July 31, 2002 -- Nigerian villagers who have long clashed with oil companies doing business in their backyards are trying a creative protest tactic. They've dropped their guns, and some have even threatened to drop their clothes.
Hundreds of unarmed women from local tribes in the oil-rich but desperately poor Niger Delta region brought production to a halt recently at pipeline facilities owned by ChevronTexaco by merely occupying the sites. Several dozen village women are still holed-up today.
To make their point, the women threatened to disrobe — a strong local shaming symbol — and managed to strike a deal with ChevronTexaco that will bring jobs and funding for schools, hospitals and other services into their struggling community.
In the past, local actions against oil and gas companies have come from armed gangs who frequently take to kidnapping and sabotage to demand jobs or money.
But experts say ChevronTexaco's peaceful negotiations with the local women highlights the strengthened bargaining power villagers wield and how multinational corporations, under significant international pressure, are increasingly bowing to local demands.
"This shows the kind of pressure on the oil companies to come through with ever higher levels of contributions," said J. Stephen Morrison, director of the Africa program at Center for Strategic and International Studies. "The pressure has been building for a long, long time."
An Otherwise Violent History
Unlike the peaceful Nigerian women's protest, the relationship between locals and oil companies often has been violent and tumultuous.
Shell came under fire after riotous protests related to the death of organizer Kan Saro-Wiwa in 1995. The native playwright was executed on trumped-up murder charges by the military dictatorship in Nigeria after he organized a protest movement aimed at the oil company.
Such troubles are not unique to West Africa.
Human rights activists have sued ExxonMobil in U.S. federal court, accusing the company of hiring Indonesian government security forces who allegedly committed atrocities against locals, including murder, torture and kidnapping. The company denies the allegations.
In Colombia, leftist rebels are suspected of blowing up a pipeline a record 170 times last year. The pipeline fed oil from a field operated by the U.S. oil company Occidental.
Such tension is perhaps inevitable in poor regions where global companies come to get rich. Like other "extraction" businesses, such as mining, oil companies are often accused of taking natural resources, giving little back in return and spoiling the environment.
The oil business does not employ large numbers of local people once pipeline facilities are built.
"Revenues generated don't adequately benefit the local area," said Arvind Ganesan, director of the business program at Human Rights Watch.
Where's the Payoff?
Regions that produce high yields of lucrative natural resources such as oil or diamonds tend to suffer from what economists call "Dutch disease," which refers to the wasting away of other industries such as manufacturing or farming.
The result is a population with scarce resources and abundant resentment for companies operating in their midst. "Where's the payoff? All of this wealth has spun through this government with very little coming back to the average citizen," Morrison said.
These days, it's becoming commonplace for major oil companies to try to shine their international reputations by making investments and charitable contributions in countries where they operate.
"Basically what you become is a partner with the local community to provide things they need to exist and not feel you're an outsider taking over everything they have and not giving anything back," said Bud Covert, executive director of the Energy Security Council, a Houston-based group comprised of the security directors of most American oil and gas companies.
Investing in local communities, of course, also reaps rewards for the companies by fostering stability.
For one, Shell, which suffered major public relations damage from its Nigeria fiasco, now reportedly gives away millions a year in local grants. On its Web site, Shell describes building classrooms in the Niger Delta, awarding school scholarships and immunizing more than 100,000 young children.
ExxonMobil says 85 percent of the royalties and taxes generated from a $3.5 billion pipeline project in Chad and Cameroon will be used for social programs to help local citizens.
Striking a Balance
In the past, money paid to national governments frequently never trickled down to the local level. The trick, in countries rife with corruption, is for companies to make wise choices about how they invest their money.
"Oil companies get hit up constantly. They are trying to manage their affairs in ways that are defensible and credible by putting money toward real projects and not just payoffs," Morrison said.
With no global regulating body, though, some experts question how far corporations can and should go to provide certain services such as schools, hospitals and basic infrastructure.
"Why should the lead responsibility for social development function fall upon a private enterprise when we know government is ingesting vast flows and they're not being returned?" Morrison said.
In some cases, of course, there are few options. "It should be the role of government, be it local, regional or national government, but in some countries, they are simply not ready," said Stephen Hayes, president of the Corporate Council on Africa. "Should businesses be expected to cover all that? There's a growing consensus among oil companies about putting resources back into the communities … but there's got to be a balance at some point."
Other experts question the long-term viability of relying on corporations for funding major development projects for poor nations.
"The danger sign is when people start turning to companies to take on social services," Ganesan said. "It's unsustainable over time."