It seems like every other little hiccup in the price of oil is blamed on sabotage in the Niger Delta. The region produces 1.5-2.5mn barrels of oil per day, depending on how active the militant activity in the region is at any given time. At the end of June however, Nigerian President Umaru Yar’Adua (local nickname: Baba Go-Slow) announced the government would be implementing a complete amnesty for militants in the Niger Delta who hand over their weapons and renounce violence. The government has also promised to find participants jobs, or to at least give them professional training. Signalling its optimism about the plan, the government has set up 15 amnesty camps throughout the region and expects up to 20,000 people to participate. At the same time, the offer of amnesty follows closely the government’s hardest military crackdown on the militants in a decade, implicitly signalling a new resolve to make life tough for militants if they balk at the offer. Finally, the government has stated that the amnesty will even apply to the captured leader of the most prominent militant group, MEND, a key demand of the group.

So then, will wire reporters now need to find a new throw-away line to explain daily movements in oil’s price?

Don’t bet on it.

First, consider MEND’s seven-part response to the offer.

1 – Blow up a well-head in a Royal Dutch Shell oil field

2 – Attack a Shell oil facility (temporarily shutting down 50% of Nigeria’s oil output)

3 – Attack another Shell well-head

4 – Kidnap six crew from a chemical tanker

5 – Sabotage oil pipelines owned by Shell and Agip

6 – Wait for a Chevron oil pipeline to be repaired… then attack it

7 – Set on fire a loading dock for oil tankers in the commercial capital of Lagos

In case there was any confusion, MEND also stated it would continue its attacks even if it begins peace talks with the government (which it has not).

Then of course, there is the fact that the amnesty does not address the ideological motivation for militancy, which spawned and may still motivate a significant portion of the militants – MEND’s comments have centred on the amnesty’s failure to address the issues it says it is fighting for (a higher share of oil wealth for economic development of the region, end to oil-related pollution of the area, etc.). Also, the problem that providing jobs and professional training for militants who accept the offer will be easier said then done, given the high incidence of youth unemployment. Oh yeah, and also that the militants don’t trust the government very much, because it offered another amnesty in 2004, only to arrest one of the participants (though he was later released). And also that the militias are highly fragmented and it is unlikely they would unanimously accept the offer.

In my opinion though, most important of all is the presence of easily obtained oil amidst poverty and corruption. Whether by tapping into hundreds of miles of unprotected oil pipelines, loading into secret compartments in otherwise legitimate boats, or forging trade documents, anywhere from 20,000 to 500,000 barrels of oil are stolen each day, worth US$1mn to US$25mn per day at US$50.00/bbl. Amidst widespread poverty (despite oil wealth, the majority of Nigerians live on less than US$2 per day), this relatively easy access to wealth has led to the development of a massive criminal enterprise, worth millions of US dollars per day, and requiring a host of participants, from corrupt officials, to engineers, to protection forces. The wealth flowing to the leaders of this illegal enterprise is a huge incentive to keep the trade going, despite the threat of military strikes or the lure of amnesty, and gives these leaders substantial means to lobby the government, bribe the military or arm the militants. Compounding the issue is the impact oil wealth has on the political system, with corrupt officials vying for or holding onto office with oil wealth (legally or illegally obtained) and the hiring of unemployed youth to form political gangs. The amnesty offer has little to entice corrupt officials from continuing these practices either.

But hey, it’s easy to be critical of the responses to really hard problems, and Risk Watchdog is not all about negativity.  Plenty of other, more developed, countries have had a hard time putting down armed resistance that knows the territory. So, on the positive side, I should point out that this is a pretty bold policy move for the Nigerian government, and while I don’t think it’s going to lead to the end of instability in the region, it could play a role in a wider strategy that eventually does.