But now the former number two at the U.S. Defence Department has decided that Chad, which threatened to halt its oil exports if the World Bank continued its aggressive posture, was not so wayward after all.
Late last month, Wolfowitz backed down from his earlier decision to suspend loan disbursements to the government, three days before a deadline set by Chad to start freezing oil exports.
The World Bank said that it reached an interim agreement with the regime of Pres. Idriss Deby that would allow the resumption of disbursements of certain loans to help the government fund education, health, community development, HIV/AIDS programmes, and agriculture, electricity, water and infrastructure.
In announcing the decision, Wolfowitz cited "serious gaps" in meeting urgent needs and the management of resources.
A risig rebel movement
But many analysts say that the World Bank was forced to reverse its course as part of a concerted Western effort to bolster the government in the face of a rising rebel movement that is reportedly supported by the not so Western-friendly government of neighbouring Sudan.
- A new regime a la Sudan in Chad would penalise Western oil firms
Sudan has involved China, rather than Western corporations, in exploiting its oil fields and a new regime a la Sudan in Chad would jeopardise the Chad-Cameroon pipeline and penalise Western oil firms with investments there.
This means that a change of regime could lead to the loss of access to whatever little oil Chad produces, against a backdrop of a tightening oil market and skyrocketing prices, analysts say.
"Deby has the World Bank over a barrel, literally," said Daphne Wysham, a fellow with the Washington-based Institute for Policy Studies.
"He is calling the shots now. Given the volatility of oil prices due to other things at play in oil markets... we are much more vulnerable to supply disruptions which Deby threatened," she said.
Another bargainig chip
Chad became an oil-producing country in 2003 and now exports a meagre 180,000 to 200,000 barrels per day — an amount not to be sneezed at, however, since gasoline prices in the United States, the world’s largest oil consumer, have shot up upwards of three dollars per gallon.
"This (much oil) is nothing in some senses but because we are so close to the margin, Deby is able to pull the strings and get the attention of world leaders," added Wysham.
Chad has another bargaining chip with the World Bank, itself a major investor in extractive industries like oil, gas and mining. It stands to produce much more oil as the U.S. giant ExxonMobil carries out further exploration. The Chad-Cameroon oil development and pipeline project is the largest private investment project in Africa.
Losing such a potential is a risky business now. In mid-April, rebels launched a daring attack on the capital, N’Djamena, coming within a few kilometres of parliament and the presidential palace, a development that has clearly put all other concerns in energy-hungry Western capitals aside, including poverty alleviation at the Washington-based World Bank.
Bank watchdog groups note that the original reasons for suspending loans to Chad and freezing the oil revenues in an escrow account have not actually changed.
"Arguably, the politico-military crisis in Chad today is even direr than it was in January, increasing the likelihood that oil money will be used for weapons," said a statement by the Bank Information Centre, a Washington-based group that monitors the World Bank.
In fact, there is no greater guarantee today that oil revenues will be used to benefit the poor than there was the day that the Bank suspended lending in January, observers say.
"There’s absolutely no indication that anything in Chad changed," said Korinna Horta, a senior economist with Environmental Defence and a long-time observer of Chadian politics.
"By resuming lending to Deby, he has a free hand now. You give him access to these funds and suddenly you believe he cares about poverty? He never cared about it. Why should he suddenly care?" she asked.
Horta cited Wednesday’s presidential elections and the fact that they were successfully boycotted by opposition groups and largely ignored by Chadians upset at corruption and mismanagement under Deby, who has been in office for the past 16 years.
Even in terms of corruption, Chad still tops Transparency International’s annual index of the world’s most corrupt governments.
The political message in the World Bank’s reversal of position can be further discerned given the clamouring from both France, the main power broker in the African nation, and the United States to support the regime there.
The coup attempt against the Chadian regime Déby on Apr. 13 was reportedly thwarted by 1,300 French troops now stationed in the country, concerned that power should not be transferred to rebels secretly backed by Sudan.
The World Bank, which was created in 1944 by victors in World War II, has a history of toeing the lines drawn by the Group of Seven most industrialised nations, which include Britain, France and the United States. The latest episode with Chad is another example.
"For the World Bank it makes sense that they would have to defend the man who is the one they have negotiated this pipeline deal with, and they have no idea who the next leader will be and there’s all sorts of instability there right now," Wysham said.
"Deby may be a dictator and a monster but at least they know how to deal with him to a degree, and that maybe what is at play here," she added.