Angola: Anatomy of an Oil State. Tony Hodges. Bloomington: Indiana University Press, 2004. 236 pp. $22.95.
In Angola: Anatomy of an Oil State, Tony Hodges updates his 2001 edition and examines Angola's principle dichotomy: both massive resource wealth in oil and diamonds (the richest in Africa), as well as 'human misery on a massive scale.' This edition addresses key changes and examines them against the backdrop of the country's history, economy, political and social landscape. It intends to present a deeper understanding of the geo-politics of oil and provide an introduction to the country's political economy.
Hodges asks if resources alone have caused this problem. He examines theories of the "resource curse" and "Dutch disease" to determine if they are to blame for engendering conflict, mismanagement, corruption, and economic distortions. He finds that dependence on resources is not the only source of Angola's problems. Instead, Hodges writes that the root of the troubles lies in the complex interaction between resource wealth, the country's distorted form of capitalism and the politically favored elite. The elite becomes an "oil nomenklatura"' with predatory characteristics, ultimately using the state to benefit from opportunities in oil and diamond wealth. Unequal access to the state results in unequal access to resources. Aggravated by the absence of other economic opportunities, this fuels competition and conflict over state control.
Armed conflict in Angola began in 1961 when three separate liberation movements fought for independence against Portuguese colonialism. This struggle turned into civil war after independence in 1975, which only truly came to an end in 2002 with Savimbi's death and UNITA's military defeat. Natural resources were the principal means of financing the war. Oil was largely in state hands. Diamonds, often illicitly traded, funded UNITA's war activities. The conflict was aggravated by the military involvement of other countries, including Soviet and Cuban support for the MPLA government and South African and U.S. support for UNITA. The country was thus deeply embroiled in the southern African conflict and Cold War politics. War persisted after the external powers fell away at the end of the Cold War in the early 1990s. The two groups were locked in a "military equilibrium" until the end of the 1990s, drawn together by "crude material interests in a remorseless struggle for power over state control and access to resource wealth."
The war caused far-ranging destruction: uprooting populations, destroying infrastructure and reducing economic activity in other sectors. Poverty was aggravated by the fact that Soviet aid and oil wealth were going into military spending, while social programs and development efforts were neglected and underfunded. Political power became centralized in the office of the president, reducing the scope of other institutions. Economic and political reforms were undertaken in 1987, involving an incomplete transition from the Soviet dirigiste model, which left a weak yet authoritarian state. This allowed even greater room for a politically favored elite to gain access to state revenues and business opportunities, in a context of cronyism and unregulated capitalism. The state was characterized by poor governance and little transparency.
Individual chapters in this book are devoted to the oil and diamond industries and their impact. Oil exploration and production have grown substantially since independence, and it is estimated that production will reach Nigerian levels by 2007. Yet, instead of acting as a development pole, the industry is organized as an enclave with few linkages to the rest of the economy. Only 4 percent of oil is locally refined and used; the rest is exported, largely by foreign multinationals - Chevron, ExxonMobil, TotalFinaElf and British Petroleum. The state oil company, Sonangol, charged with securing the maximum oil benefits for the state, plays a significant role as investor and equity partner, engaging in joint-ventures as a contractor and, to a lesser extent, as an operator. In spite of the fluctuations in oil prices that caused a debt crisis in Angola in 1987, the government remains highly dependent on oil revenues not only because of direct benefits derived from exports, sales and royalties, but also because oil earnings are used as collateral to obtain loans and finance imports, military expenditures and general government expenditures. Oil revenues made it possible for the government to avoid renegotiating its debt with the IMF, thus avoiding a structural adjustment program and its attendant conditionalities. Instead, the IMF has pressured the government to open its books to an external audit of oil revenues, debt and debt repayment. Its objective is to bring greater transparency to the complicated relationship among the government, Sonangol and holders of the oil-guaranteed loans as this relationship can hide fraud.
Alluvial diamonds can be mined with less technological and financial sophistication than oil, leaving room for informal extraction and trade along illicit routes. This book provides useful details on UNITA's diamond trading in the face of UN sanctions and other attempts within the international industry to label diamond sources. Yet, only when the government ousted UNITA from the country's northern diamond area were they defeated, paving the way to peace. Since then the government has attempt to reduce the scope of artisanal mining and reduce the sales to smugglers by requiring mining licenses and establishing a monopoly marketing agency. The government then sold off some state companies to private owners, opening the door to the Angolan elite and inviting joint ventures with foreign investors to develop the kimberlite deposits.
Angola is a timely book as it provides a broader understanding of the country as it emerges out of years of conflict with a profound linkage between the state, the politically favored elite and the oil industry. There is much to be learnt from Angola's experience with oil and diamonds that is relevant to all of sub-Saharan Africa, given renewed interest in its natural resources and the link between conflict and blood diamonds.
However, the causal relationship between the different elements of the book is weakly established. Hodges acknowledges the decades of war and conflict and the presence of outside military and economic interests, yet situates the cause of human misery in the face of great mineral wealth with the local economic and political elite, enriching itself from the spoils of oil and diamonds. Little mention is made of the role of many of the world's largest and most powerful oil multinationals or the decades of external support to UNITA. Hodges writes that the main problem is the government's lack of transparency, which impedes the emergence of good governance. For that reason, he welcomes IMF efforts to bring about greater transparency around oil revenues as this will assist the emergence of a civilian opposition.
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Yet the experiences of other African countries, required to implement IMF and World Bank good governance strategies, have found themselves eliminating state capitalism in the natural resource sectors, targeting agencies such as Sonangol, and finally giving freer reign to multinationals. Acknowledging the existence of external players and decades of war without recognizing their causal role, and ascribing blame to a local elite sounds one-sided at best. Recognizing that a complex relationship exists between the oil sector and the ruling elite does begin to get at the issues. To get a truer understanding of Angola's dichotomy requires understanding the causal role that is also played by foreign governments and corporations in shaping that relationship.
Suzanne Dansereau is an Assistant Professor of International Development Studies at Saint Mary's University in Nova Scotia. Her primary research areas are mining and labor in Southern Africa, with a specialization in Zimbabwe's political economy.
