Oil, imperialism and Equatorial Guinea
Equatorial Guinea (EG) is a West African country, a former Spanish colony, about which we in Britain hear practically nothing. It was therefore a great pleasure to meet at the annual Fiesta of the Spanish Communist Party in Madrid (September 1999) representatives from that country’s progressive movement, who supplied us with interesting information about their country, from which they have been exiled by the current dictatorship which rules on behalf of imperialism.
Like most countries in Africa, EG is poor and underdeveloped. Like people in many other poor countries, its inhabitants hoped and prayed that oil would be discovered in their territory, believing that this would make the country rich and enable it to develop its economy for the benefit of its people. Imagine the excitement when, in the 1980s, oil was discovered, and in significant quantities. A country the size of Wales, it was found to be harbouring reserves estimated at some 420 million barrels of oil, plus 1.5 billion cubic feet of natural gas. This was certainly more than enough to provide the country’s 400,000 inhabitants with the economic infrastructure of a modern society, as well as provide for their everyday needs in the meantime, especially when added to the existing economic activity in the spheres of timber production and agriculture.
Yet today, 8 years since oil exploitation in the sea off EG began, 95% of its population has seen a decline in its standard of living rather than any improvement. Theoretically annual per capita income has increased since oil production started – from $300 a year to $1,000, but in actual fact, according to World Bank calculations, 5% of the country’s population receive 80% of its income. This means that while that 5% enjoys an average per capita annual income of £16,000, the remaining 95% have on average only $207! This is despite the fact that EG’s GDP has trebled in the 1990s as a result of oil production.
Not only are the masses of the ordinary people as poor or poorer than they were before, but prospects for the future are far from good. The reason for this is that there has been a massive growth in the country’s indebtedness which has now reached $18 million – over $450 for every man, woman and child in the population (more than twice the entire annual income of anyone from the poorest 95% of the population).
This, of course, might have been acceptable if the money had been spent on infrastructural projects likely substantially to improve people’s income and general welfare, but this has not been the case.
The main reason for the failure of the masses of people to benefit from the extraction from EG of some 5,000-6,000 barrels of oil a day between 1991 and 1996, and of some 120,000 barrels a day since then, is the country’s relationship with the oil multinationals in charge of oil production. The biggest players are the US multinationals, CMS Nomeco and Mobil Oil which between them control 58% of EG’s oil production. However, United Meridien, Triton, Interline Energy, Yukong, Samedan and Elf are also active in the country.
The contracts signed by the country’s government with the oil companies give the government of EG the right to receive some 10% of the value of oil exports but will not allow it any share of the oil produced until 2003 (by which time one assumes that the oil reserves will be very much depleted!). Before EG is to be allowed a share in its own oil, the oil companies must have generated sufficient income for themselves to repay the whole of their investment in the oil industry of EG, including the cost of exploration. In addition, the oil companies were, until 1998, free of any obligation to pay import taxes in respect of anything they chose to import, with the result that they had little or no incentive to obtain any of their requirements locally. This has meant that of the $540 million investment by the oil corporations in the production and development of the oil industry in EG, $534 million (98.9%) were spent abroad. To date the presence of the oil industry has done little or nothing to stimulate supportive economic activities in EG itself
Even the IMF has felt the need to require the renegotiation of these grossly unfair contracts. In 1998 the oil companies’ contracts were renegotiated to increase the government’s oil income to 12-16% of export values, plus a 5% share of capital. The share of capital is to increase to a maximum of 25% as production levels rise. While these terms are a great deal more favourable than what was originally ‘negotiated’ by the imperialist companies with the local dictatorship in EG, it still compares unfavourably with the contracts governing oil production in Gabon, Cameroon or Nigeria – and this is saying something!. The current production levels of 120,000 barrels a day entitle the EG government to a 10% share in production, while these other countries get over 50%. The contribution of oil revenues to the public purse is between 12-19% of export values, while in Gabon, Cameroon and Nigeria it is 30%, 48% and 40% respectively.
Not even the crumbs left after imperialism has consumed the lion’s share of the oil wealth, however, benefit the country’s people as a whole. It is difficult to obtain information about how much the crumb-share amounts to, as this information varies considerably depending on whom you ask. The IMF estimates the government’s 1996 oil income to have been in the region of $90million, which is to increase to $137 million in the year 2000. Government estimates are a great deal lower. Considering that before the discovery of oil the country’s annual budget was never higher than $70 million, the government’s income would appear to have more than doubled, which should have been the basis for enormous improvements in social facilities. The government, however, has not been able to manage on its greatly increased income and has resorted both to seeking, and obtaining, advances on its oil income entitlements (thereby of course seriously diminishing government income for future years) and to loans, as has already been mentioned.
The public works that have been undertaken on the basis of this greatly increased public expenditure (which has increased 700% since 1990) are mostly confined to prestige projects having little or nothing to do with boosting the country’s production capabilities. Quite a lot of the money received into the public purse, however, is unaccounted for and is likely to have found its way, according to the World Bank, into “
unofficial savings abroad”
– i.e., the personal slush funds of the ruling elite.
With the rapidity that oil is being extracted in EG then, unless new reserves are discovered, the bonanza will be over in 10 years. Local people, however, are likely to have little or nothing to show for the billions of dollars of oil wealth that their territory yielded. They have simply been robbed. Only a genuine People’s Democratic revolution, striking at imperialism and the local élites alike, can put an end to this revolting state of affairs.