The Revocation of National Sovereignty Over National Resource - Essay Example

Business Ethics Ethics is a term that is used to de the right and the wrong in any issue. Business ethics requires that an organization does what is right financially, socially and environmentally. This paper looks into the case of Exxon, a large multinational oil mining company, the government of Chad, the World Bank and 145 local NGOs involved in the oil extraction in Chad. The main focus is the right of Chad and any other poor nation, maintaining its right of national sovereignty. This comes as a result of the World Bank being iron fisted to Chad and requiring her to pass specific oil distribution laws if she was to get any financial assistance from the bank. To what limit do the liberties of the bank stretch over developing nations? Chad is a poor oil-rich nation that has had its share of internal conflicts. Political instability and leadership battles have characterized this North African country. Corruption has also taken toll on the events in this country, and this is evidenced by the award of tenders and contracts to various corporations. The first oil contract was awarded to Exxon. After this, President Idriss quickly and corruptly awarded multimillion contracts to Chevron and Petronas, oil exploration companies. President Idriss’ rule was typical of the leadership of most Sub Saharan states in that he ruled with impunity and with no democracy. In order to hang on to leadership, the President invested a lot in armory. However, this put the government in loggerheads with International corporations like the World Bank which questioned the source of funds for such expenditures. The World Bank threatened to put financial sanctions on Chad by arguing that the manner in which the government acquired funding was questionable. It can be seen that The President of Chad may have contracted the other two companies as a desperate cat to save his country from the iron hand of the World Bank. This case typifies the corruption in the awarding of contracts in this poor African state, and the President is at the center-stage of all these. Ideally, oil exploration activities were supposed to uplift the economy of Chad. The revenues would be used for noteworthy projects in education, health and infrastructural development. The government set up a council that would oversee noteworthy utilization of oil revenues. Amazingly, the government would only be able to use 12.5% of the revenues. The rest would be remitted to the World Bank. 12.5% is an exceptionally small ratio to be allocated to a country as an economic stimulus from its own resource. World Bank had dictated this ratio to Chad. The World Bank flexed its authority in more than one ways to Chad’s disadvantage. In 1998 and 1999 parliament passed a law that saw the formation of the audition general and oil laws that favored the bank’s requirement. Funding was received in the year 2000. For Chad to receive any form of financial aid from the bank, her parliament had to pass specific oil laws. One of these was the 12.5% allocation to Chad as the rest was split between the bank and Exxon. The World Bank has in the past, and still continues to manipulate poor countries by recommending stringent laws that only favor them. Before agreeing to be the financier, the terms of the World bank were that Chad had tototally relinquish its oil sovereignty and Exxon was to submit all its plans for the bank to scrutinize. Natural resources of a nation are meant to boost the economy of that country and its citizens. The government is the sole custodian of such resources. To have the government of a poor nation give up such a right in exchange for future aid that may not be sought after is unethical. The bank took advantage of Chad’s poverty and wealth while it was supposed to protect the country as required by international business law. Exxon was not at liberty to lay down the pipeline. The bank studied the 800mile pipes layout and made drastic adjustments to them without consulting the firm. This was done to suit the bank’s environmental and social responsibility standards. After oil extraction had commenced, Chad’s economy grew by 10% in two years. This resulted from Exxon’s infrastructure construction project. This was part of Exxon’s plan for expansion in Africa. The funds from the World Bank had nothing to do with the developments. Development was on a slow rate as there were still people living in mud huts and dusty roads to offices such as the World Bank. There were frequent power outages. There was one Yorongar, a political activist who was at the forefront in clamoring for change. He was arrested a number of times for political opposition. The arrest of this man shows that the bank had the current government in its pocket. It was a puppet government which had to go by the bank rules. Any opposition that came by had to be dealt with amicably. The bank has quickly evacuated its officials from country to avoid their suffering from Chad’s poverty. They controlled Chad via their Washington office in America. The World Bank left Chad having ensured that the law works in their favor. The bank still continued to monitor events in Chad from afar. However, the irony is that, even after staying in the country for decades, the country was left reeling in abject poverty. For instance, mud huts will still stand 20 years after Exxon and the World Bank came in. Chad was left with a massive debt to pay to the World Bank. As an account holder at the bank, it is also required to keep some reserves with the bank. The beneficiaries of this contract are Exxon and the World Bank. Chad is left to suffer with little proceedings from its oil resource, a loan to repay and laws that create an open door for the bank to come in and make the situation worse should it get some interest in the country in the future. In my opinion, the revocation of national sovereignty over national resource is the ultimate purchase price for a country’s freedom. It is a form of neocolonialism and slavery. Even though Chad is an independent country, it is in bondage as a result of its need for economic freedom. This is a painful representation of the bank’s overstretched limits over the developing nations. . WORKS CITED Oman, C. (2000). Policy Competition for Foreign Direct Investment: Policy Competition for Foreign Direct Investment:. Development Centre of the Organization for Economic Co-operation and Development. August, R. (2004). International business law: text, cases, and readings. Prentice Hall. Read More