BP support for Mubarak dictatorship revealed
This post by Mika Minio-Paluello first appeared on his blog over at PLATFORM, who have recently joined twitter
The millions on the streets of Cairo, Alexandria and Suez are furious at Mubarak for upholding his own interests and those of Western powers and foreign companies at the expense of the Egyptian people. For decades, British and American oil companies worked hand in glove with the Egyptian dictatorship, enjoying its “stability” (lack of democratic change), “security” (repression of dissent) and “favourable business environment” (neoliberal policies and restrictions on trade unions).
Since Egypt’s first oil field at Gemsa came into production in 1910, the country’s resources have been dominated by London-based corporations. Back in the early 20th century, Anglo-Egyptian Oilfields – a joint venture of present-day BP and Shell – was the major operator in the country. A century later, vast chunks of the Gulf of Suez, Western Desert and Nile Delta remain long-term concessions granted to the same two companies, plus Reading-based BG.
BP is particularly proud of its “strong relationships with the Egyptian government”, boasting that it is the single largest foreign investor in the country and responsible for almost half of Egypt’s entire oil production, easily overshadowing all competitors. Describing itself as a significant part of the Egyptian oil industry for more than 45 years, the company witnessed Hosni Mubarak’s rise to power as Head of the Air Force and then Vice-President under Anwar Sadat, before he gained complete control in 1982. BP continued to extract crude and underwrite repression throughout more than four decades of Emergency Law, investing over $17 billion in oil rigs and pipelines. Billions of dollars in revenue payments enabled Mubarak to build up and arm both his civil and paramilitary police forces and the army.
In exchange, the regime ensured that its Western corporate allies profited handsomely over the years. Privatisation and reduced state involvement in the economy during the 1990s pleased the IMF, made billions for Mubarak’s associates and increased incentives to Western oil companies. Exploration and production concessions were made yet more profitable, with increased cost recovery allowances, larger blocks and longer license periods.
In parallel, harsh restrictions on freedom of expression, social movements and civil society reduced space for Egyptians to raise environmental concerns. In this context, BP has continued to drill new wells in the coral-rich but threatened Red Sea, including in its North Shadwan concession near the SS Thistlegorm, a British armed Merchant Navy ship sunk in 1940. Expanded oil extraction in these waters threatens the Egyptian tourist industry in Hurghada and the Sinai, especially after a major oil spill in June 2010. The Ministry of Petroleum, praised by BP, attempted to cover up the leak by claiming it was caused by a passing tanker discharging ballast.
With such limited environmental oversight, BP has been eager to drive ahead with new prospects, “drilling to reach reservoir technical limits”. The company aims to create “a new profit centre” in the Nile Delta offshore region by introducing its deepwater ‘expertise’ from the Gulf of Mexico.
By investing $1 billion a year into the country and making Egypt one of its 14 global Strategic Performance Units, BP emphasized the faith it places in its relationship with Mubarak’s government. Hesham Mekawi, Chairman of BP Egypt, has lauded “the stability of the country”, insisting that British oil investors will have a sustainable business in Egypt for years to come. When the regime felt threatened only months ago by a potential US Congress resolution demanding that Mubarak “hold fair elections, allow international monitoring of elections, and respect democracy and human rights”, BP allowed the American Chamber of Commerce in Egypt, in which it is one of the primary players, to lobby hard and successfully to scupper the debate in Congress.
The company that brands itself with green images of sustainability and responsibility has taken a simple approach to CSR in Egypt: Providing a handful of scholarships to Cambridge each year alongside continued support for the dictatorship.
So now that we’re witnessing a vast popular uprising across Egypt, has BP ended its allegiance and support for the dictatorship? The company’s website carries no comment on the democratic protests or the regime’s attempts at repression, referring only to “the ongoing unrest in Egypt” and evacuation plans. Meanwhile, drilling and extraction operations continue unabated, with most oil facilities located out of reach of normal street protests. BP is assuming that Egypt’s strong army will guarantee the security integrity its assets, and continues to pay revenues to and underwrite a regime now widely accepted as illegitimate.
Demands from the democracy activists sweeping Egypt include “Putting on trial all those responsible for the policies of impoverishment and torture”. Will BP Egypt Chairman Hesham Mekawi and BP ex-CEO Tony Hayward answer for their part in enabling and supporting Mubarak’s repression? Or will the company’s faith in strongman politics be rewarded with Mubarak’s survival or relative continuity through a military takeover?
Leave a Reply