MAY
28

Professor Michael Ross Explains the “Oil Curse”

 
Michael Ross is a professor at UCLA, whose work explores the ways that oil revenues and oil wealth often disrupt international development and enable nations to disengage from the international community. Some of his recent publications include The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, and Oil and Unbalanced Globalization—a study conducted with Georgetown University’s Professor Eric Voeten. A noted expert, Ross has been published in journals including Foreign Affairs, Foreign Policy, The New York Times, and Harper’s. He currently works on various task forces and committees with the World Bank, Central Intelligence Agency, United Nations, and Department of Interior. This interview is Part 1 of 2. Click here to read Part 2. Professor Ross, can you give us some information about how you became an expert in this field, and what you have learned through your research? I began as a specialist in international development, hoping to help low and middle income countries become more democratic and move out of poverty. Like many people, I had the perception that oil wealth was an asset, since it would allow governments to make larger investments in public goods, like schools, hospitals, and roads.  My research in the late 1990s began to show that as countries discovered mineral wealth, including petroleum wealth, they actually began to suffer unexpected problems, and I sought to understand how those resources affected the accountability of the government, and the likelihood of violent conflict. I noticed that there are important foreign policy consequences for countries finding oil, and I developed my partnership with Eric Voeten at Georgetown to research this topic. We observed that many of the most belligerent countries around the world are dependent on oil exports: Russia, Venezuela, Iran, until recently Libya and Iraq. This is particularly interesting, because all of these countries are heavily dependent on international trade. Usually when countries become more economically globalized and engaged in international trade, they also develop an interest in being more cooperative. It seems like common sense: the more your economy is dependent on trade, the more you want to get along with your trade partners. However, we saw that for countries that are more economically engaged through this one channel—petroleum exports—the more oil revenues increase, the more uncooperative their governments become, and the more likely they are to thumb their noses at international institutions. In other words, the problem is not just a few belligerent leaders—like Qadaffi, Putin, or Chavez—but the oil-exporting states more generally. In recent years I’ve been more involved in policies to encourage resource-rich countries to manage their natural resources in a way that benefits their development: Promoting awareness of their challenges, encouraging civil society groups to monitor resource extraction, and helping their economies move away from a dependence on natural resource extraction. I work on various task forces and committees through the World Bank, the Extractive Industries Transparency Initiative, and the CIA’s Political Instability Task Force. Regarding your research about oil revenues and unbalanced globalization: Can you explain what makes your research model statistically robust, and gives you confidence your hypothesis has been confirmed? We (Professor Ross and Professor Voeten) carried out an exhaustive number of statistical tests. We began by comparing countries with each other—oil exporters vs. non exporters. We then compared countries to themselves over time, looking at their behavior before and after they discovered oil, and when oil prices changed. And we saw the same pattern over and over again: More revenue from oil was followed by less cooperation with other countries. Naturally we were concerned that this result might be confounded by lots of other variables—wealth, democracy, and other conditions that scholars have identified as affecting international cooperation. So we controlled statistically for a long list of these and other confounding factors, and still we found this strong effect. We were also concerned that our finding might depend on how we measured international cooperation. So we tested the effects of oil revenues on about a dozen different measures of how cooperative countries are, including how they vote in the UN, whether they sign human rights treaties, if they contribute to peacekeeping, the number of embassies they have in other countries, how often they sign international agreements, and if they abide by those agreements. And again and again we found the same thing: That more oil is followed by less cooperation.  After many many tests, we ultimately came away convinced that our finding is really an important and robust one. It’s not difficult to see the connections between your findings and current events: Here in the energy policy/national security world, our work tends to focus on those notably problematic states such as Iran and Venezuela, but even friendly Norway has remained independent of the European Union because of its oil revenues and sovereign wealth fund. I’ve presented this work in Norway at a number of institutions. Many Norwegians seemed to agree that the reason they didn’t join the E.U. was that—even though they’re generally very cooperative in their foreign policy—oil wealth enabled them to stand apart and remain independent. Let’s zoom in on the Middle East, which is infamous for lagging behind the rest of the world in terms of democratic norms, good governance, human rights, and economic stability. A lot of people attribute this to the region’s religious heritage. Can you summarize how oil wealth props up these regimes, and enables these countries to remain mired in antiquated traditions or political systems? On many issues like democracy and women’s rights, the Middle East is seen as the great outlier in the world. I think many Americans assume it has to do with Islam or patriarchal traditions or the Arab culture. My own research—which is summarized in my book, The Oil Curse—shows that a lot of it can be explained by the abundance of oil. Let’s take the question of democracy, or more broadly, government accountability.  We can’t say that’s only a matter of oil, since all of the Arab countries are undemocratic, including ones without oil, like Jordan and Morocco. However, even among these authoritarian states there is still a lot of variation in the freedom of civil society and the protection of civil rights. The countries with greater oil wealth tend to allow fewer civil liberties and are generally the less accountable to their people. Or look more broadly around the world.  The oil-rich states have been governed by some of the world’s longest-running dictatorships, in places like Angola, Equatorial Guinea, and until recently, Libya. Despite their oppressive tactics, these regimes have become so durable because they were built on a foundation of oil wealth. The links between oil wealth and authoritarianism are very robust, and is connected to the insight that taxation is closely linked to representation in government. When people are taxed, they demand accountability; oil allows these regimes to keep taxes low or nonexistent. They also tend to have better funded military and police organizations. You see this demonstrated quite clearly in the Arab Spring—in pretty much all countries across the Middle East, the regimes that were most successful at quelling protests were those with access to oil wealth. Those regimes were able to keep the military on their side, and in many cases, to quiet public dissent with higher subsidies.  Arab states with less oil wealth including Bahrain, Tunisia, Egypt, and Syria were the ones that struggled to keep the lid on protestors, and saw the greatest pressures for regime change. The notable exception is Libya, and it’s an important one. But had it not been for the NATO intervention, the Gadhafi regime would have most likely prevailed—it was well on its way to quashing the rebellion, thanks in part to mercenaries hired with oil money. Click here to read Part 2 of this interview.