Equatorial Guinea

THE REPUBLIC OF EQUATORIAL Guinea is a small country in western Africa with substantial poverty, despite significant deposits of oil and natural gas. Most analysts blame the poor social conditions on the corrupt leadership of President Teodoro Obiang Nguema Mbasogo, who gained control of the country in a 1979 military coup d’etat, which overthrew, tried, and executed his uncle, President Francisco Macas Nguema.

Francisco Nguema had ruled Equatorial Guinea since it gained independence from Spain in 1968. Widespread human rights abuses throughout the 1970s caused a third of the country's population to flee. Amnesty International and other organizations claim that human rights abuses and suppression of political opposition continue under the current leader.

Equatorial Guinea is composed of a small area on the western coast of Africa between Cameroon and Gabon, and five inhabited islands. The largest island, Bioko, contains the Equatorial Guinean capital, Malabo. Equatorial Guinea officially has been a constitutional democracy since 1991. Subsequent legislative and presidential elections are widely regarded as fraudulent, however.

Traditional sources of income in Equatorial Guinea are farming, fishing, and forestry. The economic prospects of Equatorial Guinea improved dramatically in 1996 when large oil reserves were found off Bioko's coast. The outlook improved further in 2001 when sizable natural gas reserves were discovered. Equatorial Guinea is now the third largest African oil producer after Nigeria and Angola. In spite of dramatic increases in economic growth and per capita Gross Domestic Product, very few Equatorial Guineans have benefited from the improved economy. Subsistence farming remains the predominant economic activity. Approximately 90 percent of Equatorial Guinea's population continue to live in abject poverty.

A 2004 report by the U.S. Senate Permanent Subcommittee on Investigations revealed that hundreds of millions of dollars of oil industry revenues were deposited into American bank accounts controlled by President Obiang Nguema Mbasogo or his relatives and friends. According to the report, between 1995 and 2004, Riggs Bank, based in Washington, D.C., oversaw about 60 government and private Equatorial Guinean accounts worth $700 million.

Riggs Bank officials allegedly assisted in channeling much of this money into offshore tax shelters for President Obiang Nguema Mbasogo, other government officials, and their families. Riggs Bank was fined a record $25 million in 2004 for failing to report the suspicious activity. President Obiang Nguema Mbasogo claims that oil revenues are a state secret and has refused repeated requests for financial transparency in its oil industry. He denies any wrongdoing.

Though offshore oil has improved prospects, very few Equatorial Guineans have benefited from the improved economy.

The United Nations claims 80 percent of the wealth in Equatorial Guinea is controlled by five percent of the country's population. Thus, approximately 25,000 people control the wealth for a country of more than 500,000 people. A significant part of the explanation is that most of the country's businesses are owned and controlled by government officials and members of their families.

Reports suggest that very little of Equatorial Guinea's newfound wealth has been spent on social programs or economic development. Schools and hospitals are generally underfunded or nonexistent. Corruption and mismanagement by Equatorial Guinean leaders have led to the elimination of many [Page 320]international aid programs. The country's large oil revenues also have made it ineligible for World Bank and International Monetary Fund (IMF) financing and debt reduction programs.

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