Nigeria and neutrality

Nigeria has stepped onto a long and difficult road toward national legitimacy-with international oil companies shuffling alongside. Its progress will help measure success of the developing role for companies in host-country politics.

As this page has noted before and as several speakers asserted at the American Petroleum Institute annual meeting this month, the petroleum industry has entered a new era of international political relations (OGJ, Sept. 21, 1998, p. 27). Aggressive neutrality is no long

er appropriate political behavior for companies operating in countries other than their own.

Tool of development

Changes in the world make this so. Capital now moves freely across national borders. Developing countries worry less than before about falling prey to imperialism and more than before about modernizing. More enthusiastically than ever, they embrace international investment as a tool of development.

Oil companies are part of the process. The question is no longer whether companies should be engaged in host-country politics; they involve themselves in politics when they make deals with foreign governments. Questions now have to do with degree. At what point does engagement become meddling in sovereign affairs? At what point does it constitute complicity in abusive governance?

Nigeria is a test case for this evolution. Until last June, oil companies active in Africa's most populous country had watched a military junta arrogate power and wealth, corrupt the government, and aggravate already deep ethnic and religious divisions. The companies came to serve as conduits for protests of impoverished, neglected groups in the oil-producing region of the Niger River delta and as targets of activists abroad.

Since the June death of Gen. Sani Abacha, the former ruler, the outlook for Nigeria has improved. The new president, Gen. Abdulsalami Abubakar, has promised to hold elections, visited the Niger River delta, and supported negotiations with leaders of an emerging rebellion in the Christian south against the Muslim north.

At the same time, Abubakar has shown that he understands the importance to Nigeria of oil production and the role of foreign companies in it. He recently announced a new offer of exploration and development rights and a decree of support for production sharing terms agreed in 1993 for deepwater acreage. Separately, Abacha's family is reported to have returned to the government $750 million that the late strongman and his followers diverted to personal accounts.

These welcome developments do nothing to extract oil companies from the uncomfortable midst of difficult events. This month, rebels held eight workers from a Texaco Inc. project hostage for 5 days. In October, an explosion and fire near Warri killed more than 700 people after a group involved in ethnic strife tried to steal oil from a pipeline. Several Royal Dutch/Shell facilities remain in rebel hands.

Make role constructive

So, whatever their contributions to local infrastructure, oil companies still represent visible material abundance in a region where impoverished people consider themselves victims of official theft. As targets of activism, companies lose whatever remains of their political neutrality. The aim must be to make the role of companies newly engaged in local politics constructive for everyone involved-in Nigeria and elsewhere.

The role comes with no clear script. It might help if companies approach their work abroad as the relationship of convenience that it is between disparate entities united by the pursuit of wealth. One party harbors concerns about power and sovereignty to which the other party, as the outsider, must defer. The rest must come from common sense about relationships in general: Emphasize the good. Deal honestly but quietly with the bad. And work to sustain the relationship until participation becomes self-destructive.