POLS 400 Nigeria Final

Dylan Weber

POLS 400

Final Research Paper

The True Cost of Crude: Oil and the Democratic Process in Nigeria

Nigeria is home to a vast array of ethnicities and cultures. In the southern region of the

Niger Delta lies Ogoni. The inhabitants of this region, who bear the same name, have been

embroiled in human rights abuses, environmental destruction, and poverty. These conditions

have been largely attributed to the exploitation of the land and resources by major oil companies

and the Nigerian government.

In 1990 the Movement for the Survival of the Ogoni People was founded. This

organization, known as MOSOP, is a mass based democratic social movement designed to

promote the interests of the Ogoni people. That same year the MOSOP passed a document they

called the Ogoni Bill of Rights, which aimed to address their concerns regarding governmental

neglect, lack of social services, political marginalization, and the “oil related suffering” of their

people (Movement for the Suvival of the Ogoni People). More than 90% of Nigerian oil

revenues are derived from the oil production in this region. The Ogoni people feel they have

been “underpaid” in a system that sees the federal, state, and local government have near

complete control of the production and subsequent revenues.

In late December 1992 and January of 1993 the Ogoni people began demonstrating,

peacefully, against the Shell Oil Company. These protests, including January 4th, 1993 when

more than 300,000 of the Ogoni demonstrated against the activities of Shell in the area forced the

retreat of the oil giant from their lands. Shell reemerged in the area less than three months later

under the protection of Nigerian military forces. These forces are allegedly responsible for the

shootings of Ogoni farmers protesting the implementation of oil pipelines through their

farmlands.

The president of MOSOP was an environmental activist and television personality named

Ken Saro-Wiwa. Saro-Wiwa was much loved by his people and has become a rallying bell for

international businesses being held responsible for their actions (Pilkington). Saro-Wiwa and

several others were arrested for alleged involvement in the murders of four Ogoni leaders. The

government, namely the Internal Security Task Force (ISTF), used this as an opportunity to take

command in an effort to “restore order”. While Saro-Wiwa and the others awaited trial before a

military commissioned tribunal, they were denied access to the media, their families, and even

representation. By order of the special tribunal, Saro-Wiwa and the others were executed

November 10, 1995.

The price of oil was $27.88 a barrel (Macrotrends).

These executions were condemned by the international community as human rights

violations. Even more condemning was Shells 15.5 million dollar settlement in in a legal action

accusing them of collaborating in the execution of Saro-Wiwa and the others hung with him.

Throughout the next decade there would be non-partisan elections, military rule, and the

appointment of governmental leaders with limited democratic process including the elections in

March of 1996.

The price of oil was $32.65 a barrel.

The topic for this piece will be the effects of oil revenues, measuring in price per barrel,

on Nigerian democratic process. In the story above we see how international businesses can lead

to human rights violations in a country and how the government can be a contributing factor. The

goal is to look past Niger Delta and the oil companies that operate there and to focus on the

effect of oil production on Nigeria as a whole. The question that will drive the research is “are

Nigerians more deprived from the democratic process when the price per barrel of oil is in a state

of boom (valued at increasing levels)”?

In order to answer this question I will be looking at the political climate in Nigeria

starting with their independence from British rule in 1960 through the election of Olusegun

Obasanjo in 1999 and into the democratic elections in 2007. The variables that will be measured

are the number of regime changes, the number of elections and their openness, and the rate of

“unrest”, which will be calculated by looking at conflicts (civil clashes, rebel actions, extremist

groups) within the borders of Nigeria.

My belief is that when the price per barrel of oil is increasing in market value, the less

access to the democratic process the citizens of Nigeria have. It is my belief that because crude

oil dominates the Nigerian economy and leads to almost all of their income, that the instability in

the government is due in large part to competition to control oil revenues. This has led to

corruption at the highest levels and excluded the citizens from participating in meaningful

democratic process.

Subsequently when the price per barrel of oil is in decline the Nigerian people have more

access to the democratic process. Historically in Nigeria, when oil prices have fallen there were

more newspapers issued and in 1999 when arguably the first free elections happened the price

per barrel of oil was below twenty dollars.

This research and understanding is important for two reasons. The first being national

interests. It is clear that the political climate in the United States is divided, however our

dependence on foreign oil has been condemned by both sides of the aisle. This research could

illuminate another facet of this argument, the revenue generated by US oil imports funds

administrations that tend to be more oppressive. The second being international interests. If

international peace is to be fostered, there will inevitably need to be a “leveling of the playing

field” not only in socio-economic status, but in human rights and governance as well. By

understanding what drives oppressive administrations, the international community can do a

better job of enacting policies that force these administrations to be more empathetic towards

their citizens and less concerned with their bottom lines.

The initial idea for this research was brought upon by Thomas Friedman in his book

“Hot, Flat, and Crowded” in which he explains the perceived relationship between price per

barrel of oil and the social freedoms and political climate in Iran. For example, the Iranian

revolution of 1979 came on the heels of the 1973 energy crisis and saw oil prices per barrel at

less than twenty dollars. This lead to strikes at oil refineries in Iran, revolution, ousting of the

Shah, Mohammad Reza Pahlavi, and the rise of Ayatollah Khomeini who was widely supported

by the people (Freidman).

The first step in evaluating Nigerian democracy and the relationship to the petrol

income was to understand why oil is so vital to the Nigerian economy, how that relationship

reflects itself in the political structure, and what it means to the citizens of the country.

Resource Dependence

In the case of Nigeria, dependence on oil revenues for income has led to poverty,

corruption, and mismanagement of the countries resources and their allocation throughout their

independence. Nigeria is home to approximately 160 million inhabitants, making it the largest

country in Africa; subsequently it is also the continent’s largest producer of crude. While the

telecommunication industry in the country has been gaining ground, oil still accounts for almost

90% of exports and roughly ¾ of their budget revenues (The World Bank).

Paul Collier refers to this type of economic dependency as the “resource trap”. The

1970’s in Nigeria show the dangers of what export dependency can mean for a country. As the

revenues from oil rose, the country’s other exports (mainly agricultural) collapsed in value and

production began to be lessened if not halted (Collier). This trend is affectionately referred to as

“Dutch Disease” by economists after the Dutch economy trashed the value of its other exports

with dependence on natural gas revenues from the North Sea.

Resource dependency can open the door to corruption and misallocation of revenues.

Because exports, especially resource exports, are susceptible to the market value, booms and

busts can occur. During a boom, or when the market values the resource at a high dollar amount,

governments and ministries tend to overvalue and place large bids on production in order to

capitalize on the potential gains from a high value market.

The 1980’s was a time of boom in the oil market and Nigeria was a beneficiary of the

high values of crude. The government borrowed heavily in order to try to take advantage of the

market and misallocated the funds on projects that were run by corrupt parties. While some of

the revenues of the boom made its way down to the people, a majority of the revenues was seen

only at the upper levels of the government and production companies. This would come to an

end in 1986 when the price of oil fell through the bottom averaging a staggering $27.61 a barrel,

down from $67.28 a barrel the year before. While the incomes from the boom period were felt in

a miniscule amount by the citizens of Nigeria, the consequences of poor financial management

were felt heavily amongst the populous during the bust of 1986 as living conditions in the

country were nearly halved. As a citizen the effects of the boom may not have been noticed as

the rewards of the oil revenues were not widely seen by the masses, however the distaste for an

administration when living conditions go from poor to worse are noticed in all corners of the

country.

Resource dependence can lead to social issues as well. In a period of boom there are

more revenues to fund healthcare, education, and the creation of jobs for the citizens. However,

in a state of bust the government has overvalued the market and mismanaged the funds that could

have been used to provide the above mentioned services, this leads to further deterioration of

educated citizens (who are more likely to participate in the democratic process both in terms of

political and civic responsibilities), the loss of jobs in sectors outside of petrol, as well as poor

living conditions and potential human rights abuses (Lijphart).

Governmental Timeline

Nigeria earned its independence from British rule in 1960. In 1961 Cameroon was in a

state of fissure, with northern Cameroon joining Nigeria and southern Cameroon formed the

Republic of Cameroon. This was the start of divisions in the polity that furthered the ability of

corrupt regimes to come to power in Nigeria. Throughout the 1960s there were multiple military

coups.

The first of these coups was in 1966 and led by Chukwuma Nzeogwu. This coup brought

to power a military regime lead by Major General Johnson Aguiyi-Ironsi. This started an age of

military rule in Nigeria that would last through the remainder of the 1960s and lasted until the

election of Shehu Shagari which began the Second Nigerian Republic in 1979 and ended the rule

of the military. In December 1970, the price per barrel of oil was listed at $21.29.

The price would rise throughout the military rule of that time which saw four coups, one

of which was bloodless, until 1975 when the price per barrel of oil was $50.60. It was in 1975

when the coup led by a group of soldiers to overthrow General Yakubu Gowon in order to return

Nigeria to civilian rule, important to note that at the end of 1975 oil was valued at $47.86 a barrel

(Morrissette). However, civilian rule was still a few years out. In 1976 Murtula Mohammad, who

succeeded Gowon, was murdered in a coup by other members of the military that would rule

until the elections of 1979. When the elections took place oil was valued at $51.75, down from

the value of $57.57 during the last year of military rule.

Olusejun Obasanjo led the military rule from 1976-1979 in which the process of

transferring power from the military to the civilian population was in motion. A constitution was

drafted to serve much like the American style of government with an elected president. The

president elected by the citizens in an open election containing five political parties was Shehu

Shagari of the National Party of Nigeria. Obasajo was the first leader in Nigerian history to step

down and transfer power willingly.

This democratically elected regime would hold power in Nigeria until another coup

brought back military rule in 1983. Muhummadu Bahari was in command of this regime for two

years. With oil prices booming during late 1979 and the early 1980s there was an influx of

newspapers and information in Nigeria. The democratic process was flourishing by Nigerian

standards. This window of boom, with price per barrel of oil reaching a ceiling of $116.08,

coupled with a lack of tenure of a democratic system in Nigerian politics created the incentive

and opportunity for corrupt regimes to once again vie for power.

While this information goes against the argument that the democratic process is more

open when the price of oil is in decline, it is important to note that the process was started while

the price was falling. The boom happened after the elections and continued for the next few

years. I believe that while a democracy was in place during high prices doesn’t necessarily mean

that the democratic process would flourish moving forward.

The high revenues created a want for power that lead to the second installation of military

rule beginning in 1983. Until 1985 the military appointed Bahari as Chairman of the Supreme

Military Council of Nigeria. Bahari would remain in power until Ibrahim Babangida took power

in 1985 during yet another military coup.

In what was self-proclaimed by Babandgida to be the end of military rule (he proclaimed

that he would be the last military ruler before a new age of democracy was ushered in),

Babangida showed the nature of man to grab power (Ridley). He was himself a furtherance of

the corruption of the military in that he annulled results of elections and even jailed those who

opposed him. The carrot of power was the financial benefit of owning a vast majority of the

crude revenues, and the military rule furthered the removal of democracy by using the power to

form political decay, the disenfranchisement of the civilian political elite, and bring about an

overall lack of political institutions (Kwarteng).

It was the June 12, 1993 elections that were annulled by Babangida in which the

democratically elected winner would have been Chief Moshood Abiloa would have gained

power. Abiola was then jailed by the Babangia administration. The complete regard for the

democratic process and further human rights violations were accompanied by prices of oil at

$64.05 a barrel in November of 1990 and a $31.44 per barrel price when the elections took place

in June of 1993.

While the democratic process took place in 1993, in name only, it was another coup that

would place a military leader in power. Babangida temporarily handed power to an interim

leader, Ernest Shonekan. While Babangida was in Egypt, the Shonekan administration was

ousted by General Sani Abacha and his men. Oil values hit a low in December of 1993 at $23.68

a barrel. Over the next two years the price of oil would come to $31.14 a barrel at its highpoint in

April of 1995. The military was again able to remain in power by means of controlling a majority

of the countries revenue, which was primarily due to crude, and continue to rob their citizens of

the democratic process.

Abacha would remain in power throughout the next three years and into 1999.

Democratic elections were held after his death, the price of oil was at a low point of $16.38 in

December of 1998 which would be the end of military rule in Nigeria. Olusegun Obasanjo would

once again serve as head of state in Nigeria. From $18.07 a barrel in January of 1999, the price

of oil would continue to rise through Obasanjo’s stint in power until it ended in 2007 with the

price resting at $103.96 a barrel that December.

In 2007 voters in Nigeria would have the first opportunity to replace an elected official

with another elected official. While in theory this would be argued to be the most access to true

democratic process that the population has ever had, the 2007 elections were called by some to

be the worst ran elections in history. Some went as far to say that Nigerian failed elections could

contribute to a diminishing in the status of United States-Nigerian interaction (Oshodi).

We now know how resource dependence can impact a countries population as well as

impact not only the means in which power is taken but the means in which the government runs.

As countries become more dependent on resource incomes, production in the other sectors cut

back and sometimes come to a complete halt. This can lead to unemployment, crime, disease etc.

When governments over value their revenues in a resource market and the market turns down,

revenues to fund education, healthcare, and living standards are suddenly gone. Because the

government owns such a large majority of the oil production and revenues, the incentive to

power is great. This ultimately leads to the corrupt taking power by means of force and depriving

the citizens of democratic process.

The next step in the analysis is to evaluate the elections. While military rule robbed the

citizens from the democratic process, be it altogether or by hosting mock elections, it is

important to evaluate the elections and the democratic values of the society leading up to the

elections and their relation to the oil market booms and busts.

The Elections: 1999, 2003, 2007

On April 25th, 1998 parliamentary elections were held for the National Assembly in

Nigeria. These elections, held during the Abacha regime’s tenure, were run with representation

from parties with government affiliations. However, the true opposing interests were kept from

participation (African Elections Database). The price of oil in April of 1998 was $22.62 a barrel;

this is on the heels of oil prices over $37.00 a barrel the prior January.

Voter turnout during this election was extremely low, coming in at just over forty-two

percent. However, the parliamentary elections for the National assembly in 1999 would see an

increase of over ten percent in voter turnout and elections without incumbent party participants.

While voter turnout was a meek 52.3 percent, it was a ten percent increase on the previous year

while oil remained was at its low point during the February elections, $17.38 a barrel.

April 2003 saw the elections for the Nigerian National Assembly. Oil was priced at

$36.59 a barrel, down from $47.03 earlier that year. Voter turnout again continues to rise as

nearly thirty million Nigerians voted, not quite half of the registered voting population. While the

European Union condemned these as yet more rigged Nigerian elections, some of the

international bodies there to observe the government sponsored elections, such as the African

Union, commended the government on the job they had done (Oshodi).

Obasanjo was overwhelmingly reelected as the President in the national elections the

very next week, with voter turnout coming it at nearly 70% of those registered. The validity of

the 2003 elections was rivaled once more by members of the government itself, saying that the

INEC (Nigeria Independent Electoral Commission) was itself guilty of rigging primary elections

and keeping candidates from participating.

In 2007 the presidential election would be the first time in Nigerian history that the

citizenry had the chance to remove one elected official from the office of president and replace

him with another democratically elected official. With approximately 58% of the registered

voters turning out Umaru Musa Yar’Adua was elected to office.

Like all previous elections this one was marred with violence and controversy.

Immediately upon the announcement of Yar’Adua’s victory, the opposition party cried fraud.

Then State Department Spokesman Sean McCormack went on to describe the elections as

“deeply flawed in some cases” (Polgreen). The European Union took it a step further when Max

van den Berg, the chief observer for the EU, said the elections had fallen “far short” of

international and regional standards.

In April of 2007 at the time of the elections the price of oil was $73.67 a barrel, up from

its April 2003 total of $36.59. Obasanjo and Yar’Adua were members of the same political party.

The party was credited with nearly 25 million votes in a highly contested election in which the

nearest candidate didn’t even receive a quarter of the votes that the victor tallied.

Education

It is widely studied and documented that the better educated are more likely to be

politically active, whether it’s a civic minded nature, or direct participation in the democratic

process such as voting. It is also believed that the victims of violence are not specifically more or

less likely to participate democratically (Blattman). Therefore, even with the systemic violence

that has plagued Nigeria throughout its existence, the polity shouldn’t be ultimately unwilling to

participate given the opportunity given they are set up to succeed.

Unfortunately education is one area that Nigeria has not been able to see great leaps and

bounds. Nigeria has a literacy rate of 61% and a large number of out-of-school youth and young

adults that have little literacy and numeric skills that are likely to be unsuccessful in the formal

workforce (United States Embassy-Nigeria).

One of the challenges faced by the Nigerian citizens is the lack of funding for education.

The government’s inability to fund these social services is in large part due to the

mismanagement of the economy and the revenues produced from the oil production industry. As

staffing and financing education institutions continue to be a problem, the annual population

growth (already the largest country on the continent in terms of overall population) will only

exacerbate this problem moving forward.

Voter Violence

Because Nigeria is so culturally divided, be it along ethnic lines or the more hotly

contested Muslim-Christian divide, ensuring violence free elections and access to the polls has

been a constant issue in Nigerian politics. “Publicity and self-promotion seems to outweigh the

need for party cohesion and national well-being. Violence and violent tendencies still tend to

dominate the political landscape and the rest of society is petrified by the shadows of evils

looming over us as elections draw near.”, this quote from Audu Ogbeh of the People’s

Democratic Party of Nigeria is in reference to violence aimed at keeping opposition members

from making the trip to the polls, thus eliminating them from the democratic process (African

Business).

This has long been a trend between factions from the predominantly Muslim North and

the Christian South. While extremist groups have long used violence as a lobby for religious

promotion, or degradation of other religions, the violence here has oil dollars behind it. The 2011

Nigerian elections may have been the most violent with over 800 fatalities and the displacement

of over 60,000 inhabitants; it was by no means an anomaly (United States Agency for

International Development). In fact, in all major elections, the price of crude was trending

upward or coming off an inflated high.

Abstract

Nigeria has been under a state of rule in form of a military autocracy for the better part of

its existence beginning in 1960. Though access to the democratic process has been given to its

citizens, it has been little more than name only. This is in large part due to the economy of

Nigeria being resource dependent on oil production. Because the government owns upwards of

90% of oil production and revenues, the incentive to grab power is quite large.

There have been numerous coups in the course of military rule coming on the heels of

booms in the market for oil. Based on periods of time where oil is in a state of value inflation, the

governments tend to be more power grabbing, as they have more incentive to do so. However

when the bust of the market comes around, the funds evaporate and social services, standards of

living, and access to education becomes more and more limited to the citizens. This has led to

periods of unrest and changes in administration, whether through a military coup or a general

election (mostly all perceived as rigged).

This has shown that the citizens are provided less access to democratic process when the

price per barrel of oil is in a period of growth, a high, or just coming off a high point but not at a

considerably lower value or in a state of continual decline. Subsequently, when the market for oil

is in a consistent state of decline the citizens have more access to the democratic process.

Data and Methods

The original research that spawned this analysis was done by Thomas Friedman. The

original premise was that countries that were resource dependent often lent themselves more

susceptible to autocratic rule than democratic rule. The argument was that at a price of twenty

dollars a barrel for oil, the Holocaust (in complete terms) wouldn’t be a “myth” anymore. To

illustrate the original data he plotted points on graph pertaining to the price of oil, plotted along

the x axis, and the “freedom within a society” plotted on the y axis.

He uses the xy axis to show the relationship between freedom and price of oil in that as

price per barrel of oil drops (or moves right on the axis) freedoms such as liberal press and

freedom to assemble increase (vertical on the y axis).

The next step was to relate this to an applicable situation. In this chart Friendman used

the above method to show the relationship between crude oil prices and the freedom to trade

internationally in Iran. By using reference points such as the election of Khatami to president and

the building of nuclear reactors as indication points he can chart the relationship as follows.

Using information provided by Freedom House rankings, this model can be plugged with

information pertaining from number of liberal media to elections and how they impact a nation’s

freedoms. The second of the Freedom House diagrams listed below was a good measuring tools

as to how to apply this model to Nigeria.

The last piece of information I used in Friedman’s study to provide a base model for my

research was one pertaining to Nigeria itself. This chart was used to evaluate the legal system

and property rights vs. the price of crude oil.

I used the same model as Friedman to measure freedom to democratic process in Nigeria

vs. prices of crude oil. In order to construct my own timeline with significant data points I used

the democratic elections of 1999, 2003, and 2007 with contributing links from past military

autocratic rule to oil prices during the tenure of different political regimes.

I used data from Macrotrends (below), which sourced their information from the Energy

Information Administration to track the prices of oil from 1970 through today broken down into

monthly intervals. The totals for each month are the subsequent average price per barrel of the

days within each month.

Once I had my tools of measurement I was able to look at the governmental history of

Nigeria. How these regimes came to power, what the price trends of the oil market were doing

leading up to, during, and after their stay in control was measured against the freedom to the

democratic process that the citizenry had.

The overall findings support that when in periods of boom, meaning the prices of crude

are in rise, the citizenry had less access to democratic process. Most often this was during times

of military autocracy, however during general elections where the democratic process should

have been at its most free, citizens were still subject to rigged elections, poor living conditions,

and a lack of tools needed to be a good participant in the system, ie: education.

In conclusion, while voter violence and rigging elections as a means to deprive the polity

of their democratic freedom in regards to voting was still prevalent even in times of bust in the

crude market, the prevailing trend was for Nigerians to have more access to the polls and say in

their governance during this time than at times of boom in the market.

Booms in the market were met with more ferocious violence, whether at the polls or by

means of military coup. The incomes that could be generated from being in a position of power

in the largest oil producing country on the continent in which the ownership of the industry was

almost entirely controlled by the government were a carrot that those with power in a country not

accustomed to democratic freedoms were all too eager to snatch and none too keen to give over.

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