Beyond Blood Oil

Philosophy, Policy, and the Future

Rowman & Littlefield Publishing Group, Inc

Contents

Beyond Blood Oil

Leif Wenar

Natural resources empower the world's most coercive men. Autocrats from Russia to Algeria spend resource money on weapons and repression. Armed groups like ISIS and the Congo's militias have spent resource money on atrocities and ammunition. For decades the West's worst threats and crises have come from resource-enriched autocrats and armed groups — and the ultimate source of their resource money is consumers, paying at the gas station and the mall.

The first part of this chapter analyzes the law, economics, and politics of the "resource curse." The deepest cause of this curse is an ancient rule that once licensed the slave trade, apartheid, and genocide. The abolition of this rule has marked humanity's greatest moral progress — yet the rule lingers in today's multi-trillion-dollar trade in resources, endowing despots and extremists with unaccountable power.

The first part explains why the resource curse is a systemic global problem, and also where the solution to it must be. The second part sets out national policies that can lift the curse. These peaceful policies will make us more secure at home, more trusted abroad, and better able to work across borders to solve urgent problems like climate change.

The third part of the chapter is intended for readers who are interested in more abstract issues, such as the nature of the principles that should guide the reform of global institutions, what is most important in distributive justice, and what values are ultimately worth pursuing.

ANALYSIS OF THE RESOURCE CURSE

In 2014, Iraq became a war of oil against oil. The Kurds and the Iraqi government both controlled large oil fields, and ISIS, which fought both, became "the world's richest terror army" by selling up to $1 million of crude a day. ISIS spent its oil money on genocidal assaults against the Yazidis, a horror-filled global propaganda campaign, and the military seizure of more oil fields in Syria.

Meanwhile, Syria's oil-funded autocrat, Bashar Al-Assad, ordered the barrel-bombing of his own people, worsening a refugee crisis whose defining image became the photo of Aylan Kurdi, a three-year-old Syrian boy lying drowned on a Turkish beach. By 2015, this refugee crisis was straining the politics of Europe.

In 2015, Vladimir Putin — his coffers still full from years of high oil prices — joined Assad in a more intensive campaign of urban bombing in Syria. In 2016, television news worldwide was showing apocalyptic devastation in Aleppo, and Syrian civilians were still being killed by chemical weapons in 2018. The Iraq-Syria conflict became part of the cold war between two oil-rich religious blocs. Iran and its allies like Hezbollah fought hard-line Sunni militants, who received funds from within oil states like Qatar. At the same time, the Saudi crown prince was intervening in regional politics from Qatar to Lebanon, most dramatically with the bombing and blockade of Yemen, which caused thousands of civilian casualties, a massive famine, and the largest cholera outbreak in modern human history.

Oil was not the only factor in these conflicts and crises — it never is. Yet when we look back over the past forty years, we see oil behind so many headlines. In 2011, for instance, the West took military action in Libya against Muammar Gaddafi, who had for decades used oil money to finance terrorists from the Irish Republican Army to the Lockerbie bombers. Before Gaddafi, it was the Darfur genocide in the oil state of Sudan. Before Darfur, it was Al Qaeda, which was behind both 7/7 in London and 9/11 in the United States (seventeen of the nineteen 9/11 hijackers were from oil-exporting countries).

In 1990, Saddam Hussein launched his invasion of oil-rich Kuwait, triggering a Western invasion, then sanctions, then another invasion and an occupation. In the 1980s, the West's biggest-ever existential threat, the Soviet Union, used new oil revenues to surge ahead in the nuclear arms race. And since the 1979 revolution, the Iranian regime has used oil money to fund militant groups from Hamas to Islamic Jihad, while grasping at nuclear weapons.

Petroleum is the common element to these stories. All of these crises and threats have come from countries that export a lot of oil. When we in the West talk about these oil-rich countries, we often criticize the decisions that our own leaders have made, perhaps under of the influence of the big oil companies like Exxon and Shell. Many of us, for instance, will complain bitterly about George W. Bush's decision in 2003 to invade and occupy Iraq. Others will deride Barack Obama's "red line" in Syria. Donald Trump's relationships with Putin and the Saudi crown prince have drawn much scorn.

All of these criticisms are correct. Western leaders have cost their countries dearly in terms of lives, money, and influence — and some of their decisions have simply been criminal. Yet there's a bigger picture about the context in which these choices have been made. Every Western leader has faced a problem of foreign power that has had no known solution — a problem that, as we'll see, now confronts the leaders of today.

And there is a deeper level to these stories as well, which involves each of us. The threats and crises above are not just disasters that we've watched — they're disasters that we've paid for. After all, the foreign autocrats and militants in the news have spent a lot of oil money on the bombs and the missiles and the propaganda. And, ultimately, that money has come from us — the world's consumers — buying oil. In a recent year, for instance, the average American household sent $250 to authoritarian regimes and armed groups, just by filling up with gasoline.

What consumers pay at the pump has also gone to grim places that never make the headlines. The president's family in Equatorial Guinea, for instance, has for decades spent the country's oil money on itself — buying private jets, supercars, luxury residences in Paris, Washington and Malibu — while most Equatoguineans live in severe poverty, and half have no access to clean drinking water or adequate sanitation. The country's president (whom a former U.S. ambassador called "a kleptomaniac without a scintilla of social consciousness") has used "fierce political repression" to quash resistance to his rule, including having his guards tie down political prisoners, slice their ears open, and smear their bodies with grease to attract stinging ants.

So the money we've paid at the pump may have bought torture tools in an obscure African dictatorship, or textbooks that teach children to wage jihad against the infidel, or bullets that have been shot at our young soldiers. Somehow, our money is going to fund suffering and injustice, threats and crises, all over the world. Understanding our unwilling complicity with disasters and dangers overseas is essential for understanding the deepest flows of global power and the rules that run the world. As we'll see in the second part of the chapter, the rules that are making us complicit are also the rules that we can now change.

Oil Is Everywhere

To appreciate the depth of these problems, we need to grasp how intimately involved our daily lives are with oil. Because of climate change, it is urgent that we get off oil as quickly as possible. But that will still take many years, because oil is humanity's largest source of energy. Today oil supplies 33 percent of the world's power, while all of the renewables combined supply just three percent.

The world uses a thousand barrels of oil — that is, 42,000 gallons, or 159,000 liters — each and every ... second. Over 90 percent of the world's transportation runs on oil — that's nearly every car, truck, ship, and plane there is. In most stores, every product has been delivered by oil-powered vehicles, and those vehicles deliver most online shopping too. It's not unlikely that everything that you can see right now — including the people — has been moved to where it is with oil energy.

The reason that oil is so present is that — leaving the environment and the geopolitics aside for a moment — it has been the best engineering solution to the challenge of moving people and goods. Oil fuels are light and stable, and pack lots of power: a gallon of oil contains about the same energy as ten pounds of coal, seventeen pounds of wood, and fifty days of slave labor. Trying to fly a 737 using today's best batteries instead of jet fuel would mean loading batteries that weigh many times more than the plane itself.

And oil is not just for transportation. Most of the food in our stores was grown with nitrogen that was extracted from oil. Petro-chemicals are also used to make many everyday goods. Basically, if it's plastic, it's oil. And if it's synthetic, it's likely made from oil. Some common goods made with oil are aspirin, asphalt, balloons, blenders, candles, carpets, computer keyboards and screens, contact lenses, clothes, crayons, credit cards, dentures, deodorants, diapers, digital clocks, eyeglasses, furniture fabrics, game consoles, garbage bags, glue, golf balls, hair dryers, infant seats, lipstick, lubricants, luggage, newspapers, paint, patio screens, perfume, pillows, shampoo, shaving cream, shoes, tents, toothbrushes, toothpaste, toys, and vitamins. It may be in your waistband, you may have smeared it on your face this morning, it may be helping your sex life. Oil is everywhere — and we buy it all the time.

So our situation may be worse even than we thought. Unless we're walking to buy organic food at an Amish farm, our shopping will be saturated with oil at every stage. We may be funding oppression, strife, and extremism whenever we check out, online or in-store. Some oil does come from "good" countries, but tracing oil through the world's opaque, ever-shifting supply chains is too difficult for most products. It's hard to see how one could even try to be a Fair Trade consumer of oil.

Better technology is slowly shifting the economics of energy toward renewable sources, and better policies on climate can help to speed that shift. Still, even the fastest transition away from petroleum will likely take many years, as the world replaces its huge oil-powered transportation fleet — and finds other chemicals to make ordinary goods like those above. Someday, our grandchildren may laugh at our primitive condition: humans propelling themselves across the planet by burning mud. But today, if that mud suddenly became incombustible, most of humanity would be dead within a year. Even as we transition away from oil, we will be buying a lot of it for years to come.

The Systemic Curse of Resources

For as long as the world uses oil, we should expect headlines about big oil exporters like Russia, Iraq, Saudi Arabia, and Nigeria. Oceans of crude will flow out of these countries, and rivers of foreign cash will flow back in return. But why does oil cause so much trouble? Why don't we see such crisis headlines about, say, big rice exporters like Thailand, or big tea exporters like Kenya?

Some of the reasons are geologic and economic. Natural resources like oil — as well as many precious metals and gems — are "point source" resources: concentrated sources of economic value that can be extracted from easily secured small areas. These commodities can be mined or gathered by relatively few workers — and sold to foreigners for substantial sums.

The deeper reason that these resources correlate with trouble is what might seem like an obvious fact. Outside of democratic countries, whoever can control resource-rich territory by force can make large profits by exporting those resources. Essentially, whoever can keep control over some holes in the ground will get rich.

When an authoritarian regime (like the one in Iran) controls a country's oil wells, it gets the money to buy the muscle and loyalty it needs to stay in power. When armed groups (like those in the Congo) control the gold mines, they get the money they need to buy arms and pay their soldiers. Money — and, with oil, a lot of money — will go to whoever has the most guns, and help them buy more guns.

More, coercive actors can export resources even when the people of the country are very badly off. Even if the population is uneducated, unemployed, and hungry — indeed, even if the country is in the midst of civil war — whoever can control the wells or mines will still make money. These authoritarians and militants don't need a productive population to get their revenues, and the people can't stop exports by going on strike. In these countries, when an autocratic regime or an armed group controls resource-rich territory, it's like they can dig out huge troves of buried cash.

The "resource curse" is what political scientists call the results. As Michael Ross has shown, oil states in the developing world are 50 percent more likely to be authoritarian than non-oil states. Since petrocrats get the money they need by controlling the oil wells, many of these countries are full of poor people: in Angola, for example, the elite lives in luxury while the country's impoverished children have been dying at the highest rate in the world. Corruption, often on the grandest scale, also correlates with resource wealth. And civil conflict is another dimension of the resource curse: oil countries are twice as likely to be at war with themselves.

Repression, conflict, corruption, extreme neglect — oil curses countries across the world's main artery of oil, which runs from Siberia through the Middle East to Africa. This map shows the oil states that are either authoritarian, or failed, or both.

Adding in the countries that are cursed by the money from metals and gems reveals an even broader resource curse.

Some of these resource-cursed countries suffered colonial exploitation by the Western empires, as well as more recent exploitation by the Western multinationals. Some of these countries have also been invaded and sanctioned. But the resource curse is a systemic phenomenon, which strikes countries that are otherwise quite different in their histories, geographies, and religions. (Compare, for instance, Russia and Iraq and South Sudan.) This systemic phenomenon calls for a systemic explanation.

The Political Economy of Resource-Cursed States

The root of the resource curse is that coercive control over resources yields unaccountable power. Controlling wells or mines is like controlling troves of buried cash — it's a bonanza that makes authoritarians and armed groups stronger.

Consider first an authoritarian, and how he can maintain his rule. The authoritarian might consider getting aid from a foreign ally, but that ally will want something big in return. Oil money is much better — it comes with no strings attached. The authoritarian might instead take out loans from foreign banks, but those banks will want the money back with interest. Oil money is much better for the authoritarian — it never has to be paid back.

The authoritarian might consider making his country's people more productive, to get more money from taxing them. But economically empowered citizens eventually demand political rights too. Oil money is much better for the authoritarian. Far from empowering citizens, oil money enables the authoritarian to divide and rule them. Striking oil is every autocrat's dream.

Oil money is like a huge funnel of cash that goes directly into the regime's hands. With this money, the regime can pay the security forces needed to crush dissent (as in, for example, Azerbaijan). The regime can create useless jobs in the state bureaucracy that keep citizens dependent for their livelihoods and status (Kuwait). The regime can play regions, tribes, or religions against each other, to prevent them from uniting against the state (Gaddafi was a master of this). It can flood the country with nationalist propaganda (as in Turkmenistan) or fund strict religious indoctrination (as the Saudis did for decades). If times get tough, it will have the money to distract the population with a foreign war (as Putin did with Ukraine).

Studies show that oil wealth lengthens authoritarian rule. The more oil a country has the less likely it is to democratize. No country with more oil income than Mexico has successfully become democratic since 1960. After 1979, non-oil states were almost three times more likely to make democratic transitions, which means that an ever-higher proportion of the world's autocrats are petrocrats. In the popular uprisings of the past decade, from the Green Movement in Iran through the Arab Spring, the trend is that the authoritarians with large oil revenues survived, while the authoritarians with little oil fell. (Syria, which is running out of oil, is the intermediate case.)

Oil gives authoritarians unaccountable power, which in turn enables them to keep the population away from the wells from which their power flows. The Economist lists fifty-two authoritarian countries, or 31 percent of all the countries in the world. One might take a moment to ponder how many fewer authoritarians there would be in the twenty-first century — from Russia through the Middle East to Africa — if oil did not sustain regimes that can control some holes in the ground. One might also consider how different the politics of those countries, and of the world, would be.

Natural resources — and especially oil — are also prized by militants for the unchecked power they bring. Resource money enables armed groups to start or continue a conflict — and again, the money comes with no strings attached, it never has to be paid back, and it comes in regardless of the condition or the wishes of the country's people, who have to watch while the country's natural assets are sold off beyond their control. As Paul Collier quipped, "Diamonds are a guerrilla's best friend." And oil-producing countries are the sites of ever more of the world's civil wars, and a growing percentage of all civil wars. The unaccountable power of resources divides many countries against each other.