Saturday, October 25, 2014
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Nigeria’s Resurgent Oil Diplomacy

Russia is not alone in seeing oil as a means to transform its global standing. Nowadays, the mantra of President Umar Yar’Adua, who took power in June 2007, following controversial elections, is to transform the country into one of the world’s 20 largest economies by 2020. Yar’Adua and his Peoples Democratic Party (PDP) are struggling to stamp their authority on an unwieldy and restive country of 140 million people, and the government views rapid growth as a means to achieving that aim.

Nigerians can use a dose of hope. Olusegun Obasanjo, who became Nigeria’s first elected president in 1999 after nearly two decades of military dictatorship, left vast swathes of the country trapped in poverty when he handed power to Yar’Adua last year. With oil reaching $100 dollars per barrel, and energy-hungry giants like the United States and China beating a path to Nigeria’s door, Africa’s leading oil producer wants to use petrodollars to cure the country’s economic ills and flex its muscles in the international arena.

While riding the crest of the last oil boom in the late 1970’s, Nigeria’s military leaders nationalized the assets of British Petroleum and became champions of pan-African co-operation, financing several African liberation movements. The interests of the West and Nigeria repeatedly clashed, but Nigeria always stood its ground.

Inept government and economic decline in the 1980’s and 1990’s obliged Nigeria’s leaders to focus on problems closer to home, like the civil wars in Liberia and Sierra Leone. But old habits die hard. Nigeria has always sought a leadership role in Africa and its diaspora. Even in the turbulent 1990’s, when Nigeria was temporarily suspended from the British Commonwealth following the execution of minority rights campaigner Ken Saro-Wiwa by General Sani Abacha’s regime, the governing elite sought to achieve Nigeria’s “rightful” place in global affairs.

There are now signs of a resurgent oil-driven foreign policy. Last October, Yar’Adua joined South Africa and Libya in opposing US plans to deploy AFRICOM, its new African regional military command, on the continent. He then asked Nigeria’s National Assembly to write off $13 million of Liberia’s $43 million bilateral debt after Liberian President Ellen Johnson-Sirleaf withdrew her offer to host the new command.

Nigerian officials are careful to disavow any link between this financial gift and Johnson’s turn away from AFRICOM. Nor do they voice their concern that AFRICOM could be part of an American effort to exert control on West Africa’s oil-producing countries. But, in confidential briefings, Nigeria has strongly hinted that it will not tolerate any foreign incursions on a vital and strategic resource in its own backyard.

Domestically, the renewed flexing of Nigeria’s foreign policy muscles is being played out in the ongoing face-off between the new National Energy Council, which reports to the President, and Western oil companies, led by Shell’s Nigerian subsidiary, over when to end production-related gas flaring. The government insists on a January 2008 deadline, but the companies complain that the government’s reluctance to fund its share of operating costs fully and rising political violence in the Niger Delta make this deadline unrealistic, and want it extended three years. The Department of Petroleum Resources (DPR), the regulatory agency for the oil industry, has dismissed these claims, vowing to impose hefty fines on companies that flout the deadline.

In the early 1990’s, desperately short of hard currency, Nigeria negotiated contracts permitting the oil companies to develop new fields and recoup their investment before sharing profits. Now, following the companies’ discovery of massive reserves, technocrats appointed by Yar’Adua to take charge of oil policy want Nigeria to get a larger slice of the pie. That also means ending government co-financing of operating costs and demanding that the oil companies tap capital markets to bridge the shortfall.

Moreover, Tony Chukwueke, the DPR’s head, has announced plans to create an African version of Petronas, Malaysia’s state-run oil company, and transform the sclerotic Nigerian National Petroleum Corporation into a powerful oil-producing firm that can dominate the market in the Gulf of Guinea and other emerging regions.

Intense Western pressure has been brought to bear on Yar’Adua to re-consider the January deadline. His election is being challenged in court by other candidates, and Western backing could play a role in stabilizing his government. But his advisers, some of whom played a key role in shaping Nigeria’s foreign policy in the 1970’s, are keen to use the gas-flaring issue to demonstrate Yar’Adua’s resolve and standing as a pan-African leader.

But, as in the 1970’s, the success of Nigerian diplomacy will depend on the government’s ability to win legitimacy at home. That will require repairing and improving damaged infrastructure, generating economic prosperity, running efficient social services, and taming the unrest in the delta region. It is not yet clear whether Yar’Adua’s government can meet these challenges.

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