by Steve Coll
Robert Zoellick, the Bush administration’s deputy secretary of state, telephoned Wolfowitz and talked with him about the violence in Darfur and the gathering rebel attacks on Chad, sponsored by Sudan’s notorious intelligence service. Wolfowitz said he felt he could still work out a compromise with Déby.
He was wrong; Déby refused to accept the bank’s new proposals, which were designed to maintain social spending but allow some more defense spending.
In pickup trucks and sport-utility vehicles, toting automatic rifles, the self-declared soldiers of the Front Uni Pour le Changement struck N’djamena on April 13. Gunfire resounded in the capital but Déby’s loose-knit defenders proved just stalwart enough to chase the rebels back toward Darfur. Chad’s rebels had been thwarted, but only temporarily. As a World Bank analysis put it, “The government brought the situation under control through the course of the day, but the situation has remained tense. . . . The tension is likely aggravated by the new petroleum resources, which have raised the stakes associated with power, and by the paucity of tangible results associated with oil revenues to date.”20
Déby was again furious. He organized a “popular” rally of his supporters in the streets of N’djamena. He declared that if the world would not back him, he would defy the world: He threatened to expel all two hundred thousand refugees from Darfur and shut down all oil production in Chad by the following Tuesday, if the World Bank did not immediately meet his demands. “You have just been eyewitnesses to the attacks by Sundanese mercenaries,” Déby’s prime minister, Pascal Yoadimnadji, declared in a communiqué issued to all of N’djamena’s ambassadors. “We regret to state that the International Community closes its eyes to the inimical behavior of the Government of Khartoum. . . . This is a particularly laughable situation. The oil is Chadian. Its exploitation must first of all profit the Chadian people.”
ExxonMobil drew down to six core staff in N’djamena, including Ron Royal, who stayed on; others of his staff withdrew from the rebel raid to the relative safety of the oil fields in the south.
Royal met Déby’s prime minister on the evening of April 14. He suggested openly that Chad get out of its social investment obligations to the World Bank by paying off its loans. At that point, ExxonMobil “would be free to pay royalties directly” to Déby’s regime, bypassing Wolfowitz’s strictures. The prime minister asked if ExxonMobil might be willing to lend Chad the money to pull off this maneuver.
Déby asked Ambassador Marc Wall to visit him the next day. Wall had been overseeing evacuations by American Peace Corps volunteers and other aid workers spooked by the rebel attack. The ambassador drove with his deputy, Lucy Tamlyn, to one of Déby’s private residences in the capital, safely secluded from the presidential palace, a rebel target.
Wall found the president in the company of his new wife, Hinda Déby Itno. They spoke in French and took their places; Tamlyn took notes.
Wall acknowledged Déby’s successful defense of the capital. “Washington is deeply troubled by the current turn of events in Chad,” he said sympathetically.
Déby said he had sent a letter to President Bush “asking for understanding of Chad’s predicament.” Even now, he continued, Sudan’s government had unleashed a new convoy of sixty rebel trucks filled with armed men toward Chad’s eastern city of Abeche. His military problems were far from over. “I have spoken repeatedly to the international community, but the international community has failed to respond. A small country such as Chad cannot at the same time face an armed invasion as well as shelter refugees.”
Half of the rebels captured after the raid on N’djamena were Sudanese nationals, Déby said. The United States had publicly condemned any efforts to seize power in Chad by force. His implication was clear: Why then would the United States stand by and allow such an invasion to succeed, given that ExxonMobil was here and that Déby was cooperating on counterterrorism and Darfur?
Wall asked about Déby’s threat to shut down the ExxonMobil oil consortium on Tuesday. Déby had declared he would close the pipeline if ExxonMobil did not start making its payments directly to Chad’s government, rather than through the London accounts controlled by the World Bank.
“This is not a topic for discussion,” Déby answered unequivocally. “It’s our money. The money belongs to the Chadian people.” He added that he needed the ExxonMobil royalties to pay his troops.
Wall said that if Déby shut down oil production, he would deprive Chad’s government of future payments.
“Chad can live without oil,” Déby said.21
He agreed, however, to wait until the end of April before issuing his order to shut down production. The president’s bargaining was transparent. He was angry, yes, but he was also seeking leverage with the Bush administration.
“We are not cowboys,” Déby added. But the World Bank “has pushed our back to the wall.”
His oil threat galvanized the Bush administration’s attention. Don Yamamoto, a State Department envoy, flew into N’djamena on April 24. Yamamoto was a principal deputy assistant secretary of state, barely higher ranking than Ambassador Wall, but he was nonetheless the most senior American official to visit Chad in years. He carried with him a letter from Secretary of State Condoleezza Rice.
Wall rode with Yamamoto to the presidential palace. Spruced up with the help of oil revenue, the palace had marble floors, clean carpets, Greek columns, and painted murals that told of Chad’s strength in colorful allegory. Chadian special forces soldiers in U.S.-supplied camouflage and desert head scarves protected doorways and leaned against the walls. In Déby’s reception room a presidential portrait graced one wall; there were ornate white leather chairs with oversize, thronelike armrests.
Tamlyn and two other embassy diplomats completed the American delegation; Chad’s foreign minister, the country’s internal security director, and two note takers flanked President Déby.
“Chad currently has the full attention of the United States,” Yamamoto began. He thanked Déby for agreeing to postpone the shutdown of the oil pipeline. He mentioned the letter he was carrying from Rice. The envoy unfolded a French translation and read it aloud. Its essence was that the secretary understood Déby’s situation was a very difficult one and that the United States remained committed to a successful partnership with him.
Déby said that he would like to convey his gratitude to Secretary Rice. Chad wanted “a good relationship with the United States.” As to his troubles with the World Bank, “We’ve been looking for a resolution for a year and a half.”
“I know the challenge Chad faces in maintaining stability,” Ambassador Wall assured him. “Our suggestions are all designed to find a way forward for a more stable future for Chad.”22
They struck an agreement in principle on April 26. The upshot was that Déby would have greater freedom to spend money on his military and ExxonMobil could keep pumping oil.
Ron Royal told Ambassador Wall and the visiting envoy, Yamamoto, that he and ExxonMobil headquarters in Texas were “extremely appreciative” of the Bush administration’s efforts.
The World Bank project now lay exposed as a failed experiment. The bank’s presence in the oil deal had ensured that Déby allocated somewhat more funds to domestic development than he likely would have otherwise, and it probably created more space for Chadian opposition parties and civil society than Déby would have otherwise allowed. Several thousand Chadian families in the south benefited from education and incomes by working inside the ExxonMobil compound. Otherwise the project had not achieved its goals: It did not create a template for international management of resource wealth in poor countries; it did not prevent Déby from diverting funds to cronies and defense spending; it did not reduce corruption; it did not create political or social stability; and it had not yet improved Chad’s abysmal poverty indicators. In 2000, when the project was approved by the Clinton administration, Chad ranked 167th out of the 174 nations assessed by the United Nations Human Development Index, a table of qualit
y of life indicators, and the U.N. estimated that Chad’s average life expectancy was forty-seven years. In 2006, after six years of reform experimentation and several years of oil revenue, Chad ranked 171st out of 177 nations assessed, and its average life expectancy was forty-four years.23 The oil project did, however, allow ExxonMobil and its partners to generate several billions of dollars of top-line revenue, to forge a path to profitability just as world oil prices spiked, and to embed themselves with Déby’s regime, positioning the corporation for additional oil deals beyond those covered by the original bargain. Nobody was held accountable for the experiment’s failures; the project’s successes belonged to Déby, ExxonMobil, and its consortium partners.
Unlike the World Bank’s representatives, ExxonMobil’s rotating country managers in Chad managed President Déby’s expectations successfully. “They were the first to help us,” said Déby’s adviser Mahamat Hissène. “Every time we had problems with them, they expected to sit down and discuss it. We understand they have more experience than us. We understand they are here to make benefits. We think our benefits are linked.”24
Déby’s goal after his confrontation with Wolfowitz was cash in hand; he needed funds right away to pay more military salaries, and he wanted to buy Russian-made Sukhoi attack aircraft and helicopters that could blast Sudanese rebels in pickup trucks from the air. ExxonMobil agreed to accelerate the timing of payments Chad was due under its original contract, without altering the basic revenue-sharing terms. Déby might be borrowing against his own future—precisely the opposite of the World Bank’s goal for the country—but from ExxonMobil’s perspective, that was his sovereign decision as a party to their contract.25
Chevron and PETRONAS, the project’s minority partners, interpreted their tax obligations to Chad differently from ExxonMobil. As Déby received large payments from ExxonMobil in 2006, and as he sorted out a temporary understanding with the World Bank, he was surprised to learn that Chevron and PETRONAS believed they owed him nothing at the moment, because they had yet to recoup certain costs and investments. Chevron cited a mysterious agreement dating to 2000 that the corporation claimed relieved it of certain tax burdens; Déby and his aides claimed to have never heard of the document. Déby did not take the news of Chevron’s defiance calmly.
On August 17, 2006, Ron Royal invited Ambassador Wall to a new office building ExxonMobil had opened in the capital. He noted that Déby had recently restored diplomatic relations with the People’s Republic of China and that Chinese oil executives were lurking around the capital. The ExxonMobil manager said he feared the American corporation’s presence in the country might be threatened now by Chinese competition. The Chevron tax dispute seemed a symptom of rising troubles and could have knock-on effects on ExxonMobil’s production and sale of Chadian oil. Déby’s regime had indicated, for example, that it might soon try to reopen the convention under which ExxonMobil operated.
Given the “highly tense environment,” Royal told Wall, ExxonMobil would seek a meeting between President Déby and Rex Tillerson.
Déby soon announced that he was throwing Chevron and PETRONAS out of Chad. “A revolution has begun,” Déby announced to a government-organized crowd of a thousand people in the capital. “We are only receiving the crumbs that are called royalties. . . . This is a flagrant injustice.”
This would be a limited sort of revolution, however, he explained. “One company has not failed in its obligations,” the president said. “I’m speaking of ExxonMobil, with whom we will continue to work.”26
Two days later, a young United States senator from Illinois arrived on an American military charter at N’djamena’s airport. Barack Obama, in office less than two years, was on his way back to the United States from travel to Kenya, Somalia, and Chad’s eastern refugee camps. Obama had not been in national office when the World Bank’s experimental project in Chad was born. His interest in the country derived from his interest in the Darfur crisis. Déby’s ambassador in Washington had met with Obama before he traveled and had recommended to Déby that he make time to meet the senator personally when Obama passed through the capital. They scheduled a thirty-minute courtesy call at the airport.
Obama took his seat and thanked Déby for his cooperation with the United States on Darfur and counterterrorism.
Déby in turn thanked Obama for visiting Chad and for his interest in Darfur. The crisis had profoundly affected Chad, he said. Cross-border raids into his country from Sudan continued. The April 13 raid on his capital had been an effort by Sudan “to destabilize the country, bring in a regime favorable to Khartoum, and inflict harm on Sudanese refugees in Chad.”
They talked in some detail about negotiations under way to settle or at least stabilize the conflict in Darfur. Déby rarely let a meeting with an American official go by without emphasizing Chad’s needs and shopping lists. He told Obama that while their countries enjoyed cooperation on counterterrorism, “Chadians still required equipment, and had submitted requests in the past year to U.S. authorities.”
“If a request was submitted, then the Pentagon would be reviewing it,” Obama assured him.
Déby then raised the subject of his threats to throw out Chevron and his problems with the oil companies.
“I am trying to ensure that Chad benefits from oil production,” Déby told Obama. “The Chadian people cannot benefit from the country’s oil as long as Chevron and PETRONAS refuse to pay the taxes they owe. They claim they have a legal basis for not paying income taxes,” but the agreement they signed was not approved by the National Assembly and did not have the force of law.
By deciding to confront the oil companies, Déby continued, he was seeking only to reduce the “economic inequality” between the companies and Chad.
“I can’t speak for the United States or Chevron,” Obama replied. Still, he continued, “two principles need to be considered: that the Chadian people should benefit from the country’s natural resources, and that contracts need to be observed.”
Obama said that Chad “could benefit from foreign investment, but if the rules of the country’s business environment changed, foreign investors would be more hesitant to enter Chad’s economy.” He said he hoped the dispute could be resolved and that Chad “would develop a business environment where contracts were respected.”27
Déby was accustomed to this sort of lobbying by now. No matter the party membership or political ideology of American visitors, when it came to oil, diplomats and politicians always seemed to emphasize their belief in the rule of law and the sanctity of contracts.
The two men spoke much longer than scheduled. After about ninety minutes they ended their meeting and went outside to hold a press conference, to speak mainly about Darfur. Afterward, Obama flew back to Washington. At the time, Déby’s advisers gave little thought to their president’s encounter with the junior senator from Illinois. “Nobody in Chad really understands the situation in the United States,” recalled Hissène. As for Obama, “Nobody was betting on him at the time.”
Déby flew to Paris to meet with Chevron’s chief executive, David O’Reilly. Their talks stalled, but Déby expressed an interest in meeting with one of Chevron’s international negotiating consultants, Andrew Young, the former U.S. ambassador to the United Nations. Young, on behalf of a consulting firm called GoodWorks International, flew into N’djamena. With his help, Chevron negotiated an agreement that would clarify its tax obligations and those of PETRONAS. As part of the deal, the oil companies agreed to make a onetime payment in 2006. The oil companies paid President Déby’s government a single lump sum of $281 million. A Chevron negotiator privately told the American embassy that the settlement was “not the worst, but not the best.” Chad’s oil would continue to flow; Chevron and ExxonMobil would continue to sell it.28
Seventeen
“I Pray for Exxon”
During the late 1960s, Exxon Corporation erected a gas station near the three-pronged corner of Jarrettsville Pike, Paper Mill Road, an
d Sweet Air Road in Baltimore County, Maryland. The corner was nestled in thick woods, rolling hills, horse farms, and muddy streams that joined into the Gunpowder River and ran to the Chesapeake Bay. Modest aluminum-sided brick ramblers with long driveways and multiacre lots dotted the region. In the early days after the Exxon gas station opened, new homeowners in the neighborhood topped up their wide-finned Impalas or their 8-cylinder muscle cars while commuting to jobs at restaurants or insurance offices or the industrial sections around Baltimore Harbor. In 1984, Exxon shut its first station in the neighborhood and opened a new one nearby, in the midst of the three-way intersection: Jacksonville Exxon, station number 2-8077, as it was known in the corporation’s vast system of retail gasoline manufacturing and distribution. Suburban sprawl encroached as the years passed, and later, new subdivisions of brick McMansions with granite countertops and chef’s appliances sprang up in the woods. Doctors and city executives refurbished old flagstone farms and transformed them into elegant country estates each worth a million dollars or more. The small ramblers from the 1960s seemed dwarfed by the larger new residences, but all of the area’s homes rose steadily in value as the great American housing bubble inflated. By 2006, Jacksonville Exxon served a growing and economically diverse community in northern Baltimore County: professionals, small-business owners, retirees, and middle-class commuters. All along, for more than three decades, a single family, the Stortos, had operated the Exxon-branded stations and auto repair facilities in Jacksonville; day-to-day management had eventually passed down to a daughter, Andrea Loiero.1