Natural Resources and Corporate Responsibility: The Case of Angola’s War

For Angola, the end of the Cold War brought an end to the vast external political and military support for the country’s warring parties. This in turn forced the struggle for power between the ruling MPLA government, under President Jose Eduardo dos Santos, and the forces of UNITA, under Jonas Savimbi, to rely, as never before, on the natural resources under their control.

A full analysis of the failures of the peace processes from the Bicesse accords in 1991 (which led to elections in 1992) to the Lusaka peace process and the return to war in December 1998 is outside of this discussion. However, it should be noted that natural resources have played a key role in the capacity of the two sides to be able to return to war. Despite this, throughout the 1990s the international community has consistently failed to take effective action to remove the sources of finance for war.

The role of diamonds in UNITA’s struggle

Investigations by Global Witness indicate that, at a conservative estimate, UNITA generated at least US$3.7bn between 1992 and the introduction of diamond-related sanctions against UNITA in July 1998. Given the return to war between 1992 and 1994, another peace process collapse in 1997 and 1998, as well as the key role of diamonds in funding UNITA’s war effort, it is very difficult to understand why it took the international community so long to recognise these facts. Even after the introduction of sanctions in July 1998 it was clear that the UN Sanctions Committee was almost totally ineffective until Canadian Ambassador Robert Fowler took over as committee chair in January 1999. All of this directly leads to the undermining of sanctions as an effective tool in conflict mitigation, and the credibility of the UN itself.

This kind of failure to act has been witnessed before, for example in the early 1990s in Cambodia where a clear mandate for action was provided through Resolution 792 prohibiting the export of timber from Cambodia. The UN, with its biggest peacekeeping mission in history, did nothing, thus allowing vast quantities of logs to be exported from Khmer Rouge-held territory to Thailand. This generated vast revenues for the Khmer Rouge. It took investigations and exposure by Global Witness in May 1995 before Thailand finally closed its border to Khmer Rouge timber exports, cutting off their US$10–20m monthly income. This failure to act, when the possibilities were there, allowed the civil war in Cambodia to continue for several more years than would otherwise have been possible.

However, it is not just the international community that has failed the people of Angola. Perhaps the most significant role has been played by big business – business which the average person holds in high respect, and which is normally associated as the purveyor of the ultimate gift of love. In other words, business involved in the international diamond trade.

De Beers

A brief analysis of, for example, the company reports of De Beers throughout the period in question shows that the company bought up a significant proportion of the so-called ‘unofficial’ production from Angola – at a time when the vast bulk of unofficial production was coming from areas controlled by UNITA. This all changed, according the company, with the introduction of sanctions in July 1998. However, it must be asked – given the implications of this trade – why it took the introduction of sanctions to effect this change. It should also be noted that, throughout most of 1999, when challenged, the company refused to clarify how this policy was being implemented.

One year on

One year into the work of the new Sanctions Committee, and after significant pressure on the international diamond trade through a potential major consumer campaign targeting conflict-sourced diamonds, things look very different. The trade now appears finally to be opening itself up to some level of scrutiny, and removing the arcane secrecy which has surrounded its activity and which has allowed diamonds to fund some of the worst examples of human rights abuses from Angola to Sierra Leone, and from Liberia to the DRC. It is hoped that the recent momentum in this direction will be maintained, otherwise the shadow of a full-blown consumer campaign remains a reality.

The role of oil in the Angolan government’s war

The issue of how the oil industry has contributed to the disaster in Angola is more difficult to appreciate. Nevertheless, this industry provided between US$1–3bn in annual income to the Angolan state throughout the 1990s. During this same time period that oil production has increased, Angola has slipped in the UN’s Human Development Index (HDI), which ranks countries according to various social indicators, from position 73 to 160 out of a total of 174 countries assessed.

It is clear that the government’s need to fight an ugly and persistent war against UNITA has played a major role in this situation. But it is also true that widespread looting of the 90+ per cent of state income which comes from oil production is also to blame. This process is conducted with some degree of subtlety and is very difficult to analyse. However, investigations reveal a decline of the functioning of the state from one which at least gave the appearance of being interested in the well-being of its people during the 1980s, to the current situation where virtually every state process has a price, and where everything from food imports, to clothing, and weaponry for war is subject to at least a 40–50 per cent ‘commission’.

The total lack of transparency surrounding oil income to the state together with control of vast areas of expenditure by the presidency (ie, outside the state budget) and severe press censorship, all contribute to blocking change. In addition, the government insists on hiding behind the continuing war as an excuse for all the problems encountered by the population. In other words, as long as the war continues it will be impossible for Angolans to question the actions of their government, whether these actions relate to the press-ganging of under-age boys into the army to fight, or to the lack of food, education, and medical resources.

Privatisation of the war effort

An even more ugly aspect to the activities of the presidency since the resumption of war against UNITA in December 1998 is the fact that much of the war effort has been privatised. By this it is not suggested that the presidency decided to wage war in order to make money but rather that there was, by 1998, an inevitability of a return to war, and that key players in the presidency as well as those connected to these key individuals decided that, since the war was going to re-start, they might as well make money out of it. Today there is a major conflict of interest where those who should be pursuing all avenues to bring peace to the country are actively engaged in a process whereby the greater the war expenditure, the more money they will make. This process is further complicated by the involvement of organised crime in the supply of weaponry, and the removal of vast amounts of state revenue into overseas accounts.

This is the mess that the oil companies find themselves operating in. In some cases, certain companies have been, and are actively involved in, this process of state robbery. In others, rather like pigs at the trough – and where the stakes are simply too high not to be involved (Angola is likely to become the largest African oil producer in the next few years) – they have found themselves operating in a country where they account collectively for 90+ per cent of state income; income which is being plundered. Whether they like it or not they are, by default, part of the problem.

What can be done?

It is clear that things will only change for the better with a real peace process. Oil production, and hence state income, is likely to reach a peak in the next few years. This period of peak state income will have a finite life, and it is essential that this revenue be deployed for the benefit of all Angolans rather than a few individuals and for war. It is therefore essential that the Angolan government:

• make all efforts to end the war as soon as possible;
• immediately open up its oil accounts to domestic inspection. This would mean that the average Angolan would be able to determine what the state is generating from its main resource which, after all, is the property of all Angolans under the constitution.

Given the current attitude of the Angolan government to calls for transparency, this situation seems unlikely at present. This is further worsened by the government’s insistence that it must effectively fight UNITA to the end. But after three decades of war it is hard to see an end to the fighting, especially given the propensity of UNITA to continue using guerrilla tactics (and for years to come), which require the maintenance of a vast state security investment on behalf of the government.

Corporate accountability

This returns the spotlight to corporate accountability. It is time for a radical rethink of the way in which international business conducts its affairs. Just as for the international diamond trade, where it is clear that action should have been taken to remove ‘conflict sourced’ diamonds from the market place, the international oil industry urgently needs to rethink its activities in countries like Angola.

If companies operate in countries such as Angola where it is clear that there is little or no accountability or transparency of government, then there should be an additional duty of companies to operate within what Global Witness terms ‘full transparency’. This means that companies should publish fully (ie, in a format which can be understood) both domestically and internationally, everything that they pay to a government. If the oil companies in Angola were to do this then there would automatically be an accurate figure for the 90 per cent of state income. This would allow Angolans to hold their government to account for expenditure decisions for the first time. If companies fail to make this move, then they must accept their full complicity in the wholesale robbery of Angola, and the impoverishment of the majority of its people.

Simon Taylor is Director, Global Witness, London, UK.