In a much touted experiment initiated a few years ago, the World Bank financed part of a big project to build an oil pipeline from Chad to Cameroon. In order to try and ensure that massive revenue influx from the pipeline would be used to aleviate poverty in Chad and Cameroon rather than be funneled into the pockets and warchests of those countries’ deeply corrupt and human rights abusing governments, the WB required as a condition for participation serious oversight measures over the use of pipeline revenue. Alas, the experiment appears to have failed. Last December Chad passed a law, roundly condemned by the WB, allowing the regime to tap into the oil revenue as it wishes (Chad was recently ranked the most corrupt country in the world, so we’ll leave these wishes up to your imagination.)
The WB decided to show some teeth, and froze oil profits in an escrow account until Chad reverses itself and agrees to honor its contractual obligations regarding the use of funds.
Now, Chad’s regime has responded with oil blackmail demanding $100M from the account or else it will stop oil production. In a skittish oil market skirting $70, it will take significant strength of will on the part of the WB to withstand the threat. Stay tuned.