Oil and Poverty Alleviation Don't Mix

The African nation of Chad has forced the World Bank to back down in a dispute that illustrates the problems with lending to poor nations for oil and gas production.

The dispute reached full boil in January when the World Bank decided, in a rare move for an organization that's reluctant to admit to anything ever going amiss with its lending, to suspend a controversial and historic loan it made to Chad. Then, in April, Chad's oil minister Hassan Nasser threatened to stop the 160,000 barrels a day flowing through its pipeline unless the Bank reversed its decision. With oil prices topping $75 a barrel at that time, and the World Bank apparently more accountable to its oil-hungry clients than to the poor in Chad, the World Bank was the first to blink.