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Resource Wars

William K. Tabb taught economics at Queens College for many years, and economics, political science, and sociology at the Graduate Center of the City University of New York. His books include Economic Governance in the Age of Globalization (Columbia University Press, 2004), Unequal Partners: A Primer on Globalization (The New Press, 2002), and The Amoral Elephant: Globalization and the Struggle for Social Justice in the Twenty-First Century (Monthly Review Press, 2001). He can be reached at william.tabb [at] gmail.com.

This essay is adapted from a plenary presentation to the conference of the Union for Radical Political Economics, August 12, 2006.

The close relation between war and natural resources is of long standing. What else was colonial conquest about? Vast estates held by the Dutch East India Company came under direct control of the Crown as did the lands conquered by the British East India Company. What was in demand in Europe dictated the commodities produced and the natural resources that were ripped from the earth. European violence set the terms on which resource extraction occurred. There was no free trade for mutual benefit based on comparative advantage. There were few constraints on the violence employed in the extraction of resources starting with the “shock and awe” of bombardments and fire storms of wars of conquest and followed by the pitiless subjugation of people of color. Having defeated the locals in battle the invaders suborned local elites and customs to extract resources from those they had conquered.

The form of the exploitative relationships with particular colonial and neocolonial overlords depended in large measure on the local traditions and social structures the invaders found. The Spanish used the Inca mita system of requisitioned labor for the mines where the subjugated died by the thousands from brutality and, as in the case of the vast silver mines of Potosi, by mercury poisoning. The crushed ore was mixed with mercury and trodden by the workers with their bare feet and then heated producing poisonous vapors. King Leopold murdered millions in the Congo employing slavery, terror, maiming, and mass killings because it was his view that “the colonies should be exploited, not by the operation of a market economy, but by state intervention and compulsory cultivation of cash crops to be sold to and distributed by the state at controlled prices.”1

The Belgians ruled through Tutsi chiefs promoting them to a superior status over the Hutus and imposed compulsory cash crop demands through their Tutsi intermediaries. After independence Tutsi military dictators were left to rule. The animosities created provided the fear and hatred which led to genocide decades after independence. In the post-independence states without indigenous capitalism, but with only a comprador class, control of state revenues and natural resources were the major sources of wealth. After independence, control of the army and the power to coerce, following the colonial model, became the norm in many new nation states. In the struggles which broke out after independence and frequently under Cold War pressures it was often the most violent and ruthless elements willing to do whatever was necessary to gain control who came out on top—especially where there were easily exploitable resources to be appropriated and make those commanding them rich beyond imagining. The new nation’s economy remained entwined with that of the former colonial power. More democratically inclined indigenous leaders could be coerced and assassinated. sponsored civil war and military coups could be employed to maintain access on favorable terms to resources.

Resource extraction in the contemporary era continues to spur extremes of violence and war. In a 1997 study Jeffrey Sachs and Andrew Warner examined the economic performance of ninety-five countries between 1970 and 1990.2 They found the higher a country’s dependence on natural resource exports the slower their economic growth rate. Paul Collier and co-authors analyzed fifty-four large-scale civil wars that occurred between 1965 and 1999 and found that a higher ratio of primary commodity exports to GDP “significantly and substantially” increases the risk of conflict.3 High levels of oil dependence correlate especially strongly. Timber it turns out is also “technologically suited to rebel predation,” as with the Khmer Rouge. Researchers find the phenomenon of “war booty futures” where outsiders back rebel groups in exchange for a future share of the takings—a prospect which features heavily in Richard K. Morgan’s powerful dystopic novel Market Forces.

It should be pointed out that when we speak of wars in the last third of the twentieth century we are talking about civil wars. Between 1965 and 1999 if we look at those wars in which more than a thousand people were killed a year, there were seventy-three civil wars, almost all driven by greed to control resources—oil, diamonds, copper, cacao, coca, and even bananas. Collier and Anke Hoeffler find countries with one or two primary export resources have more than a one-in-five chance of civil war in any given year.4 In countries with no such dominant products there is a one in a hundred chance. In these civil wars more than 90 percent of casualties are civilians. At the start of the twentieth century war casualties were 90 percent soldiers. Such “traditional” wars are rare today. Resource wars with their devastating impacts on civilians have become the norm.

Indeed, the oil rich countries of Africa—Nigeria, Gabon, the Sudan, the Congo, Equatorial Africa, and Chad—have long histories of coups, military rule, and strongmen. Millions have died of hunger and disease as a result of wars over oil, diamonds, copper, and other resources as armed rebels steal, rape, and murder making life-generating economic activity difficult if not impossible. In the Congo, one of the resource richest countries on the planet, a half dozen countries have armies deployed and countless rebel groups have fought to control rich deposits of gold, diamonds, timber, copper, and valuable cobalt and coltan in what is often referred to as “Africa’s First World War.” Global Witness reports that despite being the fourth largest oil producer in Africa, Congo Brazzaville has overseas debt of $6.4 billion as a consequence of Elf Aquitaine, the former French state oil company’s strategy of influence peddling and bribery.

In Angola, Joseph Savimbi, backed by foreign powers from the Cold war, amassed a reported $4 billion from diamonds, ivory, and other resources sold abroad in his decades of looting and brutality before he was killed. In Angola a million people died in the civil war, one child in five does not live to its fifth birthday, and 40 percent of Angola’s population has been displaced. Almost none of the income from the state-owned oil company found its way to Angola but was instead diverted to overseas banks. It was the wholesale looting of Angola’s oil revenues that fueled that country’s vicious civil war.

Africa bleeds because of its abundant wealth. Charles Taylor privatized the resources of Liberia by selling rights to resources to foreign companies and pocketing the money. There is the case of Dafur in the oil rich Sudan. There is Nigeria, exceedingly rich in oil and corruption, where foreign aid is badly needed. The environment of the Niger Delta is being destroyed, and people are killed by army thugs protecting Shell oil. Equatorial Guinea is a criminalized state which receives half a billion in oil revenues. Because of this, it ranks sixth in the world in per capita income but third from the bottom in the UN’s human development index table. a third of the population has been killed or driven into exile. The revenues of the Cameroon-Chad pipeline operated by Exxon-Mobile, with additional investment from ChevronTexaco, do not help the people of the area who remain among the poorest of the poor as the natural wealth of their land is looted.

Wherever there are resources to be plundered we find foreign companies ready to cooperate; often there is the World Bank to put a smiley face on these atrocities, claiming things would be worse if they did not supervise the corruption. The reality of the bank’s role however is quite different. Emil Salim, a former Indonesian environment minister who led the World bank Extractions Industries Review, has written, “The bank is a publicly supported institution whose mandate is poverty alleviation. Not only have the oil, gas and mining industries not helped the poorest developing countries, they have often made them worse off.”5 That is from the man the World Bank chose to review its past practices. He points out that scores of academic assessments as well as the bank’s own reports correlate corruption, civil war, and growing poverty with reliance on extractive industries, comparing unfavorably with the performance of more diversified economies.

While the cases I have mentioned focus on the relationship between resources and war in Africa, Salim’s own country is also an example of this relationship. Indonesia can be seen as analogous to a nineteenth-century empire. The central government exploits the territories, especially those rich in resources, along lines similar to what was done by the Europeans. Jakarta conducts a dirty war in Aceh, its northern province rich in natural gas and rife with civilian killings and disappearances. The Indonesian state has waged a campaign of terror and near genocide in oil and natural gas rich East Timor. Exxon-Mobil is the largest long-term investor in Indonesia. The foreign owned gold and copper mines of Irian Jaya, where miners die while working or are killed by security forces and the environment is devastated making life difficult for the province’s people, are an international scandal. In West Papua logging companies with close ties to the military have terrible reputations as well for using force against locals as they displace tribal people from their land and destroy the local ecosystem. The atrocities carried out by the military and the government in pursuit of revenues from their resources frequently require the cooperation of foreign transnationals and are supported by World Bank project aid.

Ted Koppel, writing in the New York Times (February 24, 2006), responded to what he described as the Bush administration’s “touchiness” about the charge that we are in Iraq because of oil by stating the obvious, though often unsaid, truth, “Now that’s curious. Keeping oil flowing out of the Persian Gulf and through the Strait of Hormuz has been bedrock American foreign policy for more than half a century.” Today control over the world’s oil supply is at the forefront of Washington policy makers’ thinking, even if the president and his team deny any such intent and talk publically of reducing dependence on Middle East oil by three-quarters of present levels, an absurdly impossible goal. Two-thirds of the oil in the world is in the Middle East, much of it under Iraq and Iran, the axis of oil, the current targets of the U.S. war on terrorism. Control of oil is integral to Washington’s official goal of world domination, a goal stated this baldly in national security documents.

During the administration of the first President Bush, the Pentagon under then defense secretary Dick Cheney produced a strategy paper stating the mission of “convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.” The United States would defend their interests for them and so the policy was to “discourage them from challenging our leadership or seeking to overturn the established political and economic order.”6 Control of the world is facilitated through control of essential resources. By controlling the world’s energy, and in the presence of its overwhelming military superiority, the United States is potentially able to deny the lifeblood of any society and intimidate and coerce the world more effectively, a design going back easily to Henry Kissinger, and earlier to the emergence of U.S. global power at the end of the Second World War, but now carried to new heights by the neoconservatives.

Hegemony has always been a bipartisan consensus. With regard specifically to the Middle East we have the Carter Doctrine: “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.” Since Carter created the Rapid Deployment Force with this intervention in mind the United States has moved to forward positioning, the establishment of a huge permanent military presence in the region, including a number of multi-billion dollar bases in Iraq, huge fortified cities with all the comforts of home, fast food places, video stores, and car rental agencies for the soldiers who garrison the empire along “the arc of instability.” All of this takes place in territories which coincide with the parts of the Global South where oil is found. That the official rationale is now the war on terrorism in place of anticommunism is secondary to the continuation of the basic policy of world domination.

Michael Klare, author of Resource Wars and Blood for Oil, cites British defense secretary John Reid’s warning that climate change “will make scarce resources, clean water, viable agricultural land even scarcer” and so “make the emergence of violent conflict more likely.”7 In the United States, too, military planners and the CIA spin out scenarios of wars for desperately needed natural resources and the need to deal with the mass migrations of desperate people as entire societies disintegrate. Climate change, these forecasts suggest, will bring on new and even greater resource wars. The United States with its overwhelming advantage in all things military is likely to see saber rattling, shock, and awe as the best responses. “When you are a hammer, everything looks like a nail,” seems the appropriate metaphor for the petro-political situation. Some Americans, afraid of not being able to heat their homes and fill the tanks of their gas guzzling cars, may unthinkingly offer support for new foreign adventures—but Iraq has shown such oil comes at a high cost in blood and treasure.

It seems it is not all that easy to shock, awe, invade, and occupy countries. In the spring of 2006, 60 percent of Americans told the Gallup Poll that they did not think it worth going to war in Iraq and 74 percent disapproved of Bush’s handling of gasoline prices. They saw neither victory nor an easy exit and they had become suspicious that higher energy prices seemed to accompany such adventurism. Some worried about the U.S. balance of payments and some even knew that energy costs equaled a third of the trade deficit. Before the war, Lawrence Lindsey, then Bush’s senior economic adviser, suggested the war would cost $200 billion. He was sacked soon thereafter by an administration that insisted the war would cost $50–60 billion. Current estimates by Linda Bilmes and Joseph Stiglitz are in terms of trillions of dollars.

The relationship of demand and supply of oil is complicated. It takes up to ten years and billions of dollars to get a new field into production. Refineries also take time to build and are hugely expensive. The present shortage of gasoline, often seen as a conspiracy by the oil giants, is in the main the result of rising demand especially from China and India, and supply shocks due to political events such as the U.S. invasion of Iraq, and uncertainty over the Bush administration’s intentions toward Iran and perhaps other producer states. When oil prices spiked in the 1970s the supply response was so great that the price of crude collapsed by 1986. In the 1990s demand growth was slow, no new fields were developed to increase production levels, and even so the price collapsed again in 1998–99. This is not to say that huge profits were not made by the Western oil companies as well as OPEC and the banks which recycled petro-dollars. Since then there has been little excess capacity—in 2005 the world’s excess capacity was 2–3 percent. It had been 15 percent in 1986.

Those who would deny even the possibility of any conspiracy point out that the international oil companies have complete control over only 7–8 percent of global crude oil and access to perhaps 20 percent of reserves. They are therefore unlikely to have conspired to produce today’s high energy prices. This is a cyclical industry and conjunctural events are responsible for most oil spikes. Events such as Vice President Cheney’s remarks during a visit to Lithuania in the spring of 2006 when he criticized Russia for using oil and natural gas as “tools of intimidation and blackmail,” and the intense negotiations to build pipelines for oil and natural gas from Kazakhstan, Azerbaijan, or Uzbekistan without going through Iran or Russia, serve to illustrate that global market shares for particular companies are not the most crucial factors in understanding oil as a weapon.

It is analysis rather than an apology for Big Oil that tells us that the situation has changed since the end of the Second World War when the so-called seven Sisters dominated the world oil market. Today Exxon-Mobil produces less than 3 percent of world output and the seven largest oil companies control less than 5 percent of world reserves. This does not mean that Exxon-Mobil is not the world’s most valuable and most profitable company nor that the oil giants do not benefit from high oil prices. They do however face more sophisticated national oil companies from China, India, Brazil, and elsewhere who compete for supply which is increasingly under the control of state-controlled producers. The seven largest national oil companies, like Kuwait Petroleum, Abu Dhabi National Oil, Algeria’s Sonatrach, and the more familiar Saudi Aramco, hold at least half the world’s proven resources and account for a quarter of current production.8 Like Venezuela’s national oil company, which fuels Chavez’s Bolivarian revolution, they have changed the distributional equation nationally as well as globally.

The days of unalloyed Anglo-American petroleum dominance are gone, and that is why the hegemonic state and its coalition partner, no-longer-so-great Britain, are using force to reassert dominance not through corporate control so much as state terror and coercion. While there can be no question that the national oil companies have changed the distribution of revenues from the grossly exploitative terms of pre–Second World War Anglo-American total dominance, the governments of the Middle East retain limited room to maneuver where the national interests of the United States and its thirst for oil are concerned. The long shadow of Washington darkens and dominates the politics of the region. Price-supply conditions have been set in the past by Saudi Arabia, which has acted to prevent problems for the advanced capitalist economies. It is less certain that they can continue to do so. It is surely in the interest of the hegemonic state and its British ally to gain greater purchase over supply conditions through regime change and closer working relations with new producers in the Caspian Basin and in Africa.

As to peak oil, predictions of the end of oil have been made often in the past and it is not clear that frightening scenarios will play out in the short run that some suggest. There are complex issues of geology, technology, and prospective efficiency considerations. The accepted definition of proven reserves includes what is known and can be exploited economically with existing technology. Both price and potential supply are conservatively estimated for this purpose, although some experts suggest that producers have a strong interest in overestimating their reserve position. Because OPEC quotas are based on proven reserves it is in the interest of members to greatly exaggerate their reserves so they can pump more. Such “political barrels” are estimated to be 44 percent of the total reserves OPEC claims. Russia’s reserves are also uncertain but probably 30–40 percent lower than officially claimed.9 Some countries have been extracting large amounts of crude but maintaining the same proven reserves figures. Companies too have incentive to exaggerate their reserves. In 2006 Shell had to admit it had overestimated its reserves by nearly a third and its stock price promptly fell. Finally it is also the case that for the past two decades the oil taken out of the ground has exceeded new discoveries.

However, since only a little over a third of oil in known fields can be recovered today, technological innovation can be expected to increase the proven reserve figure. Among the optimists, Leonardo Maugeri wrote in Foreign Affairs, “Put simply, the world will continue to have plenty of oil.”10 In his view oil experts generally underestimate supply and overestimate demand. Like other optimists he believes China’s demand for oil is due to extraordinary circumstances that may not last and that demand in much of the industrialized world appears to have reached its peak and faces long-term decline. That is one view. Others point out that between 1992 and 2002 world oil demand grew by 1.5 percent, by 1.9 percent in 2003, and by 3.7 percent in 2004, with China’s demand increasing by 7.6 percent in 2003 and 15.8 percent in 2004. To say that it may not keep growing at this rate may be sensible, but it will surely keep growing and it will not be alone.

Even for those as optimistic as Maugeri, the question of who controls the oil cannot be irrelevant. The U.S. state through threat, intimidation, and violence wants its ham fist on the spigot, allowing it to blackmail other countries. U.S. imperialism has exerted control over the Global South through the World Bank, the IMF, and the WTO. During the Cold War it used the threat of communist Russia and China to keep Europe and Japan under its “leadership.” It is now attempting to use terrorism in the same way, not altogether successfully as it is turning out since its invasions and occupations of Afghanistan and Iraq have failed to produce stable governments. Its actions have produced more terrorists and alienated most of the world. Seeking control over oil for leverage does not seem a far fetched stratagem for the oil soaked Bush-Cheney administration.

The most effective resistance to this imperialist pattern now is coming from Latin America where Hugo Chávez has been repeatedly elected and won referenda because he has stood up to the United States and used his country’s oil revenues to raise living standards of the poor of his nation. In April 2006, Petroleos de Venezuela increased its stake in major projects to 60 percent from 40 percent as well as increasing its royalty cut. In Bolivia Evo Morales nationalized the energy industry, causing the United States to express disapproval regarding Morales’s “weak commitment to democracy” (echoing its charge against Chávez). However, Bolivia’s first elected indigenous president, according to the leading polling organization in the country, enjoyed an 80 percent approval rating in the spring of 2006 while George W. Bush’s approval rating was at 33 percent among his country’s citizens. Like Chávez who had suffered at least one coup attempt, Morales has to confront a military whose officers, trained at the School of the Americas, are not, as the press delicately put it, “a natural ally of Mr. Morales.” Such developments in Latin America and similar manifestations of petro-nationalism elsewhere along with the general decline in U.S. prestige and authority in the world have led Thomas Friedman to suggest we are now in the post-post-cold war era in which, “U.S. power is being checked from every corner.”11 The major enemies of the United States somehow seemed to be oil producers, a group of countries that given the current high energy prices cannot be easily intimidated through economic sanctions or political pressure.

To cheerleaders for U.S. imperialism it is the ineptitude of the Bush-Cheney policies, not their goals, that receive criticism. The critique of anti-imperialists now includes a maturing ecological consciousness. Struggles over energy are being conceptualized more usefully in terms of the economic system as well as energy alternatives. Indeed there is growing awareness that the final resource war will likely be for the planet’s survival. Currently, only 1.25 percent of China’s population possesses a car. If car ownership in that country were to reach the U.S. level, and the forecasts are that in 2031 China will have a per capita income close to that of the United States in 2004, China would have a billion vehicles. If they all needed to run on gasoline there is simply not enough oil and of course the greenhouse gases produced would heat things up distressingly. One hopes for technological breakthroughs but the precautionary principle suggests some major changes are in order as global energy consumption presses on available supply. A system that privileges accumulation over sustainability, individualism over solidarity, cannot be accepted.

The scarcity of other resources may prove serious as well. For example, today one in four people on the planet do not have access to safe drinking water; 12 percent of the world’s population consumes 86 percent of available fresh water. With global consumption of fresh water doubling in the next twenty years, there are all sorts of water war scenarios. Already five million people die a year from diseases related to contaminated water. China’s rapid industrialization has been accompanied by water contamination affecting 300 million people, that is nearly a third of the population. Kofi Annan’s Millennium Report tells us that if present trends continue two out of three people on the planet will live in countries considered to be “water stressed.” The World Bank projects that 40 percent of the people living in the world of 2050 will face some form of water shortage. In Palestine, Israel’s commandeering of scarce water is a major issue and on many other borders water conflicts are major occurrences.

The resource war against the environment will be better avoided when we stop counting consumption of nature as income, as a free good, while we deplete our natural capital, as Herman Daly and others have long suggested. The past rates of accumulation of capital which are now blithely projected forward were possible because of the unsustainable usage of natural resources. Mainstream economists have a great deal of responsibility for ignoring the distinction between natural capital and humanmade capital. Fortunately many world citizens take conservation and recycling seriously and consider a very different set of policies essential. They are ready to challenge the presumptions of a consumer society which has ignored the limits of the biosphere and resource base of our planet. How we respond to these resource pressures will determine what kind of society we shall have and what sort of planet ours will be.

The dramatic changes which will be required raise central issues regarding the logic of capitalism. Writing from prison in 1915 and facing the likely prospect of the First World War, Rosa Luxemburg in her Junius Pamphlet famously argued that humanity faced the choice between socialism or barbarism. “We stand today,” she wrote, “between the awful proposition: either the triumph of imperialism and the destruction of all culture, and as in ancient Rome, depopulation, desolation, degeneration, a vast cemetery; or, the victory of socialism.” The ecological crisis we face and the prospect of future resource wars make her warning all the more salient.

Notes

  1. Peter Duignan & Lewis H. Gann, The Rulers of Belgian Africa (Princeton, N.J.: Princeton University Press, 1979), 30; also see Adam Hochschild, King Leopold’s Ghost (New York: Houghton Mifflin Company, 1998).
  2. Jeffrey D. Sachs & Andrew Warner, “Fundamental Sources of Long-Run Growth,” American Economics Review, May 1997.
  3. See Paul Collier, “Natural Resources, Development and Conflict: Channels of causation and Policy Interventions,” World Bank, April 28, 2003.
  4. 4. Paul Collier & Anke Hoeffler, “Greed and grievance in civil war,” Oxford Economic Papers, October 2004.
  5. Extractive industries Review Secretariat, http://www.eireview.org/eir/eirhome.nsf.
  6. Patrick E. Tyler, “U.S. Strategy Plan Calls for Insuring No Rivals Develop; A One-Superpower World; Pentagon’s Document Outlines Ways to Thwart Challenges to Primacy of America,” New York Times, March 8, 1992.
  7. Michael T. Klare, “The Coming Resource Wars” March 7, 2006, http://TomPaine.com.
  8. Valerie Marcel & John V. Mitchell, Oil Titans: National Oil Companies in the Middle East (London: Chatham House/Brookings, 2006).
  9. Nicolas Sarkis, “Addicted to crude,” Le Monde Diplomatique, May 2006, 4.
  10. Leonardo Maugeri, “Two Cheers for Expensive Oil,” Foreign Affairs (March/April 2006), 155.
  11. Thomas L. Friedman, “The Post-Post-Cold War,” New York Times, May 10, 2006.
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