Africa's Oil Tycoons
by Daphne Eviatar
The Nation magazine, April
The red, white and blue helicopter soared
through streaming white clouds and sunny blue sky. Below, tiny
Lego-like platforms jutted up from the shimmering Cabinda Bay.
But as we neared the Takula oilfield, dozens of towering flares
breathed huge swirls of fire. The tides of the Congo surged into
the waves of the Atlantic, and the ethereal cloud formations were
engulfed by a yellow-brown haze.
This is the heart of Angola. Although
separated from the rest of the country by the Congo River and
a strip of land that's part of the Democratic Republic of the
Congo (Portugal only incorporated the province of Cabinda into
Angola in 1956), the twenty-four-hour oil operations that suck
coffee-colored crude off the coast of Cabinda are the country's
economic engine. They are what financed the government's army
during a civil war that ended just two years ago. And they're
the most obvious sign of the West's relentless tentacles reaching
into Angola today.
The constant cough of noxious black fumes
is the least of their consequences. Twenty-seven years of civil
war fueled by a lethal mix of oil, diamonds and cold war enemies
have left one of Africa's potentially richest countries a shambles.
Although its own kleptocratic leaders and homegrown revolutionaries
deserve much of the blame, it's impossible to divorce what's happened
from the constant manipulation of outsiders-from the Portuguese,
who kept Angola under the thumb of colonial rule for 500 years,
to the United States and white-led South Africa, which bankrolled
Angola's rebels during the cold war, to the multinationals draining
the country of its natural resources today.
I went to Angola to try to understand
how a country so rich in the most coveted resource of our time-oil-can
fall to the bottom of almost every scale of human development.
Angola pumps almost a million barrels a day; the United States
imports more oil from Angola than from Kuwait. But 70 percent
of Angolans live in poverty. Eighty percent have no access to
basic medical care. Average life expectancy is only forty years,
and three in ten children will die before reaching their fifth
It 's no secret that Angola's leaders
are siphoning off huge amounts of state money. But lurking beneath
the sinister statistics and corrosive corruption is the murky
involvement of Western governments and multinational oil companies.
What role are they playing in the postwar transformation of Angola?
Luanda's Hotel Tropico, a favorite among
oilmen and World Bank and IMF officials, offers a clue. When I
arrived in Angola's capital bleary-eyed early one morning in mid-October,
the slick new lobby was packed. While the Angolan staff scrambled
to confirm reservations on malfunctioning computers, middle-aged
white men elbowed their way to the long mahogany counter demanding
to know why their rooms weren't ready. Others dozed in overstuffed
armchairs among stacks of suitcases, waking intermittently to
drink espresso or whiskey and smoke cigarettes. It was 5 AM, and
although Angola has no tourist industry, the hotel was full and
our rooms wouldn't be ready before noon. Until then, no one seemed
to be leaving the building.
In fact, I'd been warned not to walk outside,
and I quickly understood why. Exploring the streets of Luanda
is harrowing. It requires careful maneuvering among fragments
of broken sidewalk and heaps of reeking garbage. Reckless drivers
on rough dirt roads kick up a choking dust that sticks to your
sweat in the sweltering heat. And it's almost impossible to make
it five blocks without being splashed by sewage. Frequent petty
crime in Luanda casts a pall of fear that only ratchets up the
tension. This once-thriving "Paris of Africa," now a
mix of broken-down colonial villas, 1960s-style apartment blocks
and sprawling shantytowns, has essentially been abandoned by the
government. Built for a population of about half a million, it's
now home to eight times that many, mostly refugees who fled the
ravaged country-side during the civil war. They arrived in the
capital and built a vast maze of musseques-clusters of cement-block
hovels with rusted-scrap tin roofs, held down by stones and patched
with plastic sheeting. The government has thrown up its hands:
It doesn't provide electricity or running water in much of the
city, let alone maintain the roads or pick up the garbage.
To avoid this unpleasantness, most foreigners-whether
working for oil companies, aid organizations or the United Nations-
travel around the city in chauffeur-driven SUVs. Those who work
for ChevronTexaco, which dominates the Angolan oil industry, aren't
even allowed to drive themselves. They're also forbidden to venture
into the countryside. The limit is the golf course in nearby Luanda
Sul, where the company maintains a gated, guarded compound of
Southern California-style homes for its employees.
Still, even the most privileged in Luanda
can't completely avoid its conditions. When I caught a ride to
Luanda Sul with a BP oil executive, the driver had to navigate
the Range Rover over jammed mud roads and crater-sized potholes,
swerving to avoid the children who picked through mountains of
roadside garbage. Men hawked sundries from car to car while women
sold produce in the dirt alongside open sewers.
It wasn't always this way. The Portuguese
were first drawn to Luanda in 1575 because its port offered access
to legendary silver mines. But the slave trade soon became the
main attraction: In the seventeenth and eighteenth centuries,
the Portuguese captured and shipped up to 2 million Angolans to
South America and the Caribbean. Even after slavery was outlawed,
the Portuguese used forced labor in Angola's countryside to grow
cotton, sugar, rice and tobacco for export; others reaped riches
off the country's vast diamond reserves. Luanda boomed in the
1930s, and by the 1970s it was among the continent's most modern
and picturesque cities, its wide avenues boasting stunning examples
of the finest Portuguese colonial architecture.
But all was not well. Angolans were agitating
for independence and, after a military coup overthrew Portugal's
forty-eight year dictatorship in 1974, found themselves suddenly
free. The bulk of the Portuguese elite professional and middle
class abandoned the country. With no foundation for democracy
and only the example of half a millennium of exploitation, Angola
fell prey to vicious factional fighting. The Marxist Popular Movement
for the Liberation of Angola, or MPLA, representing urban, middle-class,
mixed-race Angolans, quickly won control of the government with
the backing of the Soviet Union and Cuba. The National Union for
the Total Independence of Angola, or UNITA, led by Jonas Savimbi,
was supported in most rural areas of the country.
But if Angolans viewed the conflict as
a civil war over ethnic, geographic and resource control, the
West saw it as yet another domino to be defended in the cold war.
UNITA quickly won support from neighboring South Africa and the
By the time the war ended, with the assassination
of Savimbi in 2002, more than 500,000 Angolans had been killed.
Two million more had been driven from their homes. The countryside
was scorched and the economy in ruins. Angola has gone from being
the breadbasket of Africa to producing almost nothing; its sole
successful industry is the manufacture of artificial limbs. Although
in 1991 Angola officially abandoned Communism (the United States
recognized the MPLA government soon afterward), its overnight
transition to a market economy has done little to bolster living
conditions. The only difference most Angolans notice is that they
no longer get free education or healthcare.
For the mostly foreign elite, though,
Angolan-style capitalism provides a warm welcome. Although prices
are astronomical-a basic one-bedroom flat can cost twice what
it would in London or New York, and the electricity and water
go out several times a day-most company employees have all their
expenses paid, and generators cushion the inconvenience of power
outages. While some foreigners live along the palm-lined Marginal,
Luanda's crumbling waterfront promenade, the oil companies maintain
separate walled compounds of suburban-style houses for their employees
on the outskirts of the city. Most foreign workers, including
US Embassy employees, earn more money in Angola than they would
almost anywhere else, due to extra "hardship payments."
And while just a few years ago there was nothing to buy, a new
sporting-goods store filled with Nike products and a Range Rover
dealership have opened downtown.
For those willing to leave their homes,
Luanda can be fun. Every Friday afternoon the US Embassy hosts
a happy hour. Afterward, mostly American and South African embassy
workers and businessmen head for the Ilha-a skinny strip of land
that juts out into Luanda Bay. There, oceanfront cafes like Miami
Beach and Coconuts offer Portuguese wine and South African beer,
Brazilian cocktails and a dozen different preparations of prawns,
an Angolan delicacy. After a gourmet dinner, expats will hit Bahia,
a tasteful open-air Brazilian nightclub, or one of Luanda's all-night
dance spots, where middle-aged foreign businessmen have their
pick of young Angolan prostitutes.
Much of the fuel for this enclave of opulence
comes from California-based ChevronTexaco. Pumping 60 percent
of Angola's oil-more than half of which is exported to the United
States-the company expects to double its oil production there
by 2008. "Angola has been a terrific place to do business,"
Jim Blackwell, the director of ChevronTexaco's operations in Angola,
told me. That's because the horrors of Angola's civil war never
really touched ChevronTexaco, which pumps most of its oil from
platforms far out in the ocean.
To understand exactly how that works,
I went to visit the company's compound, known as Malongo, in Cabinda-the
only part of Angola most ChevronTexaco workers ever see. (Although
some stay at Malongo, others are ferried by helicopter out to
massive steel oil platforms in the ocean, where they spend twenty-eight
days before being shuttled back home.) Built in the 1960s, Malongo
is a campus of ranch houses, manicured green lawns and smooth
paved roads. ChevronTexaco's own well and private filtration system
supplies drinkable tap water-a rare luxury in Africa. Spacious
dining halls offer a stunning array of fresh seafood, imported
meats, salad and dessert bars. The vegetables are all grown in
an organic greenhouse on the compound, set up by Norwegians, and
bright green Granny Smith apples are flown in from South Africa.
For entertainment, there's baseball, basketball, volleyball and
tennis, a cricket pitch, horseshoes and a rolling green golf course.
Unlike the rest of Angola, where the official language is Portuguese,
the language of Malongo is English. If workers still get homesick,
they can dial direct from their rooms to the United States-no
need for international dialing codes. Indeed, except for the extraordinary
bats that hang in ominous clusters from the branches of the compound's
mango trees, you'd never know you were in Africa.
ChevronTexaco does everything it can to
keep it that way. No one enters or leaves the compound without
special permission. And there's no way to avoid the tightly guarded
security gates, because the entire compound is surrounded by a
double fence of barbed wire that encloses a ring of anti-personnel
The mines, planted by the government during
the war, are just one manifestation of the long-standing relationship
between the Angolan government and the oil company. Gulf Oil,
as the company was then known, first discovered oil in Angola's
waters in the mid-1960s. Although the ascension of the MPLA scared
off most Portuguese investors, the oil operations were largely
offshore and therefore untouched by the ensuing bloodshed. Despite
the new government's Marxist ideology, it signed a contract granting
the American corporation drilling rights. (Gulf Oil became Chevron
in 1984, which then merged with Texaco in 2001.) The MPLA played
its part by guarding the compound, and used Cuban troops to do
it. Back in the United States, though, Ronald Reagan was hailing
rebel leader Jonas Savimbi as a "freedom fighter" and
funneling millions of dollars to UNITA to support its bloody war
against the Angolan government. As a result, Chevron in the 1
980s was in the unlikely position of being an American oil company
allied with a Communist government and guarded by Cuban troops
from potential attacks by US-funded rebels. (Mysteriously, the
company's compound was never directly attacked, leading to speculation
that the United States paid off UNITA to spare the oil operations.)
The government still maintains an armed
base on a hill just outside Malongo's gates to coordinate with
the company on security. (In addition to local hostility against
the oil company, some Cabindans have been waging a separatist
campaign against the government for decades, claiming they're
not reaping any benefits from Angola's oil, the bulk of which
is in their territory.) But the benefits of the company's relationship
with the government these days go well beyond security. When I
visited, ChevronTexaco officials told me that the company is working
closely with the government to develop the environmental, tax
and other regulations that will govern, well, ChevronTexaco. "For
a long time there were no real regulations in Angola," Artur
Custodio, who holds the bold title of "operational excellence
champion" for ChevronTexaco, told me as he showed me around
Malongo. "So the government is asking ChevronTexaco to create
them." The lack of regulations is why ChevronTexaco has flares
burning off the natural gas that's produced during oil extraction,
and why it can routinely spill oil into the ocean-there were sixty-nine
oil spills reported in just the first ten months of 2003-without
any public disclosure. (The company does report spills to the
ChevronTexaco nonetheless insists it is
a good corporate citizen, and officials were eager to show me
the charitable work it does in the area, along with a group of
other international oil companies (most significantly the French
company Total, the Italian ENI-Agip and of course the Angolan
state-owned oil company, Sonangol) that own a share of the fields
it operates. Together, the companies have spent about $24 million
on development projects in Cabinda in the past five years. (ChevronTexaco
won't reveal its profits in Angola, but the company netted a record
$7.2 billion in 2003 worldwide.) "This is part of our corporate
responsibility," said Feliciana Ngada, a spokesperson for
ChevronTexaco. "We sit down with the government. They tell
us we need a school or a health center. Then they are invited
to participate in the opening ceremony." Once the project
is built, it bears a large plaque with the names of its corporate
sponsors. That is the end of the companies' involvement. They
do not check to make sure the schools are being used or the clinics
are staffed or stocked with medicine. "That's the government's
responsibility," Ngada told me.
The consequences of that policy became
immediately apparent on a daylong tour. As we drove north, we
passed villages of broken clapboard shacks, mud-caked barefoot
children and the occasional stray chicken. We stopped outside
one of those villages to visit a Catholic boys' school where the
companies had built a dormitory. At the end of a rugged dirt road
was a one-story stucco building, freshly painted creamy white
with a brick-red Spanish-tiled roof. But for 10 AM on a Thursday,
it was strangely quiet. I asked Padre Policarfao Futi, who runs
the mission connected to the school, where all the children were.
"The school is closed," he said, smiling at my surprise.
"We have no teachers." Indeed, the schools in Cabinda
hadn't had teachers for months. They were all on strike because
they hadn't been paid by the government.
Later, we drove to see a small health
clinic. Francisco de Amaral, a lanky, bearded medical technician
in a white lab coat, was inside alone. Where were all the patients?
I asked him. "There were some earlier," he said, "but
I couldn't do anything for them. We don't have a laboratory, so
I can't determine what disease they have. Usually they have symptoms
of malaria. But I don't have any medicines for malaria."
The only project I saw that was functioning
well was a blood bank funded by the oil companies housed in Cabinda's
decrepit municipal hospital. ChevronTexaco has also committed
about $11 million to supporting agricultural projects elsewhere
in the country.
Of course, oil companies don't operate
in Angola to provide social services. "Our responsibility
is to efficiently develop resources in the country for our shareholders
and our partners," ChevronTexaco's Blackwell told me. A Louisiana
native with a broad, freckled face and reddish-brown hair, dressed
in a Levi's shirt and bluejeans, Blackwell oozes corporate American
cowboy. "There's an optimism that's capturing the whole country,"
he said. "We have an opportunity to capture that." To
do that, ChevronTexaco has invested more than a billion dollars
a year in the country for the past five years, making it one of
the company's most significant investments in the world. With
the latest deepwater technology giving the company access to ever
more reserves of oil, Blackwell and others expect Angola to become
Africa's top oil producer-surpassing Nigeria-within five to eight
To take advantage of the new technology,
it helps to have good relations with the government. The schools
and clinics in Cabinda are part of that. So are the contributions
by ChevronTexaco to the Eduardo Dos Santos Foundation, ostensibly
a charitable foundation run by the president that's long been
rumored to be a means for pilfering oil money. More recently,
the president's wife has set up a similar organization, supposedly
to support disabled.: Angolans. ChevronTexaco contributes about
$50,000 per year to the Dos Santos Foundation, and has given another
$50,000 to the First Lady's foundation. Blackwell said he was
unaware of any concerns about corruption.
But the most widely cited problem in Angola,
pointed out not only by advocacy groups but by the World Bank,
the IMF and even the US State Department, is that close to a third
of the oil revenues that come into the country never make I it
into the public budget. No one outside the government knows where
the money is going. Organizations like Global Witness have documented
that at least a billion dollars has ended up in Virgin Islands
bank accounts of close associates of the president.
Blackwell doesn't seem to believe the
repeated reports about Angola's financial mismanagement. "I
think the government's really taking it on the chin with transparency,"
he said. "My sense is the government is doing the best it
Rosa Maria Joao, a mother of five whom
I met as she waited outside a crowded UN-funded health post in
a northern bairro of the city, doesn't have the same faith. As
she cradled her 6-month-old daughter, who was sick with diarrhea
and a high fever, the skinny 28-year-old told me she makes a meager
living cleaning homes and washing clothes for Luanda's wealthy.
Although she's seen changes in Angola since the end of the war,
"they're only for those who have money," she said. "For
those who don't, there is nothing." Indeed, the government
wants to bulldoze the village where she lives-a former refugee
camp where residents have built small homes and a school-to make
way for new construction. "I know the country has a lot of
money from selling petroleum," she said. "The government
can keep most of it. But shouldn't at least some of it go into
improving people's living conditions?"
Justine Pinto de Andrade, director of
the economics department at Catholic University in Luanda, agrees.
"You see some buildings that are improved, like Endiama (the
state-owned diamond company), Sonangol and De Beers," he
said. "But these are not places for the people to live. There
is nothing for them." And the expansion of Luanda Sul, with
its sprawl of guarded compounds? "Luanda Sul is the opposite
of development," Andrade said with irritation. "Sure,
it's creating something, but development is creating works for
people, like jobs and houses. This is nothing. It's only for rich
people who have houses."
The Angolan government's response to such
criticism is that its coffers have been drained not by corruption
but by the cost of fighting a brutal civil war. "The government
is very concerned about social issues," Manuel Nunes Junior,
Angola's deputy finance minister, told me. "But Angola had
a terrible, terrible war. We need massive international help."
Of course, international aid, which totals about $300 million
a year, is dwarfed by the sums paid by oil companies to the government
that go missing each year. But Junior denied that the money had
been siphoned off. "There is no proof that this money has
disappeared," he said. He said the problem is merely that
payments made to international creditors by Sonangol, which makes
"quasi official expenditures on behalf of the government,"
were not recorded in the budget.
Benjamin Castello, director of the Angola
chapter of Jubilee 2000, a coalition of advocates focused on debt
relief, notes that despite their purported charity work, the oil
companies give nothing to local pro-democracy organizations, which
provide the only hope for holding the government accountable.
"Oil companies know that if they support civil society, in
the future they won't receive new petrol blocks," he said.
(The United States has apparently decided such funding isn't in
its interest either: The Agency for International Development
has virtually eliminated its prior support for pro-democracy organizations
that were critical of the government.) Oil companies are also
resisting a campaign initiated by the Open Society Institute and
Global Witness, and supported by more than 100 organizations worldwide,
that asks companies to publish the payments they make to governments,
under the theory that this would make it harder for government
officials to steal the money. The companies say it would violate
their contracts with the government of Angola and put them at
a competitive disadvantage. \
The United States has shown no interest
in either making demands on oil companies or pressuring the Angolan
government. On the contrary, with its interest in diversifying
its sources of oil and staying on the right side of one of the
most powerful military forces in Africa, Washington is publicly
strengthening ties to the MPLA government. In 2002 the Bush Administration
welcomed President Dos Santos to the White House, and that same
year Secretary of State Colin Powell visited Angola. The United
States is now building a mammoth, $40 million fortified embassy
high on a hill overlooking Luanda; a low cement wall across the
road hides the musseque built into the slope below. American officials
say they prefer a carrot rather than a stick approach. "It's
a partnership," said a senior US Embassy official, who spoke
on condition of anonymity. "Angola can be a force for democracy,
stability and economic development. It could be one of the wealthiest
countries on the continent."
Hoping investors will see it that way,
the Angolan government is beginning to talk about changing its
ways. It has said, for example, that it will publish a complete
budget that includes all of the state oil company's expenditures.
But it won't allow any independent auditing, so if the private
oil companies continue to hide payments, there will be no way
to verify the government's revenues.
In the meantime, conditions for most Angolans
continue to worsen. In 2002, despite the war's end and an increase
in oil profits, Angola slid down the UN's Human Development Index,
compared with the three years before. According to a recent report
by Human Rights Watch, spending on social programs is now less
than 3.5 percent of the national budget-significantly lower even
than in neighboring Chad, Equatorial Guinea and the Democratic
Republic of the Congo.
For Angola's elite, though, things are
looking up. Shortly before I left in November, the Council of
Ministers had just declared its support for a $600 million project
to build two brand-new islands in Luanda Bay. They would boast
a shopping mall, luxury hotels, apartments, restaurants and casinos.
Daphne Eviatar writes frequently about
development. She went to Angola as a Pew fellow in international