COMMENTS

The First Law of PetropoliticsBY THOMAS [L

FRIEDMAN

Iran's presidentdenies theHolocaust, HugoCh6vez tellsWestern leadersto go to hell, andVladimir Putin iscracking the whip.Why? They knowthat the price ofoil and the paceof freedom alwaysmove in oppositedirections. It'sthe First Law ofPetropolitics, andit may be the axiomto explain our age

'61s it anaccident thatthe Arab world'sfirst and onlyreal democracyhappens notto have adrop of oil? J9

ccording to the First Law of Petropolitics,the higher the average global crude oilprice rises, the more free speech, free

press, free and fair elections, an independent

judiciary, the rule of law, and independentpolitical parties are eroded. And these negativetrends are reinforced by the fact that the higherthe price goes, the less petrolist leaders are

sensitive to what the world thinks or says aboutthem. Conversely - according to the First Lawof Petropolitics - the lower the price of oil, themore petrolist countries are forced to move

towards a political system and a society that ismore transparent, more sensitive to oppositionvoices, and more focused on building the legaland educational structures that will maximisetheir people's ability - both men's and women's- to compete, start new companies, and attractinvestments from abroad. The lower the priceof crude oil falls, the more petrolist leaders aresensitive to what outside forces think of them.

I would define petrolist states as those thatare both dependent on oil production for thebulk of their exports or gross domestic productand have weak state institutions or outrightauthoritarian governments (e.g. Azerbaijan,Angola, Chad, Egypt, Equatorial Guinea, Iran,Kazakhstan, Nigeria, Russia, Saudi Arabia,Sudan, Uzbekistan, and Venezuela).

One of the most trenchant analyses I havecome across into how an abundance of oilwealth, in particular, can reverse or erodedemocratising trends is the work of UCLApolitical scientist Michael L. Ross. Using astatistical analysis from 113 states between1971 and 1997, Ross concluded that a state's'reliance on either oil or mineral exports tendsto make it less democratic; that this effect is notcaused by other types of primary exports; that itis not limited to the Arabian Peninsula, to theMiddle East, or sub-Saharan Africa; and that itis not limited to small states.'

What I find particularly useful about Ross'analysis is his list of the precise mechanisms bywhich excessive oil wealth impedes democracy.First, he argues, there is the 'taxation effect'.Oil-rich governments tend to use their revenuesto 'relieve social pressures that might otherwiselead to demands for greater accountability'from, or representation in, the governingauthority. I like to put it this way: the mottoof the American Revolution was 'no taxation

without representation'. The motto of thepetrolist authoritarian is 'no representationwithout taxation'. Oil-backed regimes that donot have to tax their people in order to survive,because they can simply drill an oil well, alsodo not have to listen to their people orrepresent their wishes.

The second mechanism through which oildampens democratisation, argues Ross, is the'spending effect'. Oil wealth leads to greater

patronage spending, which in turn dampenspressures for democratisation. The thirdmechanism he cites is the 'group formation

effect'. When oil revenues provide anauthoritarian state with a cash windfall, thegovernment can use its newfound wealth toprevent independent social groups - preciselythose most inclined to demand political rights -from forming. In addition, he argues, anoverabundance of oil revenues can create a'repression effect', because it allows governments

to spend excessively on police, internal security

and intelligence forces that can be used to chokedemocratic movements. Finally, Ross sees a'modernisation effect' at work. A massive influxof oil wealth can diminish social pressures foroccupational specialisation, urbanisation, andthe securing of higher levels of education -trends that normally accompany broad economicdevelopment and that also produce a publicthat is more articulate, better able to organise,bargain and communicate, and one that isendowed with its own economic power centres.

The First Law of Petropolitics tries to buildon such arguments, but also takes the linkbetween oil and politics one step further. WhatI am arguing with the First Law of Petropoliticsis not only that an over- dependence on crudeoil can be a curse in general, but also that onecan actually correlate rises and falls in the priceof oil with rises and falls in the pace of freedomin petrolist countries. The connection is veryreal. As the graphs overleaf demonstrate, thepace of freedom really starts to decline as theprice of oil really starts to take off.

An axis of oil?The reason this connection between the priceof oil and the pace of freedom is worth focusingon today is that we appear to be at the onset ofa structural rise in global crude oil prices. If thatis the case, this higher price level is almost

024 1 THE ECOLOGIST

COMMENTS

Cru Oilma

certain to have a long-term effect on the natureof politics in many weak or authoritarian states.That, in turn, could have a negative globalimpact on our current post-cold war world.In other words, the price of crude should nowbe a daily preoccupation of the US secretary ofstate, not just the treasury secretary.

Since 9/11, oil prices have structurallyshifted from the $20-$40 range to the $40-$60range. Part of this move has to do with ageneral sense of insecurity in global oil marketsdue to violence in Iraq, Nigeria, Indonesia, andSudan, but mainly appears to be the result ofwhat I call the 'flattening' of the world andthe rapid influx into the global marketplace ofthree billion new consumers from China, Brazil,India, and the former Soviet Empire - alldreaming of a house, a car, a microwave, anda refrigerator. Their rising energy appetites areenormous. This already is, and will continue tobe, a steady source of pressure on the price of

oil. Without a dramatic move towardconservation in the West, or the discovery ofan alternative to fossil fuels, we are going tobe in this $40-to-$60 range, or higher, for theforeseeable future.

Politically, that will mean that a wholegroup of petrolist states with weak institutionsor outright authoritarian governments willlikely experience an erosion of freedoms andan increase in corruption and autocratic,antidemocratic behaviour. Leaders in thesecountries can expect to have a significantincrease in their disposable income to build upsecurity forces, bribe opponents, buy votes orpublic support, and resist international normsand conventions. One need only pick up anewspaper on any day of the week to seeevidence of this trend.

Consider a February 2005 article in The WallStreet Journal about how the mullahs in Tehran(who now are flush with cash thanks to high

' 4The lowerthe price of crudeoil falls, the morepetrolist leadersare sensitiveto what outsideforces thinkof themY

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' The linkbetween oil pricesand the pace offreedom is sotight in somecountries thateven a far-sightedleadership canbe diverted fromreform by a spikein crude pricesy

oil prices) are turning their backs on someforeign investors instead of rolling out thewelcome mat. Turkcell, a Turkish mobile phoneoperator, had signed a deal with Tehran to buildthe country's first privately owned cellphonenetwork. The deal looked good: Turkcell agreedto pay Iran $300 million for the licence andinvest $2.25 billion in the venture, which wouldhave created 20,000 Iranian jobs. But themullahs in the Iranian parliament had thecontract frozen, claiming it might helpforeigners spy on Iran. All Ansari, an Iran expertat the University of St Andrews in Scotland,told The Wall Street Journal that Iranian analystshad long been arguing in favour of economicreform. 'In actual fact, the scenario is worsenow,' said Ansari. 'They have all this moneywith the high oil price, and they don't need todo anything about reforming the economy.'

Or, how about the February 11, 2006, storyin The Economist about Iran, which stated:'Nationalism is easier on a full stomach and MrAhmadinejad is the rare and fortunate presidentwho expects to receive, over the coming Iranian

year, some $36 billion in oil export revenues tohelp buy loyalty. In his first budget bill, nowbefore parliament, the government haspromised to build 300,000 housing units,two-thirds of them outside big towns, and tomaintain energy subsidies that amount to 10per cent of [gross domestic product].'

Or consider the drama now unfolding inNigeria. The country has a term limit for itspresidents - two four-year terms. PresidentOlusegun Obasanjo came to office in 1999,after a period of military rule, and was then re-elected by a popular vote in 2003. When hetook over from the generals in 1999, Obasanjomade headlines by investigating human rightsabuses by the Nigerian military, releasingpolitical prisoners, and even making a realattempt to root out corruption. That was when

oil was around $25 a barrel. Today, with oil at$60 a barrel, Obasanjo is trying to have theconstitution amended to allow him to serve athird term. A Nigerian opposition leader in theHouse of Representatives, Wunmi Bewaji, has

alleged that bribes of $1 million were beingoffered to lawmakers who would vote to extendObasanjo's tenure. 'What they are touting nowis $1 million per vote,' Bewaji was quoted assaying in a March 11, 2006, article by VOANews. 'And it has been coordinated by aprincipal officer in the Senate and a principalofficer in the House.'

During a visit to Washington inMarch, Clement Nwankwo, one of Nigeria'sleading human rights campaigners, told methat, since the price of oil has started to climb,'civil liberties [have been] on a huge decline -people have been arbitrarily arrested, politicalopponents have been killed, and institutions ofdemocracy have been crippled.' Oil accountsfor 90 per cent of Nigeria's exports, addedNwankwo, and that explains, in part, why therehas been a sudden upsurge in the kidnapping offoreign oil workers in Nigeria's oil-rich NigerDelta. Many Nigerians think they must bestealing oil, because so little of the revenue istrickling down to the Nigerian people.

Very often in petrolist states, not only doall politics revolve around who controls the oiltap, but the public develops a distorted notionof what development is all about. If they arepoor and the leaders are rich, it is not becausetheir country has failed to promote education,innovation, rule of law, and entrepreneurship.It is because someone is getting the oil moneyand they are not. People start to think that to

get rich, all they have to do is stop those whoare stealing the country's oil, not build a societythat promotes education, innovation, andentrepreneurship. 'If Nigeria had no oil, thenthe entire political equation would be

Russia, Iran,Nigeria and

Venezuela

have displayed

a clear inverse

correlation

between the

pace of freedom

and the rise in

oil prices over

recent years

026 1 THE ECOLOGIST

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different,' said Nwankwo. 'The income wouldnot be coming from oil and therefore thediversification of the economy and privateenterprise would matter more, and peoplewould have to expand their own creativity.'

Indeed, the link between oil prices and thepace of freedom is so tight in some countriesthat even a far-sighted leadership can bediverted from the path of economic andpolitical reform by a sudden spike in crudeprices. Consider Bahrain, which knows it isrunning out of oil and has been a case study ofhow falling oil revenues can spur reform - evenit has not been able to resist the temporaryseduction of higher oil prices. 'We are havinggood times now because of high oil prices. Thismay lead officials to be complacent,' JasimHusain All, head of the University of Bahrain'seconomic research unit, recently told the GulfDaily News. 'This is a very dangerous trend, asoil income is not sustainable. [Bahrain's]diversification may be enough by Gulfstandards, but not by international standards.'No wonder an Iranian journalist once remarkedto me while we were strolling in Tehran: 'If onlywe didn't have oil, we could be just like Japan.'

Geology trumps ideologyWith all due respect to Ronald Reagan, I do notbelieve he brought down the Soviet Union.There were obviously many factors, but thecollapse in global oil prices around the late1980s and early 1990s surely played a key role.(When the Soviet Union officially dissolved onChristmas Day 1991, the price of a barrel of oilwas hovering around $17.) And lower oil pricesalso surely helped tilt the post-communist BorisYeltsin government toward more rule of law,more openness to the outside world, and moresensitivity to the legal structures demanded byglobal investors. And then came RussianPresident Vladimir Putin. Think about the

difference between Putin when oil was in the$20-$40 range and now, when it is $40-$60.When oil was $20-$40, we had what I wouldcall 'Putin I'. After their first meeting in 2001,President Bush said he had looked into Putin's'soul' and saw in there a man he could trust. IfBush looked into Putin's soul today - Putin II,the Putin of $60 a barrel - it would look veryblack down there, black as oil. He would seethat Putin has used his oil windfall to swallow(nationalise) the huge Russian oil company,Gazprom, various newspapers and televisionstations, and all sorts of other Russianbusinesses and once independent institutions.

When oil prices were at a nadir in the early1990s, even Arab oil states such as Kuwait,Saudi Arabia and Egypt, which has substantialgas deposits, were at least talking abouteconomic reform, if not baby-step politicalreforms. But as prices started to climb, thewhole reform process slowed, particularly onthe political side.

As more and more oil wealth piles up inpetrolist countries, it could really begin todistort the whole international system and thevery character of the post-cold war world.When the Berlin Wall fell there was awidespread belief that an unstoppable tide offree markets and democratisation had also beenunleashed. The proliferation of free electionsaround the world for the next decade madethat tide very real. But that tide is now runninginto an unanticipated counter-wave of petro-authoritarianism, made possible by $60-a-barreloil. Suddenly regimes such as those in Iran,Nigeria, Russia, and Venezuela are retreatingfrom what once seemed like an unstoppableprocess of democratisation. Instead, electedautocrats in each country are using theirsudden oil windfalls to ensconce themselves inpower, buy up opponents and supporters, andextend their state's chokehold into the private

'iAs moreand more oil pilesup in petrolistcountries, itcould begin todistort the verycharacter ofthe post-coldwar world 77

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Freedom House Freedom in the World Rankings vs. Crude Oil Prices

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66Thinkingabout how toalter our energyconsumptionto reduce theprice of oil isno longer justa hobby forenvironmentalistsIt is a nationalsecurity 77

lovingly,

despairingly,

tirelessly ...

sector, after many thought it had permanentlyreceded. The tide of democratisation that

followed the fall of the Berlin Wall seems tohave met its match in the black tide of

petro-authoritarianism.Although petro-authoritariansim does not

represent the sort of broad strategic and

ideological threat that communism posed to

the West, its long-term impact could stillcorrode world stability. Not only will some ofthe worst regimes in the world have extra cash

for longer than ever to do the worst things, but

decent, democratic countries (India and Japan,for instance) will be forced to kowtow or turn

a blind eye to the behaviour of petro-authoritarians (such as Iran or Sudan) because

of their heavy dependence on them for oil.That cannot be good for global stability.

Let me stress again that I know that the

correlations suggested by the graphs on theprevious pages are not perfect and there are, no

doubt, exceptions. But I do believe theyillustrate a general trend: the rising price of oilclearly has a negative impact on the pace of

freedom in many countries, and when you get

enough countries with enough negativeimpacts, you start to poison global politics.

Although we cannot affect any country'ssupply of oil, we can affect its global price by

endgame

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altering the amounts and types of energy weconsume. By 'we', I mean the US in particular,which consumes about 25 per cent of the

world's energy, and the oil-importing countriesin general. Thinking about how to alter ourenergy consumption to reduce the price of oil

is no longer just a hobby for environmentalists.It is a national security imperative.

Therefore, any American democracy-promotion strategy that does not also include a

credible and sustainable strategy for findingalternatives to oil and bringing down the price

of crude is utterly meaningless and doomed tofail. Today, no matter where you are on theforeign-policy spectrum, you have to think like

a Geo-Green. You cannot be either an effectiveforeign-policy realist or an effective democracy-promoting idealist without also being aneffective energy environmentalist.

Thomas L. Friedman is a columnist for The New York

Times and author of, most recently, The World isFlat: A Brief History of the Twenty-First Century

(New York: Farrar, Straus & Giroux, 2005).

Reprinted with permission from FOREIGN POLICY154 (May/June 2006) www.foreignpolicy.com.Copyright 2006, Carnegie Endowment forInternational Peace

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"[Endgame] forcefully, lovingly, despairingly, and tirelessly describeshow human civilization-with its global capitalism, plutocracy, andoil-based economy--is destroying planet earth.... Jensen's assertive,aphoristic style demands reader response."-Utne Magazine

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TITLE: The First Law of PetropoliticsSOURCE: The Ecologist 36 no7 S 2006PAGE(S): 24-8

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