Mercenaries, corruption and poverty complicate the road to an oil boom

May 16, 2005 02:00 AM

Staff sergeant "Peter" helped himself to another bottle of beer from the plastic dustbin full of ice beside him and wrenched the cap off with his teeth.
"I wanted to kill the man. He was this close to me," the veteran Sao Tome mercenary said, before taking a generous slug from the bottle and gazing down the beach where children were playing in the sea. He was referring to Teodoro Obiang Nguema, the president of nearby Equatorial Guinea, who visited Sao Tome and Principe a few months ago.

Obiang is an authoritarian ruler who enjoys one of the least enviable reputations in the world for corruption, human rights abuse and the failure to pass on the benefits of his country's oil boom to his own people. He had come to seek support from the government of Sao Tome as part of a drive to build better relations with his neighbours following the latest attempt to unseat him.
In March 2004, a group of Peter's former comrades in South Africa's notorious Buffalo Batallion tried unsuccessfully to invade Equatorial Guinea and overthrow Obiang. Peter, a man with the solid build of a gorilla, said he made no attempt to actually harm Obiang and he had nothing to do with the plot to overthrow him. That was nipped in the bud when a plane carrying more than 60 mercenaries towards Equatorial Guinea was detained during a stopover in Zimbabwe.

A short-lived coup
But the former soldier of fortune freely admits to having been one of 14 former members of the Buffalo Batallion who led a coup against Sao Tome President Fradique de Menezes on 16 July 2003 while he was visiting Nigeria. The retired Sao Tomean mercenaries seized control of the twin-island state with the help of disgruntled officers in the country's small and poorly paid army. Peter said his own job was to go and arrest the prime minister.
Denouncing rampant corruption in Menezes' government, the "Buffalos" hung on for a week, until international pressure, led by Nigeria, forced them to capitulate. Menezes, a prosperous cocoa trader who was elected president in 2001, then flew home, accompanied by Nigerian President Olusegun Obasanjo to make sure there was no funny business.

Nigeria has a strategic interest in Sao Tome since the two countries have decided to share the proceeds of oil exploration in their formerly disputed offshore waters, where international oil majors are queuing up for the right to sink exploration wells. The first deep-water block was awarded to a consortium led by ExxonMobil last year after it agreed to pay $ 120 mm for exploration rights in a block that adjoins prolific oilfields in Nigeria's own offshore waters.
Sao Tome, which straddles the equator, is due to receive $ 49 mm of that deal, which was finally signed on 1 February. The hefty signature bonus will provide as much money as the former Portuguese colony could expect to earn from 10 years of exports of cocoa, its main cash crop.

The United States and the United Nations have pressured Menezes and his government into adopting an oil law designed to guarantee that all of Sao Tome's windfall income from petroleum is transparently spent on improving the lives of the tiny country's 140,000 inhabitants.
There is no such law in nearby Equatorial Guinea, where Obiang last year spent $ 55 mm on buying a brand new presidential jet, even though his 500,000 people still lack a reliable electricity supply and clean drinking water.

Allegations of corruption
In Sao Tome, Peter and his pals from the Buffalo Batallion are not the only ones who fear that a large chunk of the country's future oil revenues may have been mortgaged by those in power in return for large and immediate payments which have gone straight into their private pockets.
Many people point to the mysterious ability of senior government officials earning meagre salaries of only a few hundred dollars per month to erect luxury villas in the Campo do Milho, a new suburb springing up on the road from Sao Tome city to the nearby airport. Many of these same people can also miraculously afford to import four-wheel-drive cars.

No-one has ever been jailed for corruption in recent times and one exasperated diplomat noted that Sao Tome did not even have a law obliging the government to put public sector contracts out to tender. But there has been a stormy debate about alleged irregularities in the award of the second offshore block in the Joint Development Zone shared with Nigeria. Earlier, President Menezes parted company with his personal adviser on petroleum issues, Patrice Trovoada, after public allegations that some of Trovoada's private business deals were incompatible with his role as a public servant.
Peter said he left Sao Tome soon after independence in 1975, when he was just 17, because he disagreed with the Marxist government that assumed power in Sao Tome, entrenching its rule with the assistance of 1,000 troops sent from nearby Angola.

After initially travelling to Gabon, 300 km to the east, Peter and several other young Sao Tomean dissidents ended up in Walvis Bay in what was then South African-ruled Namibia.
"We were arrested and they gave us a choice," Peter said. "Either go to prison or join the army."

So Peter and his friends joined the Buffalo Batallion, apartheid South Africa's equivalent of the French Foreign Legion. Based in the Caprivi Strip of northern Namibia, they were frequently used as special forces on clandestine operations inside Angola.
Shortly after Namibia achieved independence in 1990, the Buffalo Battalion was disbanded and Peter, along with his several hundred of his former comrades in arms became a free-lance mercenary. Many of them worked for the now disbanded South African security company, Executive Outcomes.

Peter said he was first sent to Sierra Leone, where he became the personal bodyguard of Valentine Strasser, an army captain who seized power in a 1992 coup. Then he went to Liberia to support the regime of former president Charles Taylor.
"There were 300 ex-Buffalo people in Liberia at one time," Peter said.
From therehe drifted to Papua New Guinea, where in 1998 the government hired mercenaries to try and quell an insurrection on Bougainville Island, where a large copper mine is situated. Returning to Sao Tome in 2001, "Peter " as he is universally known, eventually found work as a paramedic for a local non-governmental organisation (NGO) involved in public health campaigns.

Now aged 47, the former mercenary says that his soldiering days are over. Any further political activity by the "Buffalos" will be channelled peacefully through their small political party, the Christian Democratic Front (FDC), he added.
But many Sao Tomeans are not so sure. They fear that the Buffalos might still cause trouble on this volcanic forest-covered island with picture postcard beaches fringed by palm trees.

Poverty is increasing
In a country where the minimum wage is just $ 25 per month and a graduate civil servant earns $ 60 to $ 70, corruption is rampant and there is plenty of resentment against the ruling elite for stuffing money in its own pockets, while leaving the vast majority of the population mired in poverty.
The local trade union movement recently demanded that the government use its first oil cheque from ExxonMobil to implement a four-fold increase in the minimum wage to $ 110 per month. Ministers have rejected this as unfeasible.

Despite the increasing prosperity of an affluent minority in Sao Tome, overall living standards have fallen steadily in recent years, leaving the country with a per capita income of just $ 390 per year, according to the International Monetary Fund (IMF).
More than half of the population lives below the poverty line and many of the problems associated with chronic poverty, such as disease and malnutrition, have begun to re-emerge.
In April, the island of Sao Tome suffered its first cholera outbreak for 15 years. By mid-May 131 people had been hospitalised with acute diarrhoea suspected of being cholera and three had died.

One of the hotspots of the epidemic was Ferreira Governo, a run-down cocoa estate four km outside the capital. There, 26 of the 135 people who live in squalid plantation workers' huts lining a large square, fell victim to the disease and one died.
The community's water supply had become heavily polluted due to lack of maintenance, while its latrine block was knocked down years ago after its drains became blocked. The water pipe which spurts muddy brown water into a washing trough in the middle of the square comes from a small dam further up the mountain that has not been maintained properly since the estate was nationalised soon after independence.

And with no proper toilet facility, local people now just defecate anywhere among the cocoa trees that surround the village. Since the epidemic began, a fire engine has been bringing clean water from the nearby city every day for the inhabitants of Ferreira Governo to drink.
But they still bathe and wash their clothes in the polluted water that gushes out of the standpipe and use it to irrigate small plots of tomatoes and beans that are sold in the market in Sao Tome city. And they still lack hygienic toilet facilities.

Many of the inhabitants of Ferreira Governo blame their misery on Oscar de Barbosa, a prosperous local businessmen whose company, Mantero Agricultura Comercio Internacional, has leased the cocoa estate from the government for the past eight years, but has not invested a cent in maintaining or repairing its crumbling infrastructure.
Barbosa also happens to be the Minister of Defence.
"All he wants is the cocoa," Miguel Brito, one resident of Ferreira Governo complained. "He doesn't even bother to show his face here." Jose Andrade Boa Morte, the manager of his plantation company, said it was the government's responsibility -- not Mantero's -- to repair the decaying infrastructure at Ferreira Governo. He also accused the inhabitants of the estate of failing to take action themselves to make sure that intake of their water supply was clean.

In the early years of the 20th century, Sao Tome was the world's biggest supplier of cocoa. But some argue that the local cocoa estates have been in decline since the 1920s when British traders began to boycott Sao Tome beans in protest at the harsh conditions endured by the contract workers brought in to replace slaves on the island's colonial plantations.
The decline of the cocoa estates accelerated after the estates were nationalised at independence and since then, people have emptied out of the island's rural areas into the capital. Sao Tome city and the surrounding district now contain two thirds of the population of the entire country. Many of the more remote cocoa plantations have been abandoned entirely and have reverted to bush. Annual cocoa production has fallen to about 4,000 tpy and everyone is looking to oil -- and to a lesser extent tourism -- for economic salvation.

Fortunes to be made in construction
Money related to oil development is already pouring into Sao Tome and there are fortunes to be made. Martinho Tavares, a former member of parliament who has given up politics and journalism to launch his own construction company, says the United States has drawn up plans to invest $ 500 mm in extending the airport runway and building a brand new deep-water port.
Washington commissioned a feasibility study for both projects last year as part of its strategy of securing new sources of oil in West Africa to reduce the United States' continuing heavy dependence on the volatile Middle East.

Tavares's company is already putting up a new office block for ExxonMobil in the sleepy centre of Sao Tome city, which is graced by clean tree-lined avenues and brightly painted colonial era buildings. And on the outskirts of this tranquil seaside town, new houses are being thrown up to let to the expected influx of foreign oilmen. Exploration drilling is expected to start in 2007 and oil analysts say the country is likely to produce its first oil three to five years later.
Despite Washington's strategic interest in Sao Tome, there is still no resident US ambassador in the tiny country, whose entire population is smaller than that of a medium-sized city on the African mainland. The US ambassador is based in nearby Gabon and can be seen on his frequent visits to Sao Tome jogging along the quiet streets in a tee-shirt and shorts, his ears plugged into a walkman, with no need for a bodyguard to tag along beside him.

Nigeria's presence, on the other hand is far more marked. Africa's number one oil producer has replaced Angola, whose troops departed in 1990, as the country's African guardian. There is a fully-fledged Nigerian embassy in Sao Tome, several Nigerian banks have opened branches in the city and aggressive Igbo traders from south-eastern Nigeria are rapidly taking over the control of business in its main market.
They have a reputation for selling more cheaply than their Sao Tomean competitors and for keeping their shops open longer.

Discontent in Principe
Meanwhile, potential troubleis brewing in Principe, a small sleepy island of 5,000 people 150 km to the north of Sao Tome, in whose offshore waters the oil companies hope to strike it rich. A small, but vocal lobby is emerging in Principe to protest that although this autonomous island will produce all the oil from the Joint Development Zone shared with Nigeria, it is unlikely to get attract much economic development out of the hoped for oil boom. Nearly all the planned infrastructure to support offshore activities is due to built on the island of Sao Tome.
There have even been murmurings of separatism. Some of the malcontents on Principe have compared the island's situation to that of Cabinda, an oil-rich enclave of Angola on the north side of the Congo River, whose neglect by central government has fanned sympathy for the idea of secession.

However, the international community has taken action to head off this problem in Sao Tome. The country's new oil law, drafted with the help of legal experts from Columbia University in New York and a former governor of Alaska, reserves 7 % of all oil revenues for spending on Principe.
Back on the beach, Peter cracked open another beer.
"I hate communism," he said, pausing to hand another bottle for his friend, a Cuban-trained judge.

Sao Tome has enjoyed a multiparty democracy for the past 15 years and it seems to work, even though local journalists complain that they will be quietly frozen out of a job unless they practice self-censorship. The opposition has already established a track record for winning parliamentary elections and the last three presidential polls have all resulted in a new head of state coming to power. In this pint-sized country, family ties and friendship often count for more than ideology.
"Have some whisky?" Peter said, pulling yet another bottle out of the blue plastic dustbin.

This report does not necessarily reflect the views of the United Nations.

Source: UN Integrated Regional Information Networks
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