SHA’ABAN 5, 1429 A.H.
THURSDAY AUGUST 7 2008
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Stolen crude oil Vs blood diamonds (I)
By Abubakar Atiku Nuhu-Koko
aanuhukoko@yahoo.com
President Umaru Musa Yar'Adua (UMYA) opened another flank in the national and international search for lasting workable solutions to the lingering development and seemingly criminal quagmires in the Niger Delta hydrocarbons-rich region. This flank, once again, was announced abroad while attending the G-8 Summit in the Island of Hokkaido, Japan on Monday July 7, 2008. While expressing his serious concern regarding the international dimensions of the criminal elements of the intractable Niger Delta conundrum, President Yar’Adua specifically made the following plea to the G-8 Member countries leaders:
“I appeal to you and through you to all other G-8 leaders to support my new proposal which I will also discuss with UN Secretary General at my meeting with him, that stolen crude should be treated like stolen diamonds because they both generate blood money. Like what is now known as “blood diamond”, stolen crude also aids corruption and violence and can provoke war,” (President UMYA, Monday, July 7, 2008: at the G-8 Summit, Hokkaido, Japan, as reported by the mass media).
First, I wish to congratulate Mr. President and also my respected uncle, Dele Cole, for championing the idea of treating stolen Nigerian crude oil put in the international crude oil markets by international oil thieves in the same way conflict/stolen (blood) diamonds are treated under the model style called Kimberly Process in the international diamonds trade and markets.
Secondly, I would like to register my respect to both Mr President’s embellished address to the G-8 leaders at the Hokkaido Summit; particularly the aspect that deals with Nigeria’s stolen crude oil and the two newspaper articles written by uncle Dele Cole: the first one (two weeks ago) published in the Financial Times of London entitled 'Why choke the goose? The second one published today, Monday, July 14, 2008 in the Guardian Newspaper of Nigeria entitled: “How to lay the golden egg.”
Thirdly, I would like to draw the attention of the promoters of this wonderful idea or Kimberly model style that, the brain behind the idea is Professor Paul Collier, erudite professor of Economics and Director of the Centre for the Study of African Economies at the Oxford University (also, former director of development Research at the World Bank in the 1990s and adviser to the British government’s Commission on Africa).
Therefore, promoting this borrowed idea or model by both President UMYA in his Hokkaido address at the G-8 Summit and uncle Dele Cole’s articles I made reference to above, opens this innovative model to further analytical debate and scrutiny as far as the intended purposes by its promoters are concerned (for those interested in finding out further how this idea or model in question came about, this can be found specifically in pages 144-146 of Collier’s yet another path-breaking book entitled: “The Bottom Billion: Why The Poorest Countries Are Failing And What Can Be Done About It” (Oxford University Press, 2007, hard copy: ISBN 978-0-19-531145-7).
Fourthly, apart from presenting the originality of the model under review, I would like to further argue in this write-up that, the proposition put forward by Mr. President is an excellent one. But, it is like comparing apples and oranges or trying to mix oil and water! My argument or reason for saying this is also not new. As Professor Collier already indicated in his seminal book I referred to above that: “What worked for diamonds may not work for oil” (Collier, P., 2007, p.144).
But, whereas Professor Collier hinges his line of argument on the notion that: “it is far harder to smuggle oil than diamonds” (which a vast majority of Nigerians will now disagree with; as over 150, 000 barrels of Nigerian crude oil are alleged to be smuggled out of Nigeria’s shores daily), my own points of departure here are: a) that the markets and demand structures of diamonds and crude oil are poles apart and parallel. b) Furthermore, even though there is a lingering internal conflict going on in Nigeria’s hydrocarbons-rich Niger Delta region, Nigeria is not yet a failed state. I explain these points below.
Whereas, on the one hand, diamonds are vanity resources with international niche markets serving a small fraction of the world’s only rich people and whose demand structure is elastic. While on the other hand, crude oil is a multi-product resource that command huge local and international markets and consumers and whose demand is very inelastic. Simply stated, oil has no easy, ready and cheaper substitute at the moment.
Moreover, Conflict/stolen (blood diamonds) can easily be moved around the world across international borders in pockets of trousers, Suits and Suit Cases. Therefore, global clampdown on their illicit trade is much easier done under the Kimberly Process model style compared with stolen crude oil that is moved first, using small barges before ending up in huge super tankers that move it across the globe. Tracking these small barges and super tankers even with available advanced satellite and global positioning systems is not an easy task, more especially in Nigeria, where supply of ordinary electricity, piped water and refined oil products is a gargantuan task.
By the way, before I proceed any further, I would to point out that the Kimberly Process for the certification of diamonds is a voluntary diamonds industry initiative spearheaded by De Beers, the global diamonds conglomerate in order to clean up its soiled acts in the international diamonds market it controls. This is to say, arranging and organizing the Kimberly Process has nothing to do with the UN and or the G-8 per se.
However, another serious difference to take into consideration between diamonds and crude oil is that, crude oil is a fungible commodity that can easily be swapped and or exchanged in the international market. Therefore, once it enters the arena of lawful (and or illicit) international trade, it can be traded to any interested lawful party and or unlawful interested party as the case may be. For example, at the moment, the demand for crude oil worldwide is more than what is supplied by the producers and the markets. That is why President Bush, the president of the most powerful nation on earth and Prime Ministers from the G-8 Member nations are literally begging OPEC Member countries to pump more oil in order to have it cheap to quench their insatiable thirsts for the “devil’s excrement”, which in the first place, is responsible for the Niger Delta conundrum!
Hence, Nigeria’s stolen crude oil, if and only if rejected by buyers from G-8 Member countries (which is very unlikely), will find its way easily in ready and ever hungry markets of China, India and other Asian markets in search for cheap (legal and or illicit) crude oil to fuel their rapid economic growth needs without the concern for the necessity of dealing with the criminality involved in marketing the stolen crude oil or even environmental issues such as climate change. The world economy is simply hooked on and addicted to fossil fuels and not diamonds. Therefore, of necessity, the highly intensive international energy consuming community is very thirty of crude oil at the moment and well into the future and will access it by all means necessary.
Another eye opener is what happened some days ago at the UN Headquarters in New York when Russia and China vetoed the proposed UN sanctions against President Robert Mugabe of Zimbabwe (even though Zimbabwe is not an oil or diamonds producing nation as such). Therefore, it will not be a surprise to see some countries working against any proposal for the UN to impose Kimberly model or sanctions against trading Nigeria’s stolen crude oil in a similar manner.
In the same vain, in 1995 when the late activist Ken Saro Wiwa and his kinsmen were hanged by the Nigerian state (for interfering with the smooth flow of oil and oil rents in the Niger Delta region), the United State Congress advised the U.S. government against its rhetorically intended sanction against the Nigerian military junta. The principal reason was that sanction against Nigerian oil will work against US strategic and commercial interests in Nigeria. It’s all about oil interest and not the Nigerian people’s interests..
