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Stolen Crude Oil versus Conflict (Blood) Diamonds: The Case of Comparing Apples and Oranges? By Abubakar Atiku Nuhu-Koko
President Umaru Musa Yar'Adua (UMYA) opened another flank in the national and international search for lasting workable solutions to the lingering development and seemingly criminal quagmires in the Niger Delta hydrocarbons-rich region. This flank, once again, was announced abroad while attending the G-8 Summit in the Island of Hokkaido, Japan on Monday July 7, 2008. While expressing his serious concern regarding the international dimensions of the criminal elements of the intractable Niger Delta conundrum, President Yar’Adua specifically made the following plea to the G-8 Member countries leaders:
“I appeal to you and through you to all other G-8 leaders to support my new proposal which I will also discuss with UN Secretary General at my meeting with him, that stolen crude should be treated like stolen diamonds because they both generate blood money. Like what is now known as “blood diamond”, stolen crude also aids corruption and violence and can provoke war,” (President UMYA, Monday, July 7, 2008: at the G-8 Summit, Hokkaido, Japan, as reported by the mass media).
First, I wish to congratulate Mr. President and also my respected uncle, Dele Cole, for championing the idea of treating stolen Nigerian crude oil put in the international crude oil markets by international oil thieves in the same way conflict/stolen (blood) diamonds are treated under the model style called Kimberly Process in the international diamonds trade and markets.
Secondly, I would like to register my respect to both Mr President’s embellished address to the G-8 leaders at the Hokkaido Summit; particularly the aspect that deals with Nigeria’s stolen crude oil and the two newspaper articles written by uncle Dele Cole: the first one (two weeks ago) published in the Financial Times of London entitled 'Why choke the goose? The second one published today, Monday, July 14, 2008 in the Guardian Newspaper of Nigeria entitled: “How to lay the golden egg.”
Thirdly, I would like to draw the attention of the promoters of this wonderful idea or Kimberly model style that, the brain behind the idea is Professor Paul Collier, erudite professor of Economics and Director of the Centre for the Study of African Economies at the Oxford University (also, former director of development Research at the World Bank in the 1990s and adviser to the British government’s Commission on Africa).
Therefore, promoting this borrowed idea or model by both President UMYA in his Hokkaido address at the G-8 Summit and uncle Dele Cole’s articles I made reference to above, opens this innovative model to further analytical debate and scrutiny as far as the intended purposes by its promoters are concerned (for those interested in finding out further how this idea or model in question came about, this can be found specifically in pages 144-146 of Collier’s yet another path-breaking book entitled: “The Bottom Billion: Why The Poorest Countries Are Failing And What Can Be Done About It” (Oxford University Press, 2007, hard copy: ISBN 978-0-19-531145-7).
Fourthly, apart from presenting the originality of the model under review, I would like to further argue in this write-up that, the proposition put forward by Mr. President is an excellent one. But, it is like comparing apples and oranges or trying to mix oil and water! My argument or reason for saying this is also not new. As Professor Collier already indicated in his seminal book I referred to above that: “What worked for diamonds may not work for oil” (Collier, P., 2007, p.144).
But, whereas Professor Collier hinges his line of argument on the notion that: “it is far harder to smuggle oil than diamonds” (which a vast majority of Nigerians will now disagree with; as over 150, 000 barrels of Nigerian crude oil are alleged to be smuggled out of Nigeria’s shores daily), my own points of departure here are: a) that the markets and demand structures of diamonds and crude oil are poles apart and parallel. b) Furthermore, even though there is a lingering internal conflict going on in Nigeria’s hydrocarbons-rich Niger Delta region, Nigeria is not yet a failed state. I explain these points below.
Whereas, on the one hand, diamonds are vanity resources with international niche markets serving a small fraction of the world’s only rich people and whose demand structure is elastic. While on the other hand, crude oil is a multi-product resource that command huge local and international markets and consumers and whose demand is very inelastic. Simply stated, oil has no easy, ready and cheaper substitute at the moment.
Moreover, Conflict/stolen (blood diamonds) can easily be moved around the world across international borders in pockets of trousers, Suits and Suit Cases. Therefore, global clampdown on their illicit trade is much easier done under the Kimberly Process model style compared with stolen crude oil that is moved first, using small barges before ending up in huge super tankers that move it across the globe. Tracking these small barges and super tankers even with available advanced satellite and global positioning systems is not an easy task, more especially in Nigeria, where supply of ordinary electricity, piped water and refined oil products is a gargantuan task.
By the way, before I proceed any further, I would to point out that the Kimberly Process for the certification of diamonds is a voluntary diamonds industry initiative spearheaded by De Beers, the global diamonds conglomerate in order to clean up its soiled acts in the international diamonds market it controls. This is to say, arranging and organizing the Kimberly Process has nothing to do with the UN and or the G-8 per se.
However, another serious difference to take into consideration between diamonds and crude oil is that, crude oil is a fungible commodity that can easily be swapped and or exchanged in the international market. Therefore, once it enters the arena of lawful (and or illicit) international trade, it can be traded to any interested lawful party and or unlawful interested party as the case may be. For example, at the moment, the demand for crude oil worldwide is more than what is supplied by the producers and the markets. That is why President Bush, the president of the most powerful nation on earth and Prime Ministers from the G-8 Member nations are literally begging OPEC Member countries to pump more oil in order to have it cheap to quench their insatiable thirsts for the “devil’s excrement”, which in the first place, is responsible for the Niger Delta conundrum!
Hence, Nigeria’s stolen crude oil, if and only if rejected by buyers from G-8 Member countries (which is very unlikely), will find its way easily in ready and ever hungry markets of China, India and other Asian markets in search for cheap (legal and or illicit) crude oil to fuel their rapid economic growth needs without the concern for the necessity of dealing with the criminality involved in marketing the stolen crude oil or even environmental issues such as climate change. The world economy is simply hooked on and addicted to fossil fuels and not diamonds. Therefore, of necessity, the highly intensive international energy consuming community is very thirty of crude oil at the moment and well into the future and will access it by all means necessary.
Another eye opener is what happened some days ago at the UN Headquarters in New York when Russia and China vetoed the proposed UN sanctions against President Robert Mugabe of Zimbabwe (even though Zimbabwe is not an oil or diamonds producing nation as such). Therefore, it will not be a surprise to see some countries working against any proposal for the UN to impose Kimberly model or sanctions against trading Nigeria’s stolen crude oil in a similar manner.
In the same vain, in 1995 when the late activist Ken Saro Wiwa and his kinsmen were hanged by the Nigerian state (for interfering with the smooth flow of oil and oil rents in the Niger Delta region), the United State Congress advised the U.S. government against its rhetorically intended sanction against the Nigerian military junta. The principal reason was that sanction against Nigerian oil will work against US strategic and commercial interests in Nigeria. It’s all about oil interest and not the Nigerian people’s interests.
Therefore, Nigeria’s stolen crude oil, no matter how highly sophisticated it is technologically marked or tagged and sanctioned by the UN, the stolen crude oil will easily find a buyer once outside the protected and unprotected shores of Nigerian territorial waters. Moreover, according to a recent statistics released by the International Maritime Bureau, Africa remains the world's top piracy hotspot, with 24 reported attacks in Somalia and 18 in Nigeria so far this year. Crude oil from Nigeria is one of the priced commodities usually targeted by local and international pirates (Diamonds are rarely pirated on high seas). This is to say, the organization of the oil industry, its international trade and market is “harder than diamonds” (Collier, P., 2007, p.144).
Another major problem with Mr. President’s proposition is that, conflict/stolen (blood) diamonds are sourced from already failed states - nations that are engaged in internal civil wars and disorders. These nations have no nationally and internationally recognizable governments. They have no regular standing armed forces but armed militias. They are largely characterized by total breakdown of law and order; chaos and anarchy rules. But Nigeria does not fit this harrowing description. Nigeria is still a sovereign state with all the paraphernalia of a modern functional state.
In fact, the diamonds in question under the Kimberly Process got their sobriquet names – “Conflict (or “blood”) diamonds” from the conflicts/savage blood letting internal disorders that took place in the diamond-rich countries of Liberia and Sierra Leone in the West African sub-region. Other conflict zones in Africa used to be Namibia, Angola and Mozambique in the South West African sub-region. Another very important failed and conflict state in Africa is Somalia (probably it has diamonds and or oil).
Therefore, it will look awkward to portray the situation in Nigeria’s Niger Delta in the same mould as the crises situations in Africa’s infamous failed states such as Liberia and Sierra Leone; countries which were used to be so tagged. Far from it, but I am worried that we are getting into another messy affair in the process of finding lasting and sustainable solutions to the internal agitations in the Niger Delta region (just after the Prof. Gambari’s debacle and blunder).
Thus bringing our case before the international community (i.e. G-8 and the United Nations) to be treated in the way and manner a failed state is to be treated in protecting our natural resources endowments from pillage by local and international pirates is a misplaced and wrongly advised adventure. It is like telling the international community that Nigeria is no longer sovereign nation and hence, our national government is no longer capable of performing the basic duty of protecting our territorial integrity from internal and external threats.
If President Yar’Adua is sticking with this awkward idea (like he did with the Prof. Gambari’s gamble), he will be sending disturbing signals to Nigeria’s law abiding citizens (and the militants), our neigboring countries and the wider international community. For example, by begging the international community to clampdown on trade in stolen crude oil from Nigeria’s Niger Delta oil fields, Mr. President is saying that, the situation in Nigeria has assumed the status of a conflict state; with no national capability of internal self-cohesion and prowess to deal with it. Think of how the Cameroonians will be looking at Nigeria at the moment, particularly with the impending surrender of the Bakassi peninsular to them; another national blunder!
What needs to be done is simply to dump the idea of going to the UN to seek for a Kimberly Process model style of dealing with our stolen crude oil. President Yar’Adua simply needs to exercise the powers conferred upon him and the National Assembly under the 1999 Constitution of the Federal Republic of Nigeria no more no less.
We must acknowledge that the disturbing and agonising happenings in the Niger Delta region and beyond are predictable events associated with the resource curse and Dutch disease syndromes. We found our economy afflicted by these highly inflammable and injurious but curable paradoxes. On the one hand volatile oil and gas revenues are flowing into the treasuries of Nigerian governments and oil companies bank accounts, however, political corruption, with funds being looted off left, right and centre by a small elite, resulting in greater inequality and thus generating the violent conflicts were witnessing all over the country. Violence in Nigeria as of today is not only a Niger Delta region phenomenon. It is a nationwide scandal. Therefore, Presidential powers, intelligence and resources must be unleashed to tackle these problems.
I am afraid, engaging the international community is not a good first step and is not a panacea for success as others would want the President and the nation to believe. This is a matter that can easily be handled locally, if and only if there are the political will and prowess to so. And of course, there are but time is running out if they are not put to positive action. The wise thing is for Mr. President to eschew being unnecessarily dragged on the wrong path that leads to dead-ends most the times on this and other national issues. For instance, it is now globally acknowledged that Nigeria (among all other OPEC Member nations) is the best-known country “example of oil riches increasing tension because oil revenues have not been used adequately to address poverty in the Niger Delta, where the oil and gas are produced” (www.roughguides.com).
In conclusion, the international market for stolen oil starts in Nigeria. Therefore, if the multi-headed hydras reside in Nigeria, it is in Nigeria that heads of these hydras should be located and tamed. The criminal gangs stealing the oil in the Niger Delta are actually the hydras. They are allegedly aided by some known and unknown powerful politicians-cum-“successful” businessmen and women, community leaders and even, serving and retired members of the security services. The failure of governments (Federal, State and Local) to address the poverty of the people living in the Niger Delta region and elsewhere in Nigeria is a national shame to be shared by all Nigerians. However, governments and leaders must bear full responsibility for these massive government/policy failures.
Therefore, the lasting solutions to these national shame and disgrace are the responsibility of all Nigerians irrespective of geography and what have you. A national conference is not what is required in order to start addressing the decades known problems in this and other difficult areas with peculiar geographic characteristics that constitute stumbling blocks to rapid physical and socio-economic development.
President Yar’Adua needs to innovate by adopting a carrot and stick approach to the Niger Delta conundrum; whereby, incentives and penalties can be use to alter restiveness behaviours of the militants. At the same time states and local governments in the region need all the assistance possible for them to build local capacities in managing the huge sums of oil revenues allocated them for developmental purposes in more transparent and accountable manner. They need assistance also to build the enormous implementation capacity that they are lacking for transformative purposes in the region. Thus, this is where the role of the international community/development partners is desirously very relevant.
President Yar’Adua needs to seize this golden opportunity to change this chequered history and record for good. To this extent, I would rather recommend Mr. President to provide the needed leadership, political prowess, intelligence and resources to transform the Niger Delta region into another FCT-like development model than get engrossed with a fruitless distraction under the guise of Kimberly Process for stolen Nigerian crude oil. What matters is to be seen to be seriously active and engaged in a full blown war against the Curse of oil – which is at the heart of Nigeria’s monumental socio-economic development backwardness.
Last, but by no means the least, if the oil companies and Nigeria can tame the equally very harsh and geographically difficult Atlantic Ocean in order to erect Bonga without holding a national conference for that purpose, or requesting the G-8 leaders and the UN for assistance, I don’t see any wisdom of insisting on convening a national conference before we can start to address the physical and human made problems in the Niger Delta. The earlier we start moving the bulldozers the better, rather than waiting to mount the podiums and rostrums at the Abuja International Conference Centre and the United Nations Headquarters in New York, New York, USA.
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