Nigeria Role In International Organization: A Case Study Of OPEC

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Nigeria Role In International Organization: A Case Study Of OPEC


Abstract


Nigeria as one of the major oil producing country is also one of the eleven members of Oil Producing Exporting Countries(OPEC) formed in 1960 to regulate production and supply of crude oil in the international oil market.
Nigeria’s membership in OPEC since 1971 has generated huge foreign capital through oil supply and has not conferred on her automatic economic benefits rather has been met with several fiscal measures such as SAP to reduce the problem of hyper inflation etc. on the other hand, it has promoted corruption, crime, mono economy and social unrest among others.

In spite of this negative impacts recorded, however, it has also been associated with positive records. It is against this background that an evaluation of cost and benefit of Nigeria’s membership in OPEC is carried out since her membership.

In view of this, most literatures reviewed are secondary data and the internet so as to help the researcher to making rational judgments to situate the subject into proper analysis.

The findings therein are therefore recorded for student and policy makers to help make a good judgment of Nigeria’s prospect and challenges as a member of OPEC.


Chapter One


Introduction

1.1 Background Of The Study

Nigeria is regarded as the most populous country in Africa, with the population of approximately 140 million. This is perhaps the reason the country is pride itself as the giant of Africa1. Nigeria shares land boundaries with the Republic of Benin in the West, Cameroon to the East, Republic of Niger to the South and Chad Republic in the south-East

Nigeria became a political independence in 1960. Since then she adopted foreign policy posture which emphasizes the country’s national interest over which a national consensus has clearly emerged. With the attainment of independence, the country began to take its rightful position in the international politics. Nigeria has exhibited profound interest in the economic development of Africa states and contributed quotally for the consolidation of universal peace, mutual respect among all nations and elimination of discrimination in all its manifestations. Especially its closest neighbours of the west African sub region.2.

The primary objective of Nigeria foreign policy like other countries is to promote and protect the country’s national interest in its interaction with outside world. Nigeria’s involvement and membership of international organization with of course most relevant to my discussion have be limited upon the examination of Nigeria’s role in international organization with particular emphases on OPEC.

Economic cooperation as it is provides fair opportunities for multi-lateral negotiation and collaboration among states and could be used to monitor types of value in the image of specific national preference3. Nigeria has sought membership in the UN, OAU, ECOWAS, before narrowing down with particular reference to OPEC. Nigeria had benefited immensely from United Nation programmes such as Millennium Development Goals, UNICEF, IMF and so on. Nigeria in spite of its relative level of development continuous to chair United Nation special organ for example toward the end of 2009 Nigeria was elected one of the member of the UN security council.

Nigeria’s role in the formation and survival of the Africa union cannot be over emphasizes in the transition from OAU to the Africa Union required 36thinstrument of ratification of the constitutive ACT of the Africa Union. On 26 April 2001 Nigeria became the 36th member state to deposit its instrument of ratification this concluded the requirement of two-thirds and the Act entered into force on 26th of May 2001.4

Technical Aid Corp (TAC) was form by Nigeria aim at ease movement of Nigerian professionals such as Teacher, lawyer, doctors, engineer etc to other countries who are in need. In December 1985 Nigeria proof effort to settle border conflict between Burkina Faso and the Republic of Mali. The treaty of ECOWAS was signed in Lagos on 28th may 1975.5 Nigeria commitment as regards to fratricidal war in Liberia was a stand of Article 52 of the UN charter providing for regional security .Nigeria also give a similar spirited defence to Sierra Leone .This was possible through ECOWAS monitoring Group ECOMOG established by General lbrahim Babaginda.

Organization of petroleum Exporting countries (OPEC) came of out of necessity as the international oil market was controlled by an oligopoly of several major international companies shell. Mobil Texaco .British petroleum Exxon and Gult. These companies were in position to dictated oil prices as they represented the supply side of oil OPEC was founded in 1960 by coming together of iran, Kuwait, Sauid –Arabia and Venezuela Nigeria became a member of OPEC in 1970

The treaty formally establishing OPEC was signed in Baghdad. Iraq with the primary objective of securing fair and stable prices of petroleum product.

OPEC had specialized agencies which includes the conference, board of governor, the secretariat and special economic commission.

The Conference:

The conference is the authoritative head of the OPEC, it meets at least twice a year to formulate policy and approve new appointment.

The Board Of Governors:

There is one governor to represent each member country the board implements the resolution made by the conference. They also meet twice yearly.

The Secretariat:

Is sub–divided into various department under the Secretary –General

  • Office of the secretary –General
  • Administration department
  • Information department
  • Economic department
  • Legal department
  • Technical department
  • Statistics unit
Special Economic Commission:

Special fund was established to benefit non-OPEC members to provide loan. The fund is administered by a governing committee with a chairman and director general


1.2 Statement Of Problem

The study aims at ascertaining Nigeria policy and role in OPEC as this would contributed to the existing literature on Nigeria role in OPEC. Efforts will be made to evaluate Nigeria policy role in terms of decision and moral contribution. Some scholars both within and without have been very critical about Nigeria performance and its benefits being a member of OPEC finally to x-ray the problems and prospects of the organization since its inception and recommendations


1.3 Conceptual Clarification

Organization:

Organization refers to any group of persons coming together for specific purpose. This could be political cultural religions as well as economic oriented. Organization aim at providing interest protection for its member.

Petroleum:

Petroleum is regarded as the mineral got from the earth beneath containing gas fuel and other chemical substances.

Role:

This refer to a part played by an actor. It involve Nigeria commitment and active participation toward the success of OPEC


1.4 Methodology

The information will be derives from secondary data, relevant literature on foreign policy and federal government pronouncement on the subject. I will also make use of the few available annual volumes of bulletin journals of foreign affairs published by Nigeria institute of external affairs and official bulletin of OPEC this research work will also gather information from papers and articles written by eminent scholars on the topic in addition I will also make use of relevant articles and periodicals like the local and international magazines, internet sources and international media home like CNN, press TV, BBC and so on.


1.5 Theoretical Frame-Work

A theoretical frame- work renders a research work to be more structure. It serve as a way through which political phenomenon can be analyzed.

In the course of this research, the general system theories will be use to explain Nigeria role in OPEC.

System theory is probably the most widely used term in international relations. It is assumed that all existing political units interact with one another according to some regular and observable partner of relationship6. The system theory emphasizes the inter-dependence of all the sub-system or units within a system in their inter-locking relation. In the game of international politics, each state in the system is the guardian of its own security and independence.

According to David Easton, the state is a system consisting of interdependent part which interact with one another in order to perform a function.

Demands from the environment undergone a conversion process with the political system and come out as output, which are usually authoritative decision. It is noted that the reaction of the people form support and protest to the policy makers as a feedback.

David Easton (1953) Gabriel Almond and Bungham Powel (1966) and Robert Dahl (1970) were among the early proponents who have also led the way of applying the general system theory to explain the political system as comprising sub-system7.

In applying the general system theory to the study, OPEC is regarded as the general system while Nigeria role as a sub-system. The indication represent the relationship a sub system and a general system.

OPEC in general has a set of goals to pursue in which Nigeria as a unit is expected to perform her role in relationship with the general system for mutual benefit.

These goals may include coordination and unifying petroleum politics among member states in order to secure stable prices, securing common petroleum policy among member states, to allocate production level and to aid poor non-oil-producing countries.


1.6 Hypothesis

In order to establish the borders around which this research work is centered, the following operational hypothesis were developed and tested.

Ho: That Nigeria has made meaningful contribution to the organization of petroleum exporting countries

Hi: That Nigeria is in weak position in the OPEC


1.7 Objective Of The Study

The basic objective of this research includes:

  1. To examine the conditions that necessitate the formation of organization of petroleum exporting countries OPEC in connection with the security of good and stable price of oil.
  2. To examine the relationship between demand and supply and crude oil products
  3. To recommend the appropriate policies and strategies to streamline price and production level of the petroleum resources
  4. To examine the problems and challenges facing Nigeria as a member of OPEC.

1.8 Scope Of The Study

The scope of this research will cover the organizational structure of the OPEC which includes OPEC conference, board of governors, the secretariat and special economic commission.

The following variable will be considered.

  1. Historical development
  2. Management and organizational structure
  3. Administrative function
  4. Problem encountered

The research is centered to cover the inception of OPEC in 1960 to present date.


Chapter Five


Summary, Conclusion And Recommendation

5.1 Introduction

This work summarizes the research work; it proffers solution on how Nigeria could manage the cost and maximize the benefit there in for her membership in the organization.


5.2 Summary

The work so farhas been able to study OPEC as an organization from its formation, objectives and activities since 1960 through 1971 when Nigeria became a member. However from this period till date Nigeria has generated huge sums of foreign reserves that has not transform the economy but rather breeds crops of corrupt politicians who has mismanaged the economy there by subjecting the country into untold hardship, characterized by high crime rate unemployment, inflation, swollen bureaucracy, balance of payment deficits, neglect of the agricultural sector and over-dependence on oil etc.

In view of the unfolding event in Nigeria’s membership in OPEC since 1971 till date; it is enough to call the shot by pullingout going by the comparison of cost and benefit of her membership. But rather than pulling out as suggested by certain persons, we have forgotten the prospects there in for her, as everything good in life is based on planning and prediction. For example the gas development project between the two OPEC members “Nigeria and Algeria” through the West Africa pipeline system is an opportunity to launch her into the new global market as most developed countries are craving for an alternative source of energy.

More so her membership in OPEC gave her a unique voice among committee of nations therefore boosting her international image.

Through this, she was able to achieve what she alone cannot achieve especially in areas of determining international oil price and production quota.

The research also analyzes graphically the facts and figures of Nigeria membership in OPEC. From the analysis, we were able to review some scholars’ perception on the membership in OPEC. Some were of the opinion that Nigeria has not gained tremendously from the organization and so does not necessarily have to opt out. But with adequate planning and predictions in respect to socio economic adjustment would reap the benefits as a member of OPEC.
However, some have continue to dwell on the negative side of her membership which was majorly based on years of military mismanagement, misgovernance and faulty sharing of the oil revenue which often have generated a lot of controversy especially in the Niger delta region where oil is produced.


5.3 Conclusion,

Though Nigeria has encountered several hiccups nonetheless her membership has boosted the image of the country as being one of the 11 member countries regulating the prices and supply of crude oil hence giving her an edge over other countries in the West Africa sub region, particularly in the struggle for a permanent seat in United Nations.
More so her membership has enhanced partnership in the area of gas development projects which will boost the prospects for the markets growth of the economy particularly the gas sector.

However, going by the structural problems faced in the economy certain recommendations are given which I believe would be of enormous importance if strictly adhered to.


5.3 Recommendations

These recommendations are given to enable Nigeria re-evaluate the cost and benefits of her OPEC membership and strategically positioned her to reap the benefits of her membership. This solution is centered on Nigeria government and internal value system which are as follows.

  1. Nigeria government should divest her economy into more profitable ventures like agriculture, gas project and develop tourism as this would reduce the burden on oil and boost her economy with attendant issues like unemployment, high rate of crime.
  2. Most particularly proceeds from oil should be judiciously managed and re- invested into the economy rather than just spending it on importations of finished items into the county. In view of this the revenue sharing formula should be revised to maximize the contradictions it has generated overtime in the country between different entities in the society.
  3. Stringent fiscal measures should be adopted by the apex bank in line with international financial institutions like IMF, world bank etc to help manage and stabilize the economy from inflation and also counsel the government on what best policy to adopt to help check against balance of payment deficits. etc.
  4. Most importantly, Nigeria should remain focused in OPEC while she tries to restructure her domestic market and look for possible avenue where member countries could partner and be of benefits to one another. For example the gas project development between Algeria and Nigeria remains a laudable one
  5. The government should give adequate concentration to the‘ goose that lays the egg’ Niger delta. The region should be well catered for in areas of infrastructure, health and employment. So as to discourage attack on oil installation and kidnap of expatriate by the local community; this has invariably disrupted production of about 60,000 bpd thereby pushing up international oil price. See New Nigeria, 2006.
  6. In view of the Arab revolution in the contemporary world, there is no fear that the world will run short of energy in the foreseeable futures oil will continue to contribute substantially, in absolute terms, to primary energy and it may even increase its percentage share. The opportunities for Nigeria are obvious.
  7. The country should be poised to play its proper role in meeting world demand for crude oil and gas and their derivative so as to increase her export earning share.

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