CHAD-CAMEROON PIPELINE PROJECT: OVERVIEW OF HUMAN

UNCLAS NDJAMENA 001356 SIPDIS SENSITIVE DEPARTMENT FOR AF/C, G, DRL, INR; LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA, ENERGY FOR GPERSON AND CGAY E.O. 12958: N/A TAGS: ECON EFIN ENRG EPET PGOV PHUM CD SUBJECT: CHAD-CAMEROON PIPELINE PROJECT: OVERVIEW OF HUMAN RIGHTS ISSUES IN CHAD REF: A. NDJAMENA 1227 ¶B. NDJAMENA 1151 ¶C. NDJAMENA 1150 ¶D. NDJAMENA 910 ¶E. NJDAMENA 901 ¶F. NDJAMENA 867 ¶G. NDJAMENA 866 ¶H. NDJAMENA 454 ¶I. NDJAMENA 661 ¶J. NDJAMENA 550 ¶K. NDJAMENA 402 ¶L. NDJAMENA 72 ¶M. NDJAMENA 53 ¶1. (SBU) Summary: With oil flowing, the Chad-Cameroon pipeline project and the conventions that govern it are now being tested. Human rights groups in Chad and their international partners continue to monitor and raise compensation, environmental, social, and security issues. While recognizing that there is room for improvement on all fronts, we believe that the pipeline project in Chad has avoided the widespread corruption, environmental damage, social conflict, and security force abuses experienced in neighboring African oil producers. It must be emphasized that local perceptions (for good or for ill) are formed in the absence of an effective judicial system or contract enforcement mechanisms which could provide a common basis for understanding whether the parties (the oil consortium and the Government of Chad) are abiding by their obligations. As a result of these factors, the oil company, rather than the Government bears the brunt of the criticism and demands. Given the newness of the project, the dynamics of the relationships among the consortium, human rights groups, local residents, and government are still developing. End Summary. - - - - - - BACKGROUND - - - - - - ¶2. (SBU) Human rights groups in Chad and their international partners continue to monitor and raise compensation, environmental, social, and security issues related to the Chad-Cameroon pipeline project. This assessment of the criticisms of the project has been derived from Embassy, Department of Energy, and OPIC personnel visits to the oil-producing region, regular contact with human rights groups and the Oil Revenue Management College, meetings with visiting members of international non-governmental organizations, and from meetings with government and oil company officials over the past year. ¶3. (SBU) As previously reported, the Esso-led consortium (with partners Chevron and Petronas) has a relatively small footprint in Chad. Esso has taken steps to learn from the volatile situation in the Niger Delta in Nigeria, where oil companies become the primary provider of key government services and corrupt local government officials and chiefs abscond with funds meant for local communities. In Chad, the conventions governing the pipeline were designed to avoid many of the problems faced elsewhere in Africa and resulted from extensive consultations with civil sociey and local communities. - - - - - - - - - - - COMPENSATION PACKAGES - - - - - - - - - - - ¶4. (SBU) Displacement of families and compensation packages are (and will be) a continuing source of criticism of the pipeline project for human rights groups. In Chad, three hundred families were displaced due to pipeline construction. They were given a number of options for relocation and the consortium reconstructed their houses and paid them for their land. During the individual compensation phase of the project, market value was determined and Esso paid each family in the presence of local officials and traditional leaders. Each family selected its package and signed for it. Their photographs were taken accepting the packages. After the project's construction was completed, Esso allowed the families to return to the area and farm the land for which they have been compensated as long as they do not damage the property. Problems are now arising from individuals who claim their were never paid or not paid enough. We understand that some of this is being instigated by local chiefs, who are trying to collect ten percent from the packages paid to the individuals. Furthermore, many international NGOs are encouraging locals to demand compensation based on the number of trees cut down for construction. However, this would mean that the local residents would receive less money for their property, according to a comparison with the current compensation packages. - - - - - - - - - - - ENVIRONMENTAL ISSUES - - - - - - - - - - - ¶5. (SBU) The key environmental problem in the region is dust pollution. Respiratory ailments are prevalent, largely the result of the increased truck traffic on laterite roads. Local government officials raise this negative aspect of the project frequently. The consortium paved a few roads, but uses molasses and water to keep down the dust. Molasses actually forms a hard surface, but must be replaced after the rains and its availability varies. Initially, the consortium avoided settled areas and conducted extensive public consultations at which the local population insisted that some road be built through populated areas. In places where Esso avoided villages, many individuals moved alongside them despite being warned repeatedly about the dust. Esso built roads to "Chad standards", which means laterite. The bottom line is that the local population wants all the roads to be paved with asphalt in the area. The consortium maintains this is a function of government and should be put forward as a desired use of the oil revenues. ¶6. (SBU) Human rights groups complain about ground water quality. The World Health Organization reports a high level of iron in the soil and water content that pre-existed the pipeline project. When local communities selected well projects as part of their compensation, they were confronted with the iron content of the water. Esso would like to explore the option of creating a reservoir for the high volume of ground water being pumped from the wells, which can then be treated for distribution. However, Esso is not currently pursuing this option because it fears opposition and litigation from many quarters. In terms of its drilling operations, the consortium meets U.S. standards for water quality. Esso readily admits that gas flaring is an unanticipated problem and it is seeking solutions. For now, Esso uses most of the gas to power the gas turbines which run the facilities, rather than diesel fuel. The air quality in the area is monitored regularly and meets accepted standards. - - - - - - - - - - TRANSPARENCY ISSUES - - - - - - - - - - ¶7. (SBU) Chad's unique revenue management system is working as intended, for now, but showing some signs of strain. The creation of the system was a direct response to situations in other countries where oil revenues are mismanaged and poverty rates are growing. The College du Control et Surveillence des Resources Petrolieres (CCRSP) or "College" oversees the expenditure of revenues in priority sectors (Agriculture, Education, Environment, Health, and Infrastructure). Representatives on the College include the Director of the Central Bank, the Director of the Treasury, two members of the National Assembly, a representative of the Supreme Court, unions, human rights groups, religious groups, and non-governmental organizations. The oil revenues began flowing into the Government's escrow account in June 2004. The College just issued a project verification report, which outlines many problems with the completion of projects (septel). The Government has yet to respond. - - - - - - - - - - HUMAN RIGHTS ABUSES - - - - - - - - - - ¶8. (SBU) There have been no reports of human rights abuses by security personnel assigned to Esso. A private security company provides internal security for the project sites. Guards at well sites are unarmed. There are 175 Chadian gendarmes assigned to area. To date, the embassy has received no reports of abuses committed against residents by these gendarmes. Embassy personnel work closely with Esso on security issues and has sent eight gendarmes associated with the project to training in the U.S., which includes human rights training. In addition, Chadians living near the project receive additional compensation from Esso to perform the functions of a "neighborhood watch" as a check against vandalism. - - - - - - - SOCIAL ISSUES - - - - - - - ¶9. (SBU) HIV/AIDS and child prostitution are the most-often cited social issues in the project area. Esso supports a non-governmental organization's efforts to raise awareness and combat HIV/AIDS. HIV/AIDS was already a growing issue prior to the pipeline construction due to the trucking routes in the area and the proximity to the border with Cameroon. However, as the project construction brought in more outside labor and truckers, the prevalence of HIV/AIDS and sexually-transmitted diseases increased as well. Esso educates, monitors, and treats its workers for STDs and has monitors the local communities. Esso funds health programs in the area, including HIV/AIDS awareness and malaria prevention. Another "side effect" of the pipeline is a significant prostitution problem in the area, which has led to an influx of girls from Cameroon and Central African Republic between 15 and 17 years of age. ¶10. (SBU) Employment issues, such as numbers of Chadians employed, salaries, and benefits, are highly charged and the most common critique is that the consortium has not met the needs of its employees. The Government, unions, and human rights groups form an unlikely alliance on these issues. However, it is clear that local communities surrounding the project have benefited significantly from salaries and benefits such as education, low-cost loans, and access to low-cost medical treatment. The consortium also faces criticism for paying their employees too much and creating two economic classes of local residents, those that work for the project and those that do not. It is clear that increased salaries has had an inflationary impact on the costs of many goods and services. ¶11. (SBU) Chad's powerful labor unions criticize the consortium on a wide range of issues, including the decreased need for labor now that the construction phase is over. In preparation for the eventual cut-backs, Esso provided skills training to its employees and vocational qualification certificates for 1,700 employees. Complaints that workers were not paid bonuses are common, but mostly unfounded. The Government wants Esso to give contracts to local businesses to provide services. A key problem remains a lack of local businesses able to meet the needs of the consortium. An interesting development is the number of "local businesses" serviing the consorium which are owned by Government officials. Esso is now facing court cases lodged aainst sub-contractors who have not fulfilled ther contracts. The courts, however,are too weak to withstand political pressure from the Government and the unions to fairly arbitrate complicated commercial cases. - - - - COMMENT - - - - E ¶12. (SBU) The overall benefits of the Chad-Cameroon Pipeline Project for Chad need to be judged over the long-term. The relationships of key players--the Government, the consortium, human rights groups, and labor unions--are still developing. While recognizing that there is room for improvement on all fronts, we believe that the pipeline project in Chad has avoided the widespread corruption, environmental damage, social conflict, and security-force abuses experienced in neighboring African oil producers. ¶13. (SBU) From our perspective, the key problem in Chad is not the conventions, but the lack of a mechanism or an arena in which these players can discuss, negotiate, and settle problems and deal with the consequences of oil production and the issues being raised by the human rights groups and local communities. The Chadian judicial system is weak and susceptible to outside influences. There is no recourse for the public or for commercial enterprises to obtain justice or address perceived or real inequities. As a result of these factors, the oil company, rather than the Government bears the brunt of the criticism and demands. The Chadian Government, which does not always respect the conventions it negotiated, allows this situation to continue because it deflects responsibility for its failure to provide basic services and rights to its citizens. The negotiation of future agreements and conventions in the absence of functioning judiciaries and good governance can be informed from the types of problems and dynamics that have arisen in Chad. TAMLYN NNNN