-Arvind Ganesan is the Director of the Business and Human Rights Program at Human Rights Watch. The opinions expressed are his own.-

Equatorial Guinea is a tiny country of about half a million people on the west coast of Africa, but is the fourth-largest oil producer in sub-Saharan Africa.

Most of the investment in the country’s multi-billion dollar oil industry comes from the United States. ExxonMobil, Hess and Marathon are all there. Right now, the U.S. imports up to 100,000 barrels of oil a day from Equatorial Guinea, or about a quarter of the country’s oil production.

Oil money gives the country the means to be a model for development and human rights. The economy is nearly 130 times as big as it was when oil was discovered in 1995. But as a report released by Human Rights Watch today details, the government has squandered or stolen much of the money at the expense of its people.

It is a sad contrast, since the country has a per capita income comparable to Spain’s or Italy’s and development indicators more like Afghanistan’s. For just one sad example, infant and child mortality actually has increased — from an already-dismal 103 deaths per thousand in 1990 to 124 per thousand in 2007. Similarly, under-5 mortality rates increased from 170 per thousand in 1990 to 206 per thousand in 2007.

The president and his family are doing just fine, though. They lead lavish lifestyles while most people live in crushing poverty.

A series of corruption scandals involving government officials and their families will give you some idea of how bad it is.

In 2004, a U.S. Senate investigation into the country’s dealings with the now-defunct Riggs Bank detailed how President Teodoro Obiang Nguema Mbasogo used the country’s oil wealth to finance numerous personal transactions, including spending $3.8 million to buy two mansions in a suburb of Washington, D.C. That investigation led to one of the largest fines against a bank in U.S. history, and ultimately the bank’s takeover.

Obiang’s eldest son, Teodorin, bought a $35 million property in California in 2006. In 2004, he spent about $8.45 million for mansions and luxury cars in South Africa. His only known income was a $4,000 monthly salary as a government minister. His $43.45 million in spending on his lavish lifestyle from 2004 to 2006 was more than the $43 million the government spent on education in 2005.

The people of Equatorial Guinea have no way to hold their government accountable. Obiang has been in power since 1979, when he deposed his uncle in a coup. The government severely curtails press freedom and independent civil society, and the political opposition is weak and faces constant government harassment, intimidation, and arrests. In the most recent parliamentary elections in May 2008, Obiang and his allies won 99 out of 100 seats.

The government has joined the Extractive Industries Transparency Initiative (EITI), an effort to make natural resources benefit everyone by setting a global standard for openness in oil, gas, and mining. However, the government has been very slow to implement the initiative’s standards. The danger is that EITI may give the government a veneer of legitimacy even while it stifles its critics and opposes real scrutiny.

Perhaps the best prospect for reform lies with the Obama administration since most of the investment in Equatorial Guinea’s oil comes the US. There are in fact things the administration can do now to break the cycle of corruption in a place like Equatorial Guinea. It should hold the government accountable for human rights and insist that it rigorously enforce anti-corruption laws. Under the Bush administration, that did not happen.

The same month in 2006 that Obiang’s son bought a $35 million Malibu mansion, Secretary of State Condoleezza Rice met with Obiang in Washington and called him “a good friend” at a news conference.

Unless the Obama administration makes it clear to Equatorial Guinea’s leaders that they must share the oil wealth with the country’s people , the human cost of the oil that the US imports from that country will continue to be staggering.

---Bernd Debusmann is a Reuters columnist. The opinions expressed are his own.---

Ringing words, smoothly delivered: "To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist."

Did that memorable line from President Barack Obama's inaugural address on January 20 mean his administration would break with a long American tradition of paying lip service to democracy and human rights while supporting authoritarian rulers friendly to Washington? Too early to say for sure, but probably not.

Four months into his presidency, Obama and his Secretary of State, Hillary Clinton, lean towards pragmatism over ideology and principle, closer in foreign policy outlook to Richard Nixon and Henry Kissinger than to George W. Bush and Condoleezza Rice.

On her first official visit to China, Clinton said concern over human rights must not "interfere" with cooperation on the global financial crisis, climate change and security issues such as North Korea's nuclear arms programme.

As for those on the wrong side of history, one leader who fits Obama's description is President Hosni Mubarak of Egypt, from where the U.S. president is scheduled to make a high-profile speech to the Muslim world early in June.

A long-time U.S. ally, Mubarak has been in power since 1981. He won uncontested elections four times. The fifth and latest, in 2005, featured charges of vote-rigging and the arrest of his main opponent.

The U.S. Department of State, which issues annual reports on human rights, gives Egypt poor grades and notes "the government's respect for freedoms of press, association and religion declined during the year (2008)." No unclenched fist here.

To boot, Mubarak has played host and acted as a sponsor to Omar al-Bashir, the Sudanese president who has been indicted by the International Criminal Court in The Hague for war crimes in Darfur. The court issued a warrant for Bashir's arrest in March.

At the height of the Bush administration's "freedom agenda," the second-term drive for "democracy promotion," Washington publicly scolded Mubarak. Rice, during a visit to Cairo, announced a break with the past:

"For 60 years, my country, the United States, pursued stability at the expense of democracy in the region. And we achieved neither. Now we are taking a different course. We are supporting the democratic aspirations of the people."

TARNISHED IMAGE

By 2005, when Rice made her democratic aspirations speech, the U.S. image in the Arab world was so badly tarnished by the war in Iraq, the Abu Ghraib prison scandal and Guantanamo that few Arabs were inclined to believe anything the Bush administration said.

Her remark stood out for its bluntness and its venue but the idea was not new. Support for democracy against dictatorships has been a key theme of American foreign policy since the U.S. rose to big power status at the turn of the 20th century.

That did not keep the U.S. from overthrowing democratically-elected leaders it did not like (Chile's Salvador Allende, Guatemala's Jacobo Arbenz) and propping up dictators it did (the Shah of Iran, Congo's Mobutu Sese Seko, Ferdinand Marcos of the Philippines). Saying one thing and doing another earned the U.S. an enduring reputation for hypocrisy.

The Bush administration's enthusiasm for democracy promotion in the Middle East fizzled rapidly after the Islamist group Hamas, shunned as a terrorist group by the West, won a resounding electoral victory in Gaza in 2006. Since then, part of the American foreign policy establishment has framed the alternatives in the region as Islamists or authoritarians.

If there were free elections today in Egypt, many experts predict that the Muslim Brotherhood, whose aim is the establishment of an Islamic state, would win easily, an uncomfortable prospect for Washington.

To push an Arab peace plan Obama wants to make part of an effort to create a Palestinian state side-by-side with Israel, Mubarak is clearly a better partner even though he may be on the wrong side of history. The plan offers Israel normal relations with all Arab states in return for withdrawing from territory it seized in the 1967 Arab-Israeli war.

The plan was first floated by Saudi Arabia, another staunch U.S. ally far from democracy and prone to silence dissent.

How (and whether) Obama intends to persuade countries on the wrong side of history to switch to the right side should become clear in his speech to the Muslim world. It could be a turning point in America's relations with a fifth of the world's population, but there is a lot that could go wrong, even for a president with Obama's charisma and outstanding political skills. Not to mention a middle name that resonates: Hussein.

The goal he set himself for the speech, spelt out before he took office, is ambitious: "Reboot America's image" in the Muslim world. Words alone won't do it, but they are a start.