Niranjan Chatterjee’s Weblog

August 1, 2014

NIGER DELTA CRISIS – THE ROLE OF MULTINATIONAL OIL CORPORATIONS AND THE PUBLIC HEALTH CONCERNS

Filed under: International Economics,Political Musings,social awareness — niranjanchatterjee @ 11:17 pm

 

Table of Contents

Abstract 3

History and Origin of the Crisis. 5

Overview of geography of Nigeria and its social set-up. 5

The Civil War of 1967-1970. 7

Communal Violence. 8

  1. Economy. 9

Nigeria and Poverty. 10

The impact Oil Industry in Niger Delta. 14

Brief recount of the history of oil exploration in Nigeria. 14

Environmental hazards related to oil exploration.. 16

Bonny – a fishing community in Niger Delta. 18

Geographic and Demographic Overview of Bonny Island. 18

History of Bonny. 19

Discovery of Oil: Revival of Bonny. 21

Adverse impact of oil industry on Bonny. 22

Damage by Sea Trucks. 23

Spillage of oil and resultant pollution.. 24

Gas Flaring and Pollution.. 28

Land Filling. 29

  1. Erosion.. 30
  2. Dredging. 31

Oloma and Social Change. 31

Unrest in Niger Delta. 32

Is Federal Government a party to the nexus?. 33

Non-recognition of Minorities and Indigenous People. 34

Militancy in Niger Delta. 35

Legal resistance against environmental pollution.. 48

How unsafe it is to reside in Niger Delta. 52

Oil and Health.. 57

Key aspects of the right to health.. 57

Misconceptions about right to health.. 59

Link between right to health and other human rights. 60

Right to health as enshrined in International Human Rights Law and Constitutions of several countries. 61

Right to health: how far it is honoured in Niger Delta. 64

Is there a way forward?. 65

  1. References. 68
  2. Glossary. 73

 

 

 

Abstract

 

The crisis at Niger Delta has been analysed and evaluated from the perspective of health and human rights and while doing do, the responsibility of multinational oil corporations that operate in this region extracting crude petroleum from the oil rich delta have been minutely examined to evaluate whether they promote and protect public health and bolster human rights through robust social and corporate responsibility and governance strategy.[1] The paper also examines the relevance of international law in the realms of public health and whether the current laws have enough teeth to actually bolster and ensure genuine implementation of the right to health by multinational companies that often tend to disrupt fragile ecological balances of areas where they operate. While admitting there is a need to promote debates also regarding the relevance or otherwise of national and supranational institutions as United Nations and World Health Organisation in promoting public health and forcing multinational corporations to take adequate steps in protecting environment and promoting public health especially in their operational zones, this project takes a comprehensive view of the pronouncement of the UN Special Rapporteur on the Right to Health as a fundamental right. This project also attempts to promote the right to health as a fundamental human right, to clarify the contours and content of the right to health, and to identify good corporate practices for implementation of the right to health at community, national, and international levels.

Niger Delta is an especially delicate case where in addition to international and supranational leadership and governance, there is a need for political leadership and political will at the national and local level for the crisis to be stemmed. The paper adopts the stance that human rights based approach to public health issues might be the most suitable option for improving levels of public health and lowering the alarming levels of environmental pollution that has gripped this region through years of systematic neglect.[2]

Although this region is endowed with an abundance of natural riches, the people of this region live in the midst of abject poverty, disease and hunger. Malnutrition, illiteracy and unemployment characterize the region and the local population remain marginalised and isolated from the riches that lie under the ground. There have been efforts at community mobilization against this marginalisation and these efforts have often taken the form of mass protests that have frequently turned violent. The reactions of government and oil multinationals to such violence have frequently been disproportionately severe and have queered the pitch of the entire scenario even further.[3] So, any solution to such a complicated issue where the lives and livelihoods of numerous people, not only those who are directly affected by the pollution and consequent degradation of public health in Niger Delta but also those who are thousands of miles away from the point of crude oil extraction, working in various related activities, can only be possible through a delicately nuanced policy that views the whole issue through a humanitarian angle and the legal compulsion associated with right to health.

History and Origin of the Crisis

Overview of geography of Nigeria and its social set-up

Nigeria is a densely populated country in Western Africa that borders the Republic of Benin in the west, Chad and Cameroon in the east, Niger in the north, and the Gulf of Guinea in the south. The name “Nigeria” is derived from a combination of the words “Niger” (the country’s longest river) and “Area.” Nigeria boasts of rich ethnic diversity, it has about 374 ethnic sub-groups, but these are largely consolidated under three umbrella ethnic groups of Hausa/Fulani, Yoruba and Igbo.[4] (Peterside 2004)

Though Nigeria has a history that dates back hundreds of years, it was not until October 1, 1960 that it became an independent Nation within the Commonwealth of Nations under a constitution that provided for a Parliamentary system of government and a substantial measure of self-government for the country’s three regions. It became a Federal Republic in October, 1963 and the former Governor-General, Nnamdi Azikwe, became the country’s first President. Right from the beginning, Nigeria’s ethnic and religious tensions were exacerbated by disparities in economic and educational development between the south and the north. This was possibly a harbinger of things that were to come in subsequent years. (Olusakin 2006)

Nigeria is considered the fifth largest world exporter of crude oil to the United States based on the oil which is concentrated in the Niger Delta. The nine oil-producing states that made up the Niger Delta (Abia, Akwa Ibom, Bayelsa, Cross Rivers, Delta, Edo, Imo, Ondo, and Rivers) account for over 90 percent of oil and gas export earnings and up to 70 percent of revenues accruing to the Federation Accounts. The Niger Delta is one of the largest wetlands in the world. It covers an area of about 70,000 square kilometres. The Niger Delta terrain is made up of dry land, seasonal flooded land, swamp, shallow waters, and offshore. The coastline receives the tides of the Atlantic Ocean throughout the year, while the mainland is subjected to a series of floods by the various rivers, particularly the Niger. (Gambo 2005)

The Civil War of 1967-1970

A civil war broke out in 1967 when the Eastern part of the country tried to establish an independent country (Biafra), in which over 300,000 Nigerians lost their lives. (Trend 1996) After three years of bloody conflict, Lieutenant General Yakubu Gowon became the Nigerian Head of State in 1970 and focussed his attention on the oil sector which resulted in a period of reasonable economic growth that was due to an increase in the revenues from crude oil and the nationalization of the various oil companies.[5] Military rule continued for a period of twenty nine years (except for a brief four year period of the short-lived second republic between 1979 to 1983) and was marked by recurring coups and ethnic conflicts till the adoption of a new constitution and a relatively peaceful transition in 1999 to civilian rule of which Chief Olusegun Obasanjo was elected as the President. (Cooper 2003)

President Obasanjo was re-elected in 2003 to continue with the daunting task of rebuilding a petroleum-based economy, whose revenues have been squandered through corruption and mismanagement. Most of the times there have been one problem or the other in the Niger Delta over the environmental destruction caused by oil drilling and the ongoing poverty in the oil-rich region. (Benhabib 1996)

Communal Violence

There has also been a spate of communal violence ever since Obasanjo took office in 1999.[6] In May 1999 violence erupted in Kaduna State over the succession of an Emir resulting in more than 100 deaths. In November 1999, the army destroyed the town of Odi in Bayelsa State and killed scores of civilians in retaliation for the murder of 12 policemen by a local gang. In 2000, right from February through to May, over 1,000 people died in Kaduna in rioting over the introduction of criminal Sharia[7] law in the State. Hundreds of ethnic Hausa were killed in reprisal attacks in south-eastern Nigeria. In September 2001, over 2,000 people were killed in inter-religious rioting in Jos. In October 2001, hundreds were killed and thousands displaced in communal violence that spread across the states of Benue, Taraba, and Nasarawa. On October 1, 2001, President Obasanjo announced the formation of a National Security Commission to address the issue of communal violence to make a last ditch attempt to adhere to the official motto of Nigerian Government which is “Unity, and Faith, Peace and Progress.” (Sachs 2005)

It might perhaps be something of a redundancy to mention that the two major religions in Nigeria are Christianity and Islam, and, they engage in religious clashes especially in the northern part of the country, while some people practice the traditional African religions.[8]

Economy

Nigerian economy is heavily dependent on natural oil and gas right from the time vast deposits of this extremely valuable natural resource was discovered in Niger delta. However, prior to this discovery almost 70 percent of the population was employed in the agricultural sector producing cocoa, maize, rice, yams, peanuts, bananas, sugar cane, cotton, rubber, and dairy products. But with the advent of oil sector, agriculture was given a short shrift and as a result of this a country that was once self sufficient became an importer of food. Agriculture and other non-oil sector, which at 1962 contributed 78.2 percent of the nation’s revenue, dropped drastically to 1.1 percent in 1977, while crude oil contribution rose from 13.3 percent to 98.9 percent over the same period. Currently, Nigeria’s economy predominantly depends on the production of crude oil which accounts for about 95 percent of the nation’s export earnings while agricultural products and other non-oil commodities shared the remaining five percent among them. (Africa Report N°113 2006)[9]

Nigeria and Poverty

There is no doubt Nigeria earns huge amounts of foreign exchange through export of oil but the state of a majority of Nigerians suffering from poverty is particularly ironic as its rich oil resources do not warrant such a situation. The situation is made more complicated as there is no universal definition of poverty. It is a complex and multi-dimensional concept, and has various perceptions. It is experienced differently by men and by women and can differ according to geographical area, social group, and political or economic context. [10]

Poverty is experienced not only in economic deprivation but also in terms of an individual’s inability to have adequate daily nutritional intake, safe drinking water, basic sanitation, a livelihood that can support survival, that can give a chance for a child to make his or her way through school, access to essential health services in a health emergency, and also have access to basic social amenities like good roads, stable electricity and water supply. Poverty is also linked to a shortage of vital resources and the endurance of harsh and inhospitable environments, including the breakdown of economic, demographic, ecological, cultural, and social systems, and bad governance, which sustains systemic poverty in developing countries. (Onibokun and Kumuyi 1996)

The time has not yet gone; Nigeria can still learn from Asia and China. Much of the coastal Asia that is enjoying the fruits of economic development now wallowed in dire poverty in the not too distant past. China has doubled its living standards in less than ten years. India is now on the same course. If a country like India that was viewed as a hopeless case of suffering and extreme poverty is now a competitive threat in the IT sector, then Nigeria has a lot to learn from it.[11]

Poverty in Nigeria becomes more evident when the distortion becomes so pronounced that people, groups and countries lose their capacity to adapt, change and survive peacefully. This is evident in case of many Nigerians who risk their lives to tap gas pipelines that pass through their communities and steal fuel for money.[12] Not only do they risk arrest, but many have died in explosions they caused while trying to puncture pipelines transporting volatile gas. A list of such pathetic incidents might bring the issue to sharper focus:

  • In October 1998, more than 1,000 people died and hundreds were injured at Jesse, in south-eastern state of Delta;
  • In June 1999, at least 15 people were burnt to death in a pipeline explosion at Akute-Odo in southern Ogun state;
  • In February 2000, at least 17 people died in a fire started at a pipeline near Ogwe in the eastern part of Abia state;
  • In March 2000, at least 50 people were burnt alive when a pipeline caught fire near Isioma in Abia south-western state;
  • In June 2000, at least 28 people died in a fire caused by a pipeline explosion at Okuedjeba, near the southern Warri oilfield;
  • In July 2000, about 300 people died at Warri, Delta state, in a fire caused by a pipeline explosion;
  • Again in the same month of July, 2000, at least 40 people were killed when a pipeline burst and caught fire in Afrokpe in the Warri area and about 15 more were killed the next day in a second blast in the same area;
  • In November 2000, about 60 people lost their lives when a damaged pipeline exploded near the port of Lagos;
  • In November of 2001, another 15 people died and several others and seriously burned in a pipeline blow-up at Umudike in the south-eastern state of Imo;
  • In September 2002, several people died and many were injured at Akute-Odo in southern Ogun state as a pipeline caught fire after they had vandalized it;
  • In June 2003, about 125 people were killed in a pipeline explosion in the village of Ovim in Abia state;
  • In September 2004, at least 60 people burnt to death as a result of pipeline busting in Lagos;[13]
  • In December 2004, at least 20 other people died in Lagos from the same cause;
  • In May 2006, about 200 people lost their lives at Ilado near Lagos when gasoline from a ruptured pipeline caught fire. (BBC News 2006)

The impact Oil Industry in Niger Delta

Brief recount of the history of oil exploration in Nigeria

The earliest known incidence of search for hydrocarbons was more than a hundred years ago in 1906 when Nigerian Bitumen Company had drilled, though unsuccessfully for bitumen northeast of Lagos. Nothing much happened during the next thirty odd years till Shell D’Arcy Company was given exclusive rights in 1937 for oil exploration throughout the length and breadth of the country. It took another twenty years for Shell-BO to discover commercially exploitable oil deposits in Niger Delta and with the first oil shipment in 1958 (at a rate of 6,000 barrels per day); the oil sector began to assume an increasing importance in the nation’s economic life.[14] In 1961, the first export terminal was constructed by Shell-BP at Bonny, Rivers State. This was followed by the commissioning of the Trans-Niger pipeline in 1965 that increased manifold the evacuation of crude oil from the oilfields situated in what was known at that time as the Bendel State. However, these rapid strides in the field of oil exploration were drastically cut short by the Civil War that halted all efforts till 1970 when the flames of the war finally subsided. The end of the civil war saw massive investment in oil extraction related activities that saw a huge surge in oil production that reached a level of 1.5 million barrels per day in that year and by 1971 Shell’s second Export Terminal at Forcados was commissioned to further enhance crude export. It might be of academic interest to note that the price of crude oil at this time was about $2.00 per barrel.

Though initial forays were made by made by Shell, other oil companies as Mobil, Gulf (now Chevron) Texaco, Elf and Agip entered the scene from 1956 onwards with Gulf bringing its first field on stream in 1965. The production levels continued to increase unabated and in 1974, immediately after the first world oil price increase, and with intensified drilling and production activities, Nigeria reached its peak oil production of 2.2 million barrels per day, of which Shell produced 1.4 million barrels.[15] This high level of production was more or less sustained until 1980 when the world oil price reached $35 per barrel, though the number of barrels sold was much reduced.

Nigerian oil and gas industry has now reached a stage where it can play a key role in the world energy supply for several decades to come as the country has an abundance of both proven and undiscovered reserves of high quality oil which can be exploited at relatively low cost compared with other major oil producing countries. (Omene 2002)

Environmental hazards related to oil exploration

There are certain some hazards and risks to the people and the environment that are intimately associated with oil and gas exploration and production activities.[16] Such risks to the environment usually take the form of:

  • Seismic Operations: It is claimed that seismic activities generate vibrations that can adversely affect buildings. The seismic waves generated and the chemicals used can also deplete aquatic life in the rivers and streams.
  • Well Blow-outs: Sometimes due to overpressure of the reservoir or due to human error, a blowout can occur despite wellhead pressure control systems. During such incidents, soil and water can be contaminated.
  • Fire: The emission of flammable hydrocarbon during production can result in fire outbreaks.
  • Flaring: The flare scorches the surrounding lands and this can render them infertile, while light from flares retard photosynthesis with the resultant reduction in farm crop productivity. Increase in temperature of the surrounding river waters can impact the aquatic life and ecosystem. Global warming from gas flaring can result in saltwater incursion into fresh waters. Also, the health implications of gas flaring for human beings include sleeplessness, and breathing problems.
  • Pollution: Pollution can occur due to human error, sudden rupture of pipelines, or instrumentation failures.
  • Sabotage: Spillages due to sabotage sometimes occur. Apart from compensation expectation, the resultant spills create a lot of environmental problems and pollution.
  • Noise: Noise effects even during drilling can scare and displace wildlife. Most of the oil industry plants and operations can be noisy.[17]

Bonny – a fishing community in Niger Delta

The havoc environmental pollution has been wrecking in the entire Niger Delta can be properly understood if attention is turned on the rural fishing community on the Island of Bonny in the Eastern Niger Delta.[18] The author feels that a detailed descriptive study of one community would help to put the basic problems that affect almost all the local inhabitants of the Niger Delta in proper perspective and draws heavily from the seminal work done in this regard by Alicia Fentiman. (Fentiman 1996)

Geographic and Demographic Overview of Bonny Island

Bonny island is situated within the within the tidal mangrove swamps of the Eastern Niger Delta. Tributaries of the Bonny River dissect the flat surface of the island, creating swamps and creeks that are bordered by mangrove trees. Much of the land is uninhabitable; fresh water resources are scarce.[19] The population is clustered mainly in Bonny town and a number of adjoining villages and several fishing ports that are safely nestled in numerous meandering creeks and waterways that crisscross this region. Oloma is one such village around Bonny town. This town is approximately 50 kilometres southeast of the industrial and commercial centre of Port Harcourt.

Oloma is populated almost entirely by Ibani-Ijo community while there is a settlement of Elem Kalabari to the west, the Okrikans to the north, and the Andoni, Opobo, and Ogoni to the east. (Jewett 1988)

History of Bonny

Fishing has traditionally been the main source of livelihood of the Ibani community that lives in the village of Oloma. Over and above the fish that was abundantly available in the numerous creeks salt was evaporated from the sea water trapped in the roots of the mangrove tree. Ibani community traded their merchandise of fish and salt with the hinterland agriculturists and this internal trade network was well established and fully functional decades before European contact and provided the mercantile infrastructure on which the success of Bonny’s European trade was founded. Being crucially located[20] surely helped Bonny to gradually develop into a fulcrum of a two-way trade between the Ibo hinterland and the Ibani, on the one hand, and the Ibani and European traders on the other. Food, livestock, and, most importantly, slaves that came from the hinterland markets were brought to Bonny to be traded. The growing European demand for slaves assured the role of Bonny traders as middlemen in the West African-European trade. This lasted until the 19th century. (Alagoa, Long Distance Trade and States in the Niger Delta 1970)

With the abolition of slave trade in the 19th century merchants turned their attention to palm oil which found a huge market in Europe due to Industrial Revolution that was taking place there. Palm oil was a very effective and convenient lubricant for machinery as well as for making soap and candles. Bonny did not let this opportunity go by and prospered as one of the main centres of palm oil trade and such was its success that Bonny and Kalabari areas became known as the “Oil Rivers.”

20th century however saw a gradual decline of Bonny as coal was discovered in commercially viable quantities further inland and a new mainland port was constructed by the British colonialists to exploit better the new coal fields. Port Harcourt, a new industrial city 50 kilometres up Bonny River, was founded in 1913. In 1916 there was great exodus from Bonny and by 1930 the town was said to be in a state of decay and utter stagnation (Webber 1931) and by 1938 moves were made to abolish the third-class township that was accorded to Bonny.[21]

Discovery of Oil: Revival of Bonny

Initially the oil companies had built a temporary export terminal at Port Harcourt[22] but only small tankers could visit that terminal and even then they could load only half their capacity because of the low draft that was available at the port. Bonny thus became the ideal alternative because of its strategic location[23] and its unique capability of being able to cater to both inshore and offshore loading facilities. Shell Petroleum Development Company realised the unique geographical advantage of Bonny and by 1961 had completed the first phase of the Bonny Terminal and kept on adding more terminals throughout the sixties.

The establishment of the oil terminal had a tremendous impact on the infrastructure of Bonny Town.[24] New buildings were constructed and Bonny had a new post office, a divisional office, a branch of the Pan African Bank, a police station, and maritime clearing and forwarding houses. A new hospital was also built and communication between Bonny town and Port Harcourt improved dramatically. Though intermittent, Shell also started supplying electricity to the town. But the most unexpected sector to gain from the new found prosperity on account of oil was education and in 1966, Shell helped to fund new departments in Bonny secondary school. In 1977, the Finima Girl’s Secondary School was opened, which provided further education for females. In addition, a teacher training college was re-established, and it at once became an important educational centre. (Green 1982) Though Bonny remained indebted to oil industry for its phenomenal improvement, the lives of average inhabitants of Bonny, especially those who resided in the coastal fishing villages, deteriorated sharply due to extraction of crude oil. (Prins [ed.] 2001)

Adverse impact of oil industry on Bonny

Oil has an overwhelming presence in and around Oloma; the canalization and dredging of creeks by oil companies have significantly altered the landscape and pipes meander throughout the swamps, with signboards scattered throughout the area alerting villagers of “danger.” [25] To add to the already all pervading presence of oil, sea trucks pass daily to and from the flow station located at the end of the creek; and gas flares emit light 24 hours every day. But it was not so, at least not before Shell started dredging the creek. Rampant soil erosion swallowed the beautiful sandy beach and now houses and playgrounds are also gradually becoming prey to this silent killer. But the most important issue is fishing as a way of life is becoming more and more difficult for this predominantly fishing community as it is very fast becoming an uneconomic activity with each passing day. Some of the problems these fishermen encounter are:

Damage by Sea Trucks

Sea trucks continuously ply along the creek to and from the flow station located at the end of this waterway. The pilots of these sea trucks, it seems, have no concern about the fishermen or the oil multinationals have not paid sufficient attention in sensitising these pilots towards the needs and requirements of the poor fishing folk for whom this creek and its fishes are the only source of livelihood. Rapidly plying sea trucks do not bother to adhere to the speed restrictions and very often tear fishing lines, nets, and traps laid by the fishermen and the wake left behind by these trucks often cause the light and flimsy canoes of these fishermen to capsize.[26] In addition to these irritants, noise created by these sea trucks scare away whatever little quantities of fish that still might have remained in these creeks. (Wilcox and Powell 1985)

Spillage of oil and resultant pollution

Oil multinationals have consistently tried to make everybody believe that the main reason for low fish yields are over-fishing and overpopulation but the fishing community strongly believes that oil pollution has damaged their fishing economy beyond redemption. Fewer people reside in the community than in the past and fewer people take to fishing as the only means of livelihood. These oil companies dump all their waste products into the rivers thus polluting the waters and killing the fish and making lives of fishermen even bleaker and forcing them out of their traditional dwellings to urban centres in search of livelihood. (Alagoa and Tamuno, Land and People of Nigeria: Rivers State 1989) This has created another rather unusual problem. A greater burden has been placed upon the women because of the massive outward migration of men and each day, women spend hours in the mangrove swamps gathering shellfish such as winkles and mangrove oysters and other forms of shellfish to quench their hunger.[27]

It must however be admitted that there is not much scientific data examining the impact of oil pollution on the aquatic life. At the same time one should not lose sight of the symposium, “The Mangrove Ecosystem of the Niger Delta”, held in Port Harcourt in 1980, where several scholars researching in different disciplines discussed and shared information on the changes in the environment on account of oil exploration and broadly agreed that oil was a major factor contributing to the destruction of marine life. It was demonstrated by several scholars that crude oil contains compounds that are toxic to marine organisms and contribute to extensive mortality in finfish, shellfish, oysters, and birds. This was observed in the Apoi and Ojobo areas. (Odu and Imevbore 1985)

A study in Bonny River examined oil pollution and the brackish environment.[28] An experiment that examined the effect of crude petroleum oil and refined oils on aquatic organisms confirmed that crude oil and refined petroleum products in high concentrations were toxic to marine life. By comparing different types of fish and shellfish, it showed that some species were more resilient than others. Data revealed that shrimps were more susceptible to pollutants, followed by oysters and fish. Periwinkles were the most tolerant. Tainting of the flesh confirmed that the effect of oil spillage was lingering. Even small, though continual, spills affected the productivity of the water. It also showed that pollutants had a pronounced effect on the growth and reproductive capacity of organisms. (Onuoba 1985)

An oil spillage in Nembe in 1995 illustrates the problems with which oil producing communities must contend when there is a spillage. It was reported that an oil spill had occurred from an Agip oil pipeline. For several days, the oil flowed freely into the creeks and mangrove forest. The area went up in flames one night when a woman on a late-night fishing trip mistakenly set off the fire with her lantern. The fire destroyed much of the aquatic life in the area. In addition, farm crops were destroyed. (Agbese 1995)

A problem that many communities face during oil spillages is that many of the oil companies are unwilling to pay compensation during spillages because they believe that they are caused by sabotage. The communities, however, stress that many of the spillages are “legitimate” – not caused by sabotage, but instead by poorly maintained and faulty equipment. It is therefore necessary to monitor the areas regularly and to act immediately during spillages.[29]

It might be of interest to recollect that Shell Oil Company was compelled to shut down its operations in Ogoni in 1996 as a result of a high-profile protest campaign against it. The Nigerian government again ordered Shell in mid-2006 to resume oil production in Ogoni within one year or lose its concession. This necessitated a visit by a team of oil spill experts from the United Nations Environment Program to assess the impact of oil pollution on the region. A report compiled by World Wildlife Fund-UK (WWF UK), the World Conservation Union and the Nigeria Conservation Foundation, concluded that pollution is destroying the livelihood of 20 million people in the region and about 1.5 million tons of oil has been spilt in the Niger Delta over the past 50 years. The report says oil spills have done colossal damage to the fragile mangrove forests and wiped out rare species, including primates, fish, turtles and birds. The delta is now considered one of the five most polluted spots in the world.[30] The report concluded that the damage done by oil and gas production was one of the factors responsible for the instability and violence in the region, including the sabotage of oil facilities. (Costa 2006)

Gas Flaring and Pollution

Large quantities of methane gas are associated with oil. During oil production, this gas is burned off at flow stations above the oil wells. This introduces sulphur dioxide and oxides of carbon and nitrogen into the atmosphere. The impact of this on the environment has not yet been substantiated. However, it is said that this could contribute to global warming. (Waribor 1976)

Nigerian authorities also admit that the country loses about $2.5 billion annually to gas flaring, while thousands of people in and around the oil-rich Delta region live in grinding poverty. The authorities have promised to set a deadline for oil firms operating in the area to stop the practice. Environmental watchdog groups say the flaring of gas has further polluted the region’s water, air and farmlands. They also report a significant increase in birth defects. Mike Karikpo, programs manager with the group Environmental Rights Action, however is rather sceptical about promises made by Nigerian authorities.

He recalls several instances of setting deadlines for gas flare-out in Nigeria right since 1965 and none of them had been met and he feels that the government and the oil companies are busy playing the blame game, pointing at each other for not doing what they are supposed to be doing.[31]

He is rather scathing in his remarks about the government and the oil companies and suspects both the parties benefit from flaring and it is basically a symbiotic relationship that benefits the government and oil companies. (Offor 2008)

Land Filling

Quite a few creeks and waterways have been filled up by the oil companies for laying pipelines and this has severely disturbed accessibility of numerous hutments and small villages and most of these villagers have been denied an alternative route to reach Bonny Town. The alternative route provided a safer option to reach Bonny town during monsoon when Bonny River becomes very rough and dangerous.[32]

Canalization also damages the environment. Oil companies create canals to either drain out an area for drilling and lying of pipes or create channels to transport drilling and other oil production equipment to the site. The channels alter the ecology of the area; they can also alter the flood pattern of the delta by resulting in perennial flooding of the otherwise well-drained plains as was observed in many areas in the Niger Delta. (Ekoriko 1996)

Erosion

The local inhabitants are of the firm opinion that the continual to and from movement of sea trucks along the creek and dredging of the land and waterways have significantly contributed to the erosion of the land. In Oloma, several households lost their fertile farmlands due to erosion and the sandy beach that used to be in front of the village has eroded away even after a sand-bank was designed to prevent further erosion. The embankment was promised for several years and finally in 1984 it was indeed built by a contractor who bagged the government contract. But like many other public constructions in corruption infested Nigeria, this embankment also did not last.[33] It got washed away during the rainy season and instead of benefiting the community and improving the situation, it worsened the scenario. Gaps in the embankment became dangerous for children and adults walking on the sandbags and several of them ended with broken legs or twisted ankles. (Fentiman 1996)

Dredging

Local fishermen of this area drag a net along the creek bottom as the most effective Indigenous fishing method. But after oil companies have emerged on the scene it is difficult, rather impossible for fishermen to catch fish in such a manner because the creeks have been dredged as a part of oil exploration and the water is now too deep to stand in, making this form of fishing obsolete. Dredging also destroys valuable freshwater and mangrove vegetation, which can cause an imbalance in the ecosystem because aquatic organisms depend on them for food and shelter during part or all of their life cycles (Wilcox and Powell 1985). Also, during the dredging process, oil is spilled into the water and burning of fuel releases carbon, sulphur, and nitrogen oxides into the aquatic environment thus causing severe water and air pollution. (Odu and Imevbore 1985)

Oloma and Social Change

The Land Decree Act of 1978 caused many communities throughout the Niger Delta to lose their valuable farmland. On top of that, oil production contributed to the contamination of whatever land that still remained with them. Though there is no doubting the fact that inhabitants of Oloma suffered in many ways when parts of their land were taken away, they have suffered more by losing the access and rights of way to their creeks and waterways. Further, the destruction and contamination of their productive resources have contributed to vast changes within the economic, political, and social structure of the community. As members of the community are forced to migrate because their resources are destroyed, various changes are taking place within these institutions.[34]

Unrest in Niger Delta

Many analysts feel that ownership of land is the main reason for the continuing political unrest in this region.  The Land Decree Act of 1978 automatically transfers title to any land where oil is found to the federal government without adequate compensation to the landowners. This gives the federal government the right to enter into an unholy alliance with multinational oil companies in the name of joint venture operations at the exclusion of the people.

Is Federal Government a party to the nexus?

The result is that the federal government and the multinational oil corporations share the resulting revenue on a ratio of 60:40 percent with nothing left for the original landowners.[35] This fraudulent and complex economic arrangement is based on much deeper and extremely sinister issues of ethnicity and tribalism. There are 250 ethnic nationalities in Nigeria, with the Yorubas, Igbos and the Hausa/Fulani of the west, southeast and the north comprising the majority tribes. The minorities of the Ijaws, Itsekiris and other nationalities inhabit the oil rich Niger Delta region. However, most members of the government are from majority tribes that do not populate the Niger Delta and these people have created a formula for sharing the revenues from oil production that favours other regions, further increasing the poverty in the delta and creating anger and conflict between the delta tribes themselves. Trust amongst the tribes has been eroded, while hatred and suspicion have grown, as they are made to believe that they are enemies to one and another by the divide and rule and the divide and exploit attitude of an insincere national government and its dubious multinational collaborators. (Bisina 2005)

Non-recognition of Minorities and Indigenous People

The situation is made more volatile since Nigerian constitution does not recognise minority and indigenous rights though Chapter 2 of the constitution purports to confer equality on all citizens of the country irrespective of ethnic origin, sex, religion, and political opinion. The Nigerian constitution only deals with general question of non-discrimination but does not deal with the problem of vulnerable group like the nation’s minorities. There is no mention of minority and indigenous peoples’ rights in the constitution.[36]

A direct result of this lack of protection is Nigeria’s human rights crisis   that has arisen from the treatment meted to the mosaic of distinct minority and indigenous nationalities that straddle the length and breadth of the Niger Delta River where the nation’s exploration and exploitation of crude oil takes place.

Right from its onset, the oil industry in Nigeria had operated under the protection of certain security arrangements requiring the Nigeria Police to send officers to the oil companies as supernumerary police or spy police. These security officers had been implicated in abuses against local community members where they operate involving crimes like torture, arbitrary arrests and detention and rape.[37]

However, the response of the government took a new dimension in the wake of the decade long upsurge in agitations by the Niger Delta peoples. The standard response of the government had been the militarization of the area in order to crush community protests so as to ensure the protection of oil facilities and the continued flow of crude oil. This militarization has resulted in indiscriminate arrests, torture, rape and the extrajudicial execution of peoples in the Niger Delta. This is contrary to the principles of increasing the wellbeing of the people of Niger Delta and avoidance of adverse impacts. (The Niger Delta Civil Society Forum 2008)

Militancy in Niger Delta

Such a backdrop of corruption, nepotism, forgery and blatant show of force by governmental agencies had made Niger Delta into a lawless zone where militant youths disrupted oil production activities at will and communities frequently engaged, with little provocation, in destructive inter and intra community clashes[38]. Movement for the Emancipation of the Niger Delta (MEND) and other activists called for the Nigerian federal government to regulate the oil exploration, drilling, and processing activities of Shell Oil and other oil manufacturers in the oil-producing regions of Nigeria. This included enforcing standards on the location of oil drills, proper disposal of oil wastes, and appropriate clean-up procedures in the event of spills. The activists also asked that a larger share of the profits from the oil industry be directed to the oil-producing regions of the country. They also wanted local government leaders to be included to a larger extent in the planning and decision-making of future oil explorations and expanded activities related to current oil drilling and processing. They usually threaten oil companies and their employees to leave their region. At times, they hold foreign oil workers hostage and have sabotaged major oilfields. These militants also provide security for the oil-smugglers who are believed to exchange oil for weapons from Eastern Europe. They claim that they have had enough of the exploitation of their resources and wanted to take total control of the area to get their fair share of the wealth. (M. Olusakin 2005)

The Niger Delta crisis is a serious matter that requires serious policy and committed and courageous leadership to resolve. The Movement for the Emancipation of the Niger Delta threatened some rocket attacks. (The Guardian 2006) But there was no tangible, realistic and genuine efforts made by the government of the country to untangle that crisis.[39]

As mentioned earlier, the people of Niger Delta have been suffering from environmental degradation and pollution through oil spillage and gas flaring. The Commissions established by the government (Oil Mineral Producing Areas Development Commission (OMPADEC) in 1992, replaced by the Niger Delta Development Commission (NDDC) in 2000) have not made any noticeable socioeconomic impacts in the region. (ANEEJ 2004)

 

However, before passing a blanket judgement on governmental efforts, it would be fair to quickly browse through the details of the brief of NDDC and what it could achieve. This of course is not an attempt to whitewash the role played by Nigerian Government in tackling the crisis in the Delta region. Rather it is an attempt to remain fair and not be swayed by the high voltage rhetoric employed by all the concerned parties.[40]

Niger Delta Development Commission was charged with the responsibility of promoting sustainable development of the Niger Delta. Specifically, the functions of the NDDC included the following:

  • Formulate policies and guidelines for the development of the Niger Delta area;
  • Conceive, plan and implement in accordance with set rules and regulations, projects and programs for sustainable development of the Niger Delta area, in the fields of transportation, including roads, jetties and waterways, health, education, employment, industrialization, agriculture and fisheries, housing and urban development, water supply, electricity and telecommunications;
  • Cause the Niger Delta area to be surveyed in order to ascertain measures which are necessary to promote its physical and socioeconomic development;
  • Prepare master plans and schemes designed to promote the physical development of the Niger Delta area.[41]
  • Implement all the measures approved for the development of the Niger Delta area by the Federal Government and the member States of the Commission;
  • Identify factors inhibiting the Development of the Niger Delta area and assist the member states in the formulation and implementation of policies to ensure sound and efficient management of the resources of the Niger Delta area;
  • Assess and report on any project being funded or carried out in the Niger Delta area by oil and gas producing companies and any other company including non-governmental organizations, and ensure that funds released for such projects are properly utilized;
  • Tackle ecological and environmental problems that arise from the exploration of oil mineral in the Niger Delta area and advise the Federal Government and the member States on the prevention and control of oil spillages, gas flaring and environmental pollution;
  • Liaise with the various oil mineral and gas prospecting and producing companies on all matters of pollution, prevention and control; and
  • Execute such other works and perform such other functions which, in the opinion of the Commission, are required for the sustainable development of the Niger Delta area and its people.(Niger-Delta Development Commission (Establishment etc.) Act: 2000 Act No. 6: Laws of the Federation of Nigeria 2000)

The Niger Delta Development Commission (NDDC) placed great emphasis on human development based on the conviction that any development must begin with the human being who otherwise could become opposed to the development process[42]. It had developed various programs to facilitate this. Some of the achievements of NDDC are: Over 100,000 treated for various illnesses; 5,000 enrolled in computer training classes; 417 classrooms built; desks and tables provided for those classrooms; science equipment provided for local schools; 50 health centres constructed and many similar projects. Though these were mere drops in the ocean when compared to the yawning requirements of the area and NDDC was superseded by Consolidated Council on Social and Economic Development of Coastal States of the Niger Delta (COSEND) — a new development institution recently established by the Government of Nigeria to drive the development of the Niger Delta region — one has to admit that NDDC was not a mere spectator in the ongoing happenings in the Delta region. (Ebeku 2008)

It might seem a misnomer if it is said that the crisis in the Niger Delta is not complex by itself. But the actual fact is the approach to resolving it has made it complex and dangerous. The people are not asking for anything out of the ordinary. The region that is home to Nigeria’s oil wealth remains the most impoverished community in the nation. Reports note that they lack basic infrastructure – good network of roads, health care facilities, good schools and portable water. The spate of sad images of the poor quality of life in the creeks that are periodically shown to the world on CNN (and in the newspapers) highlight that the oil wealth is not being used to develop the area.[43] The successive governments have collected billions of dollars from the land over the decades, but little (if any) has been invested in the area to improve the people’s living conditions. Is there anything wrong in investing some money that is realized from the oil extracted from the region to improve the people’s living conditions? [44]

The main causes of Niger Delta crisis include greed and selfishness, deprivation and poverty and social injustice. (Oyadongha 2006) The simple meaning of social justice, according to experts, is that the same contribution equals the same benefit. A person’s “benefit” equals his or her “contribution” and no community should be given more when it contributes less or be given less when it contributes more. The Niger Delta, however, is contributing a lot to the economic well being of Nigeria and it is getting nothing, but destruction, in return. Without social justice there will be no peace in the Niger Delta and socioeconomic development will continue to elude the region. Social justice, as experts say, is an important ingredient for “socioeconomic development.” It creates a healthy, harmonious, and reliable social psychological atmosphere that stimulates economic development. And because of social injustice the entire nation is slowly becoming politically and economically very unstable. (Boothroyd and Nam 2000)

But this crisis has not shown any signs over the years that it would be resolved. Some thought it would end with the executions of Ken Saro-Wiwa and eight fellow Ogonis on November 10, 1995. But what followed was a worldwide condemnation of the Nigerian authorities and a genuine concern for human rights abuses in that country.

The condemnations notwithstanding ground reality has changed very little over the years and as the situation stands, the country is, losing several billions of dollars to the massive destruction being credited to the activities of saboteurs, or militants (depending on which side of the divide you are) in the region, by blowing up oil installations belonging to major multinational oil companies.[45] As a result, Nigeria is having a daily shortfall of almost a million barrels crude oil production from its quota to OPEC. This will have a massive implication on the annual budget of the country as the government will be forced to undertake a huge amount of deficit financing in order to keep up to the budgeted expenditure.

The situation is compounded by the fact that Labour Unions, under the aegis of the Nigerian Labour Congress (NLC), led Nigerian workers to draw the attention of the federal government to the deplorable plights of workers in the face of the current global economic meltdown and made several demands on the government, some of which are, an increase in workers’ salaries, a reversal of the deregulation of the downstream sector and the adoption of the Justice Uwais’ recommendations on electoral reforms. But as long as the crisis in Niger Delta continues the demands and expectations of Nigerian workers and the rest of the populace can hardly be met. Nigerian economy has become too lopsided with over 95% of foreign exchange earnings coming from the crude oil produce of Niger Delta.[46]

But in all probabilities it has not been a correct (at least economically) decision to order a military invasion of the creeks in Niger-Delta by the Joint Military Task Force (JTF), in the quest to flush out militants operating within the bowels of the oil rich region of the country. It is true that military officers were massacred, and those responsible for it must not be allowed to go free, but the process of apprehending the criminal elements responsible for this wicked act should follow an intelligent, systematic and calculated procedure. Had this been an American issue, on US soil, the FBI and CIA would surely have played predominant roles in thwarting the efforts of these militants, while ensuring that minimum “collateral damages” are incurred. Nigerian lives, whether they are of Niger-Deltan’s, Fulani or Yoruba are just too sacred and valuable to be lost and neglected in a struggle that truly centres on them. (Eseku 2009)

Pat Utomi in his article has clearly demonstrated there is a fair amount of consensus that the crisis in the Niger Delta is a cumulative consequence of six major factors. These are: the challenge of minority rights in a multi-ethnic country; a history of poor or bad governance; the allure of crude oil stealing; the challenge of principles-based nation-building with regard to fiscal federalism; and the ‘criminalization’ of politics. Then there is the enclave nature of the oil economy, which limits the trickle-down of benefits to the community.[47]

It will surely sound sweet music to multinational oil companies that Niger Delta crisis predates the discovery of oil in commercial quantities in the Delta.  Long before Shell Oil made commercial finds in Oloibiri in 1956, many of the minority peoples who dominate the Niger Delta had petitioned the British Colonial administration with concerns that they were being marginalized by the ethnic majority groups.  The petitions resulted in a commission of inquiry.  One outcome of the work of the Willinks Commission was the setting up of a Niger Delta Basin Authority to drive economic development. This initiative quickly fell into neglect and deprivation became the symbol of the region. The extraction of wealth from the earth beneath the Delta benefited the Nigerian government and the oil producing companies. At the same time, it despoiled the region’s environment and took away traditional means of livelihood from the region’s young people who were offered no employment alternatives. Their plight became a cause celebre in the quest for civil liberties and fundamental human rights.[48]

As if that was not enough of a burden, bad governance at the state and federal levels meant the region lacked the most basic infrastructure, while communities needed only look across the fence to the ultramodern facilities enjoyed by mainly foreign employees of the oil companies.  Widespread corruption in the institutions established in response to agitation for justice and fairness in the region rendered these efforts utterly ineffective. A central question has been determining who should be held accountable. The people of the region have usually held the operating companies to account, while the oil firms insist that they are victims and that the governments to whom they have paid taxes should be responsible for development.  While the debate went on, the people of the oil-rich Delta remained among the poorest people in the world. (Afiesiama 1985)

The anger of the region is further inflamed by the fact that the federal structure agreed upon at independence was an entrenchment of the principle of being a subsidiary, with an understanding that resources belong to the federating states who then contribute 50 percent of revenues from mineral resources for maintenance of the central government. Under military rule this basic understanding of the essence of the Nigerian Federation was systematically turned on its head without consultation or debate.  At one point, less than one percent of oil revenues, in real terms, accrued to the sub-national oil-producing units by the derivation principle. With greater freedoms and the advent of civilian, democratic rule, these inflamed passions and resentments were predictable and more forcefully expressed.[49]

Large scale stealing of crude oil, in which powerful politicians and senior military officials were known to be implicated, further aggravated the sense of injury felt by the people in the Niger Delta. The dominant feeling was that while they dealt with the pains of poverty, actors from outside the region engaged in rapacious conspicuous consumption from resources of the Niger Delta.

The introduction of violence as an instrument of securing legitimate political power has complicated the scenario even more. Thugs and gangs of political enforcers have proliferated in the region.[50]  This phenomenon, which has been dubbed the “criminalization of the political process,” is currently on ‘exhibition’ at the Rivers State Truth and Reconciliation Commission. It has led to proliferation of arms in the region and the emergence of warlords supported, at least initially, by the actions of politicians and government officials. Many of these actors, with no strong political convictions, add to the criminal elements compounding the activities of the political militants. (Utomi 2008)

It is no small wonder that passions run pretty high on the highly emotive issue of the crisis in Niger Delta. Very often racially loaded comments are made by people in responsible positions and those comments have far reaching implications on the political careers of these highly placed individuals. A recent case involved Van Jones, Environmental Adviser to United States President Barack Obama. He had commented that oil companies are killing “blacks” in Nigeria. His remark about Nigeria was in reference to environmental degradation in the Niger Delta caused by multinational oil companies. [51]

The Washington Times reported that Jones had also in the past made comments claiming an ecological apartheid in which white polluters; white environmentalists were steering poison to minority communities. Such a racially loaded statement is bound to raise a lot of political storm especially when United States has an African-American as President in the White House. (Ohia 2009)

Jones had to resign his post in the face of rising tide of criticism and many observers feel that he was forced to relinquish his post by the President himself as he did not want to provide additional ammunition to all those that were opposing tooth and nail his policies of Health Care reforms. The present project does not deal with the intricacies of Washington politics but the incident involving Van Jones indeed brought in sharp focus the deep lines that divide the stakeholders in this problem.

Legal resistance against environmental pollution

Apart from militant outbursts, legal resistance has also been another channel through which Nigerians have expressed their anguish over the systematic environmental destruction of their territories that multinational oil companies have been indulging in for decades.[52] A Nigerian High Court had upheld on 19th May 2006 an order asking Royal Dutch Shell to pay $1.5 billion in damages for pollution in the oil-producing Niger Delta region. The oil giant was directed to pay the money to ethnic Ijaw communities in the state of Bayelsa. A group of Ijaws had earlier approached the court of law seeking compensation for what they called the devastation of their area’s environment because of oil drilling. (US Fed News Service 2006)

In a report filed on 30th July 2001, Xinhua News Agency had stated Sola Ebiseni, commissioner of the Ondo State for environment and natural resources, had claimed in state’s capital Akure that Seven out of every ten persons living in the oil rich coastal area of Nigeria’s southern state of Ondo have fled due to the pollution of the environment and the source of livelihood of the remaining people was under severe threat.[53] Faced with an acute environmental crisis Nigerian government ordered the oil companies operating in Nigeria and to take full responsibility of clearing the mess they caused during the operations. The Nigerian Government also called for an elaborate conference of stakeholders on the Nigerian environment from September 18 to 20, 2001 in the capital Abuja. According to a statement issued by National Coordinator of the summit Bolu Jonh Folayan, the summit, a private/government sector coalition to make the Nigerian environment safer, was supported by the Ministry of Environment, the Ministry of Power and Steel, the Nigerian National Petroleum Corporation and other major stakeholders. However, in spite of such high power presence, the summit ended in a bout of finger pointing and passing of pious resolutions without any clear cut fixation of responsibility. (Xinhua News Desk 2001)

Former chairman of the Nigerian Economic and Financial Crimes Commission (EFCC), Mallam Nuhu Ribadu, on a temporary exile in the United States, has urged the United States government to expand its crime law to enable it nail high level Nigerian recipients of bribe, who usually enjoy a safe haven within the country. During a testimony before the House Financial Services Committee of the US Congress in Washington DC, he argued that while the responsibility to solve this problem ultimately lies with Nigeria, the US could help to narrow the operating space for what he described as “high-stakes elite bribery”, with an expanded law that would rein them in, irrespective of their country of origin.[54] In an effort to put the issue in sharper perspective, Ribadu reminded the Congress that the culprits of the infamous Halliburton/KBR corruption scandal had faced severe consequences including the payment of killer fines up to the tune of $600 million. However, their Nigerian counterparts are still walking free because of poor law enforcement and the fact that the US lacks jurisdiction to rein in those individuals. Same is the case with the Siemens scandal that is yet to produce any conviction or sanction from the Nigerian side. But if and when the perpetrators of this sort of crimes are nabbed across borders, he argued that the lack of hiding place will stop them in their tracks. Ribadu further claimed that Nigeria has lost some $440 billion between 1960 and 1999 to corruption; a figure, he said, is six times higher than the Marshall Plan amount needed to rebuild devastated Europe after World War II. Putting forward some telling statistics,[55] Ribadu claimed that former Governor of Plateau State Joshua Dariye was found to have 25 bank accounts in London alone, acquiring some 10 million pounds in benefits through criminal conduct. Also former Governor of Bayelsa State D.S.P. Alamieyeseigha had banks traced to Cyrpus, Denmark, US and Bahamas. He had property valued about 10 million pounds in London and another valued at 10 million rand in Cape Town, South Africa. (Ikokwu 2009)

How unsafe it is to reside in Niger Delta

Shell, which produces more than half of Nigeria’s oil, and hence one of the prime polluters of environment in the Niger Delta region, has countered condemnation of pollution by pointing out that the Delta has many other environmental problems as overpopulation and land degradation. (Alagoa, The Development of Institutions in the States of the Eastern Niger Delta 1996)

But a report by World Bank environment specialist David Moffat and Professor Olof Linden of Stockholm University, published in Ambio, the magazine of the Royal Swedish Academy of Sciences, claims that even official statistics suggest that every year the delta is polluted by 2.3 billion cubic metres of oil from some 300 separate spills, almost one a day, but that the true figure may be 10 times higher. The report also exploded the oft repeated claim by oil companies – much trumpeted by Shell in the row that had followed the killing of writer and environmentalist Saro-Wiwa and eight fellow Ogoni activists in November 1995 – that they have improved the lives of the people by investing in local communities.[56]

The report concluded that the impact of these initiatives had been “minimal”. The report confirms that that gas flaring from oil production in the area emitted some 35 million tons of carbon dioxide and 12 million tons of methane a year, making it the world’s largest single contributor to global warming. This report goes on to describe how by building canals and roads, largely to service the industry, the oil industry has precipitated some of the most extensive environmental degradation in the region.

The report describes in vivid detail how the oil companies and government construct roads that block streams, creating stagnant ponds of water, killing forests and flooding fields and fertile plains. These roads also give loggers better access to the area’s fast-diminishing forests. This report also goes on to admit that though oil provides more than 80 per cent of Nigeria’s foreign exchange, nearly three-quarters of the people of the Delta live in rural communities characterised by a lack of development, stagnant agricultural productivity, negligible opportunities in urban areas, rapid population growth and tenuous property rights.[57]

And, one must make a special mention of the fact that this is one of the first few reports that stated that while income in the area is below the national average, health is “substantially worse” than in the rest of south-east Nigeria. Tests have found 85 per cent of drinking water samples polluted by sewage, and water-related diseases account for four-fifths of all the illness. It might be of some solace to those who feel disturbed by the environmental pollution unleashed by Shell and other multinational oil corporations upon the hapless inhabitants of Niger Delta that The Royal Geographical Society had voted way back in 1996 to dump Shell as one of its sponsors because of its activities in Nigeria. At its annual conference on 5th January 1996, members of the 160-year-old society voted by 157 to 10 to remove Shell as one of its four corporate patrons because of disquiet over the company’s environmental and political record. (Lean 1996)

According to a report by Xinhua News Agency, researchers at Lagos University had conducted several studies and had come to the stunning conclusion that more than 25 percent of Nigerians are at an increased risk of developing cancer due to exposure to toxic chemicals from crude oil pollution, Polynuclear Aromatic Hydrocarbons (PAHs). [58] They are also at the risk that PAHs can be genotoxic, that is, the damage caused can be inherited. Previous studies have already indicated that PAHs caused a decrease in sperm count and fertility in crude oil polluted environment of the Niger Delta. PAHs are known to be acutely lethal in low concentrations and chronically lethal in sub-lethal concentration. Toxic effects observed due to PAHs include decreased body weight, enlarged liver with cell oedema and congestion of liver parenchyma and inflammation of kidney cells. Several related studies have also confirmed that exposure to Benzo(a) Pyrene (BaP) increases the risk of cancer. BaP is a five-ring PAH, belonging to the alternant class of PAHs. It is known to be a ubiquitous environmental carcinogen.

Chimezie Anyakora, Ugochukwu Obiakor, Funke Babalogbon and Herbert Coker of the Department of Pharmaceutical Chemistry, University of Lagos had carried out an extensive investigation on auto mechanics and found that 25 percent of exposed subjects (auto mechanics) were found to contain one PAH or the other while one out of eleven unexposed subjects (students) had PAH in their blood sample. A second study published in American Journal of Environmental Sciences by Chimezie Anyakora, and Herbert Coker of the Department of Pharmaceutical Chemistry, University of Lagos, concluded that people of the Niger Delta are at a higher risk of cancer because high concentrations of this toxic chemical were found in the fishes they eat.[59]

Oil spills have become a regular feature in the deltaic region with the then Texaco Overseas Nigeria Unlimited Funiwa blow-out and Mobil Nigeria crude oil spill in the late 1990.  Since then, most oil spills which run into millions of barrels are concentrated around oil floating stations, oil wells and crude oil pipelines which crisscross the entire offshore region of the Niger Delta region.[60]

Mid 2007 sabotage of Warri-Kaduan crude oil pipeline that is the main channel (having a capacity of 110,000 barrels per day) for transporting crude from the Niger Delta region to Kaduna Refinery and Petrochemical Company Limited caused massive oil spill and pollution in Chanomi Creeks in Delta State. (Xinhua News Desk 2007)

Oil and Health

There is absolutely no doubt that oil has spelt doom in the lives of the original inhabitants of the delta region. These victims of environmental degradation are denied the basic right to health as envisaged in “The Right to Health”, Fact Sheet No. 31 published by Office of the United Nations High Commissioner for Human Rights, United Nations Office at Geneva.

Key aspects of the right to health

The 1948 Universal Declaration of Human Rights had mentioned health as part of the right to an adequate standard of living (art. 25). The right to health was again recognized as a human right in the 1966 International Covenant on Economic, Social and Cultural Rights.[61] In recent years, increasing attention has been paid to the right to the highest attainable standard of health by WHO and by the Commission on Human Rights (now replaced by the Human Rights Council), which in 2002 created the mandate of Special Rapporteur on the right of everyone to the highest attainable standard of physical and mental health. These initiatives have helped clarify the nature of the right to health and how it can be achieved. (Office of the United Nations High Commissioner for Human Rights 2008)

The right to health is an inclusive right and goes beyond access to health care and the building of hospitals. It includes a wide range of factors that can help us lead a healthy life. The Committee on Economic, Social and Cultural Rights, the body responsible for monitoring the International Covenant on Economic, Social and Cultural Rights, calls these the “underlying determinants of health”.[62] They include:

  • Safe drinking water and adequate sanitation;
  • Safe food;
  • Adequate nutrition and housing;
  • Healthy working and environmental conditions;
  • Health-related education and information;
  • Gender equality.

(The Committee on Economic, Social and Cultural Rights 1966)

Misconceptions about right to health

One should also steer clear about certain common misconceptions about the right to health while discussing this vital component of human rights. The right to health surely does not mean the same as the right to be healthy. Rather, the right to health refers to the right to the enjoyment of a variety of goods, facilities, services and conditions necessary for its realization. So, a state is morally and ethically respoinsible to provide its citizens all the facilties and provisions that are necessary for them to enjoy unfetterd right to health.

The fact that the programme to ensure right to health has certain tangible deadlines to be met does, however, never means that State is under an immediate obligation to ensure that such deadlines are met.[63] The State must make every possible effort, within available resources, to realise the right to health and to take steps in that direction without any delay. Here, of course, comes another stipulation that prevents all those States that are not that much enthusiastic about implementing this right from escaping the responsibility. A country’s difficult financial situation does not absolve it from having to take action to realize the right to health.

Link between right to health and other human rights

Member States of United Nations feel human rights are interdependent, indivisible and interrelated. This means that violating the right to health may often impair the enjoyment of other human rights, such as the rights to education or work, and vice versa. (World Conference on Human Rights 1993) On the other hand, right to health is also dependent upon many other human rights as rights to food, to water, to an adequate standard of living, to adequate housing, to freedom from discrimination, to privacy, to access to information, to participation, and the right to benefit from scientific progress and its applications. It is common knowledge that ill health is associated with the ingestion of or contact with unsafe water which in turn is linked to lack of adequate hygiene, lack of sanitation and poor management of water resources and systems. Just in case a small bit of statistics helps the case, it may be recounted that most diarrhoeal disease in the world is attributable to unsafe water, sanitation and hygiene. In 2002, diarrhoea attributable to these three factors caused approximately 2.7 per cent of deaths (1.5 million) worldwide. (Environmental Burden of Disease Series, No. 15 2007)

Right to health as enshrined in International Human Rights Law and Constitutions of several countries

There are several international human rights treaties that recognise the right to health.[64] They are:

  • The 1965 International Convention on the Elimination of All Forms of Racial Discrimination: art. 5 (e) (iv);
  • The 1966 International Covenant on Economic, Social and Cultural Rights: art. 12;
  • The 1979 Convention on the Elimination of All Forms of Discrimination against Women: arts. 11 (1) (f), 12 and 14 (2) (b);
  • The 1989 Convention on the Rights of the Child: art. 24;
  • The 1990 International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families: arts. 28, 43 (e) and 45 (c);
  • The 2006 Convention on the Rights of Persons with Disabilities: art. 25.

The right to health is also recognized in several regional instruments, such as the African Charter on Human and Peoples’ Rights (1981), the Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, known as the Protocol of San Salvador (1988), and the European Social Charter (1961, revised in 1996). The American Convention on Human Rights (1969) and the European Convention for the Promotion of Human Rights and Fundamental Freedoms (1950) contain provisions related to health, such as the right to life, the prohibition on torture and other cruel, inhuman and degrading treatment, and the right to family and private life.[65]

The right to health is also enshrined in constitutions of some countries[66]:

Constitution of South Africa (1996):

Chapter II, Section 27: Health care, food, water and social security:

“(1) Everyone has the right to have access to health-care services, including reproductive health care; sufficient food and water; […]

(2) The State must take reasonable legislative and other measures, within its available resources, to achieve the progressive realization of each of these rights.

(3) No one may be refused emergency medical treatment.”

Constitution of India (1950):

Part IV, art. 47, articulates a duty of the State to raise the level of nutrition and the standard of living and to improve public health: “The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties…”

Constitution of Ecuador (1998):

Chapter IV: Economic, Social and Cultural Rights, art. 42:

“The State guarantees the right to health, its promotion and protection, through the development of food security, the provision of drinking water and basic sanitation, the promotion of a healthy family, work and community environment, and the possibility of permanent and uninterrupted access to health services, in conformity with the principles of equity, universality, solidarity, quality and efficiency.”

Right to health: how far it is honoured in Niger Delta

In spite of so many legal provisions it is unfortunate that hardly anything is being honoured in Niger Delta.[67] We have already discussed how oil spillage has not only polluted water in creeks and made them unfit for human consumption but also killed or infected the fish in those creeks. The pollution from spillages have also rendered fertile agricultural lands completely barren and forced large scale exodus from this region. The air pollution through flaring has also increased chances of contacting cancer and this region has become a virtual death trap for all those who are forced to reside in this condemned zone. (Charlick 2001)

In a news report in TendersInfo Edwin Clarke, an undisputed Ijaw leader claimed that there would no lasting peace in the Niger Delta region unless oil companies pay to the indigenous communities a sum of $100 million as compensation for almost 14,000 cases of environmental degradation that these companies are guilty of.[68] He further accused the Nigerian Government of not being serious about ending gas flaring as is evident from the fact that while all other governments have cut off date for gas flaring to come to an end, Nigerian Government has no such strictly enforceable cut off date and the earliest date by which one hopes it would finally end in Nigeria would be 2020. (manish03 2008)

Is there a way forward?

Though it is practically impossible to untangle the mess in Niger Delta unless environmental pollution perpetrated by oil companies is brought to a near complete halt, the government should make every effort to encourage private investment in agriculture and agro-industries by providing incentives, including tax breaks, finance credit and extension services. Also, inclusion of women would help in the process of negotiating and inculcating a positive peace agenda as that would introduce gender sensitivity.

Apart from the oil industry, there are numerous practices that impact on the Nigerian environment. Apart from the oil companies’ activities having a great impact on the environment, the following also impact the environment:

Bush burning, extermination of wildlife by hunters, rain, drought and desertification, deforestation, flooding and erosion, industrial pollution and contamination of water bodies, vehicular emission and noise pollution, toxic wastes and dumping of hazardous chemicals, emissions from mechanic workshops, sewage and municipal solid wastes disposal problems, winds and other natural disasters.[69]

A desirable outcome for the Nigerian people and the current government is a strong diversified economy able to generate employment and sustain livelihood for its citizens. The focus should be on increasing the productivity of agriculture, diversifying export earnings, increasing the utilization of industrial capacity, and providing gainful employment for its population. (Horton 2001)

According to Dr. Pat Utomi an administrative solution would be the construction of a major East-West highway through the region that will not only open economic opportunity to the community but will also improve access to prospecting areas for oil companies who have shown an interest in co-funding such a project in the past but have seen the federal government renege on its part of the proposal.[70] It is part of what will provide the thawing of the frost to allow meaningful dialogue to begin. This along with adequate funding and educated civil society monitoring of Niger Delta Development Commission, and an agreement in Abuja to return to the founding principles of the Nigerian federation will ensure that energy security and peace and development in the region is achieved. Local economic advancement and energy security are twins that should travel together for sustainable success. (Utomi 2008)

 

 

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ANEEJ. “Oil of Poverty in Niger Delta.” African Network for Environmental and Economic Justice, 2004.

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Glossary

  1. Rapporteur – somebody who is appointed to investigate a subject and deliver a report on it
  2. Hausa/Fulani – a term used to refer collectively to the Hausa and Fulani people of West Africa. The two are grouped together because their histories have been largely intertwined since the Fulani War. For example, when the Fulani took over Hausa city-state of Kano during the Fulani War, the new emirs ended up speaking the Hausa language instead of Fulfulde.
  3. Yoruba – They are one of the largest ethno-linguistic or ethnic groups in West Africa having around 120 million individuals. Most of these people speak Yoruba language and constitute approximately 21% of the total population of Nigeria.
  4. Igbo – They are also referred as Ibo(e), Ebo(e), Eboans or Heebo and are an ethnic group living chiefly in south-eastern and south Nigeria. They speak Igbo but quite a substantial number of members of this ethnic group can speak fluent English too. They are among the largest and most influential ethnic groups in Nigeria.
  5. Sharia – It is the body of Islamic religious law. The term means “way” or “path to the water source”. It is the legal framework within which the public and private aspects of life are regulated for those living in a legal system based on Islamic principles of jurisprudence and for Muslims living outside the domain.
  6. Ijaw – They are a collection of people (also known by the subgroups “Ijo” or “Izon”) who reside mostly in the forest regions of the Bayelsa, Delta and Rivers States within the Niger Delta in Nigeria. Some are also natives of Akwa-Ibom, Edo and Ondo states of Nigeria. Many are found as migrant fishermen in camps as far west as Sierra Leone and as far east as Gabon along the Western Africa coastline. They are believed to be some of the earliest inhabitants of southern Nigeria.
  7. Ogoni – They are one of the many indigenous peoples in the Niger Delta region of southeast Nigeria. They number about a half million people and live in a 404-square-mile homeland which they also refer to as Ogoni, or Ogoniland. The world came to know of these people after a massive public protest campaign against Shell Oil, led by the Movement for the Survival of the Ogoni People (MOSOP).
  8. Itsekiri – They are also known as Jekri, Isekiri or Ishekiri) and are an ethnic group of Nigeria’s Niger Delta area, Delta State. They number roughly 450,000 people. Though small in numbers they are considered to be a highly educated ethnic group and endowed with a rich cultural heritage.
  9. Ken Saro-Wiwa – He was a was a Nigerian author, television producer, environmental activist, and winner of the Goldman Environmental Prize. Saro-Wiwa was a member of the Ogoni people. He was initially a spokesperson and then President of the Movement for the Survival of the Ogoni People (MOSOP). He led a non-violent campaign against Shell and was also an outspoken critic of the Nigerian Government. At the peak of his non-violent campaign, Saro-Wiwa was arrested, hastily tried by a special military tribunal, and hanged in 1995 by the Nigerian military government of General Sani Abacha, all on charges widely viewed as entirely politically motivated and completely unfounded. His execution provoked international outrage and resulted in Nigeria’s suspension from the Commonwealth of Nations.

[1] The multinational companies do have a responsibility towards the inhabitants of Niger Delta and cannot engage in mindless destruction of environment simply to pump up their bottom-line.

[2] The situation has become an intractable mesh of conflicting economic interests mostly of those that do not inhabit the delta and thus the only sensible option of clearing this mess is to adopt a human rights approach that would attempt to uplift the lot of the local inhabitants without attempting to do the impossible, i.e. balancing the conflicting economic claims of concerned stakeholders.

[3] Violence begets violence and world history has ample examples of the futility of trying to suppress legitimate demands of ethnic people through governmental or administrative terror or violence. Such attempts only steel the resolve of the local people and incite them to adopt means they would have abhorred under normal circumstances.

[4] It is these ethnic groups that formed the three basic power centres in modern Nigeria that resulted in a consequent perpetual tug of war between them for national supremacy.

[5] An over-dependence on oil began in right earnest from this point of time.

[6] Economic disparity, a lack of proper education, and a religious divide fanned by rabid fanaticism, combined together to form a deadly potion for instigating fratricidal violence.

[7] It is the body of Islamic religious law dealing with many aspects of day-to-day life, including politics, economics, banking, business, contracts, family, sexuality, hygiene, and social issues.

[8] This religious dichotomy has also contributed to the sharp north-south divide that has been the bane of the country ever since the modern state of Nigeria came into existence.

[9] These figures only show how skewed Nigerian economy has become. A near complete dependence on oil has made this country completely subservient to the whims and fancies of oil multinationals irrespective of the growls and whimpers occasionally heard from their leaders.

[10] Poverty becomes really ironical when viewed in the Nigerian context. Here is a country that has natural resources that would put similar countries to shame, but it has simply squandered those resources by allowing oil multinationals to conduct “on rent” production and has remained satisfied with the meagre amount of royalty that these oil giants throw at it.

[11] It is highly improbable though that the present leadership in Nigeria would actually walk down the difficult path of industrialisation as both China and India did.

[12] Acute financial distress coupled with loss of traditional means of livelihood has forced many local inhabitants of the Delta region to stoop to stealing in order to survive.

[13] At times, the human aspect of the tragedy gets lost in the barrage of figures.

[14] Though it took a pretty long time for the oil companies to strike oil, once they could do so, it was a pretty smooth and increasingly rewarding journey for the multinational oil giants.

[15] Nigeria was gradually making its presence felt among petroleum producers of the world.

[16] Oil exploration has long been one of the worst enemies of environment and extraction of this non-renewable source of energy has created an unimaginable mess in Niger Delta.

[17] Every single variety of pollution mentioned here has the potential of damaging beyond recovery the fragile eco-system that is generally prevalent in deltaic regions of the world.

[18] The author feels that the best way to focus on and highlight a problem is to concentrate on a case study. This gives more genuineness and immediacy to the problem and readers can also associate themselves with the problem at hand more easily. Oloma is simply a representative of the malaise that has spread wide and deep in oil rich Niger Delta and has heaped untold misery on hapless inhabitants.

[19] This obviously makes it one of the most difficult places to stay.

[20] Bonny proved beyond all doubts the age old wisdom that cities grew not because of their citizens but because of their geographical location.

[21] It was indeed a sad day that Bonny had to see after experiencing so much importance during its heyday. But this decline was only temporary as it revived its glory, thanks once again to its unique geographical location when oil was struck in Niger Delta.

[22] Commercially viable export of crude oil required smooth access by massive oil tankers. Port Harcourt was too far inland to make this feasible. Technically perhaps it was not impossible but the enormous expenditure that the oil companies would have had to incur by dredging round the clock to maintain sufficient draft made it a completely uneconomic proposition.

[23] Bonny extracted every bit of advantage that it possibly could from its unique location and in spite of temporary setbacks it regained its position of preeminence as soon as oil was struck in Niger Delta.

[24] It would surely be unfair if no mention is made of the benefits that have accrued to Bonny town as the oil companies increased their presence.

[25] It has indeed become really dangerous for indigenous inhabitants of Bonny to continue surviving purely through their traditional occupation of fishing.

[26] The fishermen have no option but to accept their bad luck and remain mute spectators to such destruction of their hard earned property.

[27] The impact of oil is not restricted to environmental pollution only; it causes disruptions in family and social lives too.

[28] This path breaking study has nailed the excuse very often spouted by multinational oil companies that irrespective of how dirty it might look to a casual observer, oil spillages do not actually harm aquatic life to that extent the anti-oil lobbies want the world to believe and accept.

[29] The most virulent problem in Niger Delta is possibly the mutual distrust that persists between multinational oil giants and local inhabitants of this region. While the oil majors consider the local inhabitants as a perpetually whimpering and complaining nuisance that occasionally turn violent and disrupt smooth extraction of crude, the locals consider these multinational giants as usurpers who had bribed the powers that are in control in Lagos to plunder the natural wealth of this region. This plunder becomes all the more pathetic as the local populace faces all the negative effects of oil extraction without getting a chance to enjoy the benefits.

[30] Though it was apparent to all those who bothered to be worried about the pitiable condition in Niger Delta, perhaps a report by internationally acclaimed experts was needed to put the final seal of condemnation of Nigerian authorities.

[31] These environmentalists have enough reason to be indignant and sceptical about any attempts made by Nigerian government towards cleaning up the environmental mess in Niger Delta.

[32] As it is the region is extremely inhospitable and if the available communication routes are snatched away, it becomes even more difficult for the local inhabitants to survive.

[33] Corruption at various levels of administration has become one of the worst malaises to have hit these impoverished people.

[34] This happens to be “unseen” impact of oil exploration in Niger Delta. The age old social structures are gradually breaking down and slipping away from sight. These original inhabitants of the Delta region are being silently coerced to leave their habitat of numerous generations not by any foreign occupation army but (and that is most painful) by their own government. The devious government is suitably assisted by a thoroughly corrupt police force that is more eager to fill its pockets through undue gratification rather than apprehend true criminals who cause untold hardships to thousands of helpless and powerless tribes who are numerically in a minority in their own country.  

[35] Such an inherently flawed sharing system automatically creates misgivings and a sense of being wrongly cheated and hoodwinked in the minds of large number of people. This vast army of disgruntled people would initially suffer all such devious machinations and forgeries in silence. But, once their limits of tolerance are crossed, a violent backlash becomes the only plausible outcome.

[36] Such a statement on equality and non-discrimination does not carry any worthwhile meaning.

[37] Oil multinationals have spawned a culture of subterfuge, corruption and violence in Niger Delta that have destroyed the simplicity that was the hallmark of these uncomplicated fishing tribes that inhabited the numerous villages dotting the shoreline.

[38] Violence seems to be the only alternative to the hot headed local youth who feel discrimination can only be ended with the help of a gun.

[39] The Nigerian Government must take some positive steps towards solving the crisis instead of spending money in killing its own people.

[40] This happens to be one of the greatest problems faced by any independent researcher. There are so many interested parties and they are so vociferous about what they feel should be the right course of action that very often truth takes a backseat amidst the prevailing high decibel diatribe.

[41] Numerous Master Plans and Schemes had been devised for the last half a century but all these plans (before this commission was instituted, that is) failed to pay adequate attention to the human factor of the crisis in Niger Delta.

[42] This happened to be perhaps the first governmental acknowledgement of the seriousness of the human factor and a concerned attempt towards viewing the entire issue through a humanitarian prism.

[43] Though there are quite a few observers that are of the opinion that media has actually sensationalised the issue instead of directing world opinion towards practical options of solving the Delta imbroglio, it cannot be denied that concerted exposure of the issue has not allowed it to fade from Western consciousness.

[44] This has been the cry of inhabitants of the Delta region for the last half a century.

[45] It has become a free for all situation in the Niger Delta.

[46] This has been one of the gravest mistakes of all the rulers that have ruled this country irrespective of whether they got power through democratic means or through military coups.

[47] This makes crude oil extraction one of the most vilified industries in the world.

[48] Many a drawing room in plush homes of Europe and United States reverberated with “sympathies” for Delta people and numerous remedies were put forward, often in an inebriated state.

[49] That surely does not mean military dictatorship is a better option than democracy.

[50] Musclemen and corrupt politicians have one thing in common – both want to fish in troubled waters.

[51] Such a provocative statement spewing that much vitriol was surely not expected from a man occupying such an important position no matter how strongly he might have felt about the issue.

[52] All Nigerians are not militants; quite a large number among them would genuinely love to follow the rule of law.

[53] This was not something that the world did not know; it was only that the high and the mighty had started taking note of the abominable environmental conditions in coastal Nigeria.

[54] If this can actually be implemented, the criminals will not have a single place to hide anywhere on the earth. They would then, quite obviously, think several times before getting involved in criminal activities.

[55] These statistics are genuinely telling. Anyone would be scandalised on coming to know of corruption of such an abominable scale.

[56] The multinational oil companies had been playing this nasty game ever since they started exploring for oil in the Niger Delta region. Armed with enormous financial muscle, they have hired best lobbyists and spin wizards and also have won over quite a few media houses. All these three different types of publicists have worked overtime to convince the rest of the world that these multinational oil companies have in fact already done and are in the continuing process of uplifting the standards of living of all those who inhabit the Niger Delta. These publicists never let go a single opportunity to rub in the additional information that had there been no oil companies, these hapless inhabitants of the Delta region would have been forced to lead lives utter poverty and degradation. Thankfully however, due to the efforts of a handful of environmentalists and human rights activists, the nefarious designs of these multinationals have repeatedly been brought to light. 

[57] Such reports truly nail the lie that is being peddled by the oil companies and their cohorts. In fact such reports have been instrumental in making the world aware of the rape of environment that is being systematically done in the Niger Delta for decades on end.

[58] It is rather difficult to imagine that one fourth population of a country are exposed to such a fatal disease as cancer simply because of one reason – oil exploration. This also brings in genuinely sharp focus the abysmal realisation that the human cost of exploring oil is really too massive to allow such mindless destruction of Delta environment irrespective of how vital it is for the Nigerian economy to survive.

[59] The water these Delta inhabitants drink and the food they consume have all been polluted to such an extent that they actually harm themselves as they consume items that are supposed to provide them nourishment. But these people hardly have an alternative other than consuming whatever is available in that region.

[60] No matter what these oil companies would like us to believe, they simply cannot deny that oil spill is a normal working hazard in any area where oil exploration is conducted. This becomes even more acute if such a spill takes place in water since the possibilities of the hazardous spilt material spreading far and wide increase as oil gets carried long distances with river tides and sea currents. The situation in Niger Delta has become so acute partly because large tracts of this area consist of marshy land and mangrove clusters.

[61] The inclusion of right to health in basic human rights is truly a momentous step as it firmly confirms that every human being has a right to the enjoyment of the highest attainable standard of physical and mental health without distinction of race, religion, political belief and economic or social condition. Health has been described as a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.

[62] It entered into force in 1976 and by 1 December 2007 had been ratified by 157 States.

 

[63] This must not be either misinterpreted or misread to mean a state can escape its responsibility by citing the excuse of lack of adequate funds.

[64] It must however be clearly understood that these treaties and covenants will be valid in any country’s court of law only if these covenants are incorporated in the legal framework of these countries.

[65] These regional instruments, once again, will be valid in all the stakeholder countries only if these provisions are incorporated in their legal jurisprudence. Else, they will be mere pious utterances without any legal teeth. It has been observed that many stake holding nations do not hesitate in putting their stamp of approval in similar multinational declarations, but hardly ever incorporate them in their legal framework, thus rendering them completely ineffective.

[66] These countries have indeed taken the right to health seriously and genuinely intend to implement it in their respective countries. This is evident from the fact that they have incorporated these rights, not in the legal jurisprudence, but directly in their constitutions. It is quite obvious that anything which is enshrined in the constitution of a country has much more legal teeth than something that is enacted as a law by passing a resolution in the House of Representatives. This is so because, it is much easier to amend a law passed by the House of Representatives, but it is very difficult to amend a constitution.  

[67] Niger Delta is a place where right to health is given the shabbiest possible treatment. The worst part of the whole issue is; right to health is violated with absolute impunity and total disregard for the human beings who suffer because of such a gross transgression of one of the basic rights of every human being.

[68] Honestly speaking, this also appears to be one of those political leaders who are busy fishing in troubled waters of Niger Delta taking advantage of the enormous faith and support they enjoy from their followers.

[69] While discussing pollution in Nigeria one should not lose sight of some of the other contributors that cause substantial pollution in the country. Though there is no denying the fact that oil is by far the single most ubiquitous pollutant, it allows an independent observer to be more impartial if additional information about several other sources of pollution is available.

[70] Construction of highway through the Niger Delta region might actually become a two-way sword as oil companies will then be able to venture right up to the deep interiors of the region quite easily. This might very well result in an even more unbridled and rampant pollution of the entire zone.

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Nation Branding – A brand new concept in marketing

Filed under: International Economics,Marketing — niranjanchatterjee @ 11:15 pm

Introduction

Branding of a product is an age-old practice adopted by marketers to attract new customers while retaining the existing ones. A properly positioned brand often acquires an independent entity of its own and commands a devoted fan-following from a large group of committed customers who would not so much as look into a competing brand while making their purchases.

A brand could be a symbol, a logo or even a combination of both, often laid out in specific colours, that immediately associates with a particular product or service and causes a recall of previous experience the consumer has had with that particular product or service. More often than not, brand managers try to ensure that experiences the consumers would be having with the brand are overwhelmingly favourable so that the customer does not hesitate in making a repeat purchase.

But more and more marketing management experts are coming round to the view that a brand does not recall only the physical experiences related to a product or service but consumers tend to recall a total gamut of impressions that may be as wide and varied as business ethics, transparency in corporate governance or corporate responsibility of the producer. Thus, a brand tends to bring back a bouquet of impressions a customer might be having about the producer instead of the physical experiences of that particular product. Many producers take advantage of this overwhelmingly psychological aspect of brand recall to hard sell their merchandise.

A Starbucks logo, for example, does not only bring back the aroma of a perfectly prepared cup of coffee served in spotlessly clean environment, but also the additional information that Starbucks happens to be most favoured destination of an overwhelming number of fresh graduates and is one among the top five best employers. (Scmidt and Ludlow) This enormous strength of a brand has prompted many marketers to extend this concept from a product or service to an entire country or nation and position it as the most favoured destination of the targeted segment. The targeted segment could be anywhere between and including both tourists and investors.

The point of discussion in this project would be how a nation can be positioned as a brand, what are the prerequisites for such a positioning and, most importantly, how does it compare with conventional branding of a product or service that every marketer does day and day out. 

Branding of a Nation

Just as a product brand essentially highlights the best facets of a product and the positive attributes of the manufacturer, nation brand also tries to highlight the reputation of a nation in such a way that the very mention of the name of the country will conjure a positive sentiment in the minds of the targeted segment. It has been realised by the powers that may be that branding of a nation is almost as important as branding the exports of a country and a positive image of a country automatically tends to rub off on its products and services and lend them an additional sense of value which can command a premium in the market. Customers abroad might be willing to pay higher prices for products manufactured in a country that they hold in high esteem. If the properly positioned branding is accompanied by a carefully orchestrated advertising campaign, customers can be motivated to happily pay a price that defies the tenets of both – logic and gravity. (Olins) This ability of a brand to command a premium is often referred to as brand value. Every marketer tries to impart as much brand value as is possible in all the products it places in the market. A marketer who is trying to brand a nation or a country also tries to create as much as goodwill as is possible for the country so much so that customers all over the world do not hesitate to purchase an output of that country.

Not so long ago, automobiles manufactured in Germany could easily command a premium on account of the favourable impression the rest of the world had about German engineering and product reliability. Almost in a similar vein we might also recall the negative impression that Chinese products (especially toys and milk powder) have acquired in recent times.

Just as any German product other than automobile got an additional boost because of the favourable impression customers all over the world have about that country’s manufacturing ability, a Chinese product, even though faultless as far as it is concerned, will have to bear the brunt of the negative image the country has about product quality, durability and customer safety. (O’Guinn, Allen and Semenik)

Customers essentially buy something that not only has functional appeal but has a psychological appeal also. So, it has become almost imperative for every country to initiate the process of nation brand building to boost its exports, increase foreign direct investments and also its tourism industry. The only option available to countries to boost their foreign trade and attract more foreign direct investments is by projecting the country in a better light and this also has a distinctly positive spill over effect in areas of diplomatic and cultural interactions with the rest of the world. The most visible US diplomats are McDonald’s and Microsoft while Finland’s most high profile ambassador is surely Nokia. (Ham)

The opponents of this novel concept, however, tend to play down the importance of nation brand building by referring to globalisation and superfast interconnectivity fostered by internet as being the strongest forces of standardisation that is weeping across the world. Multinational companies have distributed the manufacturing centres all across the globe and now the specialities or exclusivities of countries and regions are gradually getting blurred. A Parker pen, irrespective of whether it is manufactured in UK, USA, Australia or India carries the same Parker logo and commands the same price and is produced under the same standardised production environment irrespective of the geographical location.

While this argument surely has substantial merit, it has to be admitted that the forces of globalisation have also given a boost to local flavour and regional diversities. Many manufacturers and nations have realised the hard way that the only technique to stay afloat in this era of cultural homogeneity, is to highlight the local peculiarity and speciality. It is the only way to make a mark in an otherwise highly standardised market. (True)

Thus, there should not be any two opinions about the need for nation branding. But nation branding is decidedly different from branding a product or service in the sense that every nation’s brand is defined by its people, their temperament, education, outlook and also their average economic status, their attitude to work and the general quality of life that nation provides. A nation brand thus is a delicate mix of values held by its population and the creature comforts that country provides.

One can surely appreciate how difficult it is to change the values of an entire nation. Not only does it require education but also enormous levels of patience. Switzerland undertook an elaborate brand building exercise after its name got sullied when it came to light that Swiss banks were holding Nazi gold but abandoned the process midway apparently because it did not see any positive results fructifying from that exercise. Belgium also dumped a nation branding project soon after initiating it ostensibly because no palpable positive outputs were visible immediately. Nation branding is a long process and policy makers can surely not be blamed if they do not show that much patience.

But above all, as in case of product branding, it is the quality of the products that a country is selling that ultimately determines a nation’s brand image. The products need not be tangible ones, it could even be the natural beauty of a region that can be sold to world to convert that place into a tourists’ paradise. Very often nation brand managers cite the successful branding of Slovenia and Croatia after their separation from the erstwhile Yugoslavia. Aggressive and clever advertising somehow pitched these countries in a different zone that did not carry any of the baggage from Belgrade era and presented these countries as the ultimate tourist destinations. A similar example is Tony Blair’s “Cool Britannia” branding that very imperceptibly but irreversibly brought about a quantum shift in the prism through which the British and rest of the world used to view United Kingdom. This campaign intended to portray Britain as a nation that has come a long way from its imperialist era by actively urging citizens to refer their motherland as simply Britain instead of Great Britain or the more repulsive United Kingdom. It might seem almost inconsequential that such an apparently trifle change would actually bring about any perceptible change in the opinion the world had about Britain, but the ground reality is that Britain has indeed been able to portray a far more modern and open image about itself to the rest of the world. (Anholt)

Nation branding, as has been repeatedly emphasised here and elsewhere also, is a very complex and slow process that can succeed only if all the stakeholders in this project provide the fullest cooperation and totally coordinate their efforts. Often times it has been observed that even the best efforts of the stakeholders lead to a chaos simply because of lack of any sort of coordination among the various agencies and departments that get involved in the process. Just as an example let us envisage a real life scenario where the tourism department of a country promotes the place as a beautiful country inhabited by wonderful laidback people leading a slow peaceful life untouched by pollution and industry, and, the investment promotion agency saying the exact opposite and promoting the country as having state of the art infrastructure and a robust work culture. Though you really cannot blame either of the agencies, the ultimate impact of these different messages is utterly confusing to the rest of the world. (Teslik)

Dr Keith Dinnie, one of the foremost proponents of the concept of nation brand, emphasises that all the four sectors of the society – Political Leaders, Government Departments, Private Sector Organisations and Civil Society as a whole need to be involved in the process of nation brand building. He further emphasises the need of a coordinating body and liberal leveraging of opportunities of co-branding, sponsorship etc. All directed towards to portraying the nation as a desirable brand. As an example, he refers to the film Braveheart and the product Glenfiddich malt whisky and the impact it has had on the brand Scotland. Dinnie admits branding a nation is an intensely political activity and managers of nation brand must be ready to tackle increasing diversity within nations that is taking place due to increasing integration among countries of Europe, unprecedented levels of mutual migration across European borders and the resultant heterogeneity among societies of each European nation. (Dinnie)

Nation Brands Index

Though nation brand is essentially a matter of perception, some management experts have tried to quantify this idea and tried to rank various countries in accordance with this concept. In its most elementary form, it is a sort of weighted average of several criteria that tries to put a number to all the countries under consideration and rank them according to their scores. There are of course many academics that do not really support or subscribe to this idea and tend to concentrate only on the foreign trade aspect of a country to have an idea of the nation’s brand image. But a glance at the details of this composite brand index makes one gradually gravitate towards accepting this measure as a genuine and acceptable measure of a nation’s standing in the international assembly of nations.

The most trusted and well known among these indices is the Anholt-GfK Roper Nation Brands Index that considers the following facets of a country while evaluating its brand value:

  • Exports – Highlights rest of world’s impression about the products and services of a particular country and whether the country has any brand value to the extent that consumers proactively seek products from that country.
  • Investment and Immigration – Measures the rate of flow of capital and trained manpower into the country from the rest of the world. It is a good indicator of how rest of the world perceives a country’s economic and social situation.
  • People – Attempts to quantify the general attitude of the local population, their average level of education and degree of xenophobia.
  • Governance – Measures transparency, lack of bias and competency in government. It also gives a fair indication about levels of propriety and individual freedom prevalent in the society. Obviously, the higher these levels are; the more attractive is this destination.
  • Culture and Heritage – It indicates the respect that the rest of the world has about the history, heritage and rich culture of the country. It is not always true that a high score in this aspect will automatically raise the brand value of this country. Often, as in the case with China, a high level of respect towards Chinese heritage and culture is almost synonymous to complete lack of understanding about local culture and customs.
  • Tourism – A larger number of tourists obviously means this country has a high brand value as far as a tourist destination is concerned. But this need not necessarily translate into higher investment and immigration – the two most important drivers of economic growth. (GfK Custom Research North America)

Score in each of these areas is neatly portrayed in the form of Nation Brand Hexagon of each country which is an easy tool for rating countries on the basis of their nation brand value. One must always remember that nation brands take a long time to develop and a long time to wither away too. Just as Australia enjoys the benefits of a good brand perception and will continue to do it for quite some time, it will take ages for North Korea to cleanse itself of the opprobrium of international denunciation it is subjected to for decades.

Nation Branding Greece

Every country in the world now feels the need to create a positive image and tries to take concrete advantage of that positive perception it is able to portray about itself to the rest of the world.

Greece is very advantageously placed in this race for creating perceptions as it has one of the most remarkable landscapes in the entire world and has a civilisation that is held in awe and wonder by the rest of the world. Greece is inextricably linked with some of greatest brands the world has ever seen as it happens to be birthplace of Olympics, a nursery for Democracy and an incubator for the loftiest philosophy mankind has till now been able to put forward. So, Greece does not suffer the fate of its neighbour Macedonia who has to make an effort for the world to wake up and take notice of it. This positive brand perception was further reinforced as the country managed the super successful Athens Olympics in 2004.

Perhaps as a logical follow through of Olympics, Greece climbed up in the rankings among nations of the world and clinched the 17th place in the Q2 2007 Anholt Nation Brands Index falling just behind Ireland and beating Belgium by a whisker.

The strong area of Greece is tourism and it is no wonder that with its magnificent landscapes and archaeological ruins dripping with heritage, it remains high on the wish list of every tourist in every country. It remains just behind Italy in the world’s list of desirable tourist destinations and the welcoming nature of local Greeks also adds up in good measure to its attractiveness in this sphere.

But in other areas Greece does not portray a bright picture of itself. In spite of successful management of Olympics and winning European Soccer Championships in 2004, Greece is still perceived by rest of the world as a country without any sporting excellence. This is an area where the brand managers must focus as it is purely a case of inadequate communication rather than any real shortcoming.

Greece also scores very poorly in exports (coming 26th in a list of 38 nations) and in Governance (coming 23rd among 38 nations that were considered).

The other notable feature that emerges from a careful study of these rankings is that Greece is viewed in a brighter light by distant countries while neighbours (most notably Turkey) is not prepared to hold such a charitable perception bout the country. Turkey admitted the inherent strength of Greece in areas of tourism but ranked it too far below in other sectors leading to an overall rank of 27th.

Even if we ignore the ranks as fancy figure work, the startling revelation that comes out loud and clear is a nation’s branding depends a lot on how deftly its political bosses handle its diplomatic activities and maintain cordial relations with its neighbours, some of whom may actually be its competitors in foreign trade and commerce. (Greece at the Nation Brands Index)

 

References

Anholt, Simon. Competitive Identity: The New Brand Management for Nations, Cities and Regions. Palgrave Macmillan, 2006.

Dinnie, Keith. Nation branding: Concepts, Issues, Practice. Butterworth Heinemann, 2007.

GfK Custom Research North America. “The Anholt-GfK Roper Nation Brands Index.” 2007. GfK Custom Research North America. <http://www.gfkamerica.com/practice_areas/roper_pam/nbi_index/index.en.html/&gt;.

“Greece at the Nation Brands Index.” 2 September 2007. Brandinggreece.com. 20 March 2009 <http://www.brandinggreece.com/greece-nation-brands/&gt;.

Ham, Peter van. “The Rise of the Brand State.” September/October 2001. Foreign Affairs. 18 March 2009 <http://www.foreignaffairs.com/articles/57229/peter-van-ham/the-rise-of-the-brand-state&gt;.

O’Guinn, T. C., C. T. Allen and R. J. Semenik. Advertising and Integrated Brand Promotion . OH: Thomson South-Western, 2006.

Olins, W. On Brand. London: Thames and Hudson, 2003.

Scmidt, K and C Ludlow. Inclusive Branding: The Why and How of a Holisitc Approach to Brands. Basingstoke: Palgrave Macmillan, 2002.

Teslik, Lee Hudson. “Nation Branding Explained.” 9 November 2007. Council on Foreign Relations. 19 March 2009 <http://www.cfr.org/publication/14776/&gt;.

True, Jacqui. “Globalisation and Identity.” Miller, Raymond. Globalisation and Identity. South Melbourne: Oxford University Press, 2006. 74.

April 23, 2009

HISTORY OF FTAs AND GATT: As viewed through the looking glass of Favoured Nation Principle

Filed under: International Economics — niranjanchatterjee @ 2:22 am

The Economics of International Trade

Right from the early days of history, as the concept of state as a sovereign unit of authority started taking a firm shape; trade between two states became an economic necessity. Athens and Sparta fought the Peloponnesian War for twenty seven years way back in 431-404 BC, China and Great Britain fought a series of Opium Wars more recently during 1839–1842 and 1856-1860 when the economic necessity associated with international trade acquired different and sharply contrasting perspectives between the trading partners. Without getting into the extremely onerous task of passing an ethical or a moral judgement on the motivations of warring partners, it can safely and certainly be declared that trade between two sovereign entities has always been a necessity that no state could ignore.

Though international trade, like any other trade, leaves one participant more benefitted than the other, there can be no denying that all the partners stand to gain from a scenario where there is trade than when there is no trade at all. Each country would produce more of that commodity in which it has a comparative advantage thus creating an international marketplace where more of every commodity is available at a comparatively lower price. With more output at lower price, it is but obvious that citizens of trading countries not only attain a higher level of employment but also a higher real per capita income. (Hollander, 1979)

But this scenario is possible only when trade between two countries is free from any barriers of protectionist tariffs and prices of commodities are decided through the interaction of genuine supply and demand; not influenced by either tariffs or subsidies. However, it has been observed that in most countries, the opponents of free trade (they take many hues, starting from industrialists who fear they would lose their monopoly position to trade unions that fear loss of jobs from foreign competition to political leaders eager to score a brownie point or two by raising cries of misplaced patriotism that get louder through large doses of artificially hyped up xenophobia) tend to swamp those in favour of free trade. It has been the general norm of international trade to have some form tariff barrier with industrialised countries generally maintaining tariff rates of 25% while developing countries favouring a higher protective barrier at 34% on manufactured items. (Chang, 2002)

The proponents of Free Trade have come round to accept the reality of socio-economic pressure that every government faces and the World Bank also has conceded that some form of protective barrier is an inescapable reality in modern day international trade. The moot question, however, is what would be the acceptable limit of tariff and there has been an ongoing debate among numerous think tanks in the academic world with some propagating a maximum of 20% to others who claim that industrialised nations should never raise their barrier beyond 15% while leaving the developing nations to choose their own barriers that they deem fit to be sufficient to provide their fledgling industries some breathing space and some form of level playing field to counter the might of their vastly superior cousins in developed countries. The proponents of this sort of dual tariffs claim that this is the only way the developing nations can hope to come up in future to the level of developed nations.

However, it has been observed that tariff barriers erected in developing countries to support industrialisation that attempted to substitute imports were not very successful. On the contrary, export oriented industrialisation as pursued by the so-called Four Asian Tigers of Hong Kong, South Korea, Singapore and Taiwan have actually generated considerable and perceptible economic development. But before accepting this to be a standard norm that all other developing countries should follow with unfailing vigour, one must state that each economy has its own peculiarities and typical problems that need to be tackled on a case-to-case basis and it is neither prudent nor possible to provide a blanket prescription for economic development through international trade. (Pugel, 2006)

 

US and Free Trade

United States had always appreciated the benefits of Free Trade and knew how its economy and citizens could potentially benefit from open markets in countries all over the world. But its entry into the world of Free Trade was more a quirk of history rather than a well pondered economic decision. As the American War of Independence gathered momentum, United Kingdom responded by blockading the ports of what would later become the United States of America. The Continental Congress retaliated by opening its ports to all countries of the world on 6th April 1776. However, such an open door policy did not prevail for long as leaders of the infant nation quite predictably rooted for protection of its infant industries.

First US Secretary of Treasury Alexander Hamilton was in favour of high tariff barriers and his ideas were further propagated during the later part of 19th century by Henry Clay. But Right through the nineteenth century the Democrats went on arguing and for the most part convincing majority of Americans that a moderate tariff barrier would be the best prescription for the economy that was going through its turbulent adolescence. Things, however took a sharp reverse turn with the breaking out of Civil War and it would not be out of place to mention that Republicans under the leadership of Abraham Lincoln went ahead and imposed a 44% tariff regimen partly to recover the expenses of Civil War and partly to fund the rapidly expanding railways and protecting a handful of highly favoured industries. (Tyler, 1986) For those who would wince at such a high level of tariff it must be conveyed that even this level was surpassed when the highly controversial Hawley-Smoot Tariff Act was passed during early 1930s. A sizeable number of renowned economists are of the opinion that such an absurdly high protective barrier in effect prolonged the economic depression in US while Europe could wriggle out of its clutches within a comparatively shorter period since the European countries did not barricade their economies from the self healing forces of international economics.

Most Favoured Nation Principle (MFN) – an overview

United States has right through its history incorporated the policy of MFN in some form or the other while conducting international trade. Under this policy the host country treats national and international trading entities differently but accords same treatment to all international trading partners. There are two main variants of MFN Policy – conditional and unconditional.

o   Conditional MFN PolicyThis can be best understood through an example. Let us assume US has entered into MFN agreements first with Germany and then with Japan. The agreement with Germany include a lower tariff rate on machinery imported from that country in lieu of a preferential tariff rate that Germany has decided to accord to fertilisers imported from US. A subsequent trade agreement is signed between US and Japan where US will allow import of Japanese televisions at preferential rates of tariff as Japan has allowed entry of US computers in Japanese markets at a reduced rate of tariff. Under conditional MFN Policy, US can continue with these two treaties simultaneously where German televisions cannot be imported into US at concessional rates while Japanese machinery manufacturers cannot claim the concessions accorded to their German counterparts. Japan and Germany have to rework their agreements individually to get the benefits that the other country has. United States has mainly followed this pattern of MFN policy throughout its history till 1934 when the passage of Reciprocal Trade Agreements Act (RTAA) allowed US negotiators to use unconditional MFN policy as a tool of striking international trade agreements. (Hornbeck, 1910)

o   Unconditional MFN Policy – Under this policy, US does not discriminate among its trading partners and each partner need not individually negotiate and bargain for preferential treatment for various items as a treatment accorded to one nation falling under the category of MFN is automatically conferred to all other members of this group. Thus when Japanese televisions start getting preferential treatment, Germany televisions would automatically get that benefit without any special effort on the part of the Germans. Japanese machinery manufacturers would also, needless to state, get the same preferential treatment that their German counterparts enjoy without, quite obviously, any special effort on the part of the Japanese authorities. The best part of unconditional MFN policy is that both Japan and Germany would start enjoying the additional concessions without having to provide any corresponding additional concessions on their part to avail of those. Thus a multilateral trading regime takes shape through a series of bilateral trade agreements under unconditional MFN policy. This has been the overwhelming experience of all developed countries since the Second World War came to an end. This concept has such a profound impact on policy makers throughout the world that it was incorporated in both GATT (General Agreement on Tariffs and Trade) and its successor, WTO (World Trade Organization) charters. (Gordon, 1965)

Implementation of MFN Policy during 1934 – 1974

As Hawley-Smoot Tariff Act pushed the country deeper into the throes of financial depression, Reciprocal Trade Agreements Act (RTAA) of 1934 marked the beginning of a new era trade liberalisation in the US. The first novelty that struck ones eye was Congress absolved itself of the duty of setting up trade policies and passed it on to Federal Administration, most probably to avoid the opprobrium it had to suffer with the negative impact that Hawley-Smoot Tariff Act have had on the economy.

The Administration used the provisions of RTAA to further international trade that constituted of both exports and imports and it realised pretty early that the one sided approach of only trying to increase American exports would not be able to deliver the results that the US economy badly needed at that hour. The first step thus taken was a lowering of the ultra protective tariff barriers that were preventing other nations from approaching the US markets. (Haggard, 1988)

Europe in the meanwhile was witnessing the first but unmistakable signs of rise of Fascism in Germany and US used the provisions of unconditional MFN policy as a tool to grant multilateral concessions to its European partners while unobtrusively stitching up strategic alliances that held it in good stead as war clouds started banking in European skies.

RTAA which was based on the tenets of equality of treatment, tariff rates that could be negotiated and settled upon by the executive and would become binding without the necessity of getting it ratified by the Congress, served as a platform on which subsequent progress towards liberalisation in the form of GATT took shape. But it must be mentioned that RTAA did not speak anything about dismantling tariff protection; all that it spoke was about reciprocity of treatment and unconditional MFN status which would be the guiding principles while negotiating bilateral deals. In fact, President Franklin D. Roosevelt placed the RTAA before the consideration of the Congress by labeling it as an economic measure targeted towards domestic economic recovery. There were still a sizeable number of members in the US Congress who supported protection and it would have created a furore if lowering of protectionist barriers was mentioned directly. However, Cordell Hull, the then Secretary of State Department, skilfully used the reciprocity clause to lower tariff barriers without agitating the Congress. The additional clause of unconditional MFN treatment further helped to spread the benefit of bilateral treaties to the overall gamut of international trade.

State Department officials also used RTAA as a tool to further the cause of international security which was increasingly becoming jeopardised due to the rise of Nazi power in Germany. US went for special concessions for certain strategic European allies as Belgium, Switzerland and United Kingdom among others, while at the same time pressurised certain Latin American countries by refusing to negotiate bilateral treaties with them and withholding financial aid in the form of Export-Import Bank credits and similar other sops till those governments agreed to settle defaulting US debts and treat US direct investment in a fair and equitable manner and agree to implement political reforms in their respective countries. Thus economic power was being used with increasing frequency and more telling effect by the US State Department during the uncertainties that prevailed prior to and during the Second World War.

RTAA was not explicit as to which countries would be eligible for bilateral trade agreement under the new regime of reciprocity and MFN policy. State Department took one step forward and extended the MFN treatment also to countries that were directly not involved in international trade with the US and by some skilful manoeuvring and reinterpretation of the clauses of RTAA identified Germany as the nation against whom retaliatory economic measures need to be taken at the earliest. Thus, by opening up its markets to even all those that were not so enthusiastic about opening up their markets to US products and by isolating Germany in the world of international trade, State Department took one giant step in cementing the Alliance which fought as a united front against Germany during Second World War. (Ratner, 1972)

However, the principle of reciprocity in international trade did not achieve what was anticipated, and if viewed purely from the point of economic benefits, the gains were nothing remarkable. But State Department could successfully argue repeated extensions of RTAA till 1945 as it became absolutely convinced that not only did it serve as a potent tool in international diplomacy but also had all the ingredients necessary for setting up an international economic structure based on mutually beneficial trade and commerce in a post-Second World War scenario.

In fact, the State Department had almost finalised the blueprint of a post war scenario of international cooperation as it became convinced that one of the main causes of the outbreak of Second World War was lack of proper economic coordination and cooperation between developed countries of Europe and the US. A lack of structured coordination and an inability to fully grasp the total extent of benefits that can be reaped if international trade is based on the principle of Comparative Advantage as propounded almost a century ago by David Ricardo, lead to a jingoistic attitude among nations that fostered an unhealthy trend of economic competition and consequent increase of tariff barriers. This misplaced economic nationalism was but a step away from the dangerous clutches of fascism. Determined to root away this evil so as to prevent recurrence of another World War, State Department sought to usher in an international economic order that was based on unconditional MFN treatment. The participating countries retained their prerogative of entering into bilateral trade agreements and implement steps they thought necessary to protect their domestic industries and social welfare programmes. It was thought to be the best of both worlds as it were as countries benefitted from international trade while ensuring that domestic industrial infrastructure was not sacrificed in the process. (Lake, 1988)

President Harry Truman invited twenty four countries to Geneva in 1947 to sit together and negotiate multi-lateral trade agreements based on unconditional MFN principle. Twenty three countries accepted the invitation while Russia decided to opt out from this interim arrangement which, it was hoped, would finally be superseded by an authority under the aegis of United Nations. These countries went through the utterly laborious procedure of negotiating each item bilaterally between each other and as all of them had agreed to the principle of unconditional MFN status the bilateral agreements in effect became multi-lateral trade agreements known collectively as GATT. Nine nations that controlled almost eighty percent of international trade during that period agreed to implement GATT from 1st January 1948. (Milner & Yoffie, 1989)

The State Department wanted to pursue a liberal policy as it realised that the time has come for US to take lead in international economy mostly because Europe was still suffering from the devastating hangover of Second World War. The officials realised that if US was indeed to be the leader of a new international economic framework of their choice, it must take the first step forward and, if necessary, offer concessions in excess of what was reciprocated by other GATT members. Thus, US entered an era of liberalisation where all protectionist restrictions of the past were retained to soothe the frayed tempers of many a Congress member intent on protecting American markets from international competition, but only on paper, while in reality a new found spirit of cooperation and transparency pervaded international trade and commerce. The GATT members set up a dispute settlement procedure and decided to solve all future conflicts through mutual discussion and coordination without becoming belligerent. Reciprocity obviously remained a very vital lubricant that was necessary to keep the vast wheel of GATT moving freely without any unseemly friction. (Rhodes, 1989)

But everything did not happen immediately. As it was realised that the envisaged United Nations agency that was modelled in the lines of International Monetary Fund would not materialise because US Congress would never ratify such a proposition, GATT was amplified and through successive rounds of discussion it finally became a conglomerate of 125 nations controlling almost 90% of international trade when it was superseded by WTO in 1995. (Encyclopædia Britannica, 2008)

Seven rounds of discussions were held between GATT members during its existence of nearly half a century and the most important among those discussions were the Kennedy Round that stretched from 1964 to 1967, the Tokyo Round where discussions went on for an even longer period of six years from 1973 to 1979 and, the Uruguay Round which witnessed mammoth discussions spread over eight years from 1986 to 1994. All these discussions together could reduce the tariff component in the market price which was 40% in 1947 (at the time of inception of GATT) to less than 5% in 1993. (WTO, 1998)

More than 66 countries took part in Kennedy Round (named after late US President John F. Kennedy) and together they could slash $40 billion of tariffs and generally discarded the extremely laborious and time consuming act of bilateral negotiations as it was felt that GATT automatically ensured a multi-lateral trade pact between all members of this treaty. US played a proactive role in this round of talks and unilaterally provided concessions to its trading partners like countries of Western Europe and Japan without waiting for them to reciprocate. The main emphasis of US State Department was to provide impetus to its allies in Western Europe in their attempts at economic reconstruction and also to strengthen anti-Communist columns all across the continent of Europe and North Africa rather than providing protection to its domestic industrial sector. (Goldstein, 1988)

Implementation of MFN Policy during 1974 – 2000

United States took the initiative right through 1950s and more so during 1960s to provide unilateral, unconditional MFN status to all member countries of GATT in an effort to build an international economic structure of free trade that would primarily reduce the possibilities of another major conflict like Second World War and secondarily allow US the opportunity to mark its stamp as the leader of world economy. In the process of providing unilateral benefits US most often ended up as the partner that had sacrificed more than what it gained and unconditional MFN being the accepted policy of GATT, many nations enjoyed the benefits of lower tariff for entry in US markets without having to provide a similar benefit to it. Thus it became a lopsided situation over time where US had not been getting the benefit of reciprocity it should have got had all members achieved same rate of economic growth, and each one of them opened up their economies to the same extent as US did. Though there were occasional murmurs of discontent, the overall robust health of the US economy was enough of a placebo to keep all discontent at bay.

But as US experienced an economic downturn during 1970s and 1980s the earlier murmurs of discontent gradually snowballed into loud clamours demanding a relook at the liberal policy US had been following till then. The ire of US Congress seemed to be directed particularly towards Japan who they felt took maximum advantage of liberal US policies and had become a serious contender to US supremacy in several sectors of the economy without however opening up its economy for US producers to have a free and fair share of its domestic markets. Neither did it modulate its imports to make US its dominant trading partner while ensuring that most of its products reached US shores to serve the ever expanding markets over there.

Congress members rightly felt let down and proceeded to formulate several retaliatory measures citing patriotic reasons of protecting US interests against the predatory designs of an unfair trade partner. It was suddenly a repeat show of early 1930s with calls of protectionism getting louder by the day. However successive administrations of Gerald Ford, Jimmy Carter, Ronald Reagan, George H. W. Bush, and Bill Clinton adroitly handled the clamour and kept US firmly on course towards liberalisation.

The success of GATT depended largely on transparency between partners and by the time negotiations of Kennedy Round came to an end US discovered to its dismay that though tariff barriers had come down significantly, other barriers in the form of import licensing, countervailing duties, local content rules, just to name a few, in effect maintained the same level of restrictions to entry in overseas markets as earlier high tariffs used to do. Though US did not react to these provocations, the basic tenet – transparency – on which the entire GATT regime was built on, was gradually losing its sheen and credibility. In fact, Tokyo Round of discussions actually took upon the issue of Non-Tariff Barriers but little was achieved and US markets were soon flooded with attractive Japanese cars that provided stiff competition to US auto industry which saw its sales diminishing with alarming rapidity and approached Congress for relief. It responded by legislating The Trade Act of 1974 that allowed the International Trade Commission of US to impose quotas, tariffs and other restrictions that might be necessary to protect a domestic industry from unfair competition from abroad. Such a protection would at the most be available for a period of five years from the date of application of such quotas, tariffs and other restrictions. But by 1980, the US auto industry found such restrictions to be of little help and again approached the Congress. The Congress was more than willing to come forward to help the beleaguered US auto industry, but it would have vitiated the environment of GATT to a point of no return. The State Department realised it pretty early and foiled all attempts of the Congress by intelligently playing the reciprocity card. Regan administration even went out of its way to obtain a voluntary export restraint commitment from Japan when US-Japan auto dispute was at its peak and the clamour for retaliatory tariff imposition was at its shrillest thereby managing to adhere to US commitment of unconditional MFN treatment to GATT members. (Irwin, May 1995)

During the last two decades of the previous century regional trade agreements became another major hurdle to the principle of equality in US foreign trade commitments. Regan administration started actively pursuing regional trade agreements and successive administrations of Bush (Sr.) and Clinton also followed up the agenda well after the Uruguay Round had begun in 1986. The think tanks in State Administration claimed that regional trade agreements would not violate the basic principle of equal treatment to all trading partners that has been the cornerstone of GATT. On the contrary, these policy makers declared that regional trade agreements would in effect strengthen the overall regimen of GATT as these agreements would address problems that could not be adequately focussed on under GATT regime as intellectual property rights, various non-tariff barriers and issues related to agriculture.

Whatever, the policy makers might have said the fact remained that any regional trade agreement quite surely violated the basic principle of unconditional MFN treatment and such agreements with Israel in 1985 and with Canada in 1987 marked a decisive change from the international trade policy US had adhered to till then. Clinton who was the US President during that period however ensured that Uruguay Round of negotiations between GAAT members concluded successfully and at the end of this round of negotiations GATT boasted of one hundred and eleven countries that established WTO as a natural progression of GATT.

However, regional trade treaties have come to stay as was evident from the enactment of North American Free Trade Agreement (NAFTA) between US, Canada and Mexico – the three largest countries in the American continent, in 1992. The agreement envisaged a free trade bloc between these three countries somewhat in line with European Community that mutually eliminated tariffs among them to accelerate trade and commerce to a good measure. It took almost a year to iron out the creases and after legislatures of all the three countries ratified the agreement, it went into effect from 1st January, 1994. (Encyclopædia Britannica, 2008)

MFN Policy and Human Rights

During this period of twenty five years (1974 – 2000) the US Congress also tried to use the purely economic tool of awarding MFN status to a country to further its agenda of human rights. A case in point is the famous Jackson-Vanik Amendment to the 1974 Trade Act that prohibited granting MFN status and any form of financial assistance or line of credit to any country that did not have a free market economy or restrict emigration in certain cases. The aim was to prevent Russia from restricting emigration of Jews from that country but as repeatedly articulated by the then National Security Advisor Henry Kissinger this amendment failed to have the desired impact. In fact many believe that behind the scenes diplomacy would have surely served the cause in a much better manner. But whatever may be its effect on emigration of Jews from Russia; this amendment most certainly introduced an element of human rights which was hitherto not present in US trade policy. (Eckes, 1999)

It became a burning issue when MFN status of China was debated especially after the massacre at Tiananmen Square on June 1989. (Boudreau, 1993) China as it stood was already enjoying unconditional MFN status right from the first commercial engagement that began in 1979, a decade before Tiananmen Square happened, in spite of the fact that it was not a member of GATT. The MFN status of China was subject to annual review by the US President that had to be done in accordance with various provisions laid down by Trade Act of 1974 and of course the Jackson-Vanik Amendment to it. After the massacre in 1989 when several thousand student protesters were butchered by Chinese troops, members of the Congress tried to put a hold on the MFN status of China citing the provisions of Jackson-Vanik Amendment but Bush Sr.’s administration gathered enough support in 1990 in the both the Houses to get the MFN status of China renewed for another year. But subsequently the issue got more complicated as Senators tried to include not only the issue of human rights but a whole range of other political and economic issues that had to be considered by the government before renewing the MFN status of China for another year. There were however some genuine concerns as China’s abysmal record of protecting intellectual property rights and there was enough pressure from the textile lobby that felt insecure at the flooding of markets by cheap Chinese textiles that made the matter rather delicate for Bush and Clinton administration. (Schaefer, 1998) Clinton in particular had a long running battle with human rights groups as he was unwilling to let go of the immense economic opportunity of exploring vast Chinese markets and the almost limitless potential the US Corporations had of investing in those untapped markets in a country that boasted of highest population in the world. Finally a mid-way compromise was settled upon in the form of delinking MFN status from the issue of human rights and violation of intellectual property rights. While China was granted MFN status to maintain continuity in US trade policy, violation of human rights was taken up in real earnest through diplomatic channels. (Wang, May 1993)

It was still a regular annual hurdle that the Administration had to overcome in order to continue providing MFN status to China. It continued for the next five years up to 1999 when China became a full-fledged member of the newly set up WTO and achieved a permanent MFN status.

 

Conclusion

Though US remained committed to the principle of providing unconditional MFN status to members of GATT, there was hardly any appreciable activity in this regard during the early 1990s. In fact, the authority to finalise a trade agreement that administration had was revoked by the Congress after Uruguay Round of discussions were over and Clinton administration did not make any moves to reclaim it. The US government showed a lethargic attitude not only towards GATT but also towards the newly signed NAFTA agreement and did not make any move to provide leadership to the other two signatories. The Latin American nations that were hopeful that NAFTA would very soon include them also started to feel disappointed about the lack of interest on the part of USA.

But a phenomenal expansion of US economy during this period pushed all issues of trade agreement into the backburner as possible benefits that might be obtained through concessions accorded to a particular trading partner suddenly seemed too insignificant given the huge progress the entire economy started making with IT sector taking the lead. Thus both Congress and State administration shifted their focus from trade to finance as the next high profile foreign economic policy issue.

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