FRED DE SAM LAZARO: Among the world's poorest nations, Chad is just about the poorest.
Its per capita income is $200 a year is less than half Haiti's, for example.
For years, rival warlords, some backed by neighboring Libya, have fought for control of this vast land-locked nation, which has survived largely through international development aid.
FRED DE SAM LAZARO: All that could soon change. Chad is the site of one of Africa's largest building projects: a $3.7 billion pipeline that will vault the country of 7 million into the club of oil exporters.
A consortium of oil companies, managed by Exxon Mobil, is laying 650 miles of steel pipe. It will carry a quarter million barrels of oil a day from southern Chad, through neighboring Cameroon to the Atlantic.
Andre Medoc is an executive with the Exxon Mobil, which is called Esso here.
ANDRE MEDOC, Exxon Mobil: Basically we hope and of course the Chad government administration and people hope that we can move from this project from basically the pre-industrial era to the 21st century.
FRED DE SAM LAZARO: The pipeline has presented Chad a unique opportunity to use its natural resources to benefit all its people.
That's not often been the case in resource-rich nations in Africa.
For example the oil industry in Chad's neighbor, Nigeria, has been plagued by environmental mishaps. There are widespread allegations of corruption. The oil companies have been criticized by human rights group and some non-governmental organizations for focusing solely on their profits, as life for ordinary Nigerians became increasingly miserable.
Nigeria's gross national product, for example, has nose-dived to about a third of what it was 20 years ago.
Chad's president, Idriss Deby, says African governments and western donors share the blame.
PRESIDENT IDRISS DEBY (Translated): If we in Africa have over the last 30 years completely missed our development opportunities and, if, as the West has alleged, we are bad managers or corrupt, then we share responsibility with the West.
If we are corrupt, then you are the corrupters. We were partners in responsibility.
FRED DE SAM LAZARO: But this time, in Chad, donor nations, Exxon Mobil and Chad's government vow things will be different.
To begin, the oil consortium asked the World Bank to come in as a moral guarantor, to insure that the project helps reduce poverty.
Gregor Binkert is the bank's Chad director.
GREGOR BINKERT, World Bank: The oil companies, of course, have learned from some of their -- you could call them public relations disasters in other countries in which they were somehow implicated or government officials were implicated and it is a new way of thinking on their part.
FRED DE SAM LAZARO: The World Bank itself has been criticized, by members of Congress among others, for financing questionable projects.
So when it was invited to Chad, the bank invested millions to create democratic and transparent institutions, whose accounts, for example, can be publicly audited.
It also attached strings. Exxon had to sign on to an environmental protection plan. And the government had to pass a law setting priorities for spending its windfall, outlined by Petroleum Director Mahamat Hassane.
MAHAMAT HASSANE, Petroleum Director: You know, in the law we have defined some sectors that we call the prior sector, the educational sector, health sector, environment sector, drinkable water sector and infrastructure.
FRED DE SAM LAZARO: A committee that will be drawn from government, the supreme court and civil society will allocate the money. And oil revenues will go directly to escrow accounts in Europe.
FRED DE SAM LAZARO: It is an historic government concession, according Donald Norland, a former U.S. envoy to Chad
DONALD NORLAND, Former U.S. envoy to Chad: It is an infringement on the sovereignty of a newly independent African country. Can you imagine yourself having a major account in the bank but unable to write a check on that bank? Someone else is going to have to give you permission to get at your own money…
FRED DE SAM LAZARO: Norland says worsening conditions left the government few options but to allow foreigners in to look over its shoulder
FRED DE SAM LAZARO: Chad's president, Deby, a former warlord who rose to power 10 years ago, is philosophical on the sovereignty issue.
PRESIDENT IDRISS DEBY: The world has become a village. It's all a process of globalization and economics and politics and finance.
We voluntarily entered into this agreement because we wanted to make sure the petroleum resources, the money from the petroleum, is used for no other purpose than to combat the poverty of the Chadean people.
FRED DE SAM LAZARO: People in the path of the oil pipeline are being offered compensation by Exxon, or ESSO.
They can choose $1,000 in local currency, or they can opt for kind compensation and that would come from the ESSO catalog, which features everything from bicycles to sewing machines to fruit trees.
Absent banks or legal forms payment, payment is made in cash, and recorded on camera.
FRED DE SAM LAZARO: The process is fraught with complication and there's been especially strong criticism of programs that compensate communities near the pipeline
In a country where two out of three people can't read or write many villagers complained that the school they were promised is behind schedule. They also pleaded for a well; three of four Chadeans lack access to safe water.
Company officials also are deluged by job seekers. Exxon Mobil has been criticized for not employing enough local people, for flying in most supplies from Europe instead of seeking local partners.
Michael Didama is editor of the French language weekly, Le Temps'.
MICHAEL DIDAMA, Le Temps': I have seen the schools and dispensaries that they've built. They're just buildings, they're inadequate. They have to come into a community in a way that they're really integrated and do something that's useful in the society rather than just these token things.
FRED DE SAM LAZARO: Exxon Mobil's Medoc says the problem is understandable, but the people have unrealistic expectations.
ANDRE MEDOC: In the village here they don't have a water well, they don't have a school, they don't have a dispensary, they don't have anything.
So the expectations are very high in terms, for example, of employment also. Everybody would like to have a job on this project. And we need to explain to them that our role is basically to produce the oil that we have discovered in Chad. And we are not trying to substitute ourselves for the government.
FRED DE SAM LAZARO: But the government's own role has been questioned.
Editor Didama cited an example from two years ago, when the government received a $25 million advance or bonus from the oil consortium.
MICHAEL DIDAMA (translated): The government used the money to purchase arms. It could have used the money for many other things. We haven't got electricity, we don't have health services, we don't have schools.
There's no differences between what has happened in Nigeria and Angol and what's going to happen here.
FRED DE SAM LAZARO: But others, like U.S. Ambassador Christopher Goldthwaite, note the government did yield to pressure from western donors.
U.S. AMBASSADOR CHRISTOPHER GOLDTHWAIT: We, the WorldCom and others intervened, and focused attention on it -- the government froze the remainder of it. Certainly the fact that this occurred, the fact that that money disappeared before people knew what was happening, that does raise a red flag
PRESIDENT IDRISS DEBY (translated): Let me tell you one thing! I'm a nationalist. I love my country...I don't answer to anyone except the people of Chad who elected me
FRED DE SAM LAZARO: President Deby angrily defends his actions. The advance money was not part of the World Bank agreement, he notes, and was used for a legitimate national need.
PRESIDENT IDRISS DEBY: Chad was confronting a rebellion from the north; we needed the money for the army. So, I took the $3 million only to support to the army because I am not going to let our institutions be threatened. I need to have peace and stability to make this project a reality.
DONALD NORLAND: Deby regards this as his project; he desperately wants it to succeed. He wants this to be the Deby legacy.
FRED DE SAM LAZARO: Former Ambassador Norland says if successful, the project's benefits could be far reaching and even help the war on terrorism.
DONALD NORLAND: I see a successful anti-terrorism program as requiring a long-term dimension.
And I see this project as being a marvelous opportunity to raise standards of living of the people in a part of the world that risks one day -- maybe not next year -- maybe not the year after -- but one day it could descend into the same kind of a swamp that we find in parts of the world where there are foot soldiers being conditioned to take over and use violent means, anarchic means perhaps too, to change governments and to conduct jihads against enemies.
FRED DE SAM LAZARO: Chad's first oil revenues will begin flowing early in 2003.