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ICG: Chad: Escaping from the Oil Trap

August 26, 2009

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This International Crisis Group brief examines the exploitation of oil revenues in Chad and recommends establishing stricter control and oversight over the oil revenues management mechanism.

Since 2003 the exploitation of oil has contributed greatly to the deterioration of governance in Chad and to a succession of rebellions and political crises. The financial windfall - in 2007, 53 million barrels earning the government $1.2 billion - has increased corruption, stoked domestic dissent and led to rebellions supported by neighbouring Sudan. The revenues have also allowed President Idriss Déby to reject political dialogue with his opponents and to respond to the threat from Sudan by overarming his military forces. The hope aroused by the discovery of oil has given way to generalised disenchantment. To escape this vicious circle and establish the conditions needed for durable stability, the government must work to establish a national consensus on the management of oil revenues. Its principal external partners - France, the U.S. and China - must condition their support for the regime on such a consensus.

Chad's petroleum project was bedevilled by numerous controversies that almost blocked its realisation. Beginning in 2000, however, the involvement of the World Bank allowed the project to move forward. It was an apparent role model for development, because the mechanisms for managing oil revenues seemed to guarantee an effective fight against poverty. These mechanisms specified that the revenues were to be dedicated primarily to improving the lives of Chad's present and future population.

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