Angola - the challenges of an oil dependent state

Angola – the challenges of an oil dependent state
Seminar, the Fridtjof Nansen Institute
15 January 2001

Intervention by

Anne Kristin Sydnes
Minister of International Development

Tony Hodges opens his book with the words: "Angola presents a terrible, shocking paradox." - Angola is indeed a troubled country, poor in social and economic development, but rich in natural resources and human talent.

Mr. Hodges’ book on the political economy of Angola makes a valuable contribution to the understanding of the underlying causes of the conflict in Angola, their complexities and the difficulties in finding sustainable solutions. The book should be studied by everyone involved in peace efforts in Angola.

The project ‘Petroleum states – predatory or developmental’ is an initiative that gives us a better understanding of the interaction between political and economic variables. We are all looking forward to Helge Ole Bergesen’s presentation of this project. To be completely transparent with regard to my own knowledge about this project, I should add that I followed the earlier stages quite closely - in a former capacity of mine....

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Some make the point that the present Angolan conflict has its roots in the division of the early independence movement into three distinct forces - who also fought among themselves - and in the way the Portuguese colonial administration transferred power. We also have to recognize that Angola suffered deeply as a victim of the cold war in Africa.

Whatever the original causes of the war, over the years the conflict has created its own logic. Today, the ongoing war represents a means of livelihood for a number of individuals, both inside and outside Angola. The closed nature of the war economy provides opportunities for war profiteers who have a vested interest in the continuation of the war. Representatives of the civil society also maintain that the war provides a convenient excuse for not improving people's access to public goods, and thereby creates new causes of conflict.

After years of war, a large part of the Angolan population – perhaps as many as one third to one half – is only just surviving. Very little is needed to tip the balance and cause widespread death. Epidemics and diseases, which under other circumstances could easily be eliminated, regularly cause a large number of deaths in Angola because the population is malnourished and has little resistance.

In this situation, it is difficult to question the value of international contributions made through the UN annual humanitarian assistance program, a program to which Norway has also made significant annual contributions. Total Norwegian contributions (humanitarian and long-term assistance) to Angola in 1999 amounted to NOK 154 mill (approximately 18 mill. dollars with today’s exchange rate).

However, in view of the increased income of the government, we expect the Angolan Government to do increasingly more to ensure the survival of its own population – to create an economy that ‘trickles down’ instead of ‘trickling away’ – and thus improve the human rights and living conditions in Angola. There are some signs of progress in this respect. It is now important that these increased efforts continue in a transparent manner. The renewed dialogues with the IMF and the World Bank on the transparency of oil revenues and management are important steps in the right direction.

The Norwegian Government has, together with our implementing partners, attempted to redirect some of the humanitarian assistance to programs and activities that have a perspective beyond mere survival. This involves, for example, demining, not only for humanitarian purposes but also to some extent for developmental ones. It also involves programs to ensure that internally displaced children have access to primary school through a specially adapted program. These programs enable them to continue at a normal school when they return to their home areas.

I could give you a number of other examples, but I think the point has been made. The protracted emergency situation has created needs that require flexible responses. This is an important consideration in our policy of assistance to Angola, and will continue to be so for some time to come. When the war ends in Angola, there will be a need for different kinds of assistance for quite some time.

The human rights program of the UN was not started until after the war resumed in 1998. This program is an important part of UNOA's (United Nation Office in Angola) mandate in Angola. Norway has been the largest single donor to this program since its inception. It is a pro-active human rights program, with the strong support and participation of the government, including the police, the military, the state attorney, the Bar Association, churches and other civic groups.

One can speculate whether the implementation of the Lusaka agreement would have been more successful if the human rights element had been more closely integrated into the peace agreement and more forcefully implemented at an earlier stage. If so, this is a valuable lesson, which we will bring to the discussions in the Security Council - and the UN in general – and which should be fed into the design of the future peacekeeping activities of the UN.

Surveys show that people in Angola do not regard human rights violations as a direct result of the war only, but rather as a result of the inability of the government to install a functioning justice system. This is an indication that the war cannot be blamed for all social problems and all ills in present-day Angola, but that the Angolans expect their government to do more for its people, despite the continued war: again – to be developmental!

What role can and should development aid play in a country potentially as rich as Angola, given the present lack of transparency and allegations of corruption?

We believe that even limited aid can play a significant role, if used strategically to overcome weaknesses in government institutions which otherwise may foster corruption. One example is the ongoing Norwegian assistance to the Ministry of Finance, aimed at developing more effective and transparent rules for bidding for public contracts. Another example is the collaboration between the Norwegian and the Angolan institutes of statistics, which will provide better statistics in selected areas, and help develop better systems for making data accessible to the public.

Angola has shown a keen interest in the Norwegian experience in managing a heavily oil-dependent economy. Angola has also indicated an interest in Norway's experience of ripple effects from oil activities to other areas of industrial production and the generation of service industries linked to the oil sector. We are more than willing to share these experiences

This brings me to another issue: flaring. - Flaring of associated gas from oil production is a serious global problem. We are now looking into this matter, both from the developmental and environmental perspectives, as well as in relation to the challenge of safeguarding Global Public Goods. ECON Center for Economic Analysis and this institute, FNI, have been asked to help us map and further study possible solutions to this huge problem. Through our long-term bilateral cooperation we are also financing a study on the possible use of associated gas in Angola. We hope to do some follow-up later on, depending on the results from these studies.

The government program for poverty reduction – the PRSP - should also become an important tool for ensuring better use and distribution of Angolan public goods and resources. During the recent visit to Norway of the Angolan Minister of Foreign Affairs, I was given assurances that the government intends to stay on course with the work to prepare and implement a Poverty Reduction Strategy Paper. Continued Norwegian assistance to Angola will increasingly be considered on the basis of greater transparency in the utilization of the country’s revenue – especially the oil income.

During Minister Miranda's visit we also discussed the problems of corruption and the measures being implemented or contemplated by the Angolan Government to counteract it. Our embassy in Luanda, Norwegian companies and NGOs operating in Angola have an ongoing dialogue with their partners and counterparts about corruption - and the measures that should be taken to fight it. This dialogue must continue. Corruption means stealing from the poor. Corruption is also bad for business.

This brings me to a favorite theme of mine. - It is crucially important that private companies in Angola ensure that their performance is in line with overall corporate ethics. Today this includes not only matters directly related to the companies’ employees, but also their overall corporate social responsibility. Challenges facing the oil-producing companies in particular will be dealt with by Bergesen.

Capacity building and institutional strengthening are important elements in our long-term program of cooperation with Angola. This covers important sectors within the economy – such as electricity, petroleum, fisheries, water resource management and the environment. We expect this to contribute to a more transparent and better-managed public sector. Through UN agencies Norway finances programs in health and education aiming at bridging the gap between emergency assistance and long-term development. Norwegian NGOs are – as you probably know – involved in large development programs in Angola underpinning this philosophy.

Donors have traditionally been poorly coordinated in Angola, both among themselves and with the Angolan government. Norway has worked closely with the UNDP to improve its role as a strategic resource for aid coordination. Norway will continue to take part in this important work, with an increased focus on the work for reconciliation and for laying the basis for a sustainable peace, not only in Angola, but also in the region as a whole.

Unfortunately, Angola is not an isolated trouble spot in an otherwise peaceful corner of the world; quite the contrary. As I see it, finding a solution to the protracted conflict in Angola as well as in the neighboring Democratic Republic of the Congo represents two of the most important challenges the Security Council will be facing in Africa during Norway’s membership period. These two distinct, but at the same time interlinked, conflicts can – if not contained – spill over into large parts of the continent and threaten the stability of other neighboring countries.

A solution to the conflict in neighboring Congo would certainly improve the peace prospects for Angola. Conversely, if the situation in either country deteriorates, the other one would certainly be negatively affected.

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Tony Hodges’ book and the research behind it have made a valuable contribution to a better understanding of the forces that make war - and peace - in Angola possible. I congratulate him – you, Mr. Hodges - on a work well done.

It has been suggested that Mr. Hodges’ book should also be published in Portuguese, first of all to make it available to the Angolan public. I second this motion. It is thus a pleasure for me to announce that we have decided to finance its translation into Portuguese.

Thank you.