[A-List] Resource Wars

[Bill Totten <shimogamo@xxxxxxxxxxxxx>]

by William K Tabb

Monthly Review (January 2007 issue)

[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 ninety percent of casualties are civilians. At the start of the
twentieth century war casualties were ninety 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 forty 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 of Indonesia 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 US 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 US 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 (Owl Books, 2002) and Blood for Oil
(Penguin, 2004), 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 situatioon. 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, sixty 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 US 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 to 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 US 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 to 1999. 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 two to three percent. It had been fifteen 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 seven to eight
percent of global crude oil and access to perhaps twenty 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 three percent of world output and the seven largest oil companies control
less than five 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 thirty to forty 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 US state through threat, intimidation, and violence
wants its ham fist on the spigot, allowing it to blackmail other countries. US
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 Chavez 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 sixty percent from forty
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 Chavez). However, Bolivia's first elected indigenous president,
according to the leading polling organization in the country, enjoyed an eighty
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 Chavez 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 US prestige and authority in the world have led Thomas
Friedman to suggest we are now in the post-post-cold war era in which, "US 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 US 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 US 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 forty
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.
_____

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@xxxxxxxxxx


Notes:

{1} Peter Duignan & Lewis H Gann, The Rulers of Belgian Africa (Princeton
University Press, 1979), 30; also see Adam Hochschild, King Leopold's Ghost
(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} 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, "US 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 08 1992).

{7} Michael T Klare, "The Coming Resource Wars" (March 07 2006)
http://TomPaine.com.

{8} Valerie Marcel & John V Mitchell, Oil Titans: National Oil Companies 
in the Middle East (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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