African Affairs Advance Access originally published online on December 5, 2005
African Affairs 2006 105(418):1-25; doi:10.1093/afraf/adi090
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Can policy intervention beat the resource curse? Evidence from the Chad–Cameroon pipeline project
Scott Pegg (smpegg{at}iupui.edu) is an assistant professor in the Department of Political Science at Indiana University/Purdue University Indianapolis, Indianapolis, IN, USA.
Countries that are heavily dependent on natural resource exports have performed poorly on various measures of economic, social, and political development — a phenomenon usually described as ‘the resource curse’. In spite of this, many Western policymakers believe that natural resources will ultimately provide Africa’s road to development. The World Bank argues that the resource curse is not inevitable and that good governance and sound economic policies are intervening variables that can mitigate its ill effects. This article critically evaluates the Chad–Cameroon pipeline project in order to assess whether or not policy interventions can ameliorate the resource curse. The largest single private sector investment in sub-Saharan Africa, the Chad–Cameroon pipeline project has also featured unprecedented World Bank policy interventions designed to address the complex environmental, social, and budgetary implications of large-scale oil production. The pipeline project is the World Bank’s most significant attempt yet to modify the intervening variable of government policy and transform the equation from one of resource extraction + bad governance 
poverty exacerbation to one of resource extraction + good governance poverty reduction. This article finds that these policy interventions are not working well and that the Chad–Cameroon pipeline project is unlikely to lead to poverty alleviation.
An earlier version of this article was presented at the 46th annual meeting of the International Studies Association, Honolulu, March 2005.
1. Jeffrey D. Sachs and Andrew M. Warner, Natural Resource Abundance and Economic Growth. Development Discussion Paper No. 517 (Harvard Institute for International Development, Cambridge, MA, 1995) is a seminal economic contribution here. Michael L. Ross, ‘The political economy of the resource curse’, World Politics 51, 2 (1999), pp. 297–322, is an excellent review of the literature on the resource curse.
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3. Jfdrzej George Frynas, ‘Corporate and state responses to anti-oil protests in the Niger Delta’, African Affairs 100, 398 (2001), pp. 27–54; Bronwen Manby, The Price of Oil: Corporate responsibility and human rights violations in Nigeria’s oil-producing communities (Human Rights Watch, New York, NY, 1999); Scott Pegg, ‘The cost of doing business: transnational corporations and violence in Nigeria’, Security Dialogue 30, 4 (1999), pp. 473–84.
4. Georgette Gagnon and John Ryle, Report of an Investigation into Oil Development, Conflict and Displacement in Western Upper Nile, Sudan (Canadian Auto Workers Union, Steelworkers Humanity Fund, The Simons Foundation, United Church of Canada, Division of World Outreach and World Vision Canada, Ottawa, Canada, 2001).
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7. Jeffrey D. Sachs and Andrew M. Warner, ‘The curse of natural resources’, European Economic Review 45, 4–6 (2001), p. 828.
8. Scott Pegg, Poverty Reduction or Poverty Exacerbation? World Bank Support for Extractive Industries in Africa (Oxfam America, Friends of the Earth-US, Environmental Defense, Catholic Relief Services, Bank Information Center, Washington, DC, 2003).
9. Frynas, Wood, and Soares de Oliveira, ‘Business and politics in São Tomé e Principe’, pp. 65–6. See also Ross, ‘The political economy of the resource curse’, p. 306; Carlos Leite and Jens Weidmann, Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth. IMF Working Paper WP/99/85 (International Monetary Fund, Washington, DC, 1999), pp. 8–9; Thorvaldur Gylfason, ‘Natural resources, education and economic development’, European Economic Review 45, 4–6 (2001), p. 850.
10. Sachs and Warner, ‘The curse of natural resources’, p. 835.
11. Sachs and Warner, Natural Resource Abundance and Economic Growth, pp. 8 and 15.
12. Gylfason, ‘Natural resources, education and economic development’, pp. 848–9.
13. Ross, ‘The political economy of the resource curse’, p. 312.
14. Gylfason, ‘Natural resources, education and economic development’, p. 850.
15. Leite and Weidmann, Does Mother Nature Corrupt?, pp. 23 and 29.
16. Xavier Sala-i-Martin and Arvind Subramanian, Addressing the Natural Resource Curse: An illustration from Nigeria. Working Paper WP/03/139 (International Monetary Fund, Washington, DC, 2003), p. 9.
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20. Paul Collier, Economic Causes of Civil Conflict and Their Implications for Policy (The World Bank, Washington, DC, 2000), p. 6.
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23. Ross, ‘Does oil hinder democracy?’, pp. 343–4.
24. International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), Management Report and Recommendation in Response to the Inspection Panel Investigation Report No. 23999. Chad: Chad-Cameroon Petroleum Development and Pipeline Project (Loan No. 4558-CD); Petroleum Sector Management Capacity-Building Project (Credit No. 3373-CD); and Management of the Petroleum Economy Project (Credit No. 3316-CD). Report No. 24667 (IBRD and IDA, Washington, DC, 2002), p. 2.
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26. Transparency International, Corruption Perceptions Index 2004 (Transparency International, Berlin, 2004) (http://www.transparency.org/cpi/2004/cpi2004.en.html#cpi2004, January 10, 2005).
27. Republic of Chad, National Poverty Reduction Strategy Paper (Ministry of Planning, Development and Cooperation, N’djamena, Chad, 2003) (http://poverty.worldbank.org/files/Chad_PRSP.pdf, October 18, 2004), pp. 12–3; David M. Auty, ‘Will Chad’s actions be sufficient in preventing resource curse?’ (unpublished manuscript, 2003) (http://www.dundee. ac.uk/cepmlp/car/html/car7_article5.pdf, October 18, 2004), p. 5.
28. Paul Collier and Anke Hoeffler, ‘The challenge of reducing the global incidence of civil war’, Challenge paper presented to the Copenhagen Consensus (http://www.copenhangenconsensus. com/Files?filer/cc/Papers/Conflicts_230404.pdf, June 20, 2004), p. 17.
29. United States Department of State, Chad: Country reports on human rights practices – 2003 (US Department of State, Washington, DC, 2004).
30. Terry Lynn Karl, ‘The perils of the petro-state: reflections on the paradox of plenty’, Journal of International Affairs 53, 1 (1999), p. 34.
31. IBRD and IDA, Management Report and Recommendation, p. 3; The World Bank and International Finance Corporation (IFC), Chad/Cameroon Petroleum Development and Pipeline Project. Fourth Semi-Annual Report to the Executive Directors (January-June 2002). Document SecM2002-0402 (The World Bank and IFC, Washington, DC, 2002), p. 1.
32. Energy Information Administration, Country Analysis Brief: Chad and Cameroon (Energy Information Administration, Washington, DC, 2004); Association Tchadienne pour la Promotion et la Défense des Droits de l’Homme (Chad), Centre pour l’Environnement et le Développement (Cameroon) and Environmental Defense (USA), The Chad-Cameroon Oil and Pipeline Project: A call for accountability (Environmental Defense, Washington, DC, 2002), preface.
33. Jane L. Guyer, ‘Briefing: the Chad-Cameroon petroleum and pipeline development project’, African Affairs 101, 402 (2002), p. 112.
34. Association Tchadienne pour la Promotion et la Défense des Droits de l’Homme et al., The Chad-Cameroon Oil and Pipeline Project, p. 5.
35. Donald R. Norland, ‘Innovations of the Chad/Cameroon pipeline project: thinking outside the box’, Mediterranean Quarterly 14, 2 (2003), p. 47.
36. Esso Chad, Chad/Cameroon development project. Project Update No. 18, Mid-Year 2005 (Esso Chad, N’djamena, 2005), p. 8; Esso Chad, Chad/Cameroon Development Project 3rd Quarter 2004. Report 16 (Esso Chad, N’djamena, 2004), pp. 7 and 52; Energy Information Administration, Country Analysis Brief; ‘Chad: testing times for Cameroon pipeline project’, Oxford Analytica, 26 January 2005.
37. Esso Chad, Chad/Cameroon Development Project 3rd Quarter 2003. Report 12 (Esso Chad, N’djamena, Chad, 2003), p. 7. Other dates taken from the construction component of the http://www.essochad.com Website. The World Bank’s original timeline for the project can be found in The World Bank and IFC, Project Appraisal Document on Proposed International Bank for Reconstruction and Development Loans in Amounts of US$ 39.5 Million to the Republic of Chad and US$ 53.4 Million to the Republic of Cameroon and on Proposed International Finance Corporation Loans in Amount of US$ 100 Million in A-Loans and up to US$ 300 Million in B-Loans to the Tchad Oil Transportation Company, S.A. and Cameroon Oil Transportation Company, S.A. for a Petroleum Development and Pipeline Project 2000. Report No. 19343 (The World Bank and IFC, Washington, DC, 2000), p. 55.
38. World Bank and IFC, Fourth Semi-Annual Report, p. 1. See also World Bank and IFC, Project Appraisal Document, pp. 23–8.
39. Esso Chad, Chad/Cameroon Development Project 3rd Quarter 2004, p. 53.
40. International Advisory Group, Report of Mission 8 to Chad October 10-26, 2004 (International Advisory Group, Montreal, 2004), pp. 14–6; Esso Chad, Chad/Cameroon Development Project 3rd Quarter 2004, p. 53; ‘Chad: testing times for Cameroon pipeline project’, Oxford Analytica, 26 January 2005.
41. International Monetary Fund (IMF), Sub-Saharan Africa Regional Economic Outlook (IMF, Washington, DC, 2004), pp. 42 and 53; ‘Chad: testing times for Cameroon pipeline project’, Oxford Analytica, 26 January 2005.
42. International Monetary Fund (IMF), Chad: 2003 Article IV Consultation; and Ex Post Assessment of Performance Under ESAF/PRFG Programs. IMF Country Report No. 04/111 (IMF, Washington, DC, 2004), p. 16.
43. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project (Loan No. 4558-CD); Petroleum Sector Management Capacity Building Project (Credit No. 3373-CD); and Management of the Petroleum Economy (Credit No. 3316-CD) (The Inspection Panel of the World Bank Group, Washington, DC, 2002); The Inspection Panel, Investigation Report: Cameroon: Petroleum development and pipeline project (Loan No. 7020-CM) and Petroleum Environment Capacity Enhancement (CAPECE) Project (Credit No. 3372-CM). Report No. 25734 (The Inspection Panel of the World Bank Group, Washington, DC, 2003).
44. Available at http://www.worldbank.org/afr/ccproj/project/fin_dis.htm.
45. International Advisory Group, Report of Mission to Cameroon and Chad July 19 to August 3, 2001 (International Advisory Group, Montreal, 2001), p. 3.
46. International Advisory Group, Report of Visit to Chad June 3 to 17, 2002 (International Advisory Group, Montreal, 2002), p. 18.
47. External Compliance Monitoring Group, Report of the External Compliance Monitoring Group Fourth Site Visit January 2002 (D’appolonia, Genoa, 2002), p. 46.
48. World Bank and IFC, Fourth Semi-Annual Report, p. 25; IBRD and IDA, Management Report and Recommendation, p. 8; Ian Gary and Terry Lynn Karl, Bottom of the Barrel: Africa’s oil boom and the poor (Catholic Relief Services, Baltimore, MD, 2003), p. 68.
49. IBRD and IDA, Management Report and Recommendation, p. 89.
50. This discussion draws from Gary and Karl, Bottom of the Barrel, pp. 69–70, and Environmental Defense, Catholic Relief Services and Bank Information Center, The Chad-Cameroon Pipeline: The case for the implementation of the EIR recommendations (Environmental Defense, Catholic Relief Services and Bank Information Center, Washington, DC, 2004).
51. Gary and Karl, Bottom of the Barrel, p. 69.
52. IMF, Chad: 2003 Article IV Consultation, pp. 14–5.
53. Gary and Karl, Bottom of the Barrel, p. 70.
54. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, pp. xx and 89–90.
55. IMF, Chad: 2003 Article IV Consultation, pp. 14–5.
56. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, p. 84.
57. The World Bank and International Finance Corporation (IFC), Chad/Cameroon Petroleum Development and Pipeline Project. Eighth Semi-Annual Report to the Executive Directors (January-June 2004) (The World Bank and IFC, Washington, DC, 2004), p. 6.
58. International Advisory Group, Report of Mission 8, p. 1; ‘Chad: testing times for Cameroon pipeline project’, Oxford Analytica, 26 January 2005.
59. IMF, Chad: 2003 Article IV Consultation, p. 4.
60. Guyer, ‘Briefing’, p. 112. See also J. Anyu Ndumbe, ‘The Chad-Cameroon oil pipeline—hope for poverty reduction?’, Mediterranean Quarterly 13, 4 (2002), p. 85.
61. IMF, Chad: 2003 Article IV Consultation, pp. 4, 7–8, and 20.
62. International Advisory Group, Report of Mission 8, pp. ii and 11.
63. International Advisory Group, Report of Mission 9 to Chad and Cameroon May 15 to June 6, 2005 (International Advisory Group, Montreal, 2005), p. 12.
64. IBRD and IDA, Management Report and Recommendation, p. 10.
65. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, pp. xx and 13–4.
66. External Compliance Monitoring Group, Report of the External Compliance Monitoring Group – First Site Visit to Chad and Cameroon, February 23 – March 3, 2001 (D’appolonia, Genoa, 2001), pp. 9, 13, 15, 16, and 22.
67. International Advisory Group, Report of Mission 9, p. 5.
68. Environmental Compliance Monitoring Group, Report of the External Compliance Monitoring Group Tenth Site Visit April – May 2004 (D’appolonia, Genoa, 2004), p. 7; World Bank and IFC, Eighth Semi-Annual Report, p. 17.
69. International Advisory Group, Report of Mission 8, p.18; External Compliance Monitoring Group, Report of Tenth Site Visit, p. 47.
70. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, p. 26.
71. External Compliance Monitoring Group, Report of Tenth Site Visit, p. 49. See also International Advisory Group, Report of Mission 8, p. 4, and International Advisory Group, Report of Mission 9, p. 7.
72. M. Weber-Fahr, J. Strongman, R. Kunanayagam, G. McMahon, and C. Shelton, Mining and Poverty Reduction (The World Bank, Washington, DC, 2001), pp. 10 and 15.
73. External Compliance Monitoring Group, Report of Fourth Site Visit, p. 10. See also World Bank and IFC, Fourth Semi-Annual Report, p. 12, and International Advisory Group, Report of Visit to Chad June 3 to 17, 2002, p. 8.
74. International Advisory Group, Report of Visit to Chad June 3 to 17, 2002, p. 7; External Compliance Monitoring Group, Report of Fourth Site Visit, p. 11.
75. Weber-Fahr et al., Mining and Poverty Reduction, pp. 13–4.
76. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, p. 98.
77. External Compliance Monitoring Group, Report of Tenth Site Visit, p. 22.
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81. Frynas, ‘Corporate and state responses to anti-oil protests in the Niger Delta’, pp. 32 and 38.
82. The Inspection Panel, Investigation Report: Chad-Cameroon petroleum and pipeline project, p. 85.
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84. IBRD and IDA, Management Report and Recommendation, p. 13.
85. External Compliance Monitoring Group, Report of Tenth Site Visit, p. 49.
86. International Advisory Group, Report of Mission 9, p. 18.
87. International Advisory Group, Report of Mission 8, p. 10.
88. World Bank and IFC, Eighth Semi-Annual Report, p. 7.
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92. International Advisory Group, Report of Mission 9, p. 8.
93. International Advisory Group, Report of Mission 8, p. 21.
94. External Compliance Monitoring Group, Report of Tenth Site Visit, p. 53.
95. International Advisory Group, Report of Mission 8, pp. 15–6.
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99. Monika Weber-Fahr, Treasure or Trouble? Mining in Developing Countries (World Bank and IFC, Washington, DC, 2002), p. 12. For similar arguments, see Extractive Industries Review, Striking a Better Balance, Volume I: The World Bank and extractive industries (Extractive Industries Review, Washington, DC, 2003), p. 13, and Gylfason, ‘Natural resources, education and economic development’, p. 851.
100. Sala-i-Martin and Subramanian, Addressing the Natural Resource Curse, p. 4.
101. IBRD and IDA, Management Report and Recommendation, pp. 18–9.
102. Extractive Industries Review, Striking a Better Balance, pp. 61–2.
103. Stephen Ellis, ‘How to rebuild Africa’, Foreign Affairs 84, 5 (2005), p. 136. Ellis makes this argument in the context of Liberia. William Reno, Warlord Politics and African States (Lynne Rienner, Boulder, CO, 1998) makes this argument more generally for West African states.
104. Alastair Smith, ‘Why international organizations will continue to fail their development goals’, Perspectives on Politics 3, 3 (2005), p. 566.
105. Gary and Karl, Bottom of the Barrel, p. 76.
106. Karl, ‘The perils of the petro-state’, p. 48.
107. Nicholas Shaxson, ‘New approaches to volatility: dealing with the "resource curse" in sub-Saharan Africa’, International Affairs 81, 2 (2005), p. 321.
109. Julia Devlin and Sheridan Titman, ‘Managing oil price risk in developing countries’, The World Bank Research Observer 19, 1 (2004), pp. 134–37.
110. Stephen D. Krasner, ‘Sharing sovereignty: new institutions for collapsed and failing states’, International Security 29, 2 (2004), p. 112.
112. Sala-i-Martin and Subramanian, Addressing the Natural Resource Curse, p. 18. See also Nancy Birdsall and Arvind Subramanian, ‘Saving Iraq from its oil’, Foreign Affairs 83, 4 (2004), pp. 77–89.
113. Birdsall and Subramanian, ‘Saving Iraq from its oil’, p. 86.
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