UK aid money is creating an 'oil curse' for developing economies, according to Pumping Poverty, a new report [1], launched Thursday 17 March as G8 environment ministers meet in Derby to discuss the impact of climate change on Africa. Pumping Poverty finds that government aid is being spent on supporting energy projects which benefit UK and US oil companies, but which do little to help the countries where they are based.
The research shows that the Department for International Development's (DFID's) policies on oil development are incoherent; they fail the people they are designed to help and compromise the department's mission to alleviate poverty and undermine UK efforts to fight climate change.
Specifically the report highlights the 'oil curse' which often accompanies the discovery of oil in a developing country. At a local level, oil production can have an adverse effect on local communities, with pollution affecting water supplies, farmland and air quality. Nationally, the discovery of oil can harm the economy, with investment in oil undermining other sectors, disrupting growth and potentially weakening democracy.
DFID supports fossil fuels through direct grants and the approval of loans through the World Bank and the European Bank of Reconstruction and Development (EBRD) to massive oil projects, such as the Chad-Cameroon pipeline.
In 2000, DFID supported the World Bank loan worth nearly $300 million for the Chad-Cameroon oil project. Leading the project was the richest oil company in the world - and no. 1 climate criminal - ExxonMobile, also known as Esso. The project in the south of Chad, one of the world's poorest countries, included a 1000km pipeline through Cameroon and an export terminal on Cameroon's coast.
Both countries suffered from enormous problems of corruption. Chadian organisations have reported an increase in food insecurity and social tensions as well as increases in prostitution and associated HIV-AIDS. In Cameroon, pipeline construction has damaged fishing and farmland. DFID has not assessed these complaints and continue to present he project as a model of good practice.
DFID acknowledges that climate change hits the poor hardest, but refuses to address the effect of its promotion of oil development in contributing to climate change, locking developing countries into short term, unsustainable development.
Oil extraction does not even meet the energy needs of developing countries, as it is extracted primarily for export to industrialised countries. In fact, exploiting oil reserves hinders efforts to meet the energy needs of the poor through sustainable renewable energy.
Charlie Kronick, Greenpeace Chief Policy Advisor said,
"This report highlights one of the hidden ways in which the UK government continues to subsidise the oil industry. If the UK government is to meet its goals on climate change it must stop all support for the industries that cause it and switch to supporting industries that don't. Greenpeace UK supports the recommendations in this report."
Notes
[1] Written and published by Friends of the Earth, Plan B and Platform Research. Download the report here or visit www.carbonweb.org
