Chad May Alter Its Pledge on Oil Funds

So far, Wolfowitz has limited himself to a statement expressing "serious concern" about the proposed changes in the law, which "threaten to undermine the objectives of socio-economic development, poverty reduction, accountability and transparency," according to the statement. Bank officials declined to go beyond the statement, or speak on the record at all, citing the delicacy of negotiations with the Chadians.

The bank's statement, issued Dec. 8, is viewed as too timid by many antipoverty activists, both inside and outside of Chad. The bank's difficulties, they contend, shows that their doubts about the project were well founded.

"I've tried not to say 'I told you so,' " said Ian Gary, a policy adviser for Oxfam America who is a longtime critic of the pipeline. "We had always feared that the leverage of the World Bank and other donors would decrease substantially once these oil revenues started to flow, and that's what's happening."

"But there's no good solution right now," Gary said, adding that although he thinks the bank should respond very sternly if Chad violates the terms of its agreement, "I wouldn't want to be in their position."

Chad's finance minister, Abbas Mahamat Tolli, contended in a phone interview that the government has good reason for insisting on changing the agreement. Although world oil prices have roughly doubled since the pipeline deal was signed, the revenue going to the government has been "disappointing," he said, and the government questions the international oil companies' explanation that much of the petroleum being pumped is laden with impurities.

"Relative to our needs for poverty reduction, and the lack of security, the amount of money we are getting is rather small," he said. "We understand that in principle it's good to save for the future. But the people of Chad don't understand why they should be told they must save for future generations when they have needs right now."

Spending money to improve security in the often-lawless countryside, he added, is perfectly consistent with poverty reduction, because "we can't conceive of economic development in an environment which is not secure."

Bank officials say they are willing to sit down with the Chadians and examine the reasons for the government's cash woes and its increased needs. The bank might accept amendments to the agreement, a staffer said, "but they have to be arrived at logically, in a structured review process, not just coming out of thin air."

The letter of invitation for the bank to send a mission, which is also addressed to the International Monetary Fund, could provide an opening for a mutually satisfactory compromise. But bank officials are crossing their fingers, because the letter also suggests that the Chadians will stick to their guns. "[T]he Government of Chad is surprised by the position your two institutions have taken, in which you claim you were not informed by our intention to make changes to the Petroleum Revenue Management Law," states the letter, a copy of which was obtained by The Washington Post.

"We're trying to work through this thing," another bank official said. "We're hoping for further dialogue."