IHS Global Insight Perspective | |
Significance | Human Rights Watch in a report entitled "Well Oiled: Oil and Human Rights in Equatorial Guinea" says the country's ruling family has enriched themselves while living conditions for the population at large have deteriorated. |
Implications | The organisation says that the U.S. and Spanish governments must take a firmer stance against the ruling family, which has been involved in numerous corruption incidents. |
Outlook | The country is developing a more active energy policy and becoming less reliant on U.S. oil companies by welcoming investment from European energy groups and Chinese NOCs. |
Squandered Wealth
Equatorial Guinea, Sub-Saharan Africa’s fourth-largest oil producer has squandered its oil wealth and the country’s 500,000 inhabitants now experience worse living conditions than before the country’s oil boom, according to a report published by the NGO Human Rights Watch. The report entitled "Well Oiled: Oil and Human Rights in Equatorial Guinea" describes how the government under the dictatorship of President Teodoro Obiang Nguema Mbasogo has used the oil boom to entrench and enrich itself further at the expense of the country's people. Since oil was discovered there in the early 1990s, Equatorial Guinea's GDP has increased more than 5,000% while living standards for the country's 500,000 people have worsened.
The report by the New York, United States-based Human Rights Watch says that infant mortality rose from 103 per 1,000 live births in 1990 to 124 per 1,000 in 2007, while the under-five mortality rate increased from 170 per 1,000 to 206 per 1,000 over the same period. Arvind Ganesan, director of Human Rights Watch's Business and Human Rights programme said; "The government's failure to provide basic social services violates its obligations under the International Covenant on Economic, Social and Cultural Rights". The report says that Equatorial Guinea has a per capita GDP close to that of Spain or Italy, but its people "live in poverty worse than in Afghanistan or Chad", two of the least developed countries on the planet, which have been afflicted by destructive wars. Last year the NGO Transparency International, which monitors governmental corruption, ranked Equatorial Guinea as the world’s ninth most corrupt country. Less than 2% of its GDP goes on public health and less than 1% on education.
The people of Equatorial Guinea have mechanisms through to hold their government to account. The government severely curtails press freedom and independent civil society, and the political opposition is weak and faces constant government harassment, intimidation, and threat of arrest. However, the government of Equatorial Guinea has accused Human Rights Watch of "blackmail" and issued a response signed by Miguel Oyono, head of information at the presidential office saying; "Nothing that these NGOs say worries us; we have our doors open to all international organisms of proven moral solvency such as the International Monetary Fund, the World Bank and the U.N. system to verify that everything published by NGOs like Human Rich Watch [sic] are pure fallacy. Why don’t they invite these institutions to give them trustworthy data about the economic situation in Equatorial Guinea instead of inviting governments to whom Equatorial Guinea owes nothing to apply pressure?"
Business as Usual
Equatorial Guinea has benefited hugely from investment by U.S. oil companies including ExxonMobil, which operates the 197,000-b/d Zafiro oil field, Hess, and Marathon Oil, which is the majority shareholder in the country’s LNG export facility. The U.S. imports up to 100,000 b/d from Equatorial Guinea, which was viewed favourably by the previous Bush administration, with the U.S. former secretary of state Condoleezza Rice publicly telling Obiang during a 2006 visit to Washington D.C.: "You are a good friend, and we welcome you". This was the same month that Obiang's eldest son, Teodorin, spent US$35 million on a property in Malibu, one of the most desirable locations in California. It is quite unfathomable how Teodorin could afford such a residence when his only known income was a US$4,000 monthly salary as a government minister. Two years before in 2004 he is known to have spent about US$8.45 million on mansions and luxury cars in South Africa.
The significant interests of U.S. companies have also meant that the U.S. government is a key interlocutor with the government of Equatorial Guinea, according to Human Rights Watch. The U.S. appointed a new ambassador to Malabo in 2006, after a break of 12 years, installing him in an embassy building rented from Obiang’s uncle, National Security Minister Manuel Nguema Mba, who has allegedly been complicit in the torture of opposition supporters. The report says; "In effect, the United States is providing income to a senior government member accused of acts of torture". In addition the United States also provides security training assistance through a private contractor, Military Professionals Resources Inc.
Outlook and Implications
Last week Obiang Nguema celebrated the 30th anniversary of his presidency. He staged a coup d’état against his own uncle, Francisco Macias Nguema, on 3 August 1979 but formally assumed the presidency in October 1979. Macias Nguema had taken control of the country when it gained independence from Spain in 1969. Obiang had his uncle executed by firing squad after being found guilty of a decade of misrule. Obiang is now the longest serving president in Sub-Saharan Africa following the death in June of Gabon’s Omar Bongo. The 67-year-old Obiang has no plans to leave office and is sure to be declared the winner in the next presidential poll scheduled for December. In the most recent parliamentary elections in May 2008, Obiang and his allies won 99 out of 100 seats. However, there remains the crucial question over who will succeed him. Various rival factions in his family are competing, but the main one is led by his elder son, Teodorin. The country is perhaps best known for the failed coup attempt involving British mercenaries, aiming to depose Obiang and his family in 2004. Exiled Equatorial Guineans continue to battle for democracy in their country, led by Severo Moto, who has been president of the Equatorial Guinean government-in-exile in Spain since it was established by his Progress Party in 2003.
Equatorial Guinea is the only former Spanish colony in Sub-Saharan Africa and after many years of bad relations, the two governments appear to be strengthening their friendship. Spain’s Foreign Minister Miguel Ángel Moratinos visited the country on a three-day official visit last month when he held talks with the country's Prime Minister Ignacio Milam and President Obiang. Spanish oil company Repsol is embarking on exploration in the country and in May the firm's subsidiary Repsol Exploracion Guinea SA was approved by the Ministry of Mines and Energy as operator of Block C offshore Bioko Island, as a result of the withdrawal of Mobil Equatorial Guinea and SK Corporation from the licence. The revised interests in the Block C licence are Repsol (57.38%) and NOC Compañia Nacional de Petróleos de Guinea Ecuatorial (GEPetrol) with 42.62%.
At the start of the year a memorandum of understanding (MoU) was signed in the capital, Malabo, between the National Gas Company of Equatorial Guinea (Sonagas), Spain’s Union Fenosa, Germany's E.ON Ruhrgas, and Portugal's Galp Energia for the creation and organisation of a company that will be the owner of a gas gathering system that will utilise gas that is currently being flared. The gas gathering company will be known as Consortium 3G and the company will select different projects dealing with domestic gas use and providing export solutions in the Gulf of Guinea. Considerable investment will be required to build the offshore infrastructure, but the project could result in new feedstock for the country's planned second train at Equatorial Guinea's LNG plant (EGLNG) at Punta Europa on Bioko Island. The first cargo from the first train was delivered in May 2007.
The country has recently welcomed investment from China, which has built a large embassy in Malabo, the island capital. The Export-Import Bank of China (EIBC) granted an oil-backed loan in November 2006. In the same year, China National Petroleum Corporation (CNPC) was awarded offshore Block S and plans its first well in the country before the end of the year, but an upgrade is due to take place before operations begin which could see the timetable fall back into 2010. CNPC also holds offshore Rio Muni acreage in Block M.
The Equatorial Guinea government joined the Extractive Industries Transparency Initiative (EITI), a programme designed to make natural resources benefit everyone by setting a global standard for openness in oil, gas, and mining. However, the government has been very slow to implement the initiative’s standards and is pushing for a more active energy policy in order to monetise its assets, declaring an end to flaring in order to exploit its currently wasted gas reserves. Yet for all the investment in the country's oil and gas sector (the country is estimated to earn revenues of US$4 billion a year), there is very little investment in social infrastructure and the ruling family seem to funnel away unimaginable sums in private bank accounts. The venerable Riggs Bank, based in Washington DC in the United States, came under severe criticism from the U.S. Senate after Simon P. Kareri, the manager of the African and Caribbean division of Riggs's international and embassy banking department, and his wife were charged with bank fraud, money laundering, wire fraud, and conspiracy in connection with embezzlement of customer funds and selling property. Kareri had been in charge of the Equatorial Guinean government’s account, the bank’s largest depositor and there are well known stories of suitcases full of cash being walked out of Riggs Bank and given to members of Obiang's family. In 2004 a U.S. Senate investigation detailed how President Obiang used the country’s oil wealth to finance numerous personal transactions, including spending US$3.8 million on two mansions in a suburb of Washington, D.C. That investigation led to one of the largest fines against a bank in U.S. history and ultimately the bank’s takeover by PNC Financial Services.