1. Curse or Blessing? How cheap oil influences conflict dynamics
- Author:
- Matteo Ilardo
- Publication Date:
- 03-2021
- Content Type:
- Policy Brief
- Institution:
- European Union Institute for Security Studies
- Abstract:
- When the price of oil goes down, there is often a sigh of relief among oil-importing countries, as cheap oil means a boost for the economy and increased savings for consumers and businesses. As a result, most of Europe tends to notice price shocks only when prices go up: consumers are squeezed while producers accumulate enormous wealth. Yet, for oil-exporting countries cheap oil means increased poverty and tighter budgets – a recipe for instability and conflict. This Conflict Series Brief analyses the effects of the recent pandemic-induced oil price shock on three vulnerable, conflict-affected countries. This is done by testing the two competing theories of the resource curse and of the rentier state, each offering a different interpretation of the oil-conflict nexus: The resource curse theory posits that an abundance of natural resources, and in particular oil, raises the probability, frequency, and intensity of conflict. The rentier state theory sees the presence of oil as having a positive effect on peace, as regimes use revenues to either buy off political opposition or suppress it. The recent price crash and its effects on conflicts in South Sudan, Libya and Iraq provide empirical support to the analysis. This Brief argues that both the stabilising and destabilising mechanisms identified in the two grand narratives are simultaneously at play in oil-rich countries. It shows that oil prices occupy a central role in determining which theory provides the most accurate outcome prediction. As a result, we hope to get a better understanding of the often-counterintuitive role that the resource plays in the onset of civil war. Building on the experience of the 2020 pandemic price plunge, the Brief ends with an overview of the future challenges that cheap oil will entail for producers and for Europe as oil demand peaks and the world moves away from fossil fuels.
- Topic:
- Civil War, Energy Policy, Oil, War, Natural Resources, and Conflict
- Political Geography:
- Africa, Middle East, and North Africa