Aligning Incentives for Development: Lessons Learned from the Chad-Cameroon Oil Pipeline

Annalisa M. Leibold, Yale Law School

Abstract

In this paper I study the case of the Chad-Cameroon pipeline project and argue that, although the World Bank’s attempt to coordinate the project as a poverty reduction measure failed, the model itself is promising. The Bank could and should act as a third party in major resource projects to help increase the project’s impact on a host country’s long term development profile. I argue that under normal resource concession agreements conducted between profit-maximizing corporations and non-democratic host states, short term considerations will dominate and a portion of the population will not be represented. This prevents the project from fully contributing towards long term development in the host state. The World Bank could step in and correct this by building in mechanisms which force parties to consider long term development consequence; however, the Bank’s current narrow institutional approach prevents it from fully realizing its potential as a third party coordinator. I conclude by arguing that the Bank’s failure in the case of the Chad-Cameroon oil pipeline was one of institutional will. The World Bank should transform its institutional approach to development so that in the future it can act as a successful third party coordinator of development incentives in resource extraction projects.