Oil/Poverty/Conflict Syndrome

But the story gets worse. More than any other group of countries, oil and other mineral exporters demonstrate the

perverse linkages between skewed economic performance, poverty, injustice, and conflict. Countries dependent on oil and other mineral wealth are far more likely to have civil wars than their resource-poor counterparts and war disproportionately harms the poor.

The gap between expectations and the dismal economic performance of oilexporting countries is politically explosive. Because oil governments funnel petrodollars to their own friends, family, military and political supporters, social class, ethnic or religious groups,25 their populations see foreigners and favorites getting rich, but their own lot does not change. In the context of apparent oil riches, it may even get worse. Over time, this is not a formula for stability.

Militarizing Oil Countries: As petrodollars fail to keep pace with demands, oil-based governments often increasingly rely on repression to keep themselves in power. Not surprisingly, then, oil dependence is closely associated with militarization. As a group, oil exporters spend much more money and a greater percentage of their revenues on their military and security forces than non-mineral dependent countries.26

The extent of militarization is stunning. In the decade from 1984 to 1994, for example, OPEC members’ share of annual military expenditures as a percentage of total central government expenditures was three times as much as the developed countries, and two toten times that of the non-oil developing countries. From the perspective of poverty alleviation, the sheer waste of this military spending is staggering.

Petrodollar Support for Authoritarian Rule: Not surprisingly, given this pattern of spending, oil rents have tended to impede democratization and have sustained a long line of authoritarian rulers – from the Shah of Iran to Nigeria’s Abacha to the House of Saud to Saddam Hussein.27 These regimes prohibit the types of organizations that provide a voice for the poor, create an informed civil society, and permit their people to influence the management and allocation of oil wealth. Furthermore, dependence on oil tends to impede democratization, and it may even erode democratic rule where it previously existed, as demonstrated by the dramatic case of Venezuela. This is especially unfortunate because democracy, when combined with merit-based civil services, reduces the corruption and mismanagement oftentimes associated with oil dependence.

Countries dependent on oil and other mineral wealth are far more likely to have civil wars than their resource-poor counterparts and war disproportionately harms the poor.

Oil and Civil War: Fights over oil revenues become the reason for ratcheting up the level of pre-existing conflict in a society, and oil may even become the very rationale for starting wars.29 This is especially true as economies move into decline. Petroleum revenues are also a central mechanism for prolonging violent conflict and only rarely a catalyst for resolution.30 Think, for example, of Sudan, Algeria, the Republic of Congo, ndonesia (Aceh), Nigeria, Iraq, Chechnya and Yemen.

Source: Bottom of the Barrel: Africa’s Oil Boom and the Poor