just a little on the diplomatic maneuvering between the two party.
Chad switched allegiance from Taiwan to China on 5 August. The timing of the
decision bordered on the vindictive: almost certainly on Beijing's bidding the
government waited until Taiwan's Premier Su Tseng-chang was about to board a
plane to attend President Idriss Deby's inauguration in Chad before notifying
Taipei that it had broken relations. Barely a week earlier Deby had told
President Chen that he was looking forward to receiving Su at his
Chad was Taiwan's most important ally in Africa, enjoying a
global prominence that set it far above the other five: Burkina Faso, Gambia,
Malawi, Swaziland, and Sao Tome and Principe. Chad's proximity to the Darfur
region of Sudan means that is has been drawn into the fighting between Khartoum
and Darfurian separatists, a conflict which has prompted worldwide concern and
in which the UN is taking a great interest. From an economic standpoint, Chad's
potential to be a major oil producer is attracting interest from energy
companies across the globe.
The Taiwanese government attributed Chad's
decision to the twin interests of peace and oil. According to Foreign Minister
James Huang, Deby wanted to bring China onside because China has strong
relations with the Sudanese government, which in turn supports rebel forces
operating in Chad fighting against Deby's government. The foreign ministry also
said that Chad switched ties to secure substantial Chinese investment in its
Chad's links to the crisis in Darfur are
part of its broader enmity towards Sudan. Khartoum has not only accused Chad of
supporting some of the myriad rebel groups now operating in Darfur but also of
sending regular troops and aircraft across the border to fight against Sudanese
government forces. In December 2005 Deby returned the accusation, saying
deserters from the Sudanese army had crossed into eastern Chad and attacked a
border town in support of a campaign to unseat the government. "Chad is today
in a state of belligerence with Sudan," a spokesman for Chad's government
declared on 24 December.
In February Chad and Sudan signed the Tripoli
Agreement, a deal brokered by the Libyan government which claimed to have ended
violence on the border between the two countries. However, relations
deteriorated again in April, when the Chadian capital N'Djamena was attacked by
the United Front for Change, an umbrella group of Chadian rebels formed in
December 2005 which Deby accused Sudan of supporting. Deby severed ties with
Sudan after the attack, in which some 370 rebels and 30 soldiers were killed.
China became involved after the Battle of N'Djamena. Chadian envoys on a
visit to Khartoum in July intended to normalize relations with Sudan met the
Chinese ambassador to Sudan, Zhang Dong. The fact that Chad and Sudan restored
ties on 8 August - the day of Deby's inauguration following his election in May
but also soon after the president had shunned Taiwan - strongly suggested
Chinese involvement in the rapprochement.
But affiliation with China does
not just mean peace for Deby. It also ensures that Western criticism of his
government will not lead to punitive action. China has used its permanent seat
on the UN Security Council (UNSC) to prevent the UN from imposing sanctions on
Sudan in spite of what the US considers to be Khartoum-backed genocide in
Darfur. Deby will be confident of similar protection from Beijing for his own
The international community was unhappy with
Deby's decision last year to alter the constitution to allow him to serve a
third five-year term (he has been in office since 1990). The West is also upset
that Chad's parliament last December altered the Petroleum Revenue Management
Law, legislation backed by the World Bank aimed at ensuring the government
spends a substantial amount of its oil revenues on education, health, and
development rather than pouring the funds straight into the federal budget.
The alterations to the oil-revenue law gave the government greater
control over oil revenues, allowing Deby to invest more on defence. The World
Bank, which oversaw the establishment of Chad as an oil-roducing nation in the
late 1990s and in 1999 facilitated the creation of the Doba pipeline which
links Chad to Cameroon, took umbrage at the changes to the law and in January
froze aid and loans to Chad. The Bank also froze profits from the pipeline
saved in a London escrow account, including royalties from the pipeline's
operator, Exxon Mobil.
A visit to Chad by World Bank president Paul
Wolfowitz in July eased tensions after Deby agreed to devote 70% of oil
revenues to poverty-reduction programmes. However, Deby caused shockwaves in
the global oil sector in late August when he said wanted to renegotiate all
Chad's oil exploration and production contracts to ensure the government
received its fair share.
The main focus of Deby's discontent is the $3.7bn
Doba pipeline, which is at present the only project pumping oil in Chad and
from which Chad only receives 12.5% of the wellhead value. Deby wants the
government to possess a 60% stake in the consortium, which currently includes
Exxon Mobil, Petronas of Malaysia, and US major Chevron.
Deby also demanded that Petronas and Chevron, who together hold a 60% stake in
the pipeline, pay almost $500m to the government in back taxes. When the two
companies refused, Deby ordered them to halt operations and leave. However, the
government has denied that its desire for a majority stake in the pipeline and
its attack on Petronas and Chevron are linked and said that it will negotiate a
stake rather than grab it.
Once again, the timing of Deby's sabre-rattling
towards foreign oil interests and desire to renegotiate oil contracts so soon
after he restored ties with Beijing suggests a Chinese angle. China currently
has exploration rights in Chad, which it acquired when China National Petroleum
Corp (CNPC) and Citic bought a 50% stake in Cliveden Petroleum Chad, a
subsidiary of British oil company Cliveden which was granted a license to
explore Permit H, a concession which covers some 439,240 square kilometres.
Cliveden also holds the largest single share in the oil exploration concession
granted by Khartoum in Darfur.
The links between Cliveden and Chinese oil
companies are the subject of much speculation but little substantive fact. What
is clear, however, is that China is well placed through its stake in Permit H
to expand aggressively its interest in Chad's oil and gas sector. Beijing's oil
companies will not impose any conditions on Deby; CNPC is already operating in
Sudan and remains unaffected by talk of genocide in the west of the country.
Taiwan's Chinese Petroleum Corp (CPC) signed a production-sharing deal with
Chad in January, but neither CPC nor Taipei could match the muscle of CNPC and
Beijing. While CNPC has the financial clout to lead the exploration of Chad's
oil fields, Beijing has the political and economic might to negate the
influence of the World Bank and its strictures regarding how Chad can spend its
There is even speculation that Chad's government is thinking
about sending its oil to the east coast of Africa, via a Sudanese pipeline
which ends at Port Sudan. The advantage for Chad is that the threat of a
pipeline through Sudan would serve as a powerful bargaining chip in
negotiations with the Doba consortium. The benefit for China is that it is far
easier for Chad's oil to reach China from eastern Africa than from the west
At present Chad is a relatively small player in the global oil
trade, producing barely 160,000 barrels per day versus the approximately
400,000 bpd Sudan currently produces. However, Chad's government reckons that
its existing projects will be producing 400,000 bpd within five years, and a
reliable estimate of its total oil reserves is keenly awaited.
the month since Deby switched allegiance suggest China will have a significant
and enduring influence in Chad, protecting Deby from Sudanese aggression and
Western opprobrium while at the same time aiding and abetting its
transformation into a major oil producer. An alliance with Taiwan could never
have been so beneficial for Chad.