Steve Coll (SC)—[00:00:42:19] Yeah. Well, and...when I first started, one of the first things I did was travel to West Africa because once I kind of mapped out where their oil and gas holdings were and how, where my interests were likely to lie, I thought West Africa would be an important part of the story.

So, I went out. And Chad was one of the places a visited and worked. And, as I was going around the country and trying to understand ExxonMobil’s presence there, the biggest question I had is, ‘Why are they here? Why are they here at all?’ Because this is, you know, an enormous corporation with deep financial resiliency. And here’s Chad, really, you know, the bottom of the world tables in quality of life indicators. Life expectancy is still under 50 years. So, it’s not even—Nigeria looks like Holland by comparison.

So, the answer as to why they’re there, why they gravitate to an environment like that is actually of real importance. And it has to do with the basic dilemmas that they face in their business.

In the 1970s, resource nationalism and expropriations threw them out of all of these big pools of safe oil. And, they basically started to face a dilemma they’d never faced before which is how to replace the oil that they pump and sell each year so that they don’t shrink. Because their whole business model is based on ownership. They’re not a service company. They’re not like someone you hire to renovate your house. They want to own the oil and gas in the ground. And that’s how Wall Street values them. And they produce 4.5 Million barrels of oil and gas equivalent a day. Multiply that times 365 days and that’s a Billion and half barrels they’ve got to find every year just to stay even.

Now...once they got thrown out of the Middle East, because of nationalism and anti-colonial attitudes, and those attitudes spread all over the world in post-colonial societies, there really were not that many places that they could own oil and gas anymore. They could own it in the free market West, where property rights are sacrosanct: North America, Australia, Europe. But, there’s not much oil and gas there any more. It’s all been pumped out and used. And that drove them, basically, into weak states. That’s why they’re in Africa. Because these are states that are too weak—do not have the national capacity to assert their own nationalism over oil.

In most of the Arab world, foreign corporations are not allowed to own oil because there’s a national attitude that this is a special national resource. ‘It’s not like any other property. It belongs to our people. It’s a source of national pride. We’re not giving it to Exxon.’

And, in Chad, I would imagine some of that same sentiment, if it could come forward, is probably present in the minds of Chadians. But, they don’t have a government that could do it themselves, which is what the Middle Eastern governments did. They built their own strong national oil companies. They operate and they own the oil. They hire westerners for technical service support the way we would hire a contractor to renovate our house. But, they do not allow the contractor to own the oil.

In Chad, basically, they can’t build such a national oil company. So, they invite ExxonMobil in and they say, ‘Look. Will you pump it out of the ground? We’ll let you own some of it, too. We’ll split it fifty-fifty.’

So, ExxonMobil ends up in these weak states, where they can actually own the oil and gas in the ground. And these are large reserves—especially Nigeria and Angola. So, that’s why they’re there. And the irony is that this kind of map of the way the world looks to them and the imperative of constantly replacing the reserves they produce every year, is driving them into settings of instability.

And here’s this company that’s very rule-bound, very rigid, you know, very focused on trying to ring all risk out of their daily operations to the extent engineers can figure out how to do it. But, their business model is driving them into risk. So, they’re in countries that are much more unstable than they would like. But, they have no choice but to be there.

[00:05:14:14] How does ExxonMobil balance the economic incentive to be an owner in unstable countries like Chad with the relative freedom, as a sub-contractor in more nationalistic and stable countries, from human rights issues ExxonMobil would prefer to avoid?

[00:05:23:14] Yeah. No, I mean, I think they would wish to be in more stable places for the reasons you cite. And...but they, as they would put it, ‘we have to go where the oil is.’

Well, you have to go where the oil is and you can own it. And that takes you to Chad.

But, I think what you say is correct. The one thing that’s so striking in Chad, is very vivid there, but it’s true in other countries where they operate—they’re now operating in Papua New Guinea, for example: In the most poor societies where they work, their influence is so outsized that it really changes the equation.

In Chad, for example, when this agreement that Chad put together with the World Bank and the Clinton Administration, and ExxonMobil facilitated it, ultimately didn’t sign up as a party to the agreement, to use these, their oil revenues to promote social development goals, and then that deal fell apart in 2006 and Idriss Debi, the president, basically bought his way out of the World Bank obligations by re-paying loans early.

Now, he could do that because in that year, 2006–2007, ExxonMobil’s tax and royalty revenue to Chad was in the order of $750 Million a year. That’s basically one-fourth of the national budget, all in, for 11 Million people. And, it’s...by comparison, the United States government’s embassy in Chad that same year was doling out a maximum of about $10 Million in aid.

So, you know, if you’re Debi and you look across the capital and you see the embassy on the one hand and ExxonMobil’s country representative office, who actually represents American power?

Theoretically, the embassy could call in the Marines, I suppose, in a way that ExxonMobil could not. But, otherwise, ExxonMobil is the government. And, in the south, they really are a much more powerful representative of sovereignty, order and development strategy than either the state of Chad or any other government that’s trying to provide aid.

[00:07:23:24] Unlike, say, the [Bill and Melinda] Gates Foundation and international health policy, it seems ExxonMobil engages international development goals as a cost of entering a country and in service of financial profit and political stability. Once ExxonMobil’s financial and political incentives disappear, so too does the commitment to broader development. Is that true?

[00:07:39:24] That is true. And, I think it’s a problem, myself. They don’t.

I think what they would say is that their core competency is oil and gas production. They’re not an international aid agency. They wouldn’t be a good one, if they tried to be. They’re not a charitable organization. They do give to charity but in a measured way.

Their view is that the best way to let market forces lead West Africa out of poverty is for ExxonMobil to stick the things it does well: Produce oil and gas profitably; pay it’s law abiding taxes and royalties to the host governments in copious amounts; and let those host governments figure out how to govern their own people and not to have ExxonMobil get into the business of substituting for their role just because they’re weak. If they’re weak, then other governments should be helping those governments come forward, etc, etc.

So, that’s their kind of argument. ‘We’re just here to do the thing that we know how to do. And we produce revenue that other people should use to achieve these worthy goals. We’re not saying the goals aren’t worthy. We’re just saying they’re not our goals.’

[00:08:47:09] Yeah. I mean they do some of that because they give, you know, about—I think in the most recent year a half of one percent of their total net profits to charity. And, some of that flows into the countries where they operate in West Africa. And the projects they do are, you know, well selected, in some cases. Malaria eradication in Equatorial Guinea is certainly a good thing for them to be involved in with others. And, they work with NGOs [non-governmental organizations] in those kinds of charitable…

But what they don’t do is show long-term leadership of the sort that they show where their business interests...or that the...are on the line or leadership comparable to the Gates organization.

I mean, the Gates Foundation says, ‘these are our goals’—Millenium goals or health goals. ‘We’re going to invest and show leadership, bring other partners to the table. We’re going to insist that we move the needle. And, if we try one road and it doesn’t work, we’re going to shift and go in another direction and we’re going to get there because these are long-term and deeply important goals and we’re committed to them.’

ExxonMobil could articulate that. And my view is that, it’s fine to have a normal corporate responsibility charity profile in many environments where ExxonMobil works. Let their shareholders and their employees debate whether their rate of giving, at less than one percent, is acceptable to them when WalMart is doing five and Target is doing seven. OK. Those are retail companies, maybe that’s best seen as marketing.

But, in any event, they’re in the game and there’s, in most settings, they can...I think defend their record of social investments and employee...it’s a very good place to work. Maybe they’re not as generous on the charitable side.

However, in my view, there are some settings where they work, they come of their own free will to Chad to make money pumping oil out of the ground. If they would drive out of their fenced compounds and out of their security perimeters and go down these little muddy roads and see the conditions that people are living in, you know, with life expectancy of 50 years, and recognize that they are the international power in Chad, as the lead operator of this consortium, more influential than the United States government, probably more influential than the French, and they’re in a position where they have the organizational strengths to achieve complicated targets. That’s what they do.

I mean, they could say, ‘You know what? Standard operating procedure just isn’t good enough in Chad. When life expectancy is under 50 years and we’ve been here ten years and we have made X Millions of dollars for ourselves, it’s just not good enough. You know, we’re going to have to do something, in some of these settings we’re going to have to do more because we’re here.’

And...I think other corporations do start with that premise. It doesn’t make it easy to achieve something. But, I find it unpersuasive ExxonMobil’s idea that, ‘Well, we’re not very good at that.’

Actually, they’re the most efficient, best organized institution of any kind inside Chad’s borders. So, if they wanted to show leadership to say, ‘Alright. These are the things we think we can achieve. We can see...lead the international community to build the following number of rural health clinics and make sure they’re staffed with well-trained nurses and rotating doctors. And, we are going to commit ourselves to take a leadership role, not the sole provider but we’re going to get international aid organizations, international governments, NGOs, and others. We’re going to get everybody rowing in the same direction; we’re going to set targets; and we’re going to deliver change in these communities.’

They could do that. It wouldn’t be that expensive, either.

—End of Part Two—

More GWorks Interviews: Steve Coll

to Part One: An Age of Limits & Change

Private Empire: ExxonMobil & American Power

and how to write about a crucial resource,

a reticent corporation and what they say

about America’s place in the world.

to Part Three: Standard Bearers

How ExxonMobil’s roots in Standard Oil

and the Rockefeller family affect its present and future.

to Part Four: Coherence

ExxonMobil’s relationship to environmentalism

and government regulation and their place

in a political economy.

to Part Five: Valdez|Exxon

The impact of the 1989 Exxon Valdez

oil spill and the future of energy, energy companies

and American power.

For more interviews,

please visit GWorks Interviews

EDITOR’S NOTES

GWorks Interviews: Steve Coll was filmed Tuesday 26 June 2012 in the offices of New America Foundation in the District of Columbia. GWorks would like to thank Mr Coll for his generous participation and Victoria Collins for her work to make this interview happen.

Photo: Book Cover: Private Empire: ExxonMobil & American Power. Courtesy The Penguin Press.

Photo: Steve Coll. Lauren Shay Lavin. Courtesy The Penguin Press.

GWorks Interviews is a series dedicated to exploring governance issues of interest with persons given to thinking about and having relevant experience. GWorks invites a GWorks Interviewee to respond in depth to questions. GWorks does not edit the substance of what an interviewee says. GWorks edits GWorks Interviews only for editorial and technical considerations including style, length and productions issues.