of the United States? It is not possible. The United States media and political establishment should be circumspect in talking about corruption in Nigeria and elsewhere. If the practices of its companies in Nigeria are any guide, then the US has no lesson to teach Nigerians about ethics. It has long been established that Halliburton and others give bribes to government officials to win contracts or undervalue its taxes.

The latest knock is a typical standard western attitude to Nigeria but it has been rendered ineffective by current realities. We understand the desperation of the United States to expand its source of oil, in the face of the volatile situation in the Arab world. This is what makes the Gulf of Guinea, strategic in the calculation of the United States. But Nigerians are wiser now. The era when the oil majors, with headquarters in the United States, threw their weight around government offices in Nigeria and got cheap oil concessions are over. Nigerian entrepreneurs are rising to their feet, and they will give everybody a tough competition in future. No blackmail can roll back that momentum. If the United States still wants to be a player here, it has to adjust to the changing order. If its media does not see what is coming and advise a new attitude in its government and corporations, then it will be tragic.

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