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Transnational Corporations in Conflict Zones: Shell and Society – Securing the Niger Delta?

Introduction by John Donovan

I have read many articles about the activities of Royal Dutch Shell in Nigeria. The article below by Adam Groves is one of the most informative that I have seen on the subject. 

e-International Relations

24 July 2008

By Adam Groves

Transnational Corporations in Conflict Zones: Shell and Society – Securing the Niger Delta?

Transnational Oil Companies (TNOCs) in the Niger Delta, the main oil-producing region of Nigeria, struggle to operate in the face of widespread anti-oil protests and civil unrest. A panoply of forms of violent politics, including inter- and intra-community tensions as well as attacks directed against the state and TNOCs, have caused oil output to drop by as much as one third. How has Shell -the largest TNOC in Nigeria- evolved and adapted to  increasing tensions in the Delta?

Shell’s conduct in the early to mid 1990s incited an international movement against the company. Specifically, two incidents -the controversy surrounding ‘Brent Spa’ and the repression of civil society in the Niger Delta (culminating in the hanging of Ken Saro-Wiwa)– represented public relations disasters. Shell became associated with what British Prime Minister John Major termed “judicial murder” as international news broadcasters told how the Nigerian government had executed “human-rights activists” for fear that “their opposition to mining” might drive the company out of the country. Events in the Niger Delta unfolded only a year after Shell’s major £350 million branding makeover. Yet, as John Vidal reports, the company was now

“…implicated in a human rights outrage [and] was shown to have tried to suppress the Ogoni movement for environmental justice… There were worldwide vigils, boycotts and parliamentary questions. A hundred years of brand-building was in jeopardy”.

Not only had Shell ignited an international movement which hit its brand and profits, it also failed to achieve security in the Niger Delta through the repression of civil society. Clearly, if the company was to continue its operations, a different tack would be necessary.

In recognition of previous policy failings—and as a consequence of strong international censure—Shell outlined a new approach of corporate social responsibility (CSR) and community engagement. The company’s 1998 report, ‘Profits and Principles – Does there have to be a choice?’, acknowledged that the execution of Ken Saro-Wiwa and the controversy surrounding Brent Spar were major turning points: “We had looked in the mirror and we neither recognised nor liked some of what we saw”. As part of what Shell called its ‘Transformation’, its 1976 ‘Statement of General Business Principles’ was revised to reflect the new era of CSR. Notably, in a groundbreaking move, the revised principles made explicit reference to Shell’s “express support for fundamental human rights in line with the legitimate role of business”. As early as 1999, surveys suggested that thanks to its adoption of CSR the company was perceived by many to be “strong on the environment”, “ethical”, and “committed to human rights”. Indeed, it is generally accepted that Shell’s adoption of CSR amounted to more than mere rhetoric. Influential experts have asserted that it involved “a fundamental change in corporate strategy and orientation” – and it has precipitated real shifts in Shell’s Niger Delta security policies.

Three broad phases can be identified in the evolution of Shell’s ‘socially responsible’ policies in the Delta. In its initial efforts to placate restive populations, an emphasis was placed on quickly achieving settlements with local activists by providing community assistance. Memoranda of Understanding were created in which Shell promised to be a more sensitive tenant and host communities agreed not to attack oil facilities. In 1997, as Shell’s CSR policies grew more sophisticated, the company shifted to what it termed ‘community development’. This approach was less about doing things for communities, and more about fostering dialogue and partnership with them. In 2003 the company again reorganised its community development programme, placing even “greater emphasis on partnerships between Shell and various stakeholders and interested parties (including corporate bodies, civil society, Nigerian government agencies [and] international organizations)” (Ite, 2006). The approach was termed ‘Sustainable Community Development’; it marked the latest stage of a transition which has seen Shell shift from a security policy based on state violence and repression, to one increasingly focused on partnership with local populations. Uwem Ite (Shell Nigeria’s co-ordinator of sustainable development) writes that the company’s transition leaves “no doubt that Shell has recognised its responsibilities” to civil society in the Delta. Aware of national and international perceptions that it massively exploits the region, Shell has begun the “quest for, and journey towards, sustainable development” (2006: 12).

On the face of it then, a straightforward moral and rational progression can be identified in Shell’s pursuit of security and sustainable development in the Niger Delta. Whilst, in the early 1990s, the company relied on violence and repression to maintain its operations, it has since moved increasingly towards socially responsible policies of partnership and dialogue with civil society. Yet, simultaneously, “what is striking about this transition from community assistance to community development to sustainable community development, is the incontestable fact that the communities themselves were growing ever more restive and militant”. According to official estimates, between 1998 and 2003, there were 400 attacks on company facilities each year and annual oil losses of one billion US dollars (Watts, 2005: 400). Despite Shell’s best efforts to engage civil society constructively, the Delta is now “at risk of sliding into chaos”. What, then, is going wrong?

In the struggle for democracy, Nigerian civil society “mushroomed so much that by the mid-1990s, all shades of interests, [including] ethnic, cultural, communal, environmental, professional, commercial, youth, gender and others were organised” (Ikelegbe, 2001: 11). The 1999 transition however, “removed the overarching objectives of civil society” and simultaneously provided an opportunity for elements within it to take advantage of the political disorder (ibid). Politicians, anxious to take control of the state and oil wealth, thus sought to gain the backing of ethnic, religious and other sectarian identities through the exploitation of civil society groups. Ukiwo argues that mobilising communities in this manner was possible within a context of persistent mass poverty, increasing inequality and deep popular alienation (2003: 134). Thus, contrary to the expectation that a civilian administration would be accompanied by stability, the result has been an “unbridled competition for political relevance” (ibid) and an “explosion of violent ethno-religious and communal conflicts” (ibid: 115). In a context of formal institutional turmoil and continued popular alienation then, Nigerian civil society has been vulnerable to loss of direction and political capture. Whilst there is a wealth and diversity of groups, many pursue parochial (often ethnic or sectional) agendas, sometimes through violent means.

The degeneration of parts of Nigerian civil society into an arena for ethnic, religious and sectarian mobilisation—and the proliferation of violent actors in the Niger Delta—has occurred despite Shell’s so-called ‘Transformation’ into a socially responsible company. In consequence, many analysts have devoted greater attention to ‘internal’ conflicts. The image of the TNOCs has improved since the late 1990s because the region is now understood as a difficult operating environment in which the oil companies are largely an external actor. Yet in a context where ‘civil society’ harbours parochial and violent interests, one might question how Shell’s policies of ‘partnership’ and ‘dialogue’ have impacted on the region. Does engaging with civil society necessarily equate to the beneficial outcomes taken for granted in much of the CSR literature? Who is being empowered through Shells policies?

The underlying logic which has motivated Shell to adopt CSR is commercial; the company aims to smooth relations with Delta communities in order to enable oil production and build its international brand value. Whilst relatively standard projects (for example, the donation of mosquito nets) enable glossy publicity brochures, such measures are unlikely to placate many of the restive militias attacking Shell’s facilities. The company’s CSR strategy is thus based on a paradox: whilst seeking to generate a license to operate by delivering ‘development’ and promoting cultures of respect and civil discussion, Shell is primarily concerned with those actors which pose a tangible threat to its interests, and for whom ‘development’ may not be the ultimate goal. This is not to say that all of Shell’s CSR work in the region is ill-conceived or ineffective, but rather that the company must—by the logic of its own motivations—engage not only (or even predominantly) with ‘civil’ elements of society. In the words of one Shell worker, “you pay whomever you have to pay. That’s just the way it is” (p.10). The location of Shell’s priorities is perhaps most clearly seen when the US$60 million the company spends per year on community development is compared to the money reserved for pacifying local militias. Watts asserts that it amounts to “at least double that figure” and may be as high as “US$200 million per annum” or “10% of the operating budget”. Abubakar Yar’Adua, head of the Nigerian National Petroleum Corporation (NNPC), recently seemed to acknowledge that such practices continue.

Shell’s concern with powerful and potentially disruptive actors has meant that some communities—or parts of communities—have been able to demand ‘partnership’ and ‘engagement’ from the company, whilst others have been left with nothing. By (wittingly or unwittingly) paying local militias, Shell’s security strategy has encouraged the cementation of identity along ethnic lines, feeding into a horrifying series of conflicts. Simultaneously, through their partnership with the company, youth militias have been empowered to assert themselves violently as alternative local elites – women and elders have been all but elbowed out of the public arena. Through its engagement and partnership with violent groups, the company has legitimised a lifestyle founded on high stakes rentier extortion and violent opposition to the TNOCs. Shell’s interventions into the complex societal politics of the Niger Delta appear to have further eroded the security environment for its business operations as well as the stability of civil society. Extracting itself from this spiralling regime of conflict will not be an easy task. 

References Cited:

Ikelegbe, Augustine (2001a) ‘The perverse manifestation of civil society: evidence from Nigeria’, The Journal of Modern African Studies, Vol. 39, No. 1, pp. 1-24

Ite, Uwem (2006) ‘Changing Times and Strategies: Shell’s Contribution to Sustainable Community Development in the Niger Delta, Nigeria’, Sustainable Development, Vol. 15, pp.1-14

Ukiwo, Ukoha (2003), ‘Politics, Ethno-Religious Conflicts and Democratic Consolidation in Nigeria’, Journal of Modern African Studies, Vol. 41, No. 1, pp.115-138.

WattsMichael (2005) ‘Righteous Oil? Human Rights, the Oil Complex and Corporate Social Responsibility’,Annual Review of Environment and Resources, Vol. 30, pp.373-401 

Adam Groves is a Masters Student at Oxford University.

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