Chad – (noun)
1. Paper fragments created when holes are made in paper.
2. A landlocked country in Central Africa bordered by Libya to the north, Sudan to the east, the Central African Republic to the south, and Cameroon to the southwest.

It might seem that these two meanings are unrelated. However, in the June 15, 2011 discussion about the effect of oil extraction on the citizens of Chad, it was apparent that both definitions describe the country of Chad. Drilling holes into Chadian territory for the purpose of extracting oil has resulted in increased fragmentation of Chad’s society.

Delphine Djiraibe, founder of the Public Interest Law Center in Chad; Ian Gary, senior policy manager for extractive industries at Oxfam America; and Corinna Gilfillan, head of the U.S. Office of Global Witness, spoke to a group of over 20 people regarding the results of the World Bank’s decision to financially support the Chad-Cameroon pipeline project.

The pipeline project has had reciprocal effects for the World Bank and Chadians. Approved by the World Bank in 2000, the pipeline project was intended to alleviate poverty in Chad. Chad is the fifth poorest country in the world with an annual per capita income of $230. Despite its intended purpose, the Chad-Cameroon pipeline has resulted in decreased quality of life for Chadians. Deaths due to hunger and disease have increased, and citizens often do not have access to electricity and clean drinking water. While the government has built a few hospitals and schools, many of them are useless since they do not have staff or equipment. A significant portion of the oil profits intended for these projects are diverted for President Idriss Déby’s personal expenses.

Rebel groups have formed in response to the repression experienced by Chadians and have consequently caused security issues in Chad. Chad rebel groups have also recruited Libyan rebels to assist in overturning the Déby government. However, this fight will be difficult as the president has used oil profits to purchase weapons for his protection and defend his regime. In this country with no rule of law and a history of human rights violations, the pipeline project has served as a catalyst for further violations.

Gary weighed in by revealing that many civil society groups lobbied the World Bank to institute a moratorium on the pipeline initiative until human rights and government issues were resolved. Civil society groups accurately predicted that the pipeline project would create a greater opportunity for corruption in Chad and cause additional problems in the country. Despite these warnings, the World Bank proceeded with funding the initiative which it would abandon in 2008, after Chad failed to reach the goal of reducing poverty. The bank attempted to pressure the Chadian government to uphold its promise to build structures that would alleviate poverty but the Chadian government paid its loan early and was no longer obligated to abide to the established guidelines.

The Chad-Cameroon pipeline project shed light on problems that arise as a result of the extraction of oil in unstable countries and spurred reforms at the World Bank and the International Financial Corporation (IFC). The World Bank now requires the disclosure of payments for any project it funds and the IFC requires disclosure of contracts. (Chadian oil contracts were confidential). Also, free prior informed consent of indigenous population is required before oil, mining, or any high-risk project goes forward. Furthermore, the president of the bank agreed to an Extractive Industries Review (EIR), a two year process that examined the banks’ involvement in the oil sector. The EIR report recommended that the World Bank never support oil or mining projects where the government is corrupt and human rights violations are common and government, human rights and institutional capacity should be rectified before the start of the project, not during. However, the World Bank has continued its attempt to rectify issues along the way.

The pipeline project unintentionally strengthened the power of a corrupt government and negatively impacted the citizens of Chad. This could have been avoided had the World Bank listened to the concerns of civil society groups.

So what happens now? What can the international community do to support the citizens of Chad? Clearly there needs to be a system of improved governance over resources as well as transparency of revenues and expenditures to ensure that resources granted to the government are benefiting its citizens.

Click here to listen to what the panelists had to say about oil extraction in Chad.