After the nation of Ghana won independence from Britain in 1957, Ghana's charismatic president, Kwame Nkrumah, was courted by both the United States and the Soviet Union. Development of Ghana's primitive economy was a political goal for Nkrumah and became a Cold War opportunity for the West. So when the Kaiser Aluminum and Chemical Corp. spotted an opportunity for profitable investment in Ghana, it had the enthusiastic backing of the Kennedy administration.
The vehicle for Kaiser's venture was a high dam on the Volta River. Kaiser contracted to build it with the proviso that its aluminum smelting plant would get electricity from the dam -- at extremely favorable rates.
Today, 13 years after it began producing -- and long after Nkrumah was overthrown in a 1966 military coup -- Ghana's dream dam has become a nightmare. The stagnant waters of the huge lake behind the dam have spawned diseases, and though the dam produces 90 percent of the electricity generated in Ghana, 70 percent of it is devoured by the Kaiser smelting plant. As a result, Ghana must import much of its electric power from the Ivory Coast. An because of the low rates guaranteed to Kaiser's smelter, Ghana must charge its other electric customers considerably higher rates.
As for economic benefits, the dam emplys only 150 people and the smelter 2,550 -- less than seven-tenths of 1 percent of the industrial labor force. And the Kaiser smelter has not exploited Ghana's bauxite reserves, which are among the world's largest. Instead, Kaiser imports its bauxite from Jamaica. So the Ghanaian economy depends, as it has for years, on the unstable world market for its principal crop, cocoa.
For Kaiser, on the other hand, the investment in Ghana has been a bonanza. The corporation put up only $32 million for its smelting plant. The Export-Import Bank and the Agency for International Development provided more than $140 million in loans. By contrast, Ghana funded $60 million in dam construction costs, and the World Bank loaned it the remaining $117 million.
Kaiser's agreement with Ghana guarantees the company cheap power for 30 years, with an option to renew for another 20 years. Kaiser's Volta Aluminum Co., the smelting operation, was granted a 10-year tax-free holiday, to be followed by a 40-year ceiling on corporate income tax. It is also exempt from import fees for its smelting needs for 50 years.
How did Ghana get into this fix? Secret documents from the Kennedy administration show that the U.S. government gave Kaiser help in its dealings with Nkrumah.
Then-secretary of state Dean Rusk told the Senate Foreign Relations Committee that the United States should see that funds for Ghana's dam were with-held unless there were assurances that Nkrumah was not about to "steer Ghana down a road that is hostile to the United States' interests there." According to intelligence documents reviewed by my reporters Indy Badhwar and Lisa Krieger, U.S. officials were more concerned with Kaiser's financial interests than with foreign policy matters: unless Ghana signed a "satisfactory" areement with Kaiser, millions of dollars in foreign aid and World Bank funds would be held up by the U.S. government.
At about the same time, the CIA warned about the Soviets' possible use of Nkrumah. Several U.S. missions were sent to Ghana to see if Nkrumah was in danger of becoming an "African Castro."
Nkrumah's successors are faced with a dilemma. "It's very, very frustrating," a Ghanian Embassy official said. "While we would like foreign investors like Kaiser to come in, we want there to be something left over for the people."
An official of Kaiser's Ghanaian operation said: "We think the [electric power] rate is proper, but if they think they have a grievance, we're prepared to talk about it."
Meanwhile, he suggested, the Ghanaians would do better to stick to cocoa.