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CUE: Africa's smallest nation is on the brink of an oil bonanza and President Fradique Menezes says
he's determined that every citizen will benefit. International experts have been drafted in to write a new
oil law, and the public are being asked how they want to see the oil wealth spent. But allegations of
corruption already surround early oil deals, and the government has been challenged by an abortive
military coup. The BBC's Maurice Walsh has been to Sao Tome to discover if it can escape the curse
of oil.

and run under link)

REP: The islands of Sao Tome and Principe, a few hundred miles off the coast of Africa almost on the
line of the equator would be many people's idea of paradise. Palm trees lean over the road by the
sea; white surf breaks on sandy beaches. Fewer than 150,000 people live here. But this tropical
beauty conceals a deep poverty. The average income per head is $300 a year: most people scrape by
on half that. Malaria is endemic and pernicious: half the population is infected. And there are only fifty
doctors for the whole of Sao Tome. For Isowra Sayter, a woman who sells beer at a market stall in a
little fishing village, a lot needs to be done before she can begin to regard Sao Tome as paradise.

BAND 4: ISOWRA SAYTER SPEAKS (fade and run under translation)

TRANSLATOR: Here we have a lot of problems with mosquitoes and malaria and other simple
problems that we need to solve.

BAND 5: BRING UP SAYTER (fade and run under translation)

TRANSLATOR: We need to build a nursery school, we need to build a public market; we need to fix
the roads because the roads around here coming into the city are in bad shape. Also we don't have
any electricity, we need that - and a big, giant hospital. (fade atmos under link)

REP: Suddenly there appears to be an opportunity to address that shopping list. Sao Tome has
discovered that it's sitting on billions of barrels of oil in the seas around the island. The major oil
companies are queuing up for a slice of the action and there is heady talk of Sao Tome becoming the
Brunei of the 21st Century. Even the President is mesmerised by the prospect of oil wealth.


We are talking about the business of millions of dollars. Sometimes you ask yourself "Look at this!" -
millions of dollars! With cocoa, OK I knew already what is million of… but now it's billions of dollars!

REP: It's entirely natural that President Fradique Menezes should be impressed by the amount of cash
that oil can generate. But the record in Africa shows that oil can be a poison chalice. In this BBC series
we'll be examining how oil wealth has failed to deliver benefits to millions of Africans who thought it
would solve their problems.


The mentality is quite like winning the lottery. Suddenly you have a lot of money: you don't know how
to create money but you have money. So these people confuse their good fortune with knowledge,
and they begin investing in projects that are not profitable. Lots of hucksters come from the North
selling them dream projects… they invested in lots of white elephants.

REP: This phenomenon is known to economists as the resource curse: countries that appeared to
outsiders to be rich because they'd discovered oil were ruined by their apparent good fortune, sliding
into a morass of corruption and profligacy. Now, as new oil producers emerge in Africa, we'll be
looking at how international financial institutions and and a new generation of African politicians
believe the hard won wisdom of the last few decades will enable them them to escape the oil curse.

BAND 8: CHADIAN OIL MINISTER SPEAKS (fade and run under translation)

TRANSLATOR: We have oil and people are dreaming of having fancy cars, fancy houses, having
money, living a real decent life. No. I'm telling this population that we need to have a vision - a mid
term and long term vision. And I'm waiting to tell these people in 10 years how their life is going to be

REP: Over the next four BBC programmes we'll be looking at what oil has done for Africa and
assessing whether this new optimism that the mistakes of the past can be avoided is justified.

BAND 9: SFX FOOTBALL MATCH (fade and run under link)

REP: A football match in the Sao Tome's national stadium.

BAND 10: SFX CROWD CHEERING (fade and run under link)

REP: The names of the two teams on the bone-hard, sandy pitch will give you the key to the history of
these small islands. They are called after two coffee plantations not far from the capital. The
Portuguese ruled Sao Tome for nearly 500 years. At first it was a slave-trading post. Then the forests
were hacked down to produce sugar, coffee and cocoa. Slaves were imported from the rest of Africa
to work the fields. When Portugal decided to give up its colonies in 1975, the planters abandoned their
mansions and went home. Sao Tome did not produce enough to survive as an independent country. It
gets by on foreign aid and ingenious schemes to make money: printing stamps with pictures of The
Beatles and Marilyn Monroe and providing telephone sex lines to international subscribers.

BAND 11: 2" ATMOS (then fade and run under standup)


You wouldn't know by visiting Sao Tome that this was a petrostate in the making. There are no
pipelines being laid or derricks pumping on the beaches. Not a drop of oil has been brought ashore yet
but the geologists say it's all out there under the metallic blue ocean, deep down in the Gulf of Guinea.

REP: Significantly, this part of Africa has attracted the close attention from the United States, the
world's biggest consumer of oil. A major US government report mapping out alternative sources to
the Middle East has identified the Gulf of Guinea as one of the most important areas for oil exploration
in the world. For years, Sao Tome was an afterthought for the American diplomats in Gabon, the
nearest country on mainland Africa. But now, Ambassador Kenneth Moorefield regularly boards an
ancient propeller plane for the hour-long flight to Sao Tome.


As an alternative to other sources of oil in the world, this is becoming increasingly significant and the
trend in terms of investment by oil companies' exploration would suggest that in the next ten to 15
years you are going to find the Gulf of Guinea supplying as much as 20 to 25% of US imports.

BAND 14: SFX DOOR SLAM AND CAR ATMOS (fade and run under link)

REP: In Sao Tome they're already preparing for the day when there will be money to spend. When we
were there, a national consultation exercise - partly organised by idealistic young American volunteers
- was in full swing. We went with Josh Chaffin, to a meeting in a fishing village in the north-west.


This is a part of the country that is… totally abandoned by the state… they don't have any contact with
state officials or government officials at all unless there is an election.


BAND 17: SFX PEOPLE TALKING (fade and run under link)

REP: We're just in this little courtyard in the village of Santa Caterina. It's a little open-air courtyard and
there are about three different groups of people having the petrol explained to them. For instance,
there are posters all over the place. For instance, one in front of one group says, "Where is the oil,
how much oil is there? How are we going to get the oil out of the ocean and what can the government
of Sao Tome do with the money?"

REP: People in this village have never been consulted like this before.

BAND 18: MARIO MONTAILLOU SPEAKS (fade and run under translation)

TRANSLATOR: It's the first time I have ever seen anything like this in my life. I think it's great.


Do you think what you say about what should be done with the money from the oil will be listened to?

MONTAILLOU SPEAKS (fade and run under translation)

TRANSLATOR: I really hope so, I really hope that people listen to what is said here and I hope that
they take our opinions into account and that they manage the oil money well and that they adhere to
the oil laws that are passed.

REP: That note of uncertainty about whether the oil money will be used properly belies a deep
scepticism among ordinary people about the intentions of their leaders.

BAND 20: SAYTER SPEAKS (fade and run under translation)

TRANSLATOR: Politicians talk a lot and they do nothing. There was an electoral campaign, the
President came here, some senators came here, nothing happened until today. When it's campaign
time we are all best friends. But when it's not campaign time our relationship dies.

REP: These comments reflect the huge gap between the elite which has traditionally run things in Sao
Tome and the rest of the population. Many local people regard politics as the preserve of a small
magic circle of powerful people more dedicated to their own interests than those of Sao Tome. The
early dealings with foreign oil companies seemed to confirm that view. An obscure Nigerian-owned
company called EHRC, or Chrome Energy, was sold exploration rights at a fantastically low price.
Chrome won concessions which would cost Sao Tome millions of dollars as the oil came onstream.
Sao Tome is also sharing a large chunk of its offshore oil with Nigeria. An agreement signed in 2001
gave the Nigerians 60% of the profits. All of these deals have attracted allegations that those
negotiating on behalf of Sao Tome were bought off: many Sao Tomeans believe there is no other
explanation for how bad these deals turned out to be. Rafael Branco is a veterans Sao Tomean
politician who has been in and out of government for the past 15 years. He negotiated the deal with
Nigeria. And on the original Chrome deal - which he acknowledges was deeply flawed - he is vague
about who was responsible.


People here in Sao Tome, and people outside who look at the oil industry, say they have hardly ever
seen a deal like this, such a good deal for one company, and many people suspect that the reason
they got this deal was that they were able to buy favours here?

RAFAEL BRANCO: I can speak from negotiations I participated in, and the latest one, I was minister
for natural resources… I can assure you that nobody got any favours to get this deal.

REP STANDUP: There is evidence that they did pay some money to people here involved in the deals.

BRANCO: There is evidence, that was before this deal. They gave money to people who were
campaigning here, yes.

REP STANDUP: But beyond that, this company had to submit documents to the Security and
Exchange Commission who runs the Stock Exchange in New York, and that showed that they paid
over $500,000 to people through various bank accounts including bank accounts in the British Virgin
Islands. Who got that money?

BRANCO: I don't know. It would be interesting to get those names published.

REP STANDUP: But why didn't you publish them when you were in Government?

BRANCO: Actually, I heard about payments to people but never that there was such evidence. It is
clear from some Sao Tomeans that life of some people changed since this oil business started.

REP: The bad contracts only became a public matter only after the presidential election of 2001. The
new president, Fradique Menezes, a wealthy businessman, declared that these contracts would have
to be reviewed.

BAND 22: SFX PRESIDENT'S FARM (DOG BARKING) (fade and run under link)

REP: President Menezes rarely goes to the Presidential Palace in the middle of the capital. He likes to
work on his cocoa farm, a 20 minute-drive inland, up into the cool hills. There, in one of the old
Portuguese plantation houses he renovated with the money he earned as a cocoa trader, he likes to
receive visitors.


Buon Noyte, Maurice Walsh, BBC... (fade and run under link)

REP: President Menezes has spent much of his life abroad and so is not obviously a member of the
magic circle of elite politicians. He says he realised early on that the oil contracts signed by his
predecessors stank.


Reading those papers, it was really very strange how this could have been signed, such a kind of
contract… I had to go to ask for assistance at the World Bank, if they could help us - help me,
especially - to understand these contracts better. I had to do something, so when I returned to the
country I made a public declaration that those contracts were not good at all for the people of Sao
Tome and that we had to renegotiate them.

REP: Having set in motion the difficult renegotiations, he might have tried to punish those who were
guilty of such ineptitude or - as many in Sao Tome believe - corruption. But President Menezes said
he preferred, for the sake of peace, to let bygones be bygones.


I do not accuse anyone of anything, I prefer to say that it's lack of experience. We learn and
unfortunately it cost us a lot, that lesson.

REP STANDUP: Now, in 2002 you did say you were thinking of appointing a public prosecutor?

MENEZES: I didn't do it because we are here in an atmosphere of group, of family of friends. When
you try something there are immediately some people come to your home who say "Come on, don't do
this, because he's a cousin of this, a brother of that..."

REP STANDUP: Is that a good reason?

MENEZES: Well, I think we are like we are now, we have done it, it is done.

REP: The dilemmas posed by the notorious oil contracts were not the only worries President Menezes



MAN: "Army officers staged a coup earlier today in Sao Tome and Principe, two islands off the coast
of West Africa..." (fade and run under link)

REP: In July last year, while he was visiting Nigeria, a group of former mercenary soldiers known as
the Buffaloes, acting in collusion with officers from the tiny Sao Tomean army, tried to overthrow the
president. There are only about a dozen Buffaloes but they have a fearsome reputation after spending
years fighting wars in southern Africa. The fact that Sao Tome is so tiny - and that everybody who is
anybody knows everybody else - exercised a powerful restraint on the kind of violence that often
accompanies an attempt to overthrow a government. It was a bloodless coup.

BAND 26: SFX CAFÉ AVENIDA (fade and run under link)

REP: Its leaders gave up in return for an amnesty and a series of pledges to improve the country,
including making decisions about oil contracts more transparent.

BRING UP BAND 26: SFX CAFÉ AVENIDA (fade and run under link)

REP: Far from being punished, the coup plotters are free and active. Most mornings, you can find
them if you dropping into the Café Avenida, just across the road from the Presidential Palace. Here,
over cups of coffee and glasses of hot milk, they continue to intrigue against the government. They
complain that the government is falling down on its promises. Alecio Costa - the coup plotter's most
articulate spokesman - says the influx of oil money will only make things worse.


The central point of everything is the corruption. Our intention was to call the international community
to see how we are living in Sao Tome/Principe. We have a few people that are having a nice life,
taking the state money, while people of Sao Tome/ Principe still have life without assistance, without
hospitals, without schools. People are suffering and dying of malaria and dying of hunger and we see
leaders driving in nice cars, living in nice houses. They have land, they have money outside of the
country. They forget about the people.

REP: There are fears that outsiders might be prepared to enlist the Buffaloes to further their own
interests. Sao Tome's oil has attracted the attention of its much more powerful neighbours, Nigeria
and Angola. The night before we were due to meet Alecio Costa we were told that Angolans had tried
to enlist the Buffaloes to their own scheme. When we put it to him, his response was hardly reassuring.


There's a rumour circulating while we've been in Sao Tome that some Angolans have tried to
persuade people here to stage another coup?

COSTA: I prefer not to comment on this at this present moment.

REP STANDUP: Is that because there is something going on?

COSTA: As I said, we cannot comment on that.

REP: President Menezes is remarkably frank about the pressure he is under.


If I tell you that almost every day I receive phone calls from the people saying there are people
preparing a new coup; that we are going to have problems with Angola, that we are going to have
problems with Gabon, with Portugal, with Nigeria, you know, it's a very fertile country not only for

agriculture but also for… how do you say this in English… rumours. It's terrible. If I took it seriously, I
couldn't do any work. But it's exhaustive...

REP STANDUP: But it was for real last year. What were these people about? The man who led the
coup said they were acting on behalf of the silent, powerless citizens of Sao Tome.

MENEZES: (Laughs) This is the poetry, but... No it's the people who want power. That is all… I mean,
it's really power. Our country has this oil and the people want that.

REP: Sao Tome is acutely aware of its mainland neighbours, Angola and Nigeria. During the coup last
year, Nigeria said it was ready to react to what it described as any threats to its interests in the Gulf of
Guinea. This feeling of being under siege is one reason why Sao Tome has become closer to the
United States. The American Ambassador, Kenneth Moorefield, says the US is a force for stability.


The reality is that Nigeria is a very large and very powerful country and it has a very small and very
weak neighbour, Sao Tome, which it is in partnership with for the joint development of these oil
resources. So that obviously creates an imbalance.

REP STANDUP: Some people in Sao Tome told us they are looking to the United States to protect
them from Nigeria?

MOOREFIELD: Well that's an interesting perspective. I think the role of the United States is rather one
of being a neutral friend and ally. This is not to put us in opposition to any other country, quite the

REP STANDUP: But do you think your presence is in itself a signal to countries that might want to get
involved to back off?

MOOREFIELD: Well, they might interpret it that way.

REP: As well as forging links with the American government, President Menezes has also sought the
advice of foreign economists and lawyers. Last year, he called up Jeffrey Sachs, the Columbia
University economist who travels the world advising governments - and the author of some key
research on the resource curse. A year on, Jeffrey Sachs applauds the fact that Sao Tome is
introducing an oil law and dampening expectations that the money to come will transform the country


They look to me that they're on the right direction but I have no illusion that you take one right step and
everything else is assured: this is going to be a constant challenge.

REP STANDUP: Your research has indicated that oil is, in reality, in history, a "curse," so how can you
say to Sao Tome, "you can turn this oil to your advantage"?

SACHS: Oil is not invariably a curse. On average it has been a curse. That's a very important
distinction. The theory says that oil ought to be an advantage but of course it has to be used properly
and one has to understand the pitfalls. On average, oil has not been used properly. So this is a real

REP: President Menezes has made a big impression in the United States. American politicians and
international officials have been charmed by him. But some people are not sure that he can remain the
independent man he likes to present himself as. George Frynas of Birmingham University in England
has made several visits to Sao Tome. And it he's not sure that President Menezes, whatever his
intentions, has been able to escape the net of Sao Tomean politics.


President Menezes himself has received money from Chrome Energy for his political campaigning on
two occasions. There have been allegations that certain politicians had received shares in Chrome
Energy and so looking at the track record, I'm not entirely sure how the country - with the same
politicians and the same people in charge - can suddenly turn around and become whiter than white.

REP: When it emerged that his political campaign had received money from Chrome - the Nigerian-
owned company whose contracts he had renounced as scandalous - President Menezes was angry.
He brushes off the implication of this revelation by once again pointing out the familial nature of politics
in Sao Tome.


The political parties have no money. And every political party here lives with money coming from
neighbouring countries. All of them. The main party, the biggest party in the country, received also
from Chrome. That money went to the coalition, not for my pocket, fortunately I don't need it.

REP STANDUP: But isn't that kind of money in politics compromising?

MENEZES: Of course it can compromise, but I tell you it doesn't compromise me, because I tell you
something - (laughs) - I continue being the same!

REP: In the next part of this BBC series on African oil, we go to Gabon, where more than four decades
of oil exporting has produced little return for ordinary people.


Gabon should be used as the model to see where Sao Tome is going to be 30 years from now. For
people who say, "Well, there is a possibility things are going to work out for these new oil producers,"
they're ignoring a 30-year history in the exact same region whose comparison can't be ignored.



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