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« 040304.One Year Later A Balance Sheet for the Iraq War | Main | 031004.The Theft of Mexico: How the 1988 Mexican Presidential Election Was Rigged »

May 16, 2004



Article in The Age (Australia) 01/06/04

Africa's oil pool proves tantalising for sharks

Oil predators are keen to tap Sao Tome's reserves. Tim
Butcher reports.

Off the West African coast, the sharks are circling
the sleepy "chocolate islands" of Sao Tome and
Principe, eager to bite off slices of billions of
dollars of hoped-for oil revenues.

One of Africa's poorest nations - so undeveloped that
there are no traffic lights in the entire country - is
being spoken of as a new Kuwait following recent
surveys showing that up to 11 billion barrels of oil
lie under its territorial waters.

Prospects of an oil boom in the tiny former Portuguese
colony on the Equator have attracted a wave of
charlatans and swindlers, eager to cash in, and Sao
Tome is keen to avoid becoming the next African
country to prove that oil can be more of a curse than
a blessing.

Many of the people of Nigeria, Angola, Equatorial
Guinea and elsewhere grew poorer as vast oil revenues
were stolen by corrupt regimes and businessmen - a
situation that Sao Tome's chubby and affable leader,
President Fradique de Menezes, says he wants to
prevent. Oil has already led to unrest. It was said to
have helped foment an attempted coup last July, when a
group of disaffected soldiers temporarily seized power
from de Menezes.

He survived and has made progress. He has followed
the advice of western economists about how to develop
the oil sector, and has presided over a bidding round
among oil companies that is seen as the most
transparent in African oil industry history.

"This place really is on the map more than it ever has
been, but the sharks are already circling in the
water," said the former cocoa trader.

"We are trying to keep the process clean, but the
pressures are growing stronger and stronger every day.
It is becoming horrible."

Every few days, charter planes full of businessmen
from Nigeria, Angola and elsewhere fly into Sao Tome's
tiny international airport. Most of the visitors want
time with the president, who was recently diagnosed
with diabetes and for reasons of ill-health has
refused to confirm whether he will stand for
re-election in 2006.

"Sure, they offer me all kinds of things, but I just
listen to what they have to say and show them the
door," he said.

Sao Tome, with a population of only 140,000, is also
being wooed by the United States, which has deployed a
military liaison officer there as part of its war on

Britain is also increasing aid money, with £135,000
($A346,000) going to fund a project of public
education about how to use oil revenues.

For now, Sao Tome's government appears clean, but it
also seems somewhat out of its depth.

With oil revenues still years away, the country owes
£200 million in foreign debt - one of the highest per
capita levels in Africa - and remains seriously

Cocoa growing might have earned the place the
soubriquet of "chocolate islands" and Portugal
millions in earnings, but it now generates only £3
million in exports.

The rest of the £30 million national budget comes from
foreign aid. This seems likely to be swamped by oil
revenues. The rights to explore just one block of
seabed will earn Sao Tome £50 million later this year
from Chevron-Texaco and there are plenty more blocks
for tender.

"If you have high poverty, high expectations of oil
revenues and a low level of capacity to deliver, you
might have a bomb on your hands," said Rafael Branco,
the suave former oil minister.

"The challenge is to defuse that bomb."

- Telegraph


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