UK aid money is creating an 'oil curse' for developing economies, according to a new report from Plan B. 'Pumping Poverty: Britain’s Department for International Development and the oil industry' (17 March, 2005). The report finds that taxpayers' money is being spent on supporting energy projects which benefit UK and US oil companies, but do little to help the countries where they are based. The research shows that the Department for International Development's (DFID's) policies on oil development are incoherent, fail the very people they are designed to help, and compromise the department’s mandate for poverty alleviation, undermining the aims of the Millennium Development Goals and further undermining UK efforts to fight climate change.

Specifically the report highlights the 'oil curse' which often accompanies the discovery of oil in a developing country. At a local level, oil production can have an adverse effect on local communities, with pollution affecting water supplies, farm land and air quality. Nationally, the discovery of oil can harm the economy, with investment in oil undermining other sectors, disrupting growth and potentially weakening democracy.

The report points to DFID’s continued support for fossil fuels through direct grants and the approval of loans to massive oil projects, such as the Chad-Cameroon pipeline. The use of development aid to support such projects distorts the energy market in favour of oil. The report argues that in order to prevent catastrophic climate change, such hidden subsidies need to end. The report also questions DFID’s role as a partner in maintaining UK energy security, which leads to the use of development aid to support the goals of the UK’s oil industry, and is explicitly aimed at enhancing the UK economy rather than alleviating povertymaximising poverty alleviation in developing countries. The use of African oil is expected to increase over coming years.

Friends of the Earth Oil Campaigner Nick Rau said:

"The Department for International Development was set up to alleviate poverty, yet our research shows that it is using taxpayers’ money to fund oil and gas projects which boost oil company profits, but do little for the communities it is supposed to help. Oil is a curse not a blessing for too many countries in the developing world."

Lorne Stockman, co-author of the report said:

"DFID needs to take a close look at the role of energy in achieving the Millennium Development Goals. Oil development has failed the poor and will further undermine development through climate change."

The report and summary are available online on www.planb.org

Take action – write to your MP

Since its launch on February 3rd, Early Day Motion 650 (Development Aid for Oil) has been signed by over 92 MPs. The EDM calls on the government to end support for harmful fossil fuel subsidies given through international institutions like the World Bank, and instead pioneer investment in sustainable energy. We are aiming for 150 signatures by 8 April (as after a general election is announced MPs can’t sign EDMs). There's an online action on: www.foe.co.uk/campaigns/corporates/press_for_change/oil_edm/index.html
or www.planb.org .You can see whether your MP has signed by looking at http://edm.ais.co.uk and following the links to view the EDMs.

For further information about the report and the EDM, please contact Jo Hamilton: jo@planb.org or tel 01865 241097.