The New Resource Regionalism in North Africa and the Sahara

Auteur(s) : 

Geoff D. Porter*

Les dossiers du CERI
Date : 

At the beginning of June 2013, Libyan hydrocarbons production plummeted. Prior to June, the country’s hydrocarbon sector was a post-revolutionary success story. During the 17 February Revolution against the regime of Colonel Muammar Qadhafi, oil production ceased entirely. From February to March 2011 production went from approximately 1.5 million barrels per day (mbpd) to zero barrels. However, after Tripoli fell in September 2011 and the transitional government was stood up, production almost immediately rebounded. It went from 0mbpd in December 2011 to 900,000bpd in January 2012 and then continued to push upwards, finally peaking and leveling off at slightly more than 1.5mbpd. The recovery of the sector was remarkable, but it was also critical: prior to the revolution oil exports accounted for more than 95% of Libya’s hard currency receipts and almost the entirety of the country’s GDP. If the post-revolutionary government was going to succeed, it need oil revenue as badly as the Qadhafi regime did. To the Libyan hydrocarbon sector management’s credit, production remained relatively steady throughout 2012 and into the first quarter of 2013. But it crashed in June by almost 30% from 1.3mbpd to below 1mbpd. The precipitous production decrease was quickly rectified, bouncing back up to roughly 1.3mbpd, but then just as quickly, it fell again at the end of the month. What was causing these wild swings in production volumes was not a technical or mechanical problem nor was it a geological issue. Instead the production decreases were due to labor actions. Disgruntled and dissatisfied workers went on strike, they staged protests, and they formed blockades that prevented other workers from accessing production sites. The protestors’ demands varied in their specifics, but the overall grievances were the same – workers wanted more benefits from the hydrocarbons sector.

The hydrocarbons sector labor actions in Libya are part of a new phenomenon in North Africa and the Sahara and they are mirrored by labor actions and worker unrest elsewhere throughout North Africa, the Sahara and the Sahel where workers are disrupting the operations of extractive industries and demanding a greater share of the wealth that these industries produce. The governments of North African, Saharan, and Sahelian countries are constrained in their ability to respond to this new phenomenon and as a consequence, it appears that local communities’ willingness to actively struggle for a greater share of extractive industries revenue will be enduring feature of the North African, Saharan, and Sahelian political and economic landscapes.

North Africa and the Sahara-Sahel’s extractive industries under threat

The protests that disrupted Libyan oil production are similar to protests that have disrupted other extractive industries operations throughout North Africa and the Sahara and Sahel. The June protests at Libya’s Zueitina export terminal were only the latest in a series of protests that disrupted Libyan hydrocarbons activity since the end of 2012. In December 2012 protestors halted work at the Zawiya refinery in western Libya. In March 2013, operations at the Zawiya refinery, the Mellitah Oil and Gas Facility, fields operated by the Waha Oil Company, and a facility operated by the Sirte Oil Company were all disrupted by protestors. In April, a pipeline near Ajdabiya that feeds the Zueitina Oil Company facility was targeted by an RPG and shut-down. In May, protestors shut down operations at El Fil oil field. Subsequently, the labor actions shut down the Zueitina Oil Terminal and the Marsa El Hariga terminal. In June, Mellitah was disrupted yet again by a firefight among guards and protestors or militia members.

In Algeria, protestors in the southern Algerian towns of Ouargla and Ghardaia have staged large protests and marches since April 2013, demanding that the government invest more of its hydrocarbons revenue in the region and that local university graduates and laborers be awarded more positions within Sonatrach, the Algerian state-owned energy company, that operates oil and gas production facilities in the region, but most notably at Hassi R’mel and Hassi Messaoud1.

In Morocco, roughly 800 protestors staged a month-long sit-in in the mining town of Khouribga in March 2011 demanding more employment opportunities from the phosphate mining giant OCP Groupe. The protestors insisted that the children of local employees who had retired from OCP’s mines in the region be hired to replace their parents instead of allowing workers from outside the region to fill the vacated positions. The protests grew violent, with protestors vandalizing and destroying the local OCP office and the police resorting to tear gas and batons to eventually disperse the protestors2.

In the Mauritanian mining town of Zouerate 6000 protestors took to the streets on 28 May 2013 and after an initially peaceful protest attacked the governor’s residence, administrative offices, the local sub-contractors office of Société Nationale Industrielle et Minière (SNIM), the state-owned mining company, and the local radio station. The protestors were predominantly sub-contract workers to SNIM who were demanding direct employment from the company and higher wages. The May 2013 were only the most recent instance of protests that have been taking place on and off since 2012.3

In April 2013 in Niger, protestors staged a three day protest against the China National Petroleum Company (CNPC) in Diffa, near the CNPC’s Agadem block oil fields. Protestors were demanding that CNPC hire more local workers and that a revenue sharing agreement between the central government and the municipal government be implemented according to a prior agreement. The April protest followed an eight-day strike in March at the Agadem block over wage issues. The local labor union asked for a 300% pay increase.4

Resource Regionalism

The protests that have targeted extractive industries in Mauritania, Morocco, Algeria, Libya and Niger can be loosely called a manifestation of “resource regionalism.” Resource regionalism can be defined as the localized analogue to resource nationalism. Resource nationalism first appeared in the 1970s when many resource rich countries were emerging from colonialism and were taking their first furtive independent steps. One of the core concerns was that foreign firms – usually with close ties to former colonial rulers – continued to exploit the newly independent countries’ natural resources and often under terms that were extremely favorable to the companies to the detriment of the country from which they were being extracted. During the 1970s newly independent governments nationalized their extractive industries – whether it was oil in Algeria and Libya or iron ore in Mauritania or phosphates in Morocco. Gradually, however, the new state-owned enterprises recognized that they could increase their revenue from resource extraction if they were to partner with foreign firms on new terms that were deemed more equitable to the state-owned enterprise and the host country5. This period of relatively mutually beneficial cooperation between SOEs and international firms last until the 2000s when commodities prices began to increase dramatically. The increase, driven by new demand from China and India, and increased consumption in the US and Europe, resulted in many governments reconsidering the terms that they had offered to international firms and many countries introduced reform legislation that sought to reduce international firms’ percentage of the revenue derived from extractive industries and increase the state’s share. To government decision makers, this made plain economic sense. Commodities were demanding a higher price in the marketplace and therefore states could demand a greater share of that revenue. Politicians rallied populist support for reform legislation by portraying the legislation as supportive of the overall national interest. International firms quickly dubbed the trend “resource nationalism.”6

If resource nationalism was about states insisting on greater benefits from the extraction of the natural resources by foreign firms, then resource regionalism is about local communities demanding greater benefit from those same industries but at the expense of the central state. Resource regionalism is the local equivalent of resource nationalism.

Resource regionalism in and of itself is nothing new. It is a phenomenon that has been witnessed in other resource rich locales, most notably in Nigeria’s Niger Delta, but also in the Kurdish region of Iraq, or even parts of the US where states that account for extractive industries activities demand greater benefits from those industries. In the Niger Delta, resource regionalism led to the emergence of the Movement for the Emancipation of the Niger Delta (MEND) whose stated goal was greater autonomy for Nigeria’s Delta and Rivers states and a greater share of the oil revenue that was produced from oil deposits in those states. Resource regionalist tendencies in the Niger Delta became especially acute in the mid-2000s with the MEND extending its activities beyond protests and labor actions to include attacks on oil facilities and the kidnapping of expatriate personnel working at hydrocarbons sites.7 Likewise in the Kurdish region of Iraq resource regionalist sentiments fueled attacks on export pipelines in order to advance the goal of securing Kurdish autonomy from Baghdad and more hydrocarbons revenue for the Kurdish region. After Hurricane Katrina in 2005, the US state of Louisiana floated a proposal to extract more revenue from the hydrocarbons activities taking place in the Gulf of Mexico.

In North Africa and the Sahara, protests for more employment opportunities, better education, and better infrastructure have focused on the extractive industries because it is often the most high profile economic activity in a region that suffers from a deficit of economic opportunities. Saharan communities whether in eastern Niger, southern Algerian, southern Libya, or northern Mauritania often do not have a wide range of employment options. There is limited agriculture (including animal husbandry), the small and generally impoverished population does not support any but petty commerce, and the remoteness of these regions and the lack of infrastructure make the areas unattractive to manufacturers or light industry. There are, however, natural resource deposits of varying size that can be exploited.8 There are large oil reservoirs in southern Libya and large oil and gas reservoirs in southern Algeria. Mauritania has enormous iron ore deposits. Morocco has access to potentially the world’s largest phosphates deposits and Niger has uranium deposits as well as relatively small oil reservoirs. These different natural resources have become increasingly attractive targets for exploitation in recent years as a combined result of decreasing deposits in more easily accessed locations throughout the world and greater demand for natural resource commodities throughout the world. When the international companies arrived and established themselves in remote parts of the Sahara and Sahel, they became the most prominent economic actor in any given region’s immediate vicinity.

A second reason that the extractive industries have been targeted by popular protests is the perception that they are highly profitable industries, often accounting for large percentages of the states’ GDPs. In some cases this is true – Algeria’s In Amenas gas plant generated revenues of approximately US$5mn per day. Mauritania’s iron ore mining centered around Zouerate accounted for 53% of the country’s export revenue in 2011 or roughly US$1.5 billion. Morocco’s phosphates industry accounts for roughly 4% of Moroccan GDP and almost 30% of Moroccan export revenue. The centrality of oil production to Libya’s GDP is well documented, with oil exports accounting for more than 95% of export revenue. In other cases, it is less so. The Agadem block in Niger produces 20000 barrels per day, which is a relatively small in comparison with other oil production facilities throughout the Sahara, but is very significant in relation to the size of Niger’s economy. Even the smaller extractive enterprises throughout the Sahara dwarf other economic activities.

A third reason that the extractive industries have been targeted by protestors is that extractive industries are generally environmentally damaging and local communities bear the brunt of the environmental impact of resource extraction. As a consequence, local communities argue that because they are more significantly impacted by extractive industries that they should receive a greater proportion of the industries’ revenue, partially to address the environmental degradation that they industrial activity causes, but also to compensate local communities for worsened living conditions.9

And finally, the extractive industries are differentiated from other industrial activity by the belief that the resources being extracted are the patrimony of the entire nation. As natural resources, they are something that exists for the benefit of the entirety of the population and that their exploitation should correspondingly benefit the entirety of the population. Unlike other economic activity like manufacturing or financial services, the extractive industries rely upon natural resources that exist independent of government policies and of legislation or regulations implemented by any one government. Likewise, there is a belief that natural resources should be exploited not just for the benefit of the present but that they should be conserved for future generations as well. This sense of national ownership differentiates the extractive industries from other economic activities. Citizens of North African and Sahelian states do not claim ownership of the banking sector or manufacturing, but they can plausibly argue that natural resource deposits are just as much their patrimony as they are the patrimony of the government in the capital.

Resource Regionalism and the Arab Spring

Most analysis of the Arab Spring has focused popular efforts to effect systemic political change, but there have been smaller less holistic protests that have occurred in North Africa and the Sahel since the Arab Spring uprisings. These are aimed a more immediate concerns. They are not about the overthrow of a political system, but instead about the desire for a better life, not through avenues of political participation but through economic gain.

While there may not always be a direct relationship between the labor incidents impacting the extractive industries throughout North Africa and the Sahara and the events of the Arab Spring, in some instances, there clearly are. In other instances, it appears as if the success of populist movements in overthrowing regimes in Tunisia, Egypt and Libya has emboldened other groups to try to pursue more realizable gains through mass protests.

The protests and labor movements effecting the Libyan hydrocarbons sector are unquestionably a direct consequence of the collapse of the Qadhafi regime. Prior to the 17 February Revolution it would have been unforeseeable to engage in large scale labor actions in Libya. The Qadhafi regime’s security services did not tolerate any form of populist critique or protests. This applied as much to the labor environment as it did to the political environment. Even though some parts of the country were severely neglected during the Qadhafi regime and even though the Qadhafi family horded oil revenue for itself and for its clients, protests only very rarely materialized. With the fall of the Qadhafi regime in September 2011 and the almost complete dissolution of state security services, it was all of the sudden possible to protest again and local communities in and around oil and gas producing regions saw the opportunity to exert pressure on Libya’s hydrocarbons sector in order to try to compel the government to address their grievances.

Although Algeria, Morocco, Mauritania and Niger did not have revolutions and their governments and security services remain entirely intact, it nonetheless appears that the Arab Spring events in Tunisia, Egypt, and Libya have contributed to the resource regionalist trend that has appeared in those countries. The Arab Spring did unarguably enhance people’s belief in the power of popular protest. There appears to be reinvigorated belief in Zouerate, Ghardaia, Diffa, and Khourigba that if popular protests were able to topple authoritarian regimes then they should certainly be able to compel state-owned companies to acquiesce to lesser demands such as greater local employment opportunities and higher wages. In some cases, the protests that have targeted the extractive industries sector grew out of broader political protests that had subsequently dissipated and left only protestors with specific and immediate demands. In Mauritania, the protests at Zouerate were initially part of a broader national protest movement that wanted the ouster of President Abdelaziz Ould Taya. Those protests were eventually repressed by the state, but protestors with more specific demands carried the protest momentum forward.

Similarly, the protests in Khourigba, Morocco appear to be local manifestations of earlier protests in Casablanca that were directly linked to the Arab Spring. The so-called 20 February Movement was an attempt by young Moroccans to emulate the protest movements in Tunisia and Egypt that brought about the end of President Zine el-Abidine Ben Ali’s government in Tunisia and President Hosni Mubarak’s government in Egypt. The 20 February Movement had a range of complaints against the government of King Mohamed VI, including lack of genuine popular political representation and rampant corruption, nepotism, and cronyism. The movement eventually lost steam and dissipated as a result of too many different agenda being pursued within the movement and its members being harassed and repressed by the state. The Khourigba protests, however, seem to have been fueled by the 20 February Movement’s mass protests, even if the Khourigba protestors’ goals were dramatically curtailed and focused on more immediate demands.

The same could be said of the Ouargla and Ghardaia protests that appear to have been inspired by or a continuation of earlier Arab Spring-like protests that took place in Algeria’s northern cities. Like in Mauritania and Morocco, but for ultimately different reasons, the Algerian popular protests lost momentum and eventually disappeared, but it appears as if they did stoke some populist sentiments in the country and it appears that organizers of the Ouargla and Ghardaia protests were inspired not only by the protests in Algiers, but also by the massive populist movements in Tunisia, Egypt and Libya.

Lastly, while the CNPC project in Niger has been beset by problems ever since it launched, the spread of mass protest throughout North Africa and the Sahara may not be a direct driver of the Diffa protests but it undoubtedly contributed to them.

Government Responses to Resource Regionalism

Governments from Niamey to Tripoli have responded differently to the protests that have impacted their extractive industries, but given the centrality of the extractive industries to the governments’ economic viability, none has chosen to ignore the protests. In some instances they have tried to capitulate to the local communities demands and in other instances they have tried to use force to end the protests and restore industry operations. In still other instances they have deployed a combination of the two.

However the governments are constrained in their abilities to respond to resource regionalism. First, there is a hard limit to how many jobs extractive industries can support. This is less the case for mining activities like phosphates in Morocco or iron ore in Mauritania, but it is undoubtedly the case for hydrocarbons activities. Upstream hydrocarbons exploitation is not a labor intensive activity and what labor it does require is skilled and requires higher educational levels than many local communities possess.

The second constraint is that conventional responses to resource regionalist demands require time and investment. For example, the government of Prime Minister Ali Zidan in Libya promised to create a new refining company in Awbari in response to demands from protestors that they be offered more jobs in the hydrocarbons sector.10 It will take several years at least in order to construct a new refinery. Not only will construction itself take two or three years, but the feasibility and engineering process alone can take more than a year and then an additional year for the tendering process before construction can even begin. Thus while, Zidan’s promise may be with the right intentions, it will not meet the immediate needs of protestors.

Prime Minister Abdelmalek Sellal’s government in Algeria faces similar challenges in addressing resource regionalist demands. In response to the protests at Ouargla and Ghardaia, Sellal said that his government would introduce tax incentives to stimulate investment in the region.11 Leaving aside the question of whether these incentives are sufficient enough to attract investment to a region that has little purchasing power and little infrastructure, the incentives would still take time to yield results. Obviously, Sellal’s measures are a step in the right direction, but they simply cannot meet the protestors’ immediate demands.

Third, governments have grown accustomed to and even dependent upon the revenue that the extractive industries produce and dedicating a larger percentage of that revenue to local populations could disrupt or upend their budgetary allocations. Extractive industries in Algeria, Libya, Mauritania and Niger account for significant percentages of hard currency earnings and in many instances those earnings are dedicated to programs at a national level and not to supporting local communities. Even so, revenue and spending is where governments can take the most immediate steps toward satisfying protestors’ grievances.

One area where governments can improve perceptions of extractive industries is through the implementation of greater transparency around how extractive industries revenue is used. One of the fundamental drivers of unrest and dissatisfaction around the extractive industries is the perception that the revenue that is generated by these activities has enriched political leadership, often far from where the industries take place and often even outside the country itself. Until they do this, however, it is likely that the resource regionalist trend that has emerged in North Africa, the Sahara, and the Sahel that was at least in part inspired by the Arab Spring protests further to the north will continue. This is especially so because the demand for natural resources is unlikely to abate and extractive industries are likely to spread further and further into areas of the Sahara and Sahel.

*Geoff D. Porter, North Africa Risk Consulting, Inc. , published “Why Algeria did not distinguish between expatriates and its citizens at In Amenas”, The Huffington Post, 25 January 2013 ; “The Eradicateurs”, Foreign Policy, 18 January 2013 ; “Fortress Algeria”, The Huffington Post, 12 October 2012 (republished in el-Moudjahid) ; “Libya’s Franchise Fiasco”, The New York Times, 12 March 2012 ; “The Impact of Bin Ladin’s Death on AQIM in North Africa”, The CTC Sentinel, May 2011 ; “The Unvanquished”, The New York Times, Op-Ed Page, 3 April 2011, translation of An Arabic essay by Alaa al-Aswany.

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