The model fails to work in Chad, but still makes sense

ARTICLE: "World Bank Ends Effort To Help Chad Ease Poverty," by Lydia Polgreen, New York Times, 11 September 2008, p. A12.

Simple idea: Chad has struck gold, and per reality, this "poor mountaineer" doesn't possess the counterparty capacity to deal with this new-found wealth, the cynical (and often correct) assumption being that elites will siphon off the profits and not use them adequately to finance national economic development. So deal was, ExxonMobil and World Bank and Chad agree to put oil money into internationally credentialized/monitored/populated board that would determine how to us it for the benefit of the Chadian people. Naturally, Chad's government itself would participate, but the sense was, "You need adult supervision," so let's close this financial loop, making it transparent, and avoid the siphoning.

I praised the model in PNM.

It didn't take. Chad officials realized how much money was there and haven't lived up to their end of the bargain, so the WB pulls out its financing of a $4.2b pipeline.

This was basically an oil-for-infrastructure deal that attempted to hard-wire that deal with others that would build up Chad's larger infrastructure over time. Again, the goal was to create a closed-loop where money wouldn't disappear.

Paul Collier, in his Bottom Billion, likes this model enough to say it should and could be used for foreign aid (pretty sure it was him, but maybe it was Easterly in White Man's Burden [on healthcare aid?], or maybe it was both).

In the end, the goal is worthy and the model makes sense: monetize the oil in the ground for direct financing of infrastructure in order to avoid corruption entering into the equation somewhere along the line. WB and Exxon couldn't pull it off, but that doesn't mean others can't, assuming you're talking about a national leadership that really wants development versus one that simply wants to get rich.

In other words, don't throw the baby out with Chad's bathwater, because this model will work and already does work elsewhere.

The failures just get all the press--naturally.