The Politics of International Oil

Gov 365P/MES 322K: Class 17

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The news - in the real world:

• China May Be Using Oil to Press North Korea, NYT, Oct. 31, 2006
• 3 Are Killed in 2 Truck Bombings in Algeria, NYT, Oct. 31, 2006
• Budgets Falling in Race to Fight Global Warming (NYT, Oct. 30, 2006)
• Rice’s Counselor Gives Advice Others May Not Want to Hear (NYT, Oct. 28, 2006) In his own words
• Scandal Below the Surface - Nicholas Kristof op-ed, NYT, Oct 31, 2006
• Allies Dressed in Green - Thomas Friedman op-ed, NYT, Oct 27, 2006

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From last time:

An Arab or Islamic Oil Weapon?

• Comparing the Middle East wars of 1973 and 2006
• The money weapon?
  • Ramzi Salman, The US Dollar and Oil Pricing Revisited, said (in 2004) it's impractical but are times changing?

Questions:

• If oil cannot be used as a political weapon, why do we care about security and political stability in the Persian Gulf region? Why not just let commerce take care of itself?
• Why did we organize an international coalition in 1990 to remove Iraq from Kuwait?
• Why did we invade Iraq in March 2003?
  • to preempt an imminent threat of Saddam Hussein using WMD vs. USA? vs. Israel?
  • to fight "the War on Terror" ?
  • to get control of Iraqi oil?
  • to get military bases (extend the US security periphery, contain China) ?
  • to overthrow Saddam and enable Iraq to become a democracy?

 

Fighting the "War on Terror" : Dilemmas of Petro-States

• host country needs: democracy or political stability?
• petro-states: which ones are vulnerable? (recall US suppliers of crude oil?)
  • Arc of crisis?
  • Global Balkans?
  • African Sahel? cf Pluto Press 2009:

    Author	Keenan, Jeremy, 1945-
    Title	The dark Sahara : America's war on terror in Africa / Jeremy Keenan

• what is a "petroleum rentier"state?
  • rents to the government - the issue of transparency - cf. Transparency International 2008 report on revenue transparency 2008_Report_Revenue_Transparency_Oil_Gas_Companies.pdf
  • mineral wealth enclave - isolated from rest of economy
  • uneven economic development - "Dutch disease"?
  • windfalls - booms and busts
  • the Spanish bullion precedent: cf Terry Karl The Paradox of Plenty
  • Venezuela's cosmetic growth: just keep importing the cosmetics!
• Arab Human Development Reports - the "freedom deficit" coupled with Terry Karl's petrostate "deficits":
  • informaiton deficit
  • monitoring deficit
  • participation deficit (="freedom deficit" explanation?)
• political and economic consequences for "capital-deficient oil exporters" (i.e. virtually all of OPEC except Saudi Arabia, Kuwait, UAE, and Libya)
  • no taxation: the atrophy of the state's extractive capacity
  • poor information and allocation of resources
  • windfall budgets, white elephants, cathedrals in the sand
  • oil as "devil's excrement" (Peres Alfonso) - predestination?
  • impacts of colonial legacies? "Bad" neighborhoods (cf your recommended Herb reading)?

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Nov. 3, 2009

Department of Government, University of Texas at Austin.

Questions, Comments, and Suggestions to chenry@mail.utexas.edu