A Pipeline of Good Intentions

1. What is the “oil curse”? Why do you think it develops?

“Oil curse” is a terminology that refers to numerous instances when the discovery of oil in poor countries has paradoxically led to increases in poverty and social problems. This type of paradox happens when there is a sudden or potential source of money flowing in to a poor country whose government does not know how to manage the funds appropriately to help develop the country. Lack of financial management knowledge can lead to corruption, embezzlement and increases in poverty when small number of people get their hands on the fund and use it as personal bank.

2. Why was the World Bank’s participation in the Chad-Cameroon pipeline critical?

The participation of the World Bank in the Chad-Cameroon is critical because Chad needs to be in a good relationship with the World Bank, due to several outstanding loans. Therefore, having the World Bank as one of the investor in the pipeline will reduce the risks of Chad’s government jeopardizing the agreement with other main investors.

3. Does the World Bank have a right to demand that sovereign countries like Chad spend their oil revenue in ways the World Bank deems appropriate?

In my opinion, the World Bank has reasonable rights to demand Chad spend the oil revenue in certain ways. As an investor in the pipeline, the World Bank as a stakeholder has the right to affect the ways Chad uses oil revenue to ensure future stability economically, politically and socially. By making Chad spend money on important aspects such as education, health, or social services, it can somewhat ensure that the country will less likely to suffer from more poverty, health issues, or political problems that may jeopardize the continuous operations of the pipeline. In addition to being the stakeholder, the World Bank should also act as a mentor to Chad’s government and teach government officials to manage money effectively to take the country off poverty line.

4. If the World Bank and...