Monday, November 09, 2009

it is never too late to MEND

This won't be a substantive post, but more a notice to myself to build one. A seriously under-reported story on the global guerrilla beat is that the Nigerian government has succeeded, at least for the moment, in either defeating the Niger Delta rebels or making deals with them.

It's worth rolling back a little; time was when they were roaring about the rivers of Rivers State in RIBs with three or four huge Evinrude outboards, assaulting oil installations and demanding money, following a strategy that was based on the current situation of the oil market, including things like the latest hurricane sweeping towards the Gulf of Mexico, refinery stock drawdown - essentially, they followed the market for oil like IPE traders in London. Their faceless spokesman operated from a Hotmail account and a PAYG GSM phone somewhere in South Africa, usually.

Everyone, especially J-Ro, reckoned they were our insurgent future. The lumbering energy infrastructure, supposedly, could never be defended from persistent but random disruption aimed at its key network nodes. They certainly were a guerrilla navy that was tactically and operationally very effective, and whose leaders were pursuing an intelligent strategy; their technology was obviously of the moment.

But what happened, then? A key element, of course, was the price of oil. However, the relationship between the Brent index and the violence in the Delta wasn't linear; as the price of oil rose, MEND was more able to cause trouble, but the Nigerian government and the oil companies had more money. They could spend it on soldiers, or on bribes. In the other direction, as the price of oil fell, the power of the insurgents to send bursts of panic into the market fell - but the Nigerian state would itself be weaker, and the pool of recruits wider.

Crucially, the demand for oil fell; this is possibly more important than its price. Here's me in August 2008 on this subject. As an oil-bombing insurgent, it's not so much the price that you're interested in as your ability to cause trouble. Much of the industrialised world has passed its peak demand for oil; the US may have done, or it may be the recession. We will only know in hindsight. This means that the oil market is structurally less sensitive.

This is, of course, less to the point if MEND was indeed a new kind of rebellion. I rather doubted this; it always struck me as a fight for a share of export revenues. Oil, as resources go, is remarkably suited to landlordism. Its extraction is capital-intensive, not labour intensive; much of the work is done by expatriate specialists. And, crucially, it helps to run an artificially high exchange rate, which is an excellent way for an elite to loot a country. As a robber elite, most of what you want in the way of goods are imported, and most of what you want in the way of the capital account is an export. You want to get your money out. This also tends to destroy local industries and favour importers; especially importers who need to get a licence from you.

This, and the back story of the rebellion, suggested that the main aim was what they said it was - to extract oil revenues from the Governor's gut. Unlike tension in the oil market, the money you raise from high oil prices can be stored for later use; the government deployed it this summer, both for force and for persuasion.

I hope this post can expand to take in more information; I'd like to know more about how it happened. I do know that some of the rebel leaders' men paraded through Port Harcourt getting drunk and shooting in the air before piling their rifles. But that's about it.

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