The idea that demand for oil may affect American foreign policy is neither a new nor particularly novel thesis. Many commentators from Pat Buchanan to Thomas Friedman have argued that the United States counteracts its own interests through its purchases from authoritarian regimes in the Middle East. Less examined, but equally potent, however, may be oil’s effects on its sellers. Since Hazem Beblawi published his book The Rentier State in 1987, academics and scholars have examined the Arab world’s oil-rich autocracies through Beblawi’s lens. Commentators debate which states best fit the model of using the profits generated by indigenous resources to fund a system of benefits and subsidies, as well as a strong security apparatus. Nonetheless, few have challenged Beblawi’s corollary, laid out by UCLA professor Michael Ross, that these rentier states rarely democratize. Few have challenged this view—that is to say, until the events of this spring.
Throughout the revolts of the Arab Spring, even states with access to considerable earnings have not proven immune. In particular, the upheaval in Libya challenges the assumption that oil wealth poses an insurmountable obstacle to democratization. Libya possesses the largest oil reserves in all of Africa, exporting 1.8 million barrels every day, yet its revolution has proven as newsworthy as those in more oil-less Egypt or Tunisia. As such, recent events may call into question traditional theories of the “resource curse.” Nonetheless, if rentier states have weakened, neither have they totally lost their advantages entirely. In this sense, the recent events in the Middle East demonstrate that, while globalization has increased ease of disrupting commodity-based economies, effective use of revenues can still potentially maintain a government.
Rent in a Globalized World
At first glance, the global economic changes over the past thirty years would seem to have eroded the Arab dictators’ primary base of support, namely their oil. Cyrus Bina, the author of Oil: A Time Machine and a professor at the University of Minnesota-Morris, told the HPR that “oil was one of the pioneers of globalization.” After the 1970s and 80s, states increasingly bought and sold on an interconnected, global marketplace. With cartels like OPEC and authoritarian regimes apparently losing the ability to control the global price of oil single handedly, state budgets have grown considerably more variable, and checks that much less consistent.
The social and cultural impacts of globalization enjoy an equally strong role in undermining the influence of rent. Information technology empowers the residents of rentier states to compare their life to the outside world and judge the costs of repression at home. “Most of the influences that these countries avoided could not be ignored,” said Bina. “Now, the King of Saudi Arabia cannot even buy [off ] the opposition because of the exposition of the population to the transformation of the world.” Indeed, twenty years ago, a resident of Saudi Arabia would only know his share of the nation’s revenue; now, he also knows how much the government takes.
Nonetheless, while globalization might appear to be a force against the resource-extraction model, trends towards greater state ownership of resources could counteract this growing cynicism. Giacomo Luciani, a professor at Princeton University, points out that that production-sharing agreements between Arab nations and international oil companies have grown increasingly skewed in favor of the state, even as a nation’s influence over the selling price has dropped. In Libya, for example, investors received only five percent of all profit on oil, while Gaddafi’s government retained the remaining 95 percent. While it may cost more to buy off the population than it would in an unconnected world, increased royalties still present states with greater opportunities to preserve their rule.
Resource Curse?
Nonetheless, the protests have opened the question on the extent to which resources cause political repression in the first place. James Robinson, a professor of government at Harvard and the author of Economic Origins of Dictatorship and Democracy, argues that “oil is not really responsible for the situation in the Middle East.” Robinson explains that many Arab dictatorships, such as Syria, do not have access to large oil reserves, and those that do rely on more tools than just their wealth. “What would Saudi Arabia look like if you took the oil away?” Robinson asked. “It would be a lot poorer, but it wouldn’t really be any different.” The true origins of Middle Eastern authoritarianism, he argues, predate the discovery of oil. “What’s going on in Libya has nothing to do with oil,” he said. “It has everything to do with the way Libyan society is organized and the way this colonial state was constructed as different groups were thrown together.”
As such, while oil remains important, other factors may prove even more significant. “Obviously, there are other factors as well in specific national situations,” said Luciani. He argues that “in Libya, you have the overwhelming factor of an incompetent government.” At the time of the rebellion, the country was home to a massive underground economy and high unemployment. In effect, Libya’s inefficient system of cronyism and bureaucracy wasted much of the rent that had been extracted, leaving the country no better off than if the oil had never been found.
Oil Forever After
Nonetheless, opponents of the rentier hypothesis should not be too swift to totally dismiss oil’s power. Unlike Libya, King Abdullah of Saudi Arabia has been extremely efficient with the resources of his land. As the Arab Spring protests developed, the King ordered 2,000 Saudi troops across the border into Bahrain, preserving the embattled allied monarchy. Simultaneously, the King promised his own disgruntled populace a huge jobs and housing package, spending billions of dollars to buy their loyalty. In both cases, an overflowing treasury bought economic stimulus, as well as a world-class military.
Indeed, while enjoying their fair share of protests, most oil-rich nations have ultimately quelled much dissent. Iran repressed its protesters, Algeria’s government boosted wages, and Kuwait simply sent money. “So far, there hasn’t been anything that has run counter to the patterns that I’ve seen up to this point,” said Ross.
The thesis of oil causing repression may be mistaken, but it is clear that oil rent continues to confer at least some security to authoritarian regimes. Yet the fault is not entirely the regime’s own. As the world’s largest consumer of oil, the United States has a unique opportunity to affect the ways in which Middle Eastern states spend oil revenues. While historical and cultural factors may be static, the global oil market is something that present day policymakers can actually impact. How they do so may well determine whether the climate of hope in the Middle East can be sustained.
Eric Hendey ‘14 is the Webmaster.