Handbook on Oil and International Relations 1839107545, 9781839107542

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HANDBOOK ON OIL AND INTERNATIONAL RELATIONS

To Victoria and Tessa

Handbook on Oil and International Relations Edited by

Roland Dannreuther Professor of International Relations, University of Westminster, UK

Wojciech Ostrowski Senior Lecturer in International Relations, University of Westminster, UK

Cheltenham, UK • Northampton, MA, USA

© Roland Dannreuther and Wojciech Ostrowski 2022

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2022938912 This book is available electronically in the Political Science and Public Policy subject collection http://dx.doi.org/10.4337/9781839107559

ISBN 978 1 83910 754 2 (cased) ISBN 978 1 83910 755 9 (eBook)

EEP BoX

Contents

List of contributorsviii Introduction to the Handbook on Oil and International Relations xvi Roland Dannreuther and Wojciech Ostrowski PART I

MATERIALITIES OF OIL

1

Oil and international relations: theory, materiality and the political Roland Dannreuther

2

From exploration to consumption: understanding the materialities of oil Gavin Bridge and Alexander Dodge

16

3

Oil and the materialities of other energy sources Margarita M. Balmaceda

33

4

Oil, culture and modernity Caleb Wellum

50

5

Oil securitisation: an analysis of oil security discourse and materiality in Azerbaijan Aurora Ganz

6

Oil, materiality, and interstate war Emily Meierding

79

7

Oil and Asian maritime security in the Indian Ocean Christopher Len

94

PART II

2

66

OIL, POWER AND POLITICAL ORDER

8

The geopolitics of oil: the United States in the twentieth century Gregory Brew

114

9

Russia: oil and revisionist power Richard Sakwa

129

10

Middle East: oil and political order Raymond Hinnebusch

142

11

Latin America: oil, populism and revolution David Mares

160

12

Africa: oil, colonialism and development Nelson Oppong and Kwabena Oteng Acheampong

179

v

vi  Handbook on oil and international relations PART III OIL AND DEVELOPMENT 13

Oil nationalism, decolonization and fragmentation Wojciech Ostrowski

192

14

Labour in the making of the international relations of oil: resource nationalism and trade unions Peyman Jafari

15

Oil, law, temporality and indigenous rights Suzana Sawyer and Lindsay Ofrias

223

16

The oil curse: pollution, authoritarianism, corruption, and conflict Douglas A. Yates

242

17

Oil, global governance and transparency norm proliferation Nathan Andrews

254

18

Oil and subsidies Subhes C. Bhattacharyya

270

19

Qatar: energy abundance and small powers Betul Dogan-Akkas

284

208

PART IV OIL AND GLOBAL MARKETS 20

International relations and oil: towards a networked power framework of analysis Llewelyn Hughes and Andreas Goldthau

21

Global capitalism and oil Tim Di Muzio and Matt Dow

317

22

Oil price volatility: cartels, geopolitics and speculation Xiaoyi Mu

336

23

Oil and international institutions Dag Harald Claes

356

PART V

303

OIL, SUSTAINABILITY AND THE FUTURE

24

International oil companies, decarbonisation and transition risks Mathieu Blondeel and Michael Bradshaw

372

25

The oil transition in a large oil-importing country: the case of China Philip Andrews-Speed

393

26

Shale oil and the future of geopolitics Inwook Kim

409

Contents  vii 27

Transition troubles: petrostates, decarbonization, and the geopolitics of peak oil demand Thijs Van de Graaf

427

Index445

Contributors

Nathan Andrews is an Associate Professor in the Department of Political Science at McMaster University, Canada. His research focuses on the global political economy of natural resource extraction and development and is currently principal investigator on a Social Sciences and Humanities Research Council (SSHRC) of Canada-funded collaborative project that examines meaningful stakeholder engagement in resource-rich communities in Canada, Chile, Ghana and Norway. He also has an interest in critical international relations and development theory. His peer-reviewed publications have appeared in journals such as International Affairs, Resources Policy, World Development, Third World Quarterly, Energy Research and Social Science, Africa Today, Business and Society Review and Journal of International Relations and Development, among others. His latest books include a monograph, Gold Mining and the Discourses of Corporate Social Responsibility in Ghana (Palgrave, 2019); two co-edited volumes, Corporate Social Responsibility and Canada’s Role in Africa’s Extractive Sectors (University of Toronto Press, 2020) and The Transnational Land Rush in Africa: A Decade After the Spike (Palgrave, 2021); and a co-authored monograph, Oil and Development in Ghana: Beyond the Resource Curse (Routledge, 2021). Philip Andrews-Speed is a Senior Principal Fellow at the Energy Studies Institute, National University of Singapore. He has 40 years’ experience in the field of energy and resources, starting his career as a mineral and oil exploration geologist before moving into the field of energy and resource governance. His main research interest has been the political economy of the low-carbon energy transition. China has been a particular focus for his research, but in recent years he has been more deeply engaged with energy challenges in Southeast Asia. He is currently leading a research project on the governance of nuclear safety. His latest book, with Sufang Zhang, is China as a Global Clean Energy Champion: Lifting the Veil (Palgrave, 2019). Margarita M. Balmaceda is a political scientist working at the intersection of international relations, the political economy of authoritarianism and democracy, and technology, with a special expertise in energy politics (oil, natural gas, coal, nuclear, renewables) and commodities ‒ especially steel and the metallurgical sector ‒ in Ukraine, the former USSR and the EU. She has a PhD in Politics from Princeton University, USA, and is Professor of Diplomacy and International Relations at Seton Hall University, USA. Concurrently, she heads the Study Group on “Energy Materiality: Infrastructure, Spatiality and Power” at the Hanse-Wissenschaftskolleg (Germany). Her books include: The Politics of Energy Dependency: Ukraine, Belarus and Lithuania Between Domestic Oligarchs and Russian Pressure (University of Toronto Press, 2013), Living the High Life in Minsk: Russian Energy Rents, Domestic Populism and Belarus’ Impending Crisis (CEU Press, 2014) and Energy Dependency, Politics and Corruption in the Former Soviet Union (Routledge, 2008). Capitalizing on her Ukrainian, Russian, Hungarian and German language skills, she has conducted extensive research in Ukraine, Russia, Belarus, Lithuania, Moldova, Hungary, Germany and Finland. Her latest book, Russian Energy Chains: The Remaking of Technopolitics from viii

Contributors  ix Siberia to Ukraine to the European Union (Columbia University Press, 2021) analyses how differences in the material characteristics of different types of energy can affect how different types of energy may be used as sources of foreign and domestic power. Subhes C. Bhattacharyya is an internationally renowned energy specialist working on global energy‒environment issues for over 35 years, with a special focus on developing countries. He specialises in multidisciplinary, applied energy research covering engineering, economic, regulatory and environmental perspectives. He is a Professor of Energy Economics and Policy and Director of the Institute of Energy and Sustainable Development at De Montfort University (DMU), Leicester (UK). He has written more than 80 papers in reputed peer-reviewed journals, and authored and edited several books. Mathieu Blondeel is a postdoctoral Research Fellow at the Warwick Business School, UK, where he is working on the project ‘UK Energy in a Global Context’, funded by the UK Energy Research Centre. He obtained his PhD in International Relations at Ghent University (Belgium). His research interests lie at the intersection of global climate and energy politics, with a particular focus on the geopolitical economy of energy system transformation. Michael Bradshaw is Professor of Global Energy in the Strategy and International Business Group at Warwick Business School, UK. He is also a Co-Director of the UK Energy Research Centre (UKERC), where he leads on UK Energy in a Global Context; he also leads the University of Warwick’s Global Research Priority on Energy. He is a geographer by training and works at the interface between economic geography, international relations and strategy and international business. He is currently working on the geopolitics of energy system transformation and is continuing his work on global gas security, both for UKERC. He is the author of Global Energy Dilemmas (Polity, 2014), which explores the relationship between energy security, globalization and climate change; co-editor of Global Energy: Issues, Potentials and Policy Implications (Oxford University Press, 2015), and co-author of Natural Gas (Polity, 2020), which explores the geopolitical economy of the global gas industry. Gregory Brew is a historian of oil, modern Iran and US foreign policy during the Cold War. His first book, Petroleum and Progress in Iran: Oil, Development, and the Cold War (Cambridge University Press, 2022), explores the origins of the US alliance with Pahlavi Iran, the birth of the global fossil fuel economy and the rise of the Iranian ‘petro-state’. His work has appeared in Iranian Studies, Texas National History Review, International History Review and elsewhere. From 2018 to 2020 he was a Postdoctoral Fellow at the Center for Presidential History, USA, and in 2021–2022 he was a visiting fellow at the Jackson Institute for Global Affairs at Yale University, USA. Gavin Bridge is Professor of Economic Geography at Durham University, UK, and a Fellow of the Durham Energy Institute. His research addresses questions of property, access and control associated with emergent geographies of resource production and consumption, including the political ecologies of resource scarcity and security. Recent work includes research on raw material production networks associated with old and new carbon economies; and how the material character of natural resources shapes their appropriation, commodification and marketization. He is the co-author of Oil (Polity, 2017, with P. Le Billon), co-editor of the Routledge Handbook of Political Ecology (Routledge, 2015, with T. Perreault and J.

x  Handbook on oil and international relations McCarthy), and co-author of Energy and Society: A Critical Perspective (Routledge, 2018, with S. Barr, S. Bouzarovski, M. Bradshaw, E. Brown, H. Bulkeley and G. Walker). Dag Harald Claes is Professor at the Department of Political Science at the University of Oslo, Norway. Among his publications are studies of oil producer cooperation; conflict and cooperation in oil and gas markets; Arctic oil and gas; the energy relations between Norway and the European Union; and the role of oil in Middle East conflicts. His most recent book is The Politics of Oil: Controlling Resources, Governing Markets and Creating Political Conflicts (Edward Elgar Publishing, 2018). Roland Dannreuther is Professor of International Relations at the University of Westminster, UK. His research interests include international security studies, energy politics and the regional politics of Russia, the Middle East and Central Asia. He is the author of Energy Security (Polity, 2017) and International Security: the Contemporary Agenda (Polity, 2013); co-editor of Global Resources: Conflict and Cooperation (Routledge, 2013, with Wojciech Ostrowski); and co-author of China, Oil and Global Politics (Routledge, 2011). Tim Di Muzio is an Associate Professor in International Relations and Political Economy at the University of Wollongong, Australia, and Associate at the Center for Advanced International Relations Theory, University of Sussex, UK. His research examines economic inequality, energy policy and, most recently, global debt and money. He is the author of The 1% and the Rest of Us (Bloomsbury Publishing, 2015), Carbon Capitalism (Rowman & Littlefield, 2015), The Tragedy of Human Development (Rowman & Littlefield, 2017), and with Richard H. Robbins, Debt as Power (Manchester University Press, 2016) and An Anthropology of Money (Routledge, 2017), among other works. Alexander Dodge works as an Associate Professor at the Department of Geography at the Norwegian University of Science and Technology, where he also obtained his PhD in 2020. He has previously worked as a Postdoctoral Research Associate at the Department of Geography at Durham University, UK. His research focuses on conceptualizing and accounting for the emergence, transformation and instability of hydrocarbon production networks in the global economy. He has a particular focus on the role of nation-states in constituting the conditions for stability and change in hydrocarbon production networks. He has previously carried out research on global shifts in liquefied natural gas production networks and the implications for energy markets in Southeast Asia, and he is now researching the evolution and ongoing transformation of the UK’s strategic position in global oil production networks. He teaches courses in global production networks, innovation studies and economic geography. Betul Dogan-Akkas is a PhD candidate on the joint degree programme between Qatar University Gulf Studies Center and Durham University School of Government and International Affairs, UK. She received her MA degree with her thesis, titled ‘Securitization of Qatari foreign policy’, from Qatar University. Dogan-Akkas completed her BA in International Relations at Bilkent University, Turkey. Her research interests include foreign policymaking, security and social transformation of the Gulf countries. Matt Dow received his PhD in Political Science in 2019 from York University, Toronto, Canada. He is currently a Research Assistant for Dr Stephen Gill, Dr Isabella Bakker and Dr Solomon Benatar. His research examines fossil fuels, war and imperialism; the global monetary and debt system; settler colonialism; and climate change. He has been published

Contributors  xi in the Cambridge Review of International Affairs and has contributed a variety of chapters to scholarly edited volumes. He is currently writing his first book, Canada’s Carbon Capitalism: Energy, Settler Colonialism, Social Reproduction, and the Climate Emergency. Aurora Ganz is Associate Lecturer in Critical Security Studies at the University of St Andrews, UK. She holds a PhD in International Relations from the Department of War Studies at King’s College London, UK. Her research is situated in critical security studies and is highly interdisciplinary, primarily nested in the broader social sciences. Her work exposes the perils of the undemocratic tendencies that find a home in the security realm. Dr Ganz has lectured at Sciences Po, Paris, France, and University College London (UCL), UK. Andreas Goldthau is the Franz Haniel Professor for Public Policy of the Willy Brandt School, University of Erfurt, Germany. He is also Research Group Leader at the Institute for Advanced Sustainability Studies, Germany. Before joining the Willy Brandt School, Professor Goldthau served as Professor in International Relations at Royal Holloway College, University of London, UK, and as Professor at the Central European University’s School of Public Policy. He was a Marie Curie Senior Fellow with the Geopolitics of Energy Project at Harvard Kennedy School, USA, and an Adjunct Professor with the Johns Hopkins MSc programme in Energy Policy and Climate, USA. He has also held postdoctoral appointments at the Paul Nitze School of Advanced International Studies at Johns Hopkins University, the RAND Corporation and the German Institute for International and Security Affairs. Professor Goldthau is non-resident Fellow with the Payne Institute at the Colorado School of Mines (USA), the Global Public Policy Institute (Germany) and the German Council on Foreign Relations; and a Visiting Professor at the College of Europe in Bruges, Belgium. He is the author of The Politics of Shale Gas in Eastern Europe (Cambridge University Press, 2018), A Liberal Actor in a Realist World: The EU Regulatory State and the Global Political Economy of Energy (Oxford University Press, 2015), The Global Energy Challenge: Environment, Development and Security (Palgrave Macmillan, 2015) and OPEC (Hanser, 2009). Raymond Hinnebusch is Professor of International Relations and Middle East politics and Director of the Centre for Syrian Studies at the University of St Andrews, UK. His works include Egyptian Politics under Sadat (Cambridge University Press, 1980), Authoritarian Power and State Formation in Ba’thist Syria (Westview, 1990), Syria: Revolution from Above (Routledge, 2001) and The International Relations of the Middle East (Manchester University Press, 2003, 2nd edition 2015), as well as ‘Globalization, the highest stage of imperialism: core‒periphery dynamics in the Middle East’, in Stephen Stetter (ed.), Globalization and the Middle East (Palgrave Macmillan, 2013), and ‘Order and change in the Middle East: a neo-Gramscian twist on the international society approach’, in Barry Buzan (ed.), International Society and the Middle East: English School Theory at the Regional Level (Palgrave, 2009). Llewelyn Hughes is an Associate Professor at the Crawford School of Public Policy, Australian National University. Hughes is author of Globalizing Oil: Firms and Oil Market Governance in France, Japan, and the United States (Cambridge University Press, 2015), and has contributed to journals including the Annual Review of Political Science, Climate Policy, Climatic Change, Energy Policy, International Security and International Studies Quarterly. He received a PhD from the Massachusetts Institute of Technology (MIT), USA, and holds a Master’s degree from the University of Tokyo, Japan.

xii  Handbook on oil and international relations Peyman Jafari is an Assistant Professor of History and International Relations at William and Mary, Williamsburg, VA, USA. His research interests include the history of energy, labour, commodity frontiers, revolutions and international relations. He is currently writing a book on Oil and Labour in the Making of the Iranian Revolution: A Social History of Uneven and Combined Development. His second book project is a history on Oil Frontiers in the British and Dutch Empires: Land, Labour and Environment in the Making of an Imperial Oil Regime, 1890–1940. His previous publications include Der Andere Iran: Geschichte und Kultur von 1900 zur Gegenwart (The Other Iran: History and Culture from 1900 to the Present) (C.H. Beck, 2010). He has co-edited two volumes: Worlds of Labour Turned Upside Down: Revolutions and Labour Relations in Global Historical Perspective (Brill, 2020), and Iran in the Middle East: Transnational Encounters and Social History (I.B. Tauris, 2015). Inwook Kim is an Assistant Professor of Political Science and Diplomacy at the Sungkyunkwan University, South Korea. He studies international security, history and geopolitics of oil, politics of alliances, and the Korean Peninsula. His research has appeared in International Studies Quarterly, Security Studies, Contemporary Security Policy and Foreign Affairs, among others. He holds a PhD in Political Science from George Washington University, USA, and has previously taught at Korea Military Academy, the University of Hong Kong and Singapore Management University. Christopher Len is a Senior Research Fellow at the Energy Studies Institute (ESI) of the National University of Singapore (NUS), Singapore. He received his PhD from the Centre for Energy, Petroleum and Mineral Law and Policy (CEPMLP) at the University of Dundee in the UK, where he was awarded the Dean’s Medal for Research. Christopher also has degrees from the University of Edinburgh, UK and Uppsala University, Sweden. He is currently an Associate Fellow at the ISEAS‒Yusof Ishak Institute in Singapore. He was previously a Research Fellow at the Institute for Security and Development Policy (ISDP) in Stockholm, Sweden, where he was responsible for the Energy and Security in Asia Project, and continues as an ISDP-Associated Research Fellow. His current research interests include Asia energy and maritime security, Chinese foreign policy, Arctic energy security and sustainable development, and the growing political and economic linkages between the various Asian sub-regions. David Mares is Distinguished Professor of Political Science, Institute of the Americas Endowed Chair for Inter-American Affairs and Director Emeritus of the Center for Iberian and Latin American Studies at the University of California, San Diego, USA. He is also Nonresident Scholar for Latin American Energy Studies, James A. Baker III Institute for Public Policy at Rice University, USA, and a member of the Council on Foreign Relations, USA. Mares was previously Profesor-Investigador at El Colegio de México (1980–82), Fulbright Professor at the Universidad de Chile (1990) and Visiting Professor at the Facultad Latinoamericana de Ciencias Sociales (FLACSO) in Ecuador (1995). He is the author of 12 books and his work has been translated into Spanish, Portuguese, Italian, French and Chinese. Emily Meierding is an Assistant Professor of National Security Affairs at the Naval Postgraduate School in Monterey, California, USA. Her first book, The Oil Wars Myth: Petroleum and the Causes of International Conflict (Cornell, 2020) finds that competition over oil and natural gas resources is a far less common cause of international aggression than most people assume. In addition to her research on conflict and cooperation over energy and environmental resources, she is currently examining oil producers’ responses to

Contributors  xiii low energy prices and the politics of energy transitions. Her work has appeared in Security Studies, Comparative Politics, Journal of Global Security Studies, International Studies Review, Energy Research and Social Science and Foreign Policy. Before joining the Naval Postgraduate School, she taught at the Graduate Institute of International and Development Studies in Geneva, Switzerland. Xiaoyi Mu is a Reader in Energy Economics at the Centre for Energy, Petroleum and Mineral Law and Policy (CEPMLP), the University of Dundee, UK. He earned his PhD in Economics from the University of Oklahoma, USA, in 2006, and his Bachelor’s degree in Economics from Renmin University of China in 1994. His research interest has focused on commodity pricing and volatility; electricity market design and the impact of renewables; energy taxation and subsidy; and other energy policy issues in developing countries. His papers have appeared in such journals as Journal of Industrial Economics, Journal of Commodity Markets, Economic Inquiry, Energy Journal, Energy Economics, Energy Policy and Operations Research. His book, The Economics of Oil and Gas, has recently been published by Agenda Publishing. Dr Mu has experience in both the oil and gas and the electricity industries. Before joining CEPMLP in 2008, Dr Mu was a senior consultant at Global Energy Decisions. From 1994 to 2001, he worked at China National Petroleum Corporation (CNPC) and PetroChina as an analyst and manager in marketing and natural gas divisions. Lindsay Ofrias is a PhD candidate in anthropology at Princeton University, USA. Her research examines the political economy of contamination and people’s struggles for biocultural survival in the oil frontier of the Ecuadorian Amazon. She is also director of a feature-length documentary (currently in production) that explores themes related to her chapter in this book. Lindsay’s research was made possible by support from the Social Science Research Council’s International Dissertation Research Fellowship, the Mary and Randall Hack ’69 Graduate Award (Princeton Environmental Institute) and the Health Grand Challenge Graduate Research Award (The Center for Health and Wellbeing, Princeton University). Nelson Oppong is a Lecturer in African Studies and International Development at the Centre of African Studies, University of Edinburgh, UK, whose research is devoted to the politics of natural resources, institutional reform, state building and related global processes in low-income countries. He is a member of the editorial board of the Review of African Political Economy, a Fellow of the Higher Education Academy of the United Kingdom and a guest editor for the Extractive Industries and Societies, where he completed a special issue on ‘Governing African oil and gas: boom-era political and institutional innovation’, which compiled emerging research and conceptual debates about the politics of reform in over ten oil-rich countries across Africa. His research has also appeared in other leading academic journals such as Commonwealth and Comparative Politics, Contemporary Social Sciences and Oxford Development Studies. Prior to joining the University of Edinburgh, Nelson held various teaching positions at the City University of New York (USA), University of Bath and University of Oxford (UK), and the University of Ghana, teaching courses in international development, politics, international relations, world history and human geography. He has also spent several years as a consultant for governments and international organisations, including the World Bank, the Commonwealth Secretariat and the Caribbean Leadership Programme. Nelson completed his PhD in International Development at the University of Oxford, where he also received an MPhil degree in Development Studies. He possesses another MPhil degree in

xiv  Handbook on oil and international relations Political Science, and a Bachelor of Arts (Hons) in Political Science, French and Philosophy from the University of Ghana. Wojciech Ostrowski is a Senior Lecturer in International Relations at the University of Westminster, UK. His research concentrates on the areas of energy security, political economy of resources and international relations, with a regional focus on Central Asia and Eastern Europe. He is the author of Politics and Oil in Kazakhstan (Routledge, 2010, 2nd edition 2011) and author and co-editor of Global Resources: Conflict and Cooperation (co-edited with Roland Dannreuther, Palgrave, 2013), Understanding Energy Security in Central and Eastern Europe: Russia, Transition and National Interest (co-edited with Eamonn Butler, Routledge, 2018, 2nd edition 2021). He received a PhD from the University of St Andrews, UK. Kwabena Oteng Acheampong graduated with a Doctor of Juridical Sciences (SJD) from Harvard Law School, USA, where he also obtained his LLM, and focused his research on the juridification of the processes that constitute the value chain of natural gas in Ghana. He is currently the Secretary to the Conference of Law Deans of Ghana, and a Lecturer at the Faculty of Law, Ghana Institute of Management and Public Administration (GIMPA), where he teaches public international law, administrative law and alternative dispute resolution. Prior to joining GIMPA, he worked for more than a decade at Ghana’s Commission on Human Rights and Administrative Justice (CHRAJ) and investigated several high-profile human rights and anti-corruption complaints and allegations. He was also a member of Ghana’s Constitution Review Commission’s (CRC) technical team and, as counsel/researcher, was the lead author of the chapters on the public services and independent constitutional bodies in the final CRC report. Oteng has held other academic positions such as Fellow of the Harvard Law School Graduate Programme. He has produced numerous technical and consultancy reports for a variety of governments and international organizations in Ghana, The Gambia, Liberia Sierra Leone, for United Nations agencies, the Economic Community of West African States (ECOWAS), the World Bank, the European Union and other bilateral donor agencies such as the United States Agency for International Development (USAID) and the German development agency, GTZ. Oteng also holds degrees from the Kwame Nkrumah University of Science and Technology, Ghana (BSc Agriculture) and the University of Ghana (LLB). Richard Sakwa is Professor of Politics at the University of Kent at Canterbury, UK, a Senior Research Fellow at HSE in Moscow, Russia, and an Honorary Professor in the Faculty of Political Science at Moscow State University. After graduating in History from the London School of Economics (LSE), UK, he completed a PhD from the Centre for Russian and East European Studies (CREES) at the University of Birmingham, UK. He held lectureships at the Universities of Essex, UK, and California, Santa Cruz, USA, before joining the University of Kent in 1987. He has published widely on Russian and international affairs. Recent books include Frontline Ukraine: Crisis in the Borderlands (I.B. Tauris, 2016), Russia against the Rest: The Post-Cold War Crisis of World Order (Cambridge University Press, 2017), Russia’s Futures (Polity, 2019) and The Putin Paradox (I.B. Tauris, 2020). His book Deception: Russiagate and the New Cold War was published with Lexington Books in late 2021, and he is currently working on The Lost Peace: How We Failed to Prevent a New Cold War for Yale University Press. Suzana Sawyer is a Professor of Anthropology at the University of California, Davis, USA. Her work over the past 25 years has grappled with controversies over resource extraction

Contributors  xv among indigenous people, multinational corporations, and the state in Ecuador and beyond. Her research interrogates the relations of petrocapital, liberal legality and socio-ecological integrity; oil extraction, contamination and toxicity; indigenous rights, indigeneity and narratives of the nation; and the corporate form, expertise and the legal contract. Her publications include The Small Matter of Suing Chevron (Duke University Press, 2022), The Politics of Resource Extraction (Palgrave, 2012), Crude Chronicles (Duke University Press, 2004) and numerous articles. Her work has been supported by the American Council of Learned Societies, the Wenner-Gren Foundation, the UC President’s Faculty Research Fellowship in the Humanities, UC Humanities Research Institute, the Social Science Research Council and the MacArthur Foundation. Thijs Van de Graaf is Associate Professor of International Politics at Ghent University, Belgium. He is also a non-resident Fellow of the Payne Institute, Colorado School of Mines, USA, and with the Initiative for Sustainable Energy Policy (ISEP) at Johns Hopkins University, USA. He teaches and conducts research in the areas of energy politics, international relations and global governance. His current work focuses in particular on the geopolitics of the energy transformation. His most recent books include Global Energy Politics (Polity, 2020) and The Palgrave Handbook of the International Political Economy of Energy (Palgrave, 2016). He served as the lead author of the report A New World: The Geopolitics of the Energy Transformation, commissioned by the International Renewable Energy Agency (IRENA), and is currently writing a follow-up report for IRENA on the geopolitics of hydrogen. Caleb Wellum is Assistant Professor of History at the University of Toronto, Mississauga. His main areas of research are cultural, economic and environmental history, energy humanities and critical theory. His forthcoming book Energizing the Right: The 1970s Energy Crisis and the Making of Neoliberal America will be published in 2022 (Johns Hopkins University Press). Douglas A. Yates is a Professor of Political Science and African Studies at the American Graduate School in Paris, France, and director of the Anglo-American law programme at the law school of CY Cergy Paris University, France. He has been researching the problems of oil-dependent development in Africa since the 1990s, publishing his doctoral dissertation about the oil curse in Gabon as The Rentier State in Africa (Africa World Press, 1996), and travelling extensively across the region working on democratization and the struggle against corruption for the State Department and humanitarian non-governmental organizations (NGOs). Yates has maintained a focus on the petroleum industry in francophone Africa, using special access to historical actors in Elf and Total, publishing The French Oil Industry and the Corps des Mines in Africa (Africa World Press, 2009). His general survey of problems of petroleum in Africa, The Scramble for African Oil (Pluto Press, 2012) was reviewed favourably by Foreign Affairs and the Journal of Modern African Studies.

Introduction to the Handbook on Oil and International Relations Roland Dannreuther and Wojciech Ostrowski

Oil and international relations are inextricably linked. Ever since Winston Churchill decided to shift the Royal Navy from coal to oil prior to World War I, the military and strategic significance of ensuring secure supplies of oil has been a key element of global politics. Conflicts and wars have been linked to oil, most notably in the Middle East, where the security of the oil-producing Gulf region has been a continual source of regional and international tension and conflict. Oil also plays a critical role in the global economy. It is the most significant internationally traded commodity and the companies and firms that control the production and distribution of oil are some of the largest in the world. While states are central to the international politics of oil, there are also a host of non-state economic actors along with regional and international institutions that constitute the complex global governance of oil. The intimate relationship between oil and the global development of capitalism also raises questions of international justice and the historical links between oil and imperialism, exploitation and dispossession. The history of oil is intricately linked to the histories of colonialism and decolonisation and of the continuing tensions and conflicts between the Global North and the Global South. Oil has thus been a major force in defining the nature and form of international relations during the twentieth century and its strategic importance continues into the twenty-first century.

OBJECTIVES AND AIMS The principal objective of this Handbook on Oil and International Relations is to provide a comprehensive survey of the multiple ways in which oil has influenced and shaped international and global politics. In doing so, it aims to fill a gap in the literature. Apart from a handbook on oil politics (Looney 2012), which is now a decade old, the considerable number of more recent handbooks have focused on the broader theme of energy. There have been handbooks on energy security (Sovacool 2011; Dyer and Trombetta 2013), energy governance and policy (Goldthau and Witte 2010; Goldthau 2016), the international political economy of energy (Van de Graaf et al. 2016; Goldthau and Keating 2018), energy, politics and society (Davidson and Gross 2018; Hancock and Allison 2020) and energy and democracy (Feldpaush-Parker et al. 2021). These handbooks on energy broadly conceived have the advantage of ensuring a holistic overview of the development of energy policies, which is particularly important in an era of energy transition when there are multiple energy resources which need to be considered. Such an inclusive approach also addresses a common critique that oil has tended to dominate the study of the politics of energy to the exclusion of other energy sources (Hughes and Lipscy 2013; Hancock and Vivoda 2014: Kuzemko et al. 2019; Wilson 2019). This often also comes with a concern that the global and international have also xvi

Introduction  xvii been prioritised over the national, sub-national and local. Indeed, in this perspective, it can even look anachronistic to have a large study focusing on one fossil fuel ‒ oil ‒ and to take a predominantly international and global approach. This Handbook challenges this critique and seeks to demonstrate the advantages of a single-resource focus. The potential problem of a broader ‘energy’ approach is that it can overlook the distinctive nature and trajectories of specific energy resources. There are, for example, significant differences in the geology, economics and politics of the principal fossil fuels: oil, gas and coal. Individual resource-focused studies, which are relatively rare (for gas, see Bradshaw 2020; for coal, see Freese 2016 and Thurber 2019), reveal not only their distinct histories and trajectories, but also what differentiates them from other energy resources. In relation to oil, historians have brought the politics and history of oil to life. There is the classic study of the political history of oil by Daniel Yergin (2011), The Prize; and this is complimented by other insightful studies of the politics and history of the oil industry (Parra 2004; Noreng 2006). There have also been a number of books which provide more grounded histories of oil, highlighting, for example, the links between oil and racism (Vitalis 2007), oil and democracy (Mitchell 2009), oil and neoliberalism (Labban 2008; Huber 2013) and oil and urbanism (Menoret 2014). When it comes to more comprehensive studies of oil, which include the economics and politics of oil, there are some excellent relatively short introductory texts (Smil 2017; Bridge and Le Billon 2017). In terms of the discipline of international relations, there have been a large number of studies, particularly since the United States (US) intervention into Iraq in 2003, on oil and hegemony and oil and war (Harvey 2005; Kaldor et al. 2007; Klare 2007; Bronson 2008). What is missing, though, is a more comprehensive book articulating the broader interlinkages between oil and international and global politics.

PRIORITIES This book therefore aims to fill this gap in the literature. As editors, our priority has been to commission the best possible contributions from established and rising scholars who have worked on the politics and international relations of oil. In so doing, however, we have looked beyond the discipline of international relations and have taken a deliberately interdisciplinary approach, which draws from the research of other disciplines. The result is that the book reflects a dynamic and original interdisciplinary project. There are certainly chapters by international relations scholars, but these are complemented by contributions from geography, economics, anthropology, history, business studies and environmental humanities. This reflects our own commitment to viewing the international relations of oil as an inherently interdisciplinary object of study. A central theme and focus of the book, which has supported this interdisciplinary endeavour, has been an investigation into the materiality of oil. This theme is most comprehensively explored in the first part of this book, but it is one that runs through the book as a whole. The rationale for this thematic priority is to provide a stimulus for an original and rigorous approach to the study of oil, which starts with oil’s physical qualities and attributes, and assesses how this interacts with and co-constitutes its social, economic and political manifestations. This has an advantage of drawing multiple disciplines into a dialogue about the international politics of oil. It also highlights the specificities of oil as a resource and the inherent advantages, we argue, of taking a single-resource focus.

xviii  Handbook on oil and international relations Another priority for the book is to ensure that this study is not just limited to the outwardly most powerful actors: states, great powers and large multinational oil companies. We also wanted to bring to the fore the voices of the marginalised, the dispossessed and those who have been structurally disadvantaged through the oil industry’s close links with the politics of colonialism and neo-imperialism. This is developed most fully in the third part of the book, which tackles the topic of oil and the colonialism, labour and the role of oil workers, and the struggle of indigenous communities against the depredations of oil extraction. But, again, it is a theme throughout the book, as a number of contributions highlight the structural injustices that have accompanied the economic and political trajectories of oil. Finally, the book has sought not just to reflect on the past and how oil has influenced and shaped international relations historically; it has also sought to look forward and to think systematically about the future of oil, as the world commits itself to a low carbon energy transition. The final part of the book addresses this issue directly. In a scenario where the world commits itself to policies which result in limiting global warming to 1.5°C above pre-industrial levels, it is estimated that one-third of oil reserves will need to kept in the ground. This clearly suggests that oil’s primacy as an energy resource will be greatly diminished if this scenario is realised. However, the political implications might not be so benign, particularly for many oil-exporting countries that will face severe social, economic and political challenges, which is likely to increase regional and international insecurity. This means that oil and global and international politics will remain intertwined during the twenty-first century, even if the nature and scale of its impact and influence will change.

OVERVIEW OF CHAPTERS Part I: Materialities of Oil The first part is dedicated to exploring the materialities of oil from a number of different thematic and disciplinary perspectives. In Chapter 1, Roland Dannreuther assesses how the principal theoretical traditions in the discipline of international relations (IR) – realism, liberalism and critical theory ‒ have contributed to the study of the international politics of oil, and what this reveals in terms of conceptualising the materiality of oil. This analysis reveals the many ways in which IR has made significant and original contributions to the study of the politics of oil. However, Dannreuther argues that the ‘material turn’ in IR offers new ways of approaching and understanding the international politics of energy. This theme is followed by the next two chapters. In Chapter 2, Gavin Bridge and Alexander Dodge, both political geographers, argue that adding the ‘material’ to the study of oil adds grit to the oyster, generating new ideas and transforming what is meant by the international relations of oil. The focus of the chapter is twofold: on materiality understood as physical heterogeneity, exploring how the physical qualities of oil influences the political, economic and geographical organisation of the sector; and on materiality understood as the devices and instruments through which oil becomes an object of economic and political calculation. In Chapter 3, Margarita Balmaceda offers a political economy approach and a systematic analysis of how oil differs physically from other fossil fuels ‒ gas and coal ‒ and how the specificities of oil’s materiality manifests itself in terms of the differing challenges for oil in global value chains.

Introduction  xix This initial dialogue about the materialities of oil from different social science perspectives is enriched in Chapter 4 by Caleb Wellum, who brings an energy humanities approach. The central focus of the chapter is on culture and energy: how modern cultures, and the subjects that participate in them, are shaped by the energies that they have access to. His analysis suggests three main contributions: first, how oil is integral to our understanding of modernity and how this has led to distinctive ‘petro-cultures’; second, how oil has fed the cultural imagination and the links between hegemonic cultural perceptions and material infrastructures, such as cars and driving, enabling a sense individual independence and autonomy; and third, how oil has had an impact on an array of mundane everyday practices, such as eating, travelling, working, relaxing and relating. Oil is thereby embedded in the life of people and nations in ways that are more complex than often thought, and this has shaped the past and continues to shape the present and future. The final three chapters of this part provide case studies of oil’s materiality and the international relations of oil. In Chapter 5, Aurora Ganz challenges the ways in which securitisation theory has been applied to energy politics, arguing that the theory has tended to fail to incorporate the material as well as the ideational dimensions of oil securitisation. Taking the case example of Azerbaijan, she highlights how the process of securitisation is best viewed as a socio-technical assemblage and a mix of the social, technical, material and ideational. In Chapter 6, Emily Meierding takes the materiality approach to the study of oil to understand the relationship between oil and interstate wars. She argues that classic ‘oil wars’ rarely happen because they simply do not pay their way. Where war and oil do converge is once wars have already started; it is not the desire to have physical possession of oil that causes wars over oil, but rather the ease of interruption of oil production and transportation networks that changes calculations once wars have started. In Chapter 7, Christopher Len illustrates this very point by looking at China’s sense of vulnerability over the threat of interruption of its oil supplies in the Indian Ocean, and how this is leading to growing conflict and confrontation with other great powers ‒ the US, India and Japan ‒ in the Indo-Pacific region. Part II: Oil, Power and Political Order This second part of the Handbook returns to more traditional terrain for the discipline of international relations. The focus of this part is on how oil has affected the regional and international politics of the major oil-producing countries and regions. In Chapter 8, Gregory Brew highlights the ways in which oil has consistently given the US a dominant geopolitical advantage. It gave a decisive edge in World War II; it similarly supported the Western confrontation with the Soviet Union, which ultimately resulted in the collapse of the Soviet bloc. US hegemony was challenged in the 1960s and 1970s with the rise of the Organization of the Petroleum Exporting Countries (OPEC), but this proved only temporary. By the beginning of the twenty-first century, there was again an abundance of oil with a resurgent US. In Chapter 9, Richard Sakwa looks at the contrasting case of Russia. Here oil has played a more ambiguous and complex role. On the one hand, oil and gas have been central to Russia’s power and its influence in regional and global politics; but on the other, dependence on oil is a key vulnerability, as it is a major factor behind Russia’s failure to reform and its poor record of productivity. In Chapter 10, Raymond Hinnebusch explores the ways in which the legacies of oil have been even more damaging for the Middle East region. Echoing the analysis by Brew, Hinnebusch argues that there was significant resistance to US hegemony with the rise

xx  Handbook on oil and international relations of OPEC in the 1970s. However, this struggle proved ineffective and US dominance was re-asserted and even strengthened through a close alliance with the oil-producing Arab Gulf states. The overall effect has been to debilitate and undermine the stability, autonomy and prosperity of the Middle East region. David Mares in Chapter 11 challenges popular assumptions about oil and the politics of Latin America. He provides an in-depth analysis of the relationship between oil, populism and revolution in the Latin American context. His analysis offers a complex and nuanced picture where there is no unidirectional impact of oil in promoting populism and revolution. Venezuela is more the exception than the rule in terms of how hydrocarbons contribute to the rise of populism and to fomenting a pre-revolutionary situation. The United States has also been significantly less interventionist over oil in the region, in contrast to the Middle East; oil has rarely been a factor behind US decisions to intervene in the region. Chapter 12, the final chapter of this part, by Nelson Oppong and Kwabena Oteng Acheampong examines the legacy of colonialism and the impact of the ‘colonial gaze’ on the trajectory of oil and development in Africa. The authors argue that although the colonial period was not very successful in terms of oil production in Africa, the extractive logic and the institutional norms of the period continue to shape the materiality of oil across the region. This focus on colonial legacies provides a transition to the themes of the next part. Part III: Oil and Development Wojciech Ostrowski starts the third part in Chapter 13 on oil and development by a deconstruction of the concept of oil (or resource) nationalism. He challenges the narrative, favourable to Western international oil companies (IOCs), of oil nationalism as a recurrent form of anti-Western populism that regularly undermines global investment. Instead, he makes a clear distinction between resource nationalism in the 1960s and 1970s, which was a major challenge to the international order, driven by the dynamic of decolonisation; and oil nationalism in the 2000s and 2010s, which was primarily a renegotiation of contracts between IOCs and national oil companies (NOCs), which were aimed at curbing the excesses and unfairness of agreements made in the 1980s and 1990s. The next two chapters shed light on the role of traditionally marginalised communities and the IR of oil. In Chapter 14, Peyman Jafari examines the neglected topic of the role of oil workers in influencing international politics. He offers two case studies of how labour has had a major international impact. The first case is of Iranian oil workers, and how their struggles and strikes contributed to the decision to nationalise the Iranian oil industry in 1951. The second case is how the US-supported International Oil Workers Union was developed and funded to counter communism in the oil industry in the Global South. In Chapter 15, Suzana Sawyer and Lindsay Ofrias provide an in-depth anthropological study of marginalised indigenous Ecuadorian communities who suffered significant long-term environmental and health damage from the oil extractions undertaken by the US multinational company, Chevron. The analysis focuses on the highly irregular trial against Steven Donziger, a US lawyer supporting the Ecuadorian communities, and how Chevron has utilised legal processes in the US to release it from its responsibilities to compensate for historic extractive wrongs. Overall, this case study highlights how US legal processes exacerbate inequities pervading oil extraction and releases global oil corporations from their moral and legal responsibilities.

Introduction  xxi The final four chapters of this part address the issue of the resource curse. In Chapter 16, Douglas Yates provides a forensic analysis of the nature of the resource curse, arguing that there are five negative developmental effects of petroleum in any country: pollution, authoritarianism, corruption, conflict and underdevelopment. In Chapter 17, Nathan Andrews addresses one of the most prominent recent policies for seeking to address the resource curse: greater transparency, as promoted in particular through the Extractive Industries Transparency Initiative (EITI). Andrews, however, notes the way in which the EITI has been targeted and adopted more in Africa than in other parts of the world, which has suggested that this is an initiative limited to ‘poor’ countries. In addition, he questions how much transparency can effectively tackle corruption when such corruption is interlinked with multiple other factors beyond transparency. In Chapter 18, Subhes Bhattacharyya similarly challenges the conventional wisdom of the positive benefits for overcoming corruption and dealing with the resource curse by reducing or taking away oil subsidies. He first highlights the difficulties of accurate estimations of what constitutes oil subsidies, and then highlights the potentially negative effects on poorer users of subsidy removal, which can result in them returning to traditional wood fuels which exacerbates gender and other inequalities. In the final chapter of this part, Chapter 19, Betul Dogan-Akkas takes the exceptional case of Qatar, which has bucked the resource curse to flourish as a prosperous state with an ambitious and increasingly autonomous foreign policy, which belies its physical reality as a small state in geographical and demographic terms. Part IV: Oil and Global Markets This part examines the ways in which global markets have influenced the international politics of oil and how this changed over time. A common theme of this part is that the ending of the period when Western IOCs, the so-called ‘Seven Sisters’, dominated a vertically integrated industry, radically changed the global international order. In Chapter 20, Llewelyn Hughes and Andreas Goldthau argue that the resulting ‘deverticalization’ of the industry has led to new actors and mechanisms for managing price volatility, with enhanced roles for trading houses and futures contracts. In contrast to the traditional IR concern for physical security supply, Hughes and Goldthau argue that the new theoretical focus should be on the networked structures of power in the old industry, recognising the proliferation of new actors working alongside traditional actors. In Chapter 21, Tim Di Muzio and Matt Dow argue from a Marxist tradition the need to adopt a ‘capital as power’ paradigm for understanding the structural dynamics of the oil industry. They argue that it is the investor who is now king, and what is critical is the practice of capitalisation and the institution of ownership. As such, oil is linked to the logic of the perpetual accumulation of private capital that rests on ownership, exclusion and the power that this confers to accumulate money well above what is required for a reasonable or even opulent life. In Chapter 22, Xiaoyi Mu analyses the underlying factors behind the volatility of oil prices, which is itself a major factor behind the structure of international markets. He makes the important point that the actions of OPEC do influence international oil prices, even though it does not act as an effective cartel. This is different from non-OPEC producers, where most actors (apart from NOCs) are private. For example, there are 9000 independent oil and gas producers in the US, and it is impossible for the government to coordinate their actions. In practice, Mu argues, geopolitical events have only had a limited impact on the real price of

xxii  Handbook on oil and international relations oil over time; similarly, financial speculation has only ever played a role in short-term price volatility. It is the fundamentals of supply and demand which are primarily responsible for the volatility in oil prices. In Chapter 23, the final chapter of this part, Dag Harald Claes follows up with a more detailed analysis of OPEC and other oil-related international regimes or institutions, such as the International Energy Agency (IEA), International Energy Forum (IEF) and the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO). Claes argues that the oil regime is imperfect, with complex relations of cooperation and conflict between three main groups: oil-consuming countries, IOCs and oil-producing countries. Claes argues that what has not emerged is a strong overarching institution for oil or energy. The global oil market remains fundamentally fragmented and involves a complex power-sharing between companies and markets. Part V: Oil, Sustainability and the Future In Chapter 24, Mathieu Blondeel and Michael Bradshaw make the important point that there are in fact two energy transitions that need to happen: a high-carbon transition and a low-carbon transition. The chapter then examines the particular challenges that Western IOCs face in meeting this dual-headed transition for the oil industry, with potentially one-third of oil reserves needing to remain in the ground. Blondeel and Bradshaw provide a systematic analysis of the declared policies of the major IOCs in relation to the transition, which demonstrate that the industry does not yet see itself facing an existential crisis, a ‘Kodak’ moment. In reality, their commitment to a fundamental shift to a high- and a low-carbon transition remains quite half-hearted. A similar story is told in Chapter 25 by Philip Andrews-Speed in relation to China as it seeks officially to wean itself away from its dependence on oil imports. The good news is that China has made significant progress in reducing emissions from transport through a variety of means to reduce oil consumption on the roads. However, in the petrochemicals sector the drive to reduce dependence on oil has resulted in a shift from oil to coal as a feedstock for petrochemicals. This has had major environmental consequences, resulting in high levels of emissions and contributing to water pollution. Andrews-Speed highlights how this case study shows how energy and industrial policy continue to outweigh environmental and commercial considerations in the context of China’s domestic policies. The final two chapters examine the contemporary dynamics of the geopolitics of energy. Inwook Kim in Chapter 26 analyses the potential geopolitical consequences of the new market realities of shale oil. He argues that, in general, it reduces fears of oil security and reduces temptations for competitive behaviours of states. Shale oil benefits not only the US, but also China. In Chapter 27, Thijs Van de Graaf argues that the transition away from oil, where one-third will need to remain in the ground, creates a major challenge for oil-producing states and that some states in particular, such as Libya, Venezuela and Nigeria, are highly exposed and have relatively limited resilience. Overall, however, Van de Graaf argues that the energy transition is good news for oil-importing countries and potentially can help to resolve and overcome the resource curse. Van de Graaf concludes that, as there is a transition away from oil and other fossil fuels, there is a need to adopt a new way of thinking about geopolitics.

Introduction  xxiii

REFERENCES Bradshaw, M.J. (2020), Natural gas, Hoboken, NJ: John Wiley. Bridge, G. and P. Le Billon (2017), Oil, Hoboken, NJ: John Wiley. Bronson, R. (2008), Thicker than oil: America’s uneasy partnership with Saudi Arabia, Oxford: Oxford University Press. Davidson, D.J. and M. Gross (eds) (2018), The Oxford handbook of energy and society, Oxford: Oxford University Press. Dyer, H. and M.J. Trombetta (eds) (2013), International handbook of energy security, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Feldpausch-Parker, A.M., D. Endres, T.R Peterson and S.L. Gomez (eds) (2021), Routledge handbook of energy democracy, London: Routledge. Freese, B. (2016), Coal: A human history, New York: Basic Books Goldthau, A. (ed.) (2016), The handbook of global energy policy, Hoboken, NJ: John Wiley & Sons. Goldthau, A. and M.F. Keating (eds) (2018), Handbook of the international political economy of energy and natural resources, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Goldthau, A. and J.M. Witte (eds) (2010), Global energy governance: The new rules of the game, Washington, DC: Brookings Institution Press. Hancock, K.J. and J.E. Allison (eds) (2020), The Oxford handbook of energy politics, Oxford: Oxford University Press. Hancock K.J. and V. Vivoda (2014), ‘International political economy: A field born of OPEC crisis returns to its energy roots’, Energy Research and Social Science, 1, 206‒216. Harvey, D. (2005), The new imperialism, Oxford: Oxford University Press. Huber, M.T. (2013), Lifeblood: Oil, freedom, and the forces of capital, Minneapolis, MN: University of Minnesota Press. Hughes, L. and P.Y. Lipscy (2013), ‘The politics of energy’, Annual Review of Political Science, 16 (1), 449‒469. Kaldor, M., T.L. Karl and Y. Said (2007), Oil wars, London: Pluto Press. Klare, M.T. (2007), Blood and oil: The dangers and consequences of America’s growing dependency on imported petroleum, New York: Metropolitan Books. Kuzemko, C., A. Lawrence and M. Watson (2019), ‘New directions in the international political economy of energy’, Review of International Political Economy, 26 (1), 1‒24. Labban, M. (2008), Space, oil and capital, London: Routledge. Looney, R.E. (ed.) (2012), Handbook of oil politics, London: Routledge. Menoret, P. (2014), Joyriding in Riyadh: Oil, urbanism, and road revolt, Cambridge: Cambridge University Press. Mitchell, T. (2009), ‘Carbon democracy’, Economy and Society, 38 (3), 399‒432. Noreng, O. (2006), Crude power: Politics and the oil market, London: IB Tauris. Parra, F. (2004), Oil politics: A modern history of petroleum, London: IB Tauris. Smil, V. (2017), Oil: A beginner’s guide, New York: Simon & Schuster. Sovacool, B.K. (ed.) (2011), The Routledge handbook of energy security, London: Routledge. Thurber, M.C. (2019), Coal, Hoboken, NJ: John Wiley. Van de Graaf, T., B.K Sovacool, A. Ghosh, F. Kern and M.T Klare (eds) (2016), The Palgrave handbook of the international political economy of energy, London: Palgrave Macmillan. Vitalis, R. (2007), America’s kingdom: Mythmaking on the Saudi oil frontier, Berkeley, CA: Stanford University Press. Wilson, J.D. (2019), ‘A securitization approach to international energy politics’, Energy Research and Social Science, 49, 114‒125. Yergin, D. (2011), The prize: The epic quest for oil, money and power, New York: Simon & Schuster.

PART I MATERIALITIES OF OIL

1. Oil and international relations: theory, materiality and the political Roland Dannreuther

The discipline of international relations (IR) has a long-standing and rich research agenda on the international politics of oil. This can be broken down into three broad areas. There is, first, how oil contributes to conflict, war and regional and international security. Second, there is the international political economy of oil, with the oil industry’s complex set of economic actors, its lack of a clearly defined international governance structure and its role as the most traded commodity globally. The third area is that of international justice, and oil’s links with the history of colonialism and imperialism, with dispossession and oppression, and with the continuing struggle between the Global North and the Global South. These three broad areas break down roughly into the three main theoretical approaches within traditional IR: realism, liberalism and critical theory. The first objective of this chapter is to provide an overview and survey of the significant corpus of work that has been done on the international relations of oil, utilising this tripartite theoretical division. This will demonstrate the multiple ways in which the research contributions in IR have enriched our understanding of how oil has shaped and defined international and global politics. A particular focus of this analysis will be on how IR has addressed the question of the materiality of oil, and how it has conceptualised the interaction of the physical qualities of oil with its social, economic and political manifestations. This analysis will argue that IR has, in fact, taken the materiality of oil seriously, but that the nature of this engagement differs significantly dependent on the particular theoretical approach adopted. The second objective of this chapter is to explore how the recent ‘material turn’ in international relations, incorporating insights from the new materialisms literature, can be used to better understand oil’s materiality. The chapter argues that new insights can be gained through looking anew at oil through three perspectives offered by the new materialisms: first, through a focus on agency and the agentic role of non-human subjects; second, through the idea of oil as an international assemblage; and third, through a relational ontology which does not privilege any particular body/actor or scale. The chapter concludes by calling for an ethic of care to be adopted as the transition towards a low-carbon future increasingly determines and defines the international politics of oil. This chapter represents an initial exploration of the materiality of oil from a predominantly IR theoretical perspective. The chapters that follow by Bridge and Dodge (Chapter 2) and Balmaceda (Chapter 3) provide further ways of conceptualising and understanding the materialities of oil derived from other non-IR traditions.

2

Oil and international relations  3

IR THEORIES: THE TRIPARTITE APPROACH The division of international relations into three discrete and self-contained theoretical traditions – realism, liberalism and criticial theory – is inevitably a simplification, and a distortion of a much more complex reality. There are multiple theoretical approaches and innovations in IR which have moved beyond the traditional approaches and have, indeed, directly challenged and sought to displace them. There are also many studies in IR which have no explicit theoretical framework and are empirical in their nature. This is particularly evident in energy studies, where policy-focused research, which does not engage significantly with theory, is common. Nevertheless, there is a utility to maintaining these traditional categories so long as it is also recognised that these are ‘ideal-types’ that inevitably simplify a complex reality. This is demonstrated by the fact that this tripartite division is one which is accepted as a legitimate way of framing the historical development of the study of oil and energy in IR, even by those who wish to undermine and displace it. Indeed, in other social science disciplines as well, there is a recognition that the principal theoretical and methodological divide is between a primary focus on the state (realism, geopolitics and mercantilism) and a focus on the market (liberalism). The Realist Approach The realist approach is one which does take seriously the materiality of oil. The main materialist assumption, which realism shares with mercantilism and the tradition of geopolitics, is that oil is defined by its material scarcity. As a scarce and valuable resource, states have a natural desire to ensure that their access to global supplies is safe and secure. Given the realist assumption that international relations is an anarchical system, where there is no overarching sovereign and distrust pervades interstate relations, this inevitably creates the conditions for competition and conflict (Morgenthau 1960; Niebuhr 1960; Waltz 1979). During the Cold War period, it was the rise of the Organization of the Petroleum Exporting Countries (OPEC) in particular and the subsequent nationalisations of oil production in the post-colonial world, most notably in the Middle East, which brought oil most directly to the disciplinary attention of IR. The principal concern was primarily a realist-driven one and focused on how oil could be used as a weapon which could shift the regional and global balance of power. In particular, there was the question of the extent to which the Arab countries had gained a new ‘oil weapon’ which would be used to threaten and to gain concessions from the developed world. In the aftermath of the Iranian revolution and the Soviet invasion of Afghanistan, the belief that the Soviet Union might be seeking to gain dominance of the oil-rich Persian Gulf led to a massive increase in United States (US) military engagement in the region. The promulgation of the Carter Doctrine in 1980 confirmed this doctrinally, with threats to the flow of oil in the Persian Gulf being recognised as a matter of US national security interest. The end of the Cold War might have reduced the threat of Soviet expansionsim but it did not eliminate strategic realist-driven concerns about the international politics of oil. Michael Klare has been a consistent voice arguing that the potential for conflict and war over resources has become stronger rather than weaker since the ending of the Cold War (Klare 2001, 2004, 2008, 2012). He offered an alternative perspective to either Francis Fukuyama’s liberal expectation of ‘the end of history’ or Samuel Huntington’s inevitability of the rise of ethnic and religious conflict and a ‘clash of civilisations’. Rather, he proposed that ‘it is resources, not differences

4  Handbook on oil and international relations in civilizations and identities, that are at the root of most contemporary conflicts’ (Klare 2004, p. xii). This was because of a number of factors, according to Klare. First, oil supply was becoming more scarce and was now reaching its ‘peak’ and would start to decline. Second, most of the remaining oil reserves were to be found in some of the most fragile and internally weak states, where political and religious extremism was on the rise. And third, oil and the politics of the Middle East are closely linked to the rise of al-Qaida and the global threat of Islamist terrorism. This post-Cold War focus on resources as sources of conflict has also been extended to the study of conflict within states, particularly in relation to inter-ethnic conflict. Again, this focus on the conflict-inducing properties of resources is linked to a rejection of the idea that the post-Cold War proliferation of civil wars is primarily due to conflicts over identity or ideology. Instead, influential economists such as Paul Collier have argued that it is material greed, the drive by elites to gain control over valuable internal resources, which is the principal driver of conflict (Collier and Hoeffler 1998; Collier 2000). Identities and ideologies might provide the formal external legitimation and justification for those fighting in these intrastate wars, but it is the inter-elite struggle to control such resources and thereby seize control of the state which is the real underlying source and cause of these conflicts. This is very much a realist explanation but now moved from an interstate to an intrastate context. There has also been significant research which, while broadly remaining within a realist framework, has sought to qualify an overly deterministic and systemic application of the theory to oil. Colgan has highlighted how not all oil-rich states have a significantly greater propensity for war and aggression; this is only the case where the state also adopts a clearly revolutionary and revisionist political agenda (Colgan 2010, 2013). It is thus not accidental that a number of the most prominent revisionist states (so-called ‘pariah states’), such as Iran, Iraq and Libya, are all oil-rich and with a track record of external intervention. Le Billon has similarly demonstrated that not all oil-rich states have a tendency towards inter-ethnic conflict and civil war, but that this is more likely to be the case when the oil in such a state is found in a peripheral region and which thereby generates a centre‒periphery conflict (Le Billon 2004; Le Billon and Cervantes 2009). This is evident, for example, in the Niger Delta, the Aceh province in Indonesia and in South Sudan. Hughes and Long have also shown that not all parts of the oil value-chain generate the same levels of security threats. In practice, the most sensitive security conditions come with the transportation of oil across the world’s oceans, where the US exerts an unrivalled naval dominance (Hughes and Long 2015). As countries such as Iran and Iraq can testify, the sanctions imposed by the United States, which is policed by their naval forces, represents a real threat to their national security. It is also a legitimate source of concern for China, as expressed in the so-called Malacca Dilemma, which points to the strategic vulnerability of US disruption of this vital sea line of communication (Lanteigne 2008). As such, there are legitimate military and strategic concerns that make it rational for China to follow a mercantilist and state-driven approach to ensuring its supplies of oil, rather than relying solely on the operation of the market (Lind and Press 2018). The Liberal Approach The liberal approach to international relations has its origins as a critique of geopolitical approaches to international politics. Historically, the liberal internationalist tradition emerged within IR as an anti-realist critique of the causes for World War I: that the tragedy and slaugh-

Oil and international relations  5 ter of that war was ultimately due to the political and military elites pursuing, without regard for public opinion and civil society, realist policies such as the balance of power, military expansion, secret diplomacy, nationalist xenophobia and the lack of respect for international legal norms and institutions. There is a similar approach in the liberal critique of the realist emphasis on the scarcity of oil and the struggle of states for control of these scarce supplies of oil. In contrast to the realist conceptualisation of the materiality of oil as defined by scarcity and conflict, liberalism presents the negative conflict-inducing materiality of oil as something which can be socialised and neutralised through cooperation and interdependence. The core liberal argument is that the realist conceptualisation of oil misdescribes the reality of the ways in which oil is actually produced, transported and traded. First, the notion of scarcity is challenged by the role that the market plays in managing supply and demand, and how market signals along with technological innovation have consistently ensured adequate supplies of oil to meet demand. This approach thereby challenges the gloomy pessimism of the ‘peak oil’ thesis. The shale oil revolution, which relies on new technological innovations such as horizontal drilling and seismic surveys, provides a practical example of the limits of an approach based on assumptions of geological scarcity. Indeed, it is now generally recognised that peak oil will occur due to constraints on demand rather than supply. Second, the liberal approach challenges the primacy accorded to states in the international politics of oil. The liberal perspective has always presented the realm of international relations as a pluralist one where the state coexists with multiple other actors which also have power and agency (Keohane and Nye 1977). This is the case in the oil industry, where oil companies have consistently played a powerful role. More recent scholarship has also sought to show how the market has increasing numbers of important players, such as the little-known role of Swiss trading houses which currently control 35 per cent of the global market share in crude oil (Goldthau and Hughes 2020). The background to this is the transformation of the market in the late 1970s due to the nationalisation of domestic production, which broke apart from the vertical integration of the industry and which led to an increase in the fungibility of crude oil and the increased transparency and predictability of price formation. This in turn led to the creation of oil futures contracts and spot oil markets in New York and London, which cemented the formation of a ‘new oil world depending on short-term rather than long-term contracts’ (Goldthau and Witte 2009, p. 376). In terms of the materiality of oil, the liberal approach tends towards seeing ways in which to socialise and dematerialise oil and thereby to exorcise the role of the state and its pathologies of control. This has led to scholarship in liberal IR that has concentrated on two main areas. First, there is the role of regimes and institutions in the energy field which act as intermediate organisations that provide opportunities for cooperation. There has, as a consequence, been much work on mapping the global energy architecture and examining the interaction of bodies such as OPEC, the International Energy Agency (IEA) and the International Energy Forum (IEF). Some scholars have conceptualised this patchwork of energy-related instititions as a single and coherent body, understood as a ‘regime complex’, and have looked at how this complex has changed and adapted over time (Colgan et al. 2012; Van de Graaf 2013). There has also been much work on the European Union (EU) as an examplar of a liberal institutional actor in relation to energy policy, and how the EU has used the power of EU energy markets to respond to Russia’s more realist-driven approach to European energy security (Goldthau and Sitter 2015).

6  Handbook on oil and international relations Second, there has been considerable research into understanding the so-called ‘resource curse’, which focuses on understanding the causes of the multiple illiberal impacts of oil wealth, such as the prevalence of authoritarian regimes and lack of respect for human rights among many oil-rich states (Rosser 2006; Di John 2008; Frankel 2012). Here the material presence of oil is seen in a primarily negative light, as a source of wealth which can be captured by state elites in a way that is not possible with other sources of production, such as manufacturing. The concept of the ‘rentier state’ captures this sense of the resource-rich states as comparable to the aristocratic landlords that dominated traditional societies, and which liberalism sought to dismantle as the major sources of resistance to liberalisation and modernisation. The counterpoint to the repressive and poorly developed oil-rich states are the resource-poor but dynamic Asian tigers. The view that oil as a material resource should be understood through the prism of a ‘curse’ has been a powerful legacy that has been difficult to dismantle, and represents a significant legacy of a liberal approach to the international political economy of oil. Nevertheless, there is growing scholarship which fundamentally challenges the assumptions and deterministic outcomes of the ‘resource curse’ (Haber and Menaldo 2011). The Critical Approach Before the collapse of the Soviet Union, the third branch of the tripartite theoretical framework was often defined as Marxism or neo-Marxism. This subsequently changed into a broader critical theory, but the roots of this approach are in historical materialism. Clearly, this rootedness in the traditions of historical materialism involves a recognition of the materialities of oil, but it is a different understanding from the essentially material passivity of oil in realist accounts, and the attempted sublimation and diffusion of the materiality of oil in the liberal approaches. Instead, the materiality of oil is refracted in the critical approach within the broader material structures of international power and global capitalism. Susan Strange was an early scholar in IR who promoted energy ‒ and by this she meant primarily oil ‒ as a form of structural power. But she also conceived of energy as a secondary structure to what she saw as the four primary structural powers, which were security, production, finance and knowledge (Strange 1988). In this analysis, while states are understood as critical actors, their role is also defined by their facilitation of the multinational oil companies, the banks and financial investors, the military‒industrial complexes, and the scientific communities that gain structural advantage through the various ways in which they control the production, flow and consumption of oil. Embedded within this analysis is the continuing domination of the North in the global capitalist and militarised structures which particularly negatively impact on the resource-dependent countries in the Global South. This systemic analysis has been more fully theorised through the dependency and world systems approaches within international relations. The main thesis of dependency theory is that the post-colonial world remains caught in conditions of exploitation and underdevelopment since most of the countries in the South continue to depend upon a few basic export commodities, of which oil is one of the prime examples. This dependency is perpetuated by the consistent failure to possess the capacity to process these raw materials into high-value finished goods. Politically, this is the result of a symbiotic relationship between the core and the locally dominant economic and political elites, which detaches these elites from their local populations and prevents autonomous economic development. These local elites in turn rely upon a Western-supported military and security structure that suppresses all indigenous chal-

Oil and international relations  7 lenges to conditions of dependency and exploitative core‒periphery relations. This approach has been applied to a number of regions of the Global South. For example, in the Middle East, Ray Hinnebusch views the general politics of the Arab states as one of a continual struggle between local forms of indigenous resistance, such as the radical Arab nationalist movements in the 1970s, and Western states and the oil multinationals that have continually sought to repress and eliminate such struggles for autonomy (Hinnebusch 2003). An example of this is how indigenous resistance led to the nationalisations of oil production among the Middle Eastern countries, but ultimately resulted in the formation of new structures of Western hegemony. This resulted from the US developing a security embrace of the Arab Gulf states, along with international oil companies developing non-OPEC production so as to reduce the market power exercised by the OPEC cartel. The critical approach, therefore, provides a complex field of networks and structures of power which link the global and the national/local in conditions of exploitation and repression. Michael Watts expresses this well when he talks about the multiplicity of actors involved in the endemic oil-fuelled conflict in the Niger Delta. He states that it is: not only IOCS [international oil companies], NOCs [national oil companies] and their service companies but also the petrostates, the engineering companies and the financial groups, the shadow economies (theft, money laundering, drugs, organised crime), the raft of NGOs [non-governmental organisations] (human rights CSR [corporate social rsponsibility] groups, monitoring agencies), the research institutes and lobby groups, the landscape of oil consumption and, not least, the oil communities, the military and paramilitary groups, and the social movements which surround the operation of, and the shape and functioning of, the oil industry narrowly construed (Watts 2009, p. 10; see also Watts 2001, 2004)

As well as this more fine-tuned analysis, there is also a more holistic dimension that seeks to examine the particular ways in which oil, and fossil fuels more generally, have helped to constitute the global capitalist order. Timothy Mitchell has noted how the particular material forms of oil, as against coal, have created different structures of power between capital and labour and between the North and the South (Mitchell 2009). He argues that while the development of coal created the conditions for an internal struggle for the expansion of democracy, this progressive dimension was not replicated in the sociopolitical development of oil. This highlights the need for considering the materiality of oil and its interaction with social and political structures as a historically evolving and continually shifting and emerging phenomenon.

THE NEW MATERIALISMS AND THE IR OF OIL When it comes to the physicality and materiality of oil, it can be seen that the principal theoretical traditions in IR have engaged seriously with this material dimension, but in differing ways. Realism has primarily focused on oil as a scarce material resource; liberalism has sought ways to socialise and dematerialise oil through market integration and institutionalisation; and critical theory has highlighted the structural and historical determination of the interaction between the materiality of oil and the historical development of global inequalities and structural injustice. The rest of this chapter explores the ways that the new materialisms, recently introduced to IR, can help to develop further insights and innovative new ways of thinking about the mate-

8  Handbook on oil and international relations riality of oil. The new materialisms incorporate a number of diverse literatures, from a range of disciplines that have been variously called the ‘material turn’, ‘post-humanism’ and the ‘new vitalisms’. What binds together this varied collection of work is the need to rethink the concept of materiality and to articulate new perspectives on how material things relate to the political and the international, and how this might change and transform our understanding of the ‘political’ (Bennett 2010; Coole and Frost 2010). The claim made by the new materialisms approach is that the study of politics has tended to isolate and separate the ‘sociopolitical’ world from the material and non-human world. According to Coole and Frost, the cause of this is embedded in the history of philosophy, which has tended to identify ‘language, consciousness, subjectivity, agency, mind and soul’ as distinct from and superior to ‘mindless matter’, and has thereby marginalised the material as something essentially inert and inactive (Coole and Frost 2010, p. 2). In contrast, the new materialisms approach demands a deliberate re-assertion of the active role of matter; a rejection of the idea that political significance can only be deduced through linguistic representation; and a recognition that material objects and bodies can themselves be affective, active and a source of political significance in their own right. Within IR theory, the main target of the new materialisms has tended to be constructivist and post-structuralist theoretical approaches, which have promoted the primacy of language and meaning, and argued that there is no clearly knowable ‘world out there’ but only the politically fused representations of that world. Constructivism and post-structuralism have claimed, in particular, that the traditional realist and liberal approaches are flawed through their positivist approach to the understanding of the international, in particular the key assumptions they make about the state, anarchy and the conditions of conflict and cooperation. For constructivists, these assumptions are not objectively given, but rather socially constructed through the discourses that elites use to embed priviliged structures of power. Within political geography, there has been a similar critique of traditional geopolitics, with a radical reinterpretation of classical geopolitical thinking whose discourses and narratives supported imperialism and territorial expansion. Within energy studies, there have been similar attempts to deconstruct the concept of ‘energy security’ and to identify the processes through which energy is securitised by political and economic elites. Energy security, on this account, is not something objectively given, but something that is constructed and created to serve particular political purposes (Wilson 2019). Nevertheless, the extent of such constructivist and post-structuralist accounts of the international politics of oil have generally been quite limited. Indeed, the area where securitisation theory has been most extensively developed is in relation to the European dependence on Russian energy imports, but in reality these concerns are primarily about Russian gas and not Russian oil supplies. However, the approach of the new materialisms does still offer a number of insightful and helpful ways of thinking about the IR of oil, and transcending the traditional tripartite approaches. This can be broken down into three main areas: the distinctive idea that material objects have their own agency; the idea of assemblages as dynamic, heterogeneous and contigent; and the adoption of a relational ontology which does not accord primacy to the international.

Oil and international relations  9 Materiality and Agency One of the most striking claims of the new materialisms is that non-human objects and things more generally also have agency. This represents a fundamental shift away from the traditional ideas of the human domination of nature, reflected in neo-Cartesian assumptions of mind‒body dualism, and of a strict divide between nature and society. It is an assertion that objects and non-human bodies have their own agency and dynamism, and that the ‘stuff of politics’, the objects, materials and forces around us, ‘help constitute the common worlds that we share and the dense fabric of relations with others in and through which we live’ (Braun and Whatmore 2010, p. ix). In other words, objects and things actually help to shape human interaction, contribute to defining the political communities we live in and are an integral part of the social and political interactions that shape the conditions for domestic and international political conflict and cooperation. Matter is not the ‘dead, inert passive matter of the mechanist’, but the ‘materialisation that contains its own energies and forces of transformation’ (Coole 2013, p. 453). Jane Bennett calls this ‘vibrant matter’, and challenges the traditional political analysis of seeing matter as dull and inert and human life as vibrant and alive. She identifies something called ‘thing power’, which is the ability ‘of inanimate things to animate, to act, to produce effects dramatic and subtle’. Indeed, one of her principal examples of this is an electrical power-grid, which is a ‘volatile mix of coal, sweat, electromagnetic fields, computer programs, electron streams, profit motives, heat, lifestyles, nuclear fuel, fantasies of mastery, states, legislation, water, economic theory, wire and wood’ (Bennett 2010, p. 25). Thinking about the materiality of oil in this more dynamic, agentic way offers potentially new perspectives on how research on the international politics of oil might be conducted. First, this approach takes seriously the materiality of oil as a starting point of analysis. In practice, this can only be done effectively when oil’s physical attributes and properties, and how these interact in complex ways with the social and political, are compared with other energy resources, such as the other fossil fuels of coal and gas as well as with renewables (Balmaceda 2018; Chapter 3 in this book). Oil’s distinctive physical features include its liquid form, which makes it considerably easier to transport long distances than gas and coal. It can also be transported in a variety of ways: pipeline, tanker, truck and rail. In the context of civil war and disintegration of state power, oil’s transportability makes it a potentially lucrative lootable asset. In terms of the global economy, this flexibility in the flows of oil create the conditions for oil to be intensively traded internationally. Oil is also distinctive because of its high energy density and its high value to volume, which marks it out compared to other energy sources. This is a principal reason why oil has a truly global market, compared, for instance, with gas, which primarily has a number of separate regional markets. It is this unique concentration of energy found in oil, and its relative flexibility, which give oil much of its economic power and attraction. This in turn becomes a matter of political and international contestation, because oil is not geographically dispersed but concentrated in certain regions. There is also much variation in the production costs of oil, with the Middle East, for example, historically enjoying significantly lower production costs as well as having the largest reserves. This, in itself, has created significant international political tensions and conflicts, most notably between foreign oil companies, the Middle Eastern producer states and consuming states. However, oil also has a high carbon density with negative environmental impacts, and the oil industry can also been seen as a ‘carbon conveyor’, taking carbon from its sequestered underground reserves into the atmosphere.

10  Handbook on oil and international relations The materiality of oil can also be understood in terms of the ways in which it moves across space, in the hydrocarbon chain which flows from acquisition and exploration, to production and then to consumption with its environmental impacts. Crude oil is extracted from its underground reserves and then transported to be processed and refined in multiple spatial sites; these refined products are then converted either into petrochemicals and plastics or into fuels, which are then used in the engines of the cars, ships and planes which make possible the radically increased mobility of humans and goods. Oil’s hydrocarbon journey, if not recycled or carbon captured, then continues either into the atmosphere as greenhouse gas emissions or into the plastics that litter the oceans. The materiality of oil is here found in the multiplicity of physical forms and objects that it makes up a dynamic part of: the oil installations, both onshore and offshore; the large oil tankers that transport much of the world’s oil across the oceans; the refineries that process and refine crude oil and create oil products; and the cars, ships, trucks and planes that require oil for their effective operation. Oil is, in this sense, fully embodied in the world of both things and bodies, and gives them their vitality. As humans, we are inextricably invested in the oil-created and oil-sustained environments and landscapes that surround us in the places that we live (rural, suburban, city), the objects in which we move ourselves and the goods that we need around (cars, planes, ships), and the complex infrastructures that sustain all of this (refineries, service stations, airports, ports). In this sense, oil is truly ‘vibrant matter’ interacting in complex and multiple ways in our everday embodied lives, and this recognition of oil’s materiality, and how this interacts with the social, political and international, is a fundamental starting position for an IR of oil. Oil as an International Assemblage A second useful step in how the new materialisms potentially contribute to thinking about oil’s materiality and its interactions with the social, political and international is to conceptualise oil in terms of assemblage theory. This theory is derived from the work of Deleuze and Guattari, which was later systematised by DeLanda (Deleuze and Guattari 1987; DeLanda 2006). There are, though, significant parallels and overlaps with the theories of networks, as developed for example in Latour’s actor-network theory and in Jervis’s complexity theory (Jervis 1997; Latour 2005). The distinctive features of assemblages as systematised by DeLanda is that they contain relations of exteriority, being arrangements of different heterogeneous entities linked together to make a new whole. Relations of exteriority mean that the different component parts cannot be reduced to their function in the whole, and indeed can also be part of other wholes or assemblages. There is also no assumption of what can be related ‒ humans, things, ideas, materials – nor of heirarchies of dominance, and assemblages in this sense are sociomaterial, without any ontological preference accorded to humans. The different parts of these assemblages are nevertheless affected by their interaction with one another; crucially, this is not determined by the properties of the constituent parts, but by their capacities. While properties of materials are finite and limited, capacities are infinite and unlimited because they interact with the capacities of multiple other sets of components. There is here a powerful sense of the dynamism and contingencies of assemblages, which is expressed by Deleuze and Guattari through the metaphor of ‘lines of flight’. A further key feature of assemblages is that they are caught up in a dynamic of deterritorialisation and reterritorialisation. This is a central axis of assemblage theory, where ‘reterritorialised sides … stabilise it and cutting edges of deterritori-

Oil and international relations  11 alisation … carry it away’ (Deleuze and Guattari 1987, p. 87). Assemblages define territories as they emerge and stabilise, but also constantly mutate, break up and are transformed. The dynamic of deterritorialisation and reterritorialisation is helpful in thinking about how the international oil assemblage has changed over time. The IR of oil is about the continual struggle in seeking control over the international oil assemblage. There was the reterritorialisation of the 1970s as OPEC and the oil-producing states reclaimed control over the sovereignty of their oil resources and sought to concentrate power in a cartel that would control the volumes of oil on the market. This was followed by a dynamic of deterritorialisation during the 1980s and 1990s as the component parts of the assemblage disintegrated to include new non-OPEC territories, and the power of the OPEC cartel splintered apart through the liberalisation of oil markets. This was again reversed in the 2000s when there was a further shift towards reterritorialisation as China’s extraordinary growth shifted the components of the assemblage, producer states gained greater control, resource nationalism became stronger and the earlier centripetal forces were partially reversed. These are necessarily high-level and generalised descriptions of the changing dynamics of the international oil assemblage, and there are in reality multiple different component parts that are continually shifting and changing. An IR of oil must engage substantively with the need to define and describe the changing dynamics of the oil assemblage, requiring a strong historical and sociological perspective as well as an active awareness and recognition of the materiality of oil. As well as highlighting the path dependencies which inhibit change and hold together existing components, the assemblage theory approach also focuses on the multiple capacities for more progressive change in which futures are brought into the present in order to remake the present. Bringing the desired futures into the present brings to the fore arguably the greatest challenge of the current oil assemblage: how to bring about a reversal of the oil assemblage and promote the ‘disassemblage’ of oil. While the IR of oil has mainly focused on the ways in which the past and present oil assemblage has international impacts, and how that assemblage can best be managed and governed, the imperative of a low-carbon transition brings the future of the oil assemblage to the fore, and the need to think radically about the ‘lines of flight’ that would lead to a final deterritorialisation of oil. This is essentially about how to stop the extraction of oil and leave it as a ‘stranded asset’ in the ground. There are a whole complex of different factors to be included in the disassemblage project, and IR has a critical role to play. This is not, though, a purely social, economic and political challenge; it is also one where the agentic power of oil, its physical components and how this interlocks with complex sets of assemblages meets some of the most vital needs of humans and the values and goods they depend on. Understanding the continuing exertion of the power and resistances of the oil assemblages is required if the project of disassemblage is going to be realisable. Relational Ontology A key feature of the assemblage approach is its commitment to a flat or relational ontology. There is not only a dissolution of the nature‒society divide, where bodies interact with other bodies and also with things, but also a rejection of the privileging of any one site or scale of level of analysis over another. Assemblage theory is radically open to analysis of the ways in which the components of the assemblage have effects which cannot be limited to one particular scale or level of analysis. As such, assemblage thinking ‘foregrounds the ways in which

12  Handbook on oil and international relations social/political processes are generated through relations between sites, rather than configured through “internal relations” in sites’ (Featherstone 2011, p. 140). The traditional approaches to IR have tended to give authority to the global level. Primacy has been generally accorded to the state, and its international interactions are defined by relations with other states or with larger structural forces, such as global capitalism. Where individual agencies are recognised, these tend to be elites, whether in government or in business. This is also evident in the analysis of the international politics of oil in the traditional tripartite divisions that have been discussed above. A common feature in realist, liberal and critical accounts of the international politics of oil is that the principal actors are seen to be states, companies and elites. This is also the case with accounts which seek to critique these, such as the constructivist-inspired securitisation theory; in these accounts, primacy is still given to how elites seek to securitise discourses of energy so as to pursue particular elite-driven political projects. What is missing from such accounts is how these global interactions have effects on, and are affected by, their relations with everyday life and with embodied agents at more local levels. This also takes into account the feminist challenge to recognise how such bodies are also highly differentiated ‒ by sex, but also by other differences ‒ and that the failure to engage with this in traditional IR approaches embeds structures of inequality and discrimination. When this greater focus on the human body is supplemented by the materialism of assemblage theory, you have a much flatter ontology whereby it is through the interactions at the micro level which form the interactions at the macro level. Examining the ways in which bodies have relations with the materialities of oil, and thereby construct the international, opens up relatively unexplored research agendas, at least within IR. There is, for example, the role of labour in the international oil industry and how labour relations have challenged and transformed the actions of both companies and states. Similarly, the ways in which race and white supremacy historically structured, and continue to structure, the oil industry and the international security and military arrangements which surround that industry represent a critically important dimension of the international oil assemblage. For example, the destruction and marginalisation of indigenous groups through oil exploitation are part of the ongoing effects of the international politics of oil. To be fair, one of the strengths of the IR of oil is that it has also emphasised oil’s impact on the politics of the Global South, which has not necessarily been present in a number of other disciplines. Nevertheless, there is still a need for the decolonisation of the ways in which both research and teaching of the international politics of oil is conducted. At the more embodied local level, one of the distinctive features of the politics of oil is how it generates a range of emotions and effects. Studying and incorporating these emotions and effects, as an increasingly important theoretical approach within IR, offers new insights into the interactions of the international oil assemblage. Oil provokes emotions, ranging from those which come close to horror – oil as a ‘curse’, as a ‘weapon’, as a ‘destroyer’ of lives and the environment – to those which link oil to various critical human freedoms, such as the freedom of the car, the desirability of suburban life, the opportunities to travel abroad. For those countries which possess oil, this often translates into a form of national pride and as a blessing for the country. As discussed above, the liberal approach has focused significant attention on the negative linkages between oil and poor development and political outcomes. This dualism in the emotions and effects of oil is critically important in understanding the politics of transition and the constraints and opportunities for the ‘disassemblage’ of oil. While there has been powerful expression of the need for a radical shift from fossil fuels, as expressed through the

Oil and international relations  13 Extinction Rebellion movement, it should also be remembered that the spark which led to the ‘Gilets jaunes’ (Yellow Vests) popular protests in France was the decision to impose a green tax on petrol, which was taken to be an attack on the rights and freedoms of the rural population who depend on cars for their everyday transportation. It is these everyday struggles, undertaken at various national and sub-national local sites in a multiplicity of countries, which undoubtedly contribute to the emergent formations of the international oil assemblage.

CONCLUSION: TOWARDS AN ETHIC OF CARE The overarching objective of this chapter has been to explore the relationship between the study of oil in the discipline of international relations and the materiality of oil. The chapter first analysed how IR has approached the materiality of oil through the three main traditional IR theoretical traditions: realism, liberalism and critical theory. The conclusion was that IR has addressed seriously the materiality of oil, but in different ways dependent on the particular theoretical perspective adopted. The next section provided an initial assessment of how the new materialisms theoretical approach can potentially provide new insights and ways of thinking about oil’s materiality, which can enrich and strengthen the study of oil in international relations. The argument was that this can be done in three ways: by focusing on agentic power of oil as a material resource, on how oil is embedded in an international assemblage, and how this oil assemblage is formed without privileging or prioritising any particular body or actor. There is, though, one final dimension of the new materialisms that has a significant implication for the future study of oil in international relations. This is an implicitly normative dimension of this approach, which flows from the recognition of the changing and intensifying nature of the interactions between human bodies, materiality and sociopolitical life. This means that, according to Coole and Frost (2010, p. 15), it is ‘impossible to live apart from the more-than-human company that is now so self-evidently integral to what it means to be human and from which collectivities are made’. Coole and Frost call for a ‘political-ethical intervention’ and a ‘reckoning of the material circuits, flows and experiences that mark the 21st century’. Similarly, William Connolly promotes the need for an ‘ethic of cultivation grounded in the contingency of care for this world’, in response to the ‘increased vitality and periodic capacity for surprise in the variety of nonhuman force-fields’. He depicts the contemporary condition as fragile and that an ‘appreciation of the fragility of things requires greater sensitivity to the multiple ways in which contemporary institutions, role definitions and nonhuman processes intersect’ (Connolly 2013, p. 402). The conception of the fragility of the multiple interactions of bodies and matter is particularly relevant for framing the nature and conditions of oil as an international assemblage. The shift to the politics of transition, the sense that the ecological conditions for survival in the Anthropocene age are becoming ever more endangered, provides the overarching context for highlighting the multiple complex ways in which the oil assemblage contributes to the fragility of all systems, but in particular how it is integrally linked to the rapidly shifting dynamics of climate change that represents such an existential threat to both human and non-human systems. This gives the study of the IR of oil a broader normative purpose that is not just limited to the international, but is also deeply embodied in the micropolitics of the assemblages affecting everyday life.

14  Handbook on oil and international relations

REFERENCES Balmaceda, M.M. (2018), ‘Differentiation, materiality, and power: towards a political economy of fossil fuels’, Energy Research and Social Science, 39, 130‒140. Bennett, J. (2010), Vibrant Matter: A Political Ecology of Things, Durham, NC: Duke University Press. Braun, B. and S. Whatmore (eds) (2010), Political Matter: Technoscience, Democracy and Public Life, Minneapolis, MN: University of Minnesota Press. Colgan, J.D. (2010), ‘Oil and revolutionary government: fuel for international conflict’, International Organization, 64 (4), 661‒694. Colgan, J.D. (2013), Petro-Aggression: When Oil Causes War, Cambridge: Cambridge University Press. Colgan, J.D., R.O. Keohane and T. Van de Graaf (2012), ‘Punctuated equilibrium in the energy regime complex’, Review of International Organizations, 7 (2), 117‒143. Collier, P. (2000), ‘Doing well out of war: an economic perspective’, in M. Berdal and D. Malone (eds), Greed and Grievance: Economic Agendas in Civil Wars, Boulder, CO: Lynne Rienner. Collier, P. and A. Hoeffler (1998), ‘On the economic causes of civil wars’, Oxford Economic Papers, 50 (4), 563‒573. Connolly, W.A. (2013), ‘The “new materialism” and the fragility of things’, Millennium: Journal of International Studies, 41 (3), 399‒412. Coole, D. (2013), ‘Agentic capacities and capacious historical materialism: thinking with the new materialisms in the political sciences’, Millennium: Journal of International Studies, 41 (3), 451‒469. Coole, D. and S. Frost (2010), ‘Introducing the new materialisms’, in D. Coole and S. Frost (eds), New Materialisms: Ontology, Agency and Politics, Durham, NC: Duke University Press. DeLanda, M. (2006), A New Philosophy of Society: Assemblage Theory and Social Complexity, London: Continuum. Deleuze, G. and F. Guattari (1987), A Thousand Plateaus, London: Continuum. Di John, J. (2008), ‘Oil abundance and violent political conflict: a critical assessment’, Journal of Development Studies, 43 (6), 961‒986. Featherstone, D. (2011), ‘On assemblage and articulation’, Area, 43, 139‒142. Frankel, J. (2012), ‘The natural resource curse: a survey’, in B. Shaffer and T. Ziyadov (eds), Beyond the Resource Curse, Philadelphia, PA: University of Pennsylvania Press. Goldthau, A. and L. Hughes (2020), ‘Saudi on the Rhine? Explaining the emergence of private governance in the global oil market’, Review of International Political Economy, 28 (5), 1410‒1432. Goldthau, A. and N. Sitter (2015), A Liberal Actor in a Realist World: The European Union Regulatory State and the Global Political Economy of Energy, Oxford: Oxford University Press. Goldthau, A. and J.M. Witte (2009), ‘Back to the future or forward to the past? Strengthening markets and rules for effective global energy governance’, International Affairs, 85 (2), 373‒390. Haber, S. and V. Menaldo (2011), ‘Do natural resources fuel authoritarianism? A reappraisal of the resource curse’, American Political Science Review, 105 (1), 1‒26. Hinnebusch, R. (2003), The International Politics of the Middle East, Manchester: Manchester University Press. Hughes, L. and A. Long (2015), ‘Is there an oil weapon? Security implications of changes in the structure of the international oil market’, International Security, 39 (3), 152‒189. Jervis, R. (1997), System Effects: Complexity in Political and Social Life, Princeton, NJ: Princeton University Press. Keohane, R.O. and J. Nye (1977), Power and Interdependence: World Politics in Transition, Boston, MA: Little & Brown. Klare, M. (2001), Resource Wars, New York: Henry Bolt. Klare, M. (2004), Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum, New York: Metropolitan Books. Klare, M. (2008), Rising Powers, Shrinking Planet: The New Geopolitics of Energy, New York: Henry Holt. Klare, M. (2012), The Race for What’s Left: The Global Scramble for the World’s Last Resources, New York: Picador. Lanteigne, M. (2008), ‘China’s maritime security and the “Mallaca Dilemma”’, Asian Studies, 4 (2), 143‒161.

Oil and international relations  15 Latour, B. (2005), Reassembling the Social: An Introduction to Actor-Network Theory, Oxford: Oxford University Press. Le Billon, P. (2004), ‘The geopolitical economy of “resource wars”’, Geopolitics, 9 (1), 1‒28. Le Billon, P. and A. Cervantes (2009), ‘Oil prices, scarcity, and geographies of war’, Annals of the Association of American Geographers, 99 (5), 836‒844. Lind, J. and D.G. Press (2018), ‘Markets or mercantilism: how China secures its energy supplies’, International Organization, 42 (4), 170‒204. Mitchell, T. (2009), ‘Carbon democracy’, Economy and Society, 38 (3), 399‒432. Morgenthau, H.J. (1960), Politics Among Nations: The Struggle for Power and Peace, New York: Knopf. Niebuhr, R. (1960), Moral Man and Immoral Society: A Study in Ethics and Politics, New York: George Scribner. Rosser, A. (2006), The Political Economy of the Resource Curse, Brighton: Institute of Development Studies. Strange, S. (1988), States and Markets, London: Bloomsbury. Van de Graaf, T. (2013), The Politics and Institutions of Global Energy Governance, Basingstoke: Palgrave Macmillan. Waltz, K.N. (1979), Theory of International Politics, New York: McGraw-Hill Higher Education. Watts, M. (2001), ‘Petro-violence: community, extraction and political ecology of a mythic commodity’, in N.L. Peluso and M. Watts (eds), Violent Conflicts, Ithaca, NY: Cornell University Press. Watts, M. (2004), ‘Violent environment: petroleum conflict and the political ecology of rule in the Niger Delta’, in R. Peet and M. Watts (eds), Liberation Ecologies, London: Routledge. Watts, M. (2009), Crude Politics: Life and Death on the Nigerian Oil Fields, Berkeley, CA: University of California Press. Wilson, J.D. (2019), ‘A securitization approach to international energy politics’, Energy Research and Social Science, 49, 114‒125.

2. From exploration to consumption: understanding the materialities of oil Gavin Bridge and Alexander Dodge

INTRODUCTION International relations (IR) has an extensive record of work on the politics of oil, arising from the field’s substantive engagement with questions of political order, security, development and globalisation. By acknowledging how geographical features, material qualities and infrastructures shape the political economy of hydrocarbons, IR has contributed ideas and concepts to the social sciences – such as energy security and the resource curse – that extend well beyond the specifics of oil and gas. The value of engaging with the concept of materiality, then, may not be immediately obvious for a field already aware of the influence of physical geography and infrastructure on the international politics of oil. And all the more so because contemporary ideas about materiality have origins outside of international relations and – on the face of it – appear to draw the field away from the analysis of big power politics and to celebrate (even wallow in) the multiple and mundane instances through which oil’s international political economy is constituted. Yet this would be a mistake. Materiality challenges conventional notions of who and what has agency, and illuminates the devices and techniques through which oil becomes an object of political-economic calculation. It has the potential, therefore, to radically expand how IR understands the ‘politics’ of oil. Research on materiality, originating largely outside IR, is transforming what it means to think about the political in the social sciences, by foregrounding the constitutive role of the non-human in social and economic life (Barry 2001; Tsing 2015; DeLanda 2016). There is no reason that international relations, as a field dedicated to the study of relations and interactions across state boundaries, should be immune from this post-humanist critique (see, e.g., Cudworth and Hobden 2021). Elsewhere in the social sciences, admitting the ‘material’ into accounts of oil’s political economies is already acting like the grit in the oyster: a generative friction, creating new ideas and understandings about agency and scale that raise new research questions and transform what it means to study the ‘geopolitics’ of hydrocarbons (Mitchell 2011; Barry 2013; Appel et al. 2015; Valdivia 2015; Cederlöf and Kingsbury 2019; Kama and Kuchler 2019). Thinking with the materialities of oil, then, can be simultaneously an evolutionary and a revolutionary project for IR: it can productively deepen and extend existing accounts (often by showing how apparently placeless and universal phenomena – a ‘global oil market’, for example – hinge on specific infrastructures or techniques); and, more fundamentally, it has the potential to re-order understandings of the ‘politics’ of oil. In this chapter we take up the challenge of thinking with oil’s materialities, with an eye towards what it means for international relations. In doing so, we aim to achieve three things. First, we want to seize the implicit invitation that ‘materiality’ extends to explore some of the diverse (and contradictory) material configurations that oil adopts in the twenty-first century: 16

From exploration to consumption  17 as a geological phenomenon of indeterminable size, a financial asset of uncertain value, a saleable good of variable price and a carbon stock of existential threat. Here we work with the grain of social science inquiry while also finding inspiration in the embodied knowledge of those who know oil through their work and labour: from reservoir engineers to refinery operators and oil storage managers, those who work with oil know well its varied properties, capacities and affordances. Our second objective for the chapter is to highlight some of the already diverse arguments for oil’s materiality among social scientists, which go beyond technical concerns with geochemistry, geophysics or petroleum engineering to account for the way oil’s materialities do some kind of ‘social’ (that is, political-economic) work. We briefly reflect on how these diverse invocations of materiality sit uneasily across several traditions of thought, from political ecology and science and technology studies, to biopolitics and post-humanism (Balmaceda et al. 2019; Bakker and Bridge 2021). Our third objective is to demonstrate how one can work with several different understandings of materiality simultaneously. To do this we mobilise two distinctive meanings from the literature: materiality as physical heterogeneity, in which the qualities of oil (energy density, carbon intensity, liquidity) and its associated infrastructures influence the organisation of the sector in significant ways; and materiality as the instruments and devices through which oil emerges as the object of economic and political calculation. To take these themes forward, the chapter proceeds in two main sections. The first of these briefly considers how materiality (understood as physical heterogeneity) currently features in accounts of oil and international relations, before seeking to expand this repertoire via reference to work on new materialism, infrastructural studies and political ecology. These bodies of work problematise the idea that oil is a stable and passive object – a fixed ‘thing’ of known properties around and through which international relations are configured – to highlight how oil’s physical qualities and material capacities enable it to act in the world. Some of these interventions represent relatively modest shifts, but are important for the way they progressively expand the significance of thinking about material heterogeneity; others are more radical, in that they presuppose alternative ontologies that reconstitute ‘oil’ as network effects. In the second section, we examine how materiality (understood as the instrumentation and devices through which oil becomes an object of economic and political calculation) can reveal the particularity of knowing oil in a certain way, and how the politics of oil emerge from this epistemic process. We illustrate this with reference to the ‘booking’ of proven oil reserves, and the potential ‘stranding’ of oil assets as their carbon content becomes increasingly qualified and quantified in the context of global climate change. The chapter concludes by reflecting on how the concept of materiality can strengthen conventional political economic analyses of the international oil sector, and its value for thinking about the organisation and durability of oil production networks over space and time.

MATERIALITY AS HETEROGENEITY AND ITS SOCIAL ORDERING EFFECTS The oil of international relations is a relatively uncomplicated thing: either a strategic good or a traded commodity, the politics of oil in international relations derive almost exclusively from its entanglement with the political economies of firms and nation-states. The ‘almost’ here merits qualification, as the long-standing interest in IR research on oil with issues of

18  Handbook on oil and international relations resource endowment – and the growing concern with issues of carbon intensity – suggest that the field already admits some understanding of material qualities into its analyses. The differential rents arising from spatial variations in lifting costs, for example, highlight IR’s interest in what Odell (1997, p. 312) referred to some time ago as ‘the organizing forces of location’ on the international oil industry. Indeed, the materiality of oil reserves – their geographically uneven distribution, variable quality and potential scarcity relative to oil demand – has underpinned a long-standing research concern with how the ‘struggle to secure … resources has both excited and driven international politics’ (Dannreuther 2013, p. 79). Recent articulations of this theme in IR include work on the shift from resource scarcity to abundance associated with fracking and ‘unconventional’ hydrocarbons; Van de Graaf and Bradshaw (2018), for example, show how the material properties of shale oil and gas give rise to an industry more akin to a standardised manufacturing process than the one-off, large-scale engineering characteristic of many conventional oil enterprises. Recent work also considers the carbon intensity of oil reserves held by states and firms, the extent to which this renders these assets ‘unburnable’ in the context of climate policy goals, and the international distribution of supply-side cuts to oil production in the context of rapid decarbonisation (Van de Graaf and Verbruggen 2015; Overland 2015; Bradshaw et al. 2019; Le Billon and Kristoffersen 2020). International relations, then, acknowledges the physical heterogeneity of oil as a raw material and acknowledges the significance of this heterogeneity (and its spatial unevenness) for geopolitics. We argue that this is a preliminary and constrained understanding of materiality, and one which assumes that oil itself is a largely fungible and biddable material with little agentic capacity of its own. The qualities of the relative stability, homogeneity and quiescence of oil that make possible accounts of a ‘global oil market’ or a ‘race for resources’ are a productive fiction: they have allowed international relations as a field to focus on the relations of conflict and cooperation constructed in and through oil. To invoke materiality is to query this fiction, pushing back at oil’s assumed stability and quiescence by seeking to highlight the specific at the expense of the general. Materiality here references a multitude of specificities rather than signalling one in particular. In this section, however, we focus on three in particular: energy density, carbon intensity and the particular infrastructural forms associated with oil’s liquid character (for example, pumps, pipelines, internal combustion engines). A primary step towards acknowledging these particularities is to focus on the material specificities of oil relative to coal, gas and non-fuel commodities more broadly (Fine 1994; Bridge and Bradshaw 2017; Balmaceda 2018; Dodge 2020). Balmaceda (2018, p. 130), for example, works methodically through the ways in which oil’s ‘physical characteristics … affect secondary features (such as those having to do with and transportability, obstructability, size and location of typical markets, type of processing required, cartel possibilities, and substitutability)’, in an effort to establish the specific qualities of oil versus coal and gas (see also Chapter 3 in this book). A related move is to pluralise the category ‘oil’ to acknowledge the heterogeneity of crude, and account for its significance in the organisation of production. Crude in the ground is a variable material; its qualities are a product of the regional context in which petrogenesis occurs. The outcomes of this regional variation in formation are variations in sulphur (sweet/sour) and water content, and the co-presence of gas with crude. Other significant aspects of physical variation include the ratio of carbon to hydrogen atoms, which influences viscosity, carbon-intensity and ignition temperature. However, materiality implies more than mere descriptions of heterogeneity or the inventorying of difference. A key insight is that material differences of texture and form are sig-

From exploration to consumption  19 nificant – they matter – in ways that exceed conventional technology-centred or cost-focused appraisals of oil reserves. Materialising the study of oil, then, is a process of analytical sensitisation: it broadens the range of analytical pathways through which oil – as a geological substance, subterranean financial asset, traded commodity or global carbon flux – becomes political, in the sense of its capacity to influence social outcomes. By explicitly acknowledging the role of material forms and textures in constituting political capacity, materiality admits a broader account of power into the political economy of oil by ‘understanding energy differences in relation to their role in helping constitute actors (“power to”) and not simply in terms of influence (“power over”)’ (Balmaceda 2018, p. 138). We can take this insight further by drawing on concepts from infrastructure studies, human geography and anthropology, where as part of a ‘material turn’ in the social sciences over the past decade there has been growing interest in how social power is exercised via materials, and the generative effects that material qualities have on social relations (Bennet and Joyce 2010; Weszkalnys 2013; Richardson and Weszkalnys 2014; Luque-Ayala and Silver 2016; Clark and Yusoff 2017; Bakker and Bridge 2021). Materiality here references the ‘productivity and resilience of matter’ (Coole and Frost 2010, p. 7), the ‘physical, chemical, biological, and cultural acting ... [and] sociotechnical mediation’ of materials (Swyngedouw 2015, p. 28), and the ‘influence materiality exerts on industrial organization’ (Bridge 2008, p. 415; see also Boyd et al. 2001; Prudham 2005; Hudson 2008). Significantly, this work does not share a single or common theory of power. As a consequence, materiality sits somewhat awkwardly across several different conceptual approaches, drawing variously from assemblage theory (Deleuze and Guattari), biopolitics (Foucault), post-humanism, science and technology studies (Callon), and vitalist thought (Bennett 2010). The common gesture of this work towards the material, however, invites reflection on how the characteristics and capacities of oil (and related infrastructures) shape relations of production or exchange, or become implicated in political possibilities and limitations (Birch and Calvert 2015). By way of illustration, we offer below three ‘moments’ along the oil value chain – upstream, midstream and downstream – that illustrate the implications of oil’s physical and infrastructural heterogeneity for international relations. Upstream: The Affordances of Oil as a Fugitive Resource At the upstream end of the chain, materiality highlights the specific configurations of land, property and infrastructure through which liquid crude is appropriated and mobilised. It is useful here to reflect on the particular affordances of oil for generating and sustaining economic and political power. The concept of ‘affordance’ entered anthropology and human geography as a way of thinking about what ‘environments, organisms and things furnish for the purpose of a subject’ (Barua 2016, p. 730; see also Ingold 2002; Knappett 2004). At the upstream end of the oil chain, many of oil’s affordances relate to its ease of capture relative to other energy sources, and in particular, to the liquid properties of crude oil which mean it can appropriated by sinking a well. Drawing on recent scholarship, we suggest that this seemingly innocuous upstream materiality has at least four political consequences of significance for international relations. IR scholarship already acknowledges some influence of oil’s physical characteristics on political relations, so the direction of travel here is elaboration and extension. The implication of materiality for IR is not necessarily new objects of analysis, but a different analytical process yielding a fuller appreciation of the origin and political expression of oil’s agentic capacities.

20  Handbook on oil and international relations First, some forms of crude oil are easier to appropriate and work with than others – they have lower lifting costs, or their chemistry facilitates processing and refining – so that there is then competition for access to and control over those reserves offering higher social value. Historically this competition has led to the concentration of capital and the centralisation of control within transnational oil firms. It has also meant that control over the world’s largest low-cost reserves is a critical means for maintaining market scarcity and, therefore, the profit and rent to be generated from oil (Labban 2008). For example, although far from international markets, the low lifting costs and abundance of light sweet crude in the Middle East have secured the region’s dominance in global oil markets and ensured a century-old struggle over access and control. More significantly, durable infrastructures of production, distribution and consumption (pumps, pipelines, shipping ports, refineries, distribution systems and end markets – for example, the design of internal combustion engines) have been tailored to such high-quality ‘conventional’ reserves. Ownership and/or control of these infrastructures serve to concentrate political power in ways that structure international relations. Furthermore, the historical development and incumbency of these dedicated infrastructures means that the affordances of conventional oil cast a long shadow: they exert a form of path dependency to technological innovation, in which new developments in energy systems are geared towards reproducing similar affordances. Prominent examples include the extraction of lower-quality, ‘unconventional’ sources (such as bituminous sands of Alberta or the ultra-heavy crudes of Venezuela) that need to be ‘upgraded’ to make them compatible with existing infrastructures and markets; and ‘drop in’ biofuels with material characteristics which mean that they can ‘be incorporated into existing distribution infrastructure (for example, pipelines) and conversion devices with relatively few, if any, technical modifications’ (Birch and Calvert 2015, p. 52). Second, in many cases reservoir pressure performs the work of mobilising oil to the surface and, unlike coal, no subsurface workforce is required (Mitchell 2011). The capacity of oil to flow unaided has allowed upstream infrastructures that rely on automated flow rather than manual handling. Mitchell (2011) argues that oil’s capacity for automatic flow has significantly shaped opportunities for working-class politics relative to coal and, as a consequence, influenced the class structure and social democratic basis of national political systems. Third, political-economic control over fluid subterranean crude may be obtained by a simple property right giving title to land. The classic histories of ‘oil booms’ – whether in Baku on the Caspian Sea or Beaumont in southeast Texas – feature dense forests of oil derricks as each property owner sinks a well in a bid to capture oil from beneath the surface. As a ‘fugitive’ resource that redistributes itself within subterranean reservoirs, oil extraction requires only a small surface footprint, ‘a molecular point of access rather than a contiguous territorial claim’ (Bridge 2009, p. 46). The limited land requirement, and the enormous spatial concentrations of energy that result, are key material characteristics of oil’s ‘subterranean energy regime’ (Huber and McCarthy 2017). The resulting geography of extraction is one of discrete spatial monopolies, where power rests on the ability to control specific patches of ground and the associated infrastructure (Bridge 2009). This molecular and discontinuous form of property underpins the creation of classic enclave economies ‘that are, at the same moment, both deeply integrated into the global economy and fragmented from national space’ (Bridge 2009, p. 46). In short, the materiality of oil extraction – meaning the configuration of land, property and infrastructure required to appropriate crude – gives rise to scales of community and spaces of governance that rarely conform to the imagined space of the ‘nation’ (Watts 2004; Ferguson 2006).

From exploration to consumption  21 Fourth, the molecular and fragmented forms of landed property that grow up around oil extraction secure conditions for oil development, but at the same time, they are an obstacle to the further expansion of oil investment (Fine 1994). The material structure of property relations – that is, the fragmented character of land and lease ownership relative to the physical structure of the oil field – influences the international direction of capital investment in the sector by skewing it towards intensification within existing leases. In the context of the lower 48 states in the United States (US), for example, Bina (1989, p. 101) shows how US oil was ‘largely produced through the successive investments of capital upon the already-producing US oilfields’. His argument is that fragmentation in the pattern of land ownership works as a barrier that ‘tends to move the capitalist investors away from engagement in new and larger oil fields which often require the assembling of large tracts of land prior to exploration’ (ibid., p. 100). The consequence of these impediments, he argues, is that investment was ‘either directed to exploration in the aged US oilfields, or aimed at further development of oil from existing oil wells, or canalized towards foreign oilfields’ (ibid., p. 101). More generally, invoking materiality at the upstream end – in the context of this kind of historical materialist analysis – highlights the critical role of property relations in accessing oil, and points to the significance of their spatial form in structuring patterns of investment. Labban (2008) extends this argument to the world scale, to consider how the property relations governing access to oil under conditions of competition determine the location and rate at which investment occurs and, ultimately, determine the scarcity (and price) of oil. With reference to the historical integration of Russia and Iran into world oil markets, Labban (2008, p. 5) highlights a ‘contradictory process of spatial integration and fragmentation that regulates the flow of capital into reserves’, and that acts as ‘an effective and necessary means in regulating the scarcity of oil and determining the profitability of the oil industry’. He shows how this core geographical tension between expansionary capital and state protectionism has played out differently with respect to Russia and Iran, so that these two oil-rich states are integrated into the world economy via oil exports and investment in different ways. Russia’s long-standing integration into world markets via oil accelerated following the collapse of the Soviet Union, even with reassertion of state control after early privatisations. By contrast, Iran’s integration has been caught in the tension between US efforts to exclude the Iranian hydrocarbon industry from global investment, and efforts by Europe, India and China to integrate the country’s oil and gas sector. Midstream: The Constitutive Role of Infrastructure A focus on the midstream part of the global oil value chain highlights the materiality of oil infrastructures associated with realising the value of crude. It includes the refineries that convert crude into a variety of product streams, and the transport, storage and distribution infrastructures for crude oil and products. Materiality here highlights two things of relevance to the analysis of international relations. First, it grounds analysis in the particular topographies and topologies of infrastructure by, for example, underscoring the relative fixity and flexibility of the sunk costs associated with oil refineries. It is an explicitly geographical approach that elevates the particularities of location, capacity and connection, and introduces them as sources of friction within otherwise space-less notions of the ‘world oil market’. It draws attention, for example, to the way refineries produce standard and commensurable grades of fuel, yet are themselves tailored to particular types of crude feedstock. The result

22  Handbook on oil and international relations is a kind of asymmetric commensurability that structures international crude oil trade; for example, until recently a large portion of Venezuela’s oil exports was locked into US markets, as over time refineries in the US had built up capacity able to process its heavy crudes. Since the US imposed sanctions on Venezuelan crude exports, its heavy crude has struggled to find alternative markets. Second, it also highlights the fixed capacities of refining and storage infrastructure, and their impact on the spatial movements and temporal rhythms of oil, including the very significant role of oil storage (Simpson 2019). It is in this sense that materiality is frequently invoked to explain moments of apparent market failure, such as when sharp spikes or falls in price are attributed to infrastructural issues; for example, the negative prices for supplies of West Texas Intermediate briefly experienced in April 2020 attributed to maxing out crude oil storage capacity at Cushing, Oklahoma. Midstream infrastructure frequently only becomes visible at moments of breakdown, such as in refinery outages, pipeline ruptures, or congestion at transport choke points (Star 1999). The wider insight in relation to the midstream, however, is that materiality is not merely an aberrant interruption to the ‘normal’ market. Rather, it is the materiality of infrastructure – that is, its capacity, connectivity and durability – that actively constitutes the market. In this way, infrastructure governs what oil is (via technical standards and norms), where and how readily it flows, and how it distributes social power. We can see this across the midstream in several ways. First, the ‘global’ character of the oil market rests on an extensive infrastructure of oil transportation and storage, including revolutionary shipping technologies such as the very large crude carrier, or VLCC (capacity up to 320 000 dwt), and the ultra large crude carrier, or ULCC (up to 550 000 dwt), developed from the 1960s (Bridge 2009). Realising such scale economies in transportation creates tensions with the scale economies of production and consumption that shape geographies of trade and investment: the development of larger-capacity transport units (and the terminals to receive them) has in turn driven a focus on developing oil fields able to produce such capacity, and on markets that can absorb it (Bunker and Ciccantell 2005). In this sense the international political economy of oil trade and investment is shaped in significant ways by the materiality of midstream infrastructures. Second, research on growing volatility within oil markets – and the expanded significance of oil trading versus production to the returns of oil companies – points to the constitutive role of midstream infrastructure in enabling both market volatility and opportunities for oil traders to profit from it (for example, the ability to access storage capacity). Third, research on oil pollution – and, specifically, on the social and spatial distribution of oil’s environmental costs – highlights how ‘these physical and technical forms produce the ambient conditions of everyday life’ (Landa 2016, p. 720). Whether through leaking pipelines, tanker accidents or the ‘normal’ pollution associated with the processing and transportation of crude oil and petroleum products, oil’s midstream materialities are often experienced as risks to human and non-human life, and drivers of environmental injustice, as refinery ‘fence line’ communities know well (Carpenter and Wagner 2019; Mah and Wang 2019). Downstream: Energy Density ‒ Lubricating Consumption, Neoliberalising Life At the downstream end of oil’s value chain, materiality draws attention to the experience of consumption and the cultural-political identities and forms of agency to which oil gives rise. In particular, it draws attention to oil’s energy density; to geographical unevenness and social inequalities in access to oil, and their structuring effects on modes of collective life; and to

From exploration to consumption  23 the social relations and forms of political subjectification associated with consumption. First, oil’s energy dense and liquid character enabled experiences of movement in the twentieth century that were fundamentally novel: jet engines and the internal combustion engine have transformed the experience of space and time (and the understanding of economic and political possibility) for billions of people. The energetic surpluses available to society via oil have given rise to transformative geographies of transport and production that structure international relations, from airline travel and automobility, to the globalisation of manufacturing via low-cost maritime transportation (Hall et al. 2003; Smil 2010; Bridge and Bradshaw 2015). Although they emphasise abundance and energy surplus, such accounts of oil’s political effects highlight quite different pathways to arguments about the resource curse, which ‘read off’ political-economic outcomes from a country’s national endowment of natural resources. To speak of oil’s materiality in this context, then, is to highlight its underpinning influences on relations between places, collective forms of social life and political possibilities (Cederlöf and Kingsbury 2019; Cederlöf 2021). Second, oil now unevenly permeates the experience of social life to a degree unmatched by any other commodity (Bridge and Le Billon 2017). Huber (2013) reflects on what cheap oil (and energy surplus) meant for US workers on relatively modest wages who, for the first time, were able to access a range of experiences (home ownership, leisure time, family vacation), accumulate goods (automobiles, consumer durables) and maintain living standards that once could only be procured at great cost. The result, he argues, was to create a ‘world beyond work’: a sphere of social life made up of consumption, leisure and travel. This not only became synonymous with the American Way of Life but also, significantly, its accessibility lubricated the friction-prone relationship between workers and employers in ways that effectively subsidised profits for American firms. Third, oil’s energy density – and the technologies and infrastructures designed to capitalise on its consumption – have fostered notions of individual autonomy and self-determination, for which the suburban home and private car are striking illustrations. Huber (2013) describes the material conditions of oil consumption as creating ‘structures of feeling’ around the self-made life and the ‘entrepreneurial life’. These habits of mind have travelled widely from their specific origins in oil-enabled post-war suburban life to ‘become a cultural crucible for the politics of neoliberalism’ (Bridge and Le Billon 2017, p. 130; see also Campbell 2005; Watts 2008). We have illustrated some of the ways in which the materiality of oil – understood as the heterogeneity of crude, petroleum products and associated infrastructures – shape social relations along the value chain. The outcomes of this process are diverse and often contradictory: at the upstream end of the chain, for example, crude oil is associated with particular forms of nationalism; while at the downstream end, oil has lubricated capital relations in ways that have made neoliberal policy regimes possible. The general value of these accounts is as an antidote to conventional forms of theorisation in the social sciences which attribute agency and capacity solely to human actors (whether states, firms or individuals). They create an analytical space in which oil is able to exceed its conventional IR characterisation – as either national resource endowment or internationally traded commodity – and, in this way, they hold the potential for alternative, supplementary understandings of the politics of oil. Their more specific value lies in the ability to show how oil’s material qualities and affordances are significant for different actors in particular ways. Determining which materialities matter for whom (and under what conditions) is an important part of political economic analysis. Materiality, we suggest, has the capacity to show how oil’s physical and social heterogeneities intersect to constitute oil

24  Handbook on oil and international relations markets or global value chains in the sector. Having laid out the analytical significance of thinking through the heterogeneity of materials (drawing, for the most part, on perspectives from infrastructural studies and political ecology), we now turn to an alternative understanding of materiality derived from science and technology studies.

MATERIALITY AS EPISTEMIC APPARATUS: CONSTITUTING RESERVES, ASSETS AND CARBON LIABILITIES In this section we examine a different notion of materiality, one that signals the instruments and devices through which oil, and its associated infrastructures and environments, become objects of economic and political calculation. Thinking about materiality in this way draws attention to the ‘epistemic apparatus’ (Birch and Calvert 2015, p. 56) through which materials and substances are rendered knowable and actionable. To think of subterranean oil resources from this perspective is to examine the knowledge practices of science and economics: via investigation, classification and calculation, heterogeneous underground materials are defined as resources, calculated as reserves and then booked as assets – that is, ‘bankable’ objects against which debt can be raised and which anticipate financial return. When applied to traded petroleum products or crude oil, this perspective highlights the metrological standards and practices through which materials qualify for markets, from the basic units of volume through which hydrocarbons are traded, to fuel quality standards and the work of ‘benchmark’ crudes in making heterogeneous sources of crude commensurable. And in relation to pollution events – whether catastrophic blowouts such as Deepwater Horizon, the ‘normal’ accidents of leaking pipelines, or fugitive methane emissions from oil and gas development – materiality as epistemic apparatus highlights the instruments, models and representations through which pollutant flows become identified, established as scientific fact and made into a matter of public concern. A primary insight here is that the materials and infrastructures that make up the international oil sector ‘are subject to a growing range of modes of information production, such that their existence is bound up with the production of information’ (Barry 2013, p. 14). As this informational layer grows and changes – such as when new facts are established, or new modes of measurement are introduced (for example, carbon intensity of crude) – so too do the material politics of infrastructure. Barry’s (2013) work on the Baku‒Tbilisi‒Ceyhan pipeline shows, for example, how public controversies generate the objects they purportedly describe through the production of information. Pipelines and oil reserves from this perspective are not predefined objects, but material forms whose shape, significance and political effects are the product of information. Such materials become ‘encas[ed] in an array of figures, traces, and samples’ (Barry 2013, p. 141) so that they are best understood as ‘informed materials’ (Bensaude-Vincent and Stengers 1996, p. 205). Thinking about materiality in this way emphasises the particularity of knowing oil as a geological phenomenon, a financial asset, a saleable good or liquidated carbon stock, by reference to the techniques and devices through which these understandings are established and stabilised (Barry 2013; Kama and Kuchler 2019; Kama 2020; Bakker and Bridge 2021). In this section we consider the significance for international relations of materiality as an epistemic apparatus through two examples: proven reserves and stranded assets. We then observe how understanding materiality as ‘epistemic

From exploration to consumption  25 apparatus’ highlights the politics of anticipation associated with oil; whether this be about reserves development or demand destruction. Proven Reserves We focus first on the foundational role of information in constituting oil reserves. Uncertainty over the size and distribution of oil reserves is a long-standing source of tension in the political economy of oil, and underpins, for example, debates over peak oil and the relative power of large reserve holding states. The power of countries holding significant oil reserves is closely linked to their ability to ramp up production in the face of rising demand, to restore market balance. Saudi Arabia, for example, has consistently declared reserves of around 260 billion barrels since 1989, having sharply raised them in the late 1980s when members of the Organization of the Petroleum Exporting Countries (OPEC) proposed using the size of oil reserves as a criterion for distributing national production quotas (Bridge and Le Billon 2017). The political character of reserves, then, is widely acknowledged in international relations. A focus on materiality (as epistemic apparatus) takes this insight further, offering an account in which reserves are a relational effect, a consequence of joining together imperfect pieces of geological information with anticipations of the future. Thinking of reserves in this way disrupts accounts which assume that the prospecting, survey and appraisal of oil reserves merely reveal pre-existing forms. In her ethnographic study of oil exploration in São Tomé and Príncipe, Weszkalnys (2015) examines the precarious dynamics of ‘first oil’; that is, hydrocarbon development in areas without prior exploration and infrastructural investment. In such settings, she notes, the absence of prior development means that ‘the precise contours posed by geological matter are opaque’ (ibid., p. 631), but become known through imperfect geological measurements, such as surveys of the subsurface and seismic measurements. Weszkalnys explains how ‘a dispersed sociotechnical arrangement of instruments designed to determine oil’s political, economic, and geoscientific parameters …. [are used] to reduce such uncertainties’ (ibid., p. 631). These gestures of resource petroleum potential subsequently feed speculation, buoyed by wider notions of economic crisis, ideological struggle or epistemic and technical shifts. Weszkalnys shows, then, how first oil is ‘a protracted and precarious achievement based on a speculative epistemology and reliant on specific technical, legal and commercial practices and devices’ (ibid., p. 612). It is out of these epistemic relations of geological science and commercial speculation that the international relations converging on São Tomé and Príncipe are configured. ‘Booking’ oil reserves on the balance sheets of corporations is subject to a similar process of ‘informational enrichment’ and controversy (Barry 2013). Transforming a fundamentally unknown piece of subterranean space into an asset involves ‘capitalising property’; that is, converting an ownership or access right into something capable of generating future income (Birch 2017, p. 468). This transformation hinges on practices of valuation which construct the volumetric qualities of a land package in ways that are legible to investors. Materiality here gestures to the techniques of valuation (for example, discounted cash flow modelling) and to the work of standards and certification, such as the valuation and reporting requirements of major stock exchanges that enable companies to ‘book’ reserves. Several high-profile scandals point to the way in which these reserves only exist through a process of ‘informational enrichment’. For example, in 2004 Shell admitted it had overstated its proven reserves in Oman for

26  Handbook on oil and international relations 2000 by 40 per cent on its previous financial reporting, leading to resignation of the company’s Chairman and Chief Executive for Exploration and Production (Limbert 2015). Adopting materiality as an entry point here reveals that the controversy was not merely a matter of fraudulent calculation; that is, of overestimating the quantity of oil. Rather, it highlights the work of categorisation, as oil booked as ‘proven reserves’ should have been categorised under the less exacting category of ‘possible reserves’ (indicating that it may be uneconomical to develop) (Limbert 2015). In the wake of the scandal, oil companies and several national governments have sought to enhance the accuracy of oil forecasting, but, paradoxically, this has been accompanied by a greater disbelief in state and oil-company transparency. Booking reserves is more than merely a question of reporting: by formally acknowledging their existence as proprietary assets with the potential to generate rents, the material techniques for booking reserves underpin financialisation in the sector (Christophers 2020). Proven oil and gas reserves, for example, can be used to securitise what are termed reserve-based loan facilities (Azar 2017). Approaching oil accounting from the perspective of materiality shows how, through such techniques, proven reserves ‘serve as projective devices, they enable companies, governments, managers, engineers and investors to extend their understanding into the future by envisaging certain actions, without necessarily ever acknowledging precisely what exists in the present’ (Barry 2013, p. 13). Stranded Assets Attention to knowledge controversies surrounding oil is increasingly important in the context of growing visibility surrounding the carbon content of oil fuels, and the performance of oil reserves as financial assets in a post peak-demand oil market. A long-term shift from scarcity to abundance in oil markets has been noted in recent IR scholarship on oil: a product of the hydraulic fracturing ‘revolution’ increasing available supply, at the same time as there is growing acknowledgement of a ‘carbon constraint’ on demand growth (Van de Graaf and Bradshaw 2018; Blondeel et al. 2021). Here the ‘informational enrichment’ of materials involves the recoding of oil as potential carbon emissions, and a re-inventorying of subterranean reserves as ‘unburnable carbon’. Organisations such as Carbon Tracker have played a key role in inventorying and mapping fossil fuel reserves in relation to the global carbon budget. The effect has been to give national and corporate oil reserves a new material form: as an abundance of emissions-in-waiting, a surplus far in excess of what the carbon budget can withstand. Fossil fuel reserves held by the top 100 listed coal companies and top 100 listed oil and gas companies represent potential emissions of 745 gigatonnes of carbon dioxide (GtCO2), against a total remaining carbon budget of 565 GtCO2 (Carbon Tracker 2011). Projections such as these have gathered market and civil society actors together in new ways, generating growing concern among fossil fuel investors and reserve owners that existing proven reserves (on which company valuations and the national budgets of oil-exporting countries are based) will not all be extracted. This in turn has propelled assessments of which country’s oil reserves are most at risk of a write-down in assets (McGlade and Ekins 2015), and the mapping of reserves (and potentially stranded assets) on national stock exchanges to determine the level of systemic risk that stranded assets may pose. Meanwhile, the exploration and appraisal of new oil and gas resources continues apace. Inherent uncertainties about the scale, value and demand for new fossil fuel resources – particularly around unconventional hydrocarbons, or new frontiers such as the Arctic – is driving the production of multiple layers of commercial,

From exploration to consumption  27 geological and environmental information. As with Barry’s (2013) pipeline, the circulation of these informational layers is creating a new multiscalar politics of oil/carbon that features non-governmental actors (think-tanks, social movements), investors and even some oil firms increasingly questioning whether their listed oil reserves are assets or liabilities. A consequence of this shift is that governments in major oil-exporting economies – which fear the impact of oil demand destruction on government revenues – are reappraising their production regimes (for example, Saudi Arabia’s recent inaction on falling oil prices in order to maximise market share) while oil and gas companies are revaluating their asset portfolios (Van de Graaf and Bradshaw 2018). The prospect of peak oil demand confronts oil companies and oil-exporting governments with the possibility of stranded assets, a situation where their vast reserve-holdings may never be monetised. The coronavirus pandemic brought this prospect sharply into focus: peak oil demand entered the vocabulary of major oil companies, with some reappraising their asset portfolios and writing down asset values in the context of an environment in which oil prices were anticipated to remain lower for longer. Anticipatory Politics A focus on materiality as epistemic apparatus reveals how both proven reserves and stranded assets exercise a form of ‘anticipatory politics’, in which their prospective valuation (that is, projected future value) shapes action in the present. The uncertainties of anticipation are particularly acute in the case of unconventional hydrocarbons, which ‘need to be specifically qualified as worthy of exploration through targeted geological prospecting and techno-scientific experiments’, and whose exploration ‘is negotiated … in the context of prevailing uncertainty and public discontent’ (Kama 2020, pp. 334, 335). Two brief examples highlight this anticipatory character. The first relates to the United Kingdom Continental Shelf (UKCS), which has experienced a long-term decline in oil production: output peaked in 1999, and after 2010 the UK part of the North Sea basin was expected never again to exceed 2 million boepd (Rystad Energy 2020). UK government policy is to maximise economic recovery offshore and, with conventional reserves declining, a number of producers have turned to alternative reservoir rocks. So-called fractured basement reservoirs are one example: they are an unconventional source rock with considerable uncertainty over their potential for recovery and ability to drive further output growth from the basin. Speculation about the potentialities of fractured basement reservoirs in the UK was largely driven by the exploration campaign of a small, independent oil company (Hurricane Energy) operating in the West of Shetland area on the UKCS. Hurricane’s exploration work fed an anticipatory politics around basement plays in the UK that centred on their potential to drive national oil production back above 2 million boepd by 2035 (Rystad Energy 2020). A claim by Hurricane Energy in 2017 to have the largest undeveloped discovery on the UKCS – the Lancaster field – drove a wider narrative about the potential of fractured basement plays for reviving the basin (Energy Voice 2020a). However, by 2020, high levels of water production and rapid reservoir decline had resulted in far lower output from the early production system than expected. Consequently, Hurricane Energy was forced to downgrade its estimated resources by a whopping 90 per cent, causing its stock to plummet and the Chief Executive Officer and founder of the company to resign. Hurricane’s misfortune drove a wider revaluation of the production potential and long-term value of frac-

28  Handbook on oil and international relations tured basement reservoirs on the UKCS, with Rystad revising its production forecast to project that production would never again exceed the threshold of 2 million boepd in the UK. The story of Hurricane Energy shows how initial geoscientific and engineering data interact with investor optimism and national narratives of resource recovery, only to be confronted with the material qualities of a subterranean resource, the precise contours and qualities of which are opaque and challenge adequate evaluation (Weszkalnys 2015). Part of the challenge of evaluating fractured basement reservoirs is the difficulty of quantifying fluid distributions between them, and in the case of Hurricane and the Lancaster field, this was a source of some geological controversy (Energy Voice 2020b). The relevance of a geoscientific controversy involving a small independent oil company for the geopolitics of oil centres on the ‘knowability’ of an unconventional resource. Rather than shying away from mundane instances in order to focus on big-power politics, IR scholars may draw on concepts such as materiality to work their way up instead of down: that is, to consider what the opacity of particular reservoirs (such as fractured basement plays) mean for an anticipatory politics of oil, now tensioned between valorising narratives of an unconventional resource revolution (driving new patterns of international trade and investment) and a horizon of demand destruction, stranded assets and unburnable carbon.

CONCLUSION Research in IR on oil has long dealt with infrastructural choke points, geological endowments and the uneven geographies of oil trade and investment. In this sense, IR has always been alive to the possibility that materials and infrastructures exert an influence on the organisation of the sector. Originating outside of IR, the concept of materiality can build productively on this legacy as a form of elaboration and extension. At the same time, it also suggests radically different ways to think about the meaning of oil politics that challenge not only the scale of the nation-state, but also who and what has the capacity to affect social outcomes. For the social sciences at large, materiality brings the textures, forms and capacities of materials to the forefront of social analysis. Many of these materialities, over time, have been systematically repressed by the processes of conceptual abstraction common to social science. In the case of IR work on oil, for example, this has involved thinking about the sector through social categories such as the traded commodity or sovereign asset, and not in terms of energy density, spatial footprint or carbon intensity. For the social sciences, then, materiality boldly gestures to the significance of the non-human in a way that can be thought of as ‘levelling up’. A consequence of this process for the field of IR is a ‘more-than-human’ international relations. There is some way to go if IR is to fully embrace the material turn in the social sciences. This chapter has suggested some of the possibilities for doing this in relation to the oil sector, and for the most part, we have structured our discussion of what this might look like around the oil value chain: from upstream exploration, through midstream processing and distribution, to downstream consumption. We recognise that discussion of oil’s materialities can be read as an indulgence in specificity; as a conceptual gesture inevitably drawing empirical attention to textures, materials, capacities and their contexts in a way that surrenders any desire to think across difference and formulate general abstractions. We do not subscribe to this view. Furthermore, we suggest that one way to ensure that materiality leads to more than a celebration of particularity is to ask: ‘For whom does materiality matter?’ Oil’s affordances are neither singular nor

From exploration to consumption  29 uniform, and it is their interaction with social difference (to produce the forms of social power that IR seeks to understand) that is key to political-economic analysis. We have outlined how materiality is not all of a piece conceptually, with diverse conceptual commitments flying under its flag. We have embraced the possibility of this conceptual pluralism in advocating for a ‘more material’ approach. Specifically, we have shown that it is possible to pursue two ways of understanding materiality simultaneously, and in reference to the whole of the value chain, from exploration through to consumption. We have not sought to synthesise these two approaches which emerge from different traditions of social thought, preferring instead to illustrate the analytical value of plural perspectives. A potential point of conceptual convergence between them, however, is the ‘distributed materiality’ proposed by Weszkalnys (2013, p. 267; see also Richardson and Weszkalnys 2014) which, in the case of oil, ‘spans this substance’s physical and chemical constituents as well as the specialist equipment needed for its extraction, the practices of abstraction and valuation that go into its making, and the people doing the extracting, contesting, and transforming of oil’ (Weszkalnys (2013, p. 267). This is, necessarily, a broad and compound definition; its advantage, however, is that it acknowledges both the textural-infrastructural characteristics of oil and the epistemic apparatus of science and political-economic strategy through which oil becomes known, while also suggesting their intersection and interrelation. At root, we suggest, materiality draws attention to fundamental processes of material and spatial differentiation – of producing and ordering difference – through which geopolitics (writ large) is constituted (Bridge 2018). It is, therefore, an appropriate concept for thinking through the differentiations that sustain the oil value chain and global oil markets; and for analysing new practices of differentiation – around resource access, reserve valuation and the carbon intensity of fuels, for example – that are now reworking the oil sector’s international relations, organisational structures and geographies.

ACKNOWLEDGEMENTS This chapter draws on research conducted as part of ‘Fraying Ties? Networks, Territory and Transformation in the UK Oil Sector’ (ES/S011080/1). The support of the Economic and Social Research Council (UK) is gratefully acknowledged, as are helpful comments from colleagues and the editors during the writing process.

REFERENCES Appel, H., A. Mason and M. Watts (eds) (2015), Subterranean estates: Life worlds of oil and gas, Ithaca, NY: Cornell University Press. Azar, A. (2017), ‘Reserve base lending and the outlook for shale oil and gas finance’, Columbia Center on Global Energy Policy working paper, accessed 31 January 2021 at https://​www​.energypolicy​ .columbia​.edu/​sites/​default/​files/​CGEPReser​veBaseLend​ingAndTheO​utlookForS​haleOilAnd​ GasFinance​.pdf. Bakker, K. and G. Bridge (2021), ‘Material worlds redux’, in M. Himley, E. Havice and G. Valdivia (eds), Routledge handbook of critical resource geography, London: Routledge, pp. 43–56. Balmaceda, M.M. (2018), ‘Differentiation, materiality, and power: Towards a political economy of fossil fuels’, Energy Research and Social Science, 39: 130–140.

30  Handbook on oil and international relations Balmaceda, M., P. Högselius, C. Johnson, H. Pleines, D. Rogers and V.P. Tynkkynen (2019), ‘Energy materiality: A conceptual review of multi-disciplinary approaches’, Energy Research and Social Science, 56: 101220. Barry, A. (2001), Political machines: Governing a technological society, London: A&C Black. Barry, A. (2013), Material politics: Disputes along the pipeline, Hoboken, NJ: John Wiley & Sons. Barua, M. (2016), ‘Lively commodities and encounter value’, Environment and Planning D: Society and Space, 34 (4): 725–744. Bennett, J. (2010), Vibrant matter: A political ecology of things, Durham, NC: Duke University Press. Bennett, T. and P. Joyce (eds) (2010), Material powers: Cultural studies, history and the material turn, London: Routledge. Bensaude-Vincent, B. and I. Stengers (1996), A history of chemistry, Cambridge, MA: Harvard University Press. Bina, C. (1989), ‘Some controversies in the development of rent theory: The nature of oil rent’, Capital and Class, 13 (3): 82–112. Birch, K. (2017), ‘Rethinking value in the bioeconomy: Finance, assetization, and the management of value’, Science, Technology and Human Values, 42 (3): 460–490. Birch, K. and K. Calvert (2015), ‘Rethinking “drop-in” biofuels’, Science and Technology Studies, 28 (1): 52–72. Blondeel, M., M.J. Bradshaw, G. Bridge and C. Kuzemko (2021), ‘The geopolitics of energy system transformation: A review’, Geography Compass, 15 (7): 1–22. Boyd, W., W.S. Prudham and R.A. Schurman (2001), ‘Industrial dynamics and the problem of nature’, Society and Natural Resources, 14 (7): 555–570. Bradshaw, M., T. Van de Graaf and R. Connolly (2019), ‘Preparing for the new oil order? Saudi Arabia and Russia’, Energy Strategy Reviews, 26: 100374. Bridge, G. (2008), ‘Global production networks and the extractive sector: Governing resource-based development’, Journal of Economic Geography, 8 (3): 389–419. Bridge, G. (2009), The hole world. New geographies 2: Landscapes of energy, Cambridge, MA: Harvard Graduate School of Design. Bridge, G. (2018), ‘The map is not the territory: A sympathetic critique of energy research’s spatial turn’, Energy Research and Social Science, 36: 11–20. Bridge, G. and M. Bradshaw (2015), ‘Deepening globalisation: Economies, trade and energy systems’, in P. Ekins, M. Bradshaw and J. Watson (eds), Global energy: Issues, policy and implications, Oxford and New York: Oxford University Press, pp. 52–72. Bridge, G and M. Bradshaw (2017), ‘Making a global gas market: Territoriality and production networks in liquefied natural gas’, Economic Geography, 93 (3): 215–240. Bridge, G. and P. Le Billon (2017), Oil, Cambridge: Polity Press. Bunker, S. and P. Ciccantell (2005), Globalisation and the Race for Resources, Baltimore, MD: Johns Hopkins University Press. Campbell, D. (2005), ‘The biopolitics of security: Oil, empire, and the sports utility vehicle’, American Quarterly, 57 (3): 943–972. Carbon Tracker (2011), Unburnable carbon: Are the world’s financial markets carrying a carbon bubble?, London: Carbon Tracker Initiative. Carpenter, A. and M. Wagner (2019), ‘Environmental justice in the oil refinery industry: A panel analysis across United States counties’, Ecological Economics, 159: 101–109. Cederlöf, G. (2021), ‘Out of steam: Energy, materiality, and political ecology’, Progress in Human Geography, 45 (1): 70–87. Cederlöf, G. and D.V. Kingsbury (2019), ‘On PetroCaribe: Petropolitics, energopower, and post-neoliberal development in the Caribbean energy region’, Political Geography, 72: 124–133. Christophers, B. (2020), Rentier capitalism: Who owns the economy, and who pays for it?, London: Verso. Clark, N. and K. Yusoff (2017), ‘Geosocial formations and the Anthropocene’, Theory, Culture and Society, 34 (2–3): 3–23. Coole, D. and S. Frost (2010), New materialisms: Ontology, agency, and politics, Durham, NC: Duke University Press.

From exploration to consumption  31 Cudworth, E. and S. Hobden (2021), ‘Posthuman international relations: Complexity, ecology and global politics’, in D. Chandler, F. Muller and D. Rothe (eds), International relations in the anthropocene, London: Palgrave Macmillan, pp. 233–249. Dannreuther, R. (2013), ‘Geopolitics and the international relations of resources’, in R. Dannreuther and W. Ostrowski (eds), Global resources: Conflict and co-operation, New York: Springer, pp. 79–97. DeLanda, M. (2016), Assemblage theory, Edinburgh: Edinburgh University Press. Dodge, A.S. (2020), ‘Reassembling liquified natural gas production networks: The globalization of gas markets and the implication for energy development and politics in Southeast Asia’, PhD Dissertation, Norwegian University of Science and Technology (NTNU). Energy Voice (2020a), ‘Hurricane makes huge cuts to west of Shetland oil resource estimates’, accessed 20 September 2021 at https://​www​.energyvoice​.com/​oilandgas/​264784/​hurricane​-west​-shetland​ -reserves​-downgrade/​. Energy Voice (2020b), ‘Exclusive: Lancaster climbdown no surprise to geologist who clashed with OGA and Hurricane management’, accessed 20 September 2021 at https://​www​.energyvoice​.com/​ oilandgas/​north​-sea/​280759/​oga​-geologist​-clashed​-hurricane​-west​-shetland/​. Ferguson, J. (2006), Global shadows: Africa in the neoliberal world order, Durham, NC: Duke University Press. Fine, B. (1994), ‘Coal, diamonds and oil: Towards a comparative theory of mining?’, Review of Political Economy, 6 (3): 279–302. Hall, C., P. Tharakan, J. Hallock, C. Cleveland and M. Jefferson (2003), ‘Hydrocarbons and the evolution of human culture’, Nature, 426 (6964): 318–322. Huber, M.T. (2013), Lifeblood: Oil, freedom, and the forces of capital, Minneapolis, MI: University of Minnesota Press. Huber, M.T. and J. McCarthy (2017), ‘Beyond the subterranean energy regime? Fuel, land use and the production of space’, Transactions of the Institute of British Geographers, 42 (4): 655–668. Hudson, R. (2008), ‘Cultural political economy meets global production networks: A productive meeting?’, Journal of Economic Geography, 8 (3): 421–440. Ingold, T. (2002), The perception of the environment: Essays on livelihood, dwelling and skill, London: Routledge. Kama K. (2020), ‘Resource-making controversies: Knowledge, anticipatory politics and economization of unconventional fossil fuels’, Progress in Human Geography, 44 (2): 333–356. Kama, K. and M. Kuchler (2019), ‘Geo-metrics and geo-politics: Controversies in estimating European shale gas resources’, in A. Bobbette and A. Donovan (eds), Political Geology, Basingstoke: Palgrave Macmillan, pp. 104–145. Knappett, C. (2004), ‘The affordances of things: A post-Gibsonian perspective on the relationality of mind and matter’, in E. DeMarrais, C. Gosden and C. Renfrew (eds), Rethinking materiality: The engagement of mind with the material world, Cambridge: Mcdonald Institute for Archeological Research, pp. 43–51. Labban, M. (2008), Space, oil and capital, London: Routledge. Landa, M. (2016), ‘Crude residues: The workings of failing oil infrastructure in Poza Rica, Veracruz, Mexico’, Environment and Planning A: Economy and Space, 48 (4): 718–735. Le Billon, P. and B. Kristoffersen (2020), ‘Just cuts for fossil fuels? Supply-side carbon constraints and energy transition’, Environment and Planning A: Economy and Space, 52 (6): 1072–1092. Limbert, M. (2015), ‘Reserves, secrecy, and the science of oil prognostication in southern Arabia’, in H. Appel, A. Mason and M. Watts (eds), Subterranean estates: Life worlds of oil and gas, Ithaca, NY: Cornell University Press, pp. 340–353. Luque-Ayala, A. and J. Silver (eds) (2016), Energy, power and protest on the urban grid: Geographies of the electric city, London: Routledge. Mah, A. and X. Wang (2019), ‘Accumulated injuries of environmental injustice: Living and working with petrochemical pollution in Nanjing, China’, Annals of the American Association of Geographers, 109 (6): 1961–1977. McGlade, C. and P. Ekins (2015), ‘The geographical distribution of fossil fuels unused when limiting global warming to 2 C’, Nature, 517 (7533): 187–190. Mitchell, T. (2011), Carbon democracy: Political power in the age of oil, London: Verso Books.

32  Handbook on oil and international relations Odell, P.R. (1997), ‘The global oil industry: The location of production ‒ Middle East domination or regionalization?’, Regional Studies, 31 (3): 311–322. Overland, I. (2015), ‘Future petroleum geopolitics: Consequences of climate policy and unconventional oil and gas’, in Yan, Jinyue (ed.), Handbook of clean energy systems, Chichester: John Wiley & Sons, pp. 1–29. Prudham, W.S. (2005), Knock on wood: Nature as commodity in Douglas-fir country, London: Psychology Press. Richardson, T. and G. Weszkalnys (2014), ‘Introduction: Resource materialities’, Anthropological Quarterly, 87 (1): 5–30. Rystad Energy (2020), ‘Reserves revisions on the UKCS doom hydrocarbon output never to rise above 2 million boepd again’, accessed 20 September 2021 at https://​www​.rystadenergy​.com/​newsevents/​ news/​press​-releases/​reserve​-revisions​-on​-the​-ukcs​-doom​-hydrocarbon​-output​-never​-to​-rise​-above​-2​ -million​-boepd​-again/​. Simpson, M. (2019), ‘The annihilation of time by space: Pluri-temporal strategies of capitalist circulation’, Environment and Planning E: Nature and Space, 2 (1): 110–128. Smil, V. (2010), Prime movers of globalization: The history and impact of diesel engines and gas turbines, Boston, MA: MIT Press. Star, S.L. (1999), ‘The ethnography of infrastructure’, American Behavioral Scientist, 43 (3): 377–391. Swyngedouw, E. (2015), Liquid power: Contested hydro-modernities in twentieth-century Spain, Boston, MA: MIT Press. Tsing, A. (2015), The Mushroom at the End of the World, Princeton, NJ: Princeton University Press. Valdivia, G. (2015), ‘Oil frictions and the subterranean geopolitics of energy regionalisms’, Environment and Planning A: Economy and Space, 47 (7): 1422–1439. Van de Graaf, T. and M. Bradshaw (2018), ‘Stranded wealth: Rethinking the politics of oil in an age of abundance’, International Affairs, 94 (6): 1309–1328. Van de Graaf, T. and A. Verbruggen (2015), ‘The oil endgame: Strategies of oil exporters in a carbon-constrained world’, Environmental Science and Policy, 54: 456–462. Watts, M.J. (2004), ‘Antinomies of community: Some thoughts on geography, resources and empire’, Transactions of the Institute of British Geographers, 29 (2): 195–216. Watts, M.J. (2008), ‘Soft machine: Notes on oil addiction’, Human Geography 1 (2): 33–41. Weszkalnys, G. (2013), ‘Oil’s Magic: Contestation and materiality’, in S. Strauss, S. Rupp and T. Love (eds), Cultures of Energy: Power, Practices and Technologies, London: Routledge, pp. 267–283. Weszkalnys, G. (2015), ‘Geology, potentiality, speculation: On the indeterminacy of first oil’, Cultural Anthropology, 30 (4): 611–639.

3. Oil and the materialities of other energy sources Margarita M. Balmaceda

INTRODUCTION Since at least the 1973‒74 oil crisis, oil has dominated not only global energy supplies, but also energy imaginaries and perceptions of energy security. Paradoxically, however, despite the ubiquity of writings on oil and on the various supply crises associated with it, important aspects of the way oil works have remained elusive exactly because of the energy literature’s overconcentration on oil, to the detriment of other energy sources. While there is no shortage of excellent research on other types of energy, such as natural gas, attempts at specifically theorizing the role of energy in domestic politics and international relations—such as the literature on the oil curse and rentier states (see Mahdavy 1970; Beblawi and Luciani 1987; Auty and Gelb 2001, among others)—have largely focused on oil, fostering the implicit assumption that other fossil fuels, such as natural gas, work in the same way as oil does. In particular, while there have been volumes written about “oil power,” a fuller appreciation of how that power works needs to include materiality considerations: how the specific material characteristics of an energy good and its associated technical constraints act as a filter between what an actor may want to do with energy (for example, exercise power over something or someone, or use as a means of foreign policy influence, among others), and what this actor may actually be able to do with it (see Balmaceda 2021, pp. 23‒24). This impact of materiality on the ability to exercise “energy power” also takes place in a context where various actors engage in various uses of energy and the systems that produce, supply, and “metabolize” it (see Giampietro 1997; Fischer-Kowalski 1998; Haberl 2001)—from enabling a particular type of political regime by substituting allocation of export rents for actual production (Beblawi and Luciani 1987), to supporting social provisioning, to rent-seeking—which may interfere with its use as a means of external influence. So the ways in which oil may be used for both rent-seeking and social provisioning goals will also affect its use as external power, but these uses will also be constrained by its materiality characteristics and the technical constraints associated with them. With few exceptions (see Balmaceda 2018; Balmaceda et al. 2019), an explicit discussion of the comparative materiality characteristics of various energy goods as related to energy power has been largely absent in the literature. Much insight, however, is provided by approaches to the issue found in the literature on resources and conflict, for example through the discussion of lootable/non-lootable resources as sources of revenue in civil conflict situations (see Le Billon 2001; Ross 2003), and landmark historical works such as Mitchell’s (2011) study of the beginning of oil age politics. Key elements that we may fail to appreciate in oil, as we take them for granted, come into a sharper focus once we look at them in comparison with other energy goods. 33

34  Handbook on oil and international relations

CONTEXTUALIZING THE IMPACT OF MATERIALITY What does materiality refer to, and how may it best be used as an analytical tool? “Energy materiality” remains a “chaotic concept” (Sayer 1992) used by authors in a wide variety of ways (for a survey, see Balmaceda et al. 2019). While some authors have focused either on the materiality of infrastructures delivering energy services (e.g. Collier 2011), or on the discourses surrounding material energy resources (see Tynkkynen 2018), here I focus on the physical characteristics of primary energy resources. Different types of energy could be compared on the basis of innumerable criteria, which would be an unsurmountable task. Rather, the criteria chosen by different authors are usually related to the purpose of the comparison. Thus, while for some characteristics related to cultural representation, such as smell, depth, and color, may be key (as for example in Rogers 2015), my focus is on characteristics affecting how various types of energy function differently as part of global economic processes and supply and value chains. Similarly, the range of energy goods vis-à-vis which one particular type of energy may be compared can also vary. I focus on primary energy resources, as opposed to final energy (such as electricity) or energy services (such as heating). Within primary energy sources, my emphasis is on types of energy that are tradable in a relatively straightforward manner (that is, “commodifiable”), in contrast with harder to store and transport local-use resources usually not traded. At the same time, the focus is on non-renewable resources and, within them, on fossil fuels as a sub-category (although all fossil fuels are non-renewable, not all non-renewables are fossil fuels; for example, uranium is non-renewable but is not a fossil fuel). Within these, I focus on the most commonly used natural gas, oil, and coal, which taken together make up the overwhelming majority of fossil fuel consumption. (Although the same fields may produce both natural gas and oil, their physical characteristics differ; moreover, their spatial patterns differ due to their production differences.) In this chapter, I first focus on oil’s primary physical characteristics in the context of other fossil fuels, and the significance of these differences; I then analyze a number of secondary features related to these primary characteristics. In particular, I focus on how these characteristics affect the spatiality and typical challenges observed in the oil value chain as compared to those of other fossil fuels. Finally, I address the question of the discursive and instrumental use of oil’s materiality characteristics, and how it feeds back into actors’ choices and behavior. Before going into the discussion in detail, however, a few caveats are in order. It would be tempting to see materiality as a purely external, objectively given set of characteristics. However, its impact needs to be seen in the context of the mutual production of relations between human society and nature, an issue problematized by the literature on political ecology (see for example Forsyth 2004; Bakker and Bridge 2006), but which has remained largely unaddressed by specifically energy-focused work. What this co-creation refers to in this context is that we humans as users of nature also co-create it in the process of this “using” it. Concerning natural resources, including energy resources, De Gregori, following Zimmerman, reminds us that “resources are not; they become,” in the sense that they are not so much an objective category that is externally given but are related to human actors’ perceived (and changeable) needs and technical capabilities to use different nature-given objects to fulfill these (De Gregori 1987, p. 1241; Zimmermann 1951, p. 15). Thus, without this relationship with humans, the term “resources” is “meaningless” (De Gregori 1987, p. 1243). Even physical quantities, which may seem deeply and objectively external givens, such as “size of reserves,”

Oil and the materialities of other energy sources  35 are socially contextualized. A case in point is the standard definition of proven oil reserves, referring to those reserves proven to be “economically producible” using current technology. Thus, such “proven” reserves fluctuate not only according to the technology available, but also according to changing understandings of what constitutes an appropriate economic return (see Rees 1990, pp. 18‒21). Technically recoverable resources, conversely, are resources that “can be recovered with current technology, but whose recovery is not economical under current conditions” (Allaby and Park 2013).

MATERIALITY: PRIMARY PHYSICAL CHARACTERISTICS AND THEIR IMPACT These caveats aside, I first take a look at oil’s primary physical characteristics in the context of those of other fossil fuels; I then turn to secondary characteristics and how they affect oil’s journey in value and supply chains. Primary physical criteria refer to basic characteristics of an energy good, before it is further processed or distributed. Among these, it makes sense to focus on ubiquity, physical state, density, and within-good variation. Ubiquity Ubiquity refers to the degree to which a resource’s deposits are located in a geographically concentrated area, or are more evenly distributed throughout the world. Although coal reserves are available in almost every country, petroleum (oil and natural gas) reserves are predominantly concentrated in a narrower area (mainly North Africa, the Middle East, and some areas of North America and Eurasia), with the effect of most reserves and production being concentrated in a relatively small number of states. This concentration in a number of limited geographical areas features prominently in the case of oil, becoming a key element in its politics and political economy. Related to ubiquity, differences in the physical features of different oil-producing areas (so-called “oil provinces”)—such as quality and ease of accessibility of deposits—compound with these differences in geological availability, leading to widely different production costs (which have traditionally been significantly lower in the Middle East) and significantly differential rents between producers. Such differential rents (in the Ricardian understanding of profit related to differential natural advantages available to different producers, allowing them to produce a good—including those “produced” by extraction, such as minerals—at different costs) have important effects in value chain and competition terms. Differential rents have key spatial and power implications through the issue of the profitability of the industry in concrete locations, and low-cost producers’ ability to drive out other, higher-cost producers, affecting the relative bargaining power of specific producer companies and countries. Such an uneven spatial footprint makes access to costly exploration technology and financing even more important, amplifying differences in various producers’ ability to capture economies of scale (Bridge 2008, pp. 403‒404), as well as giving a small number of producers the ability to “independently regulate the world market for a major raw material” (Krasner 1974, p. 68, emphasis original); in other words, it is this very lack of ubiquity that, to paraphrase the title of Krasner’s landmark article, makes oil an exception.

36  Handbook on oil and international relations So, in the case of less ubiquitous energy types such as oil, we see more potential for inequality between states; one key element of the international political economy of oil. At the same time, these differences in endowments, together with differences in production conditions and costs, mean not only differential rents between states,1 but also the uneven distribution of rents (see Kartha et al. 2016) within producing states; here the difference between whether a resource is “diffuse” (that is, scattered widely, and at least in theory amenable to being extracted by a large number of small operators), or a “point resource” concentrated in small areas and more likely to be extracted by a few producers (see Baldwin 1956; Auty 2001) is key. In the case of oil, its generally being a point resource has had key distributional impacts both domestically and internationally, aggravating this uneven distribution of rents. Physical State The most obvious physical difference between oil, natural gas, and coal concerns their basic physical state at ambient pressure and reference temperature (15 degrees Celsius, the ISO Standard Reference Conditions standard): gaseous for natural gas, liquid for oil, and solid for coal. I will be coming back to this point now and again, as differences in physical state have important implications for differences in the secondary characteristics related to transportation and processing, their interface with other value chains, and producers’ ability to engage in collective action. In the case of crude oil, the liquid nature of the good at ambient temperature and pressure means maximum flexibility in the means by which it can be transported. Although for most long-distance land routes pipelines remain the most economical means of transportation, it is also possible to transport oil by tanker, rail, and—in extreme cases—by truck (for longer distances, transportation by tanker is more economical). For consumer states, this transportation flexibility facilitates access to alternative supplies in the case of an interruption of supplies from a specific supplier. This is also related to how various means of transporting energy may make a route more flexible (as in the case of shipment via tanker) or, on the contrary, predetermined (as in the case of pipelines, which perforce follow a fixed route). However, while multiple transportation options mean increased flexibility for both exporters and importers, this also means that oil pipeline owners face the possibility of empty pipelines through flight to other transportation means (the sunk costs problem), an issue I discuss separately below when addressing typical challenges of the oil value chain. (Despite recent discussions on liquefied natural gas, LNG, behaving more “like oil” than “like natural gas” due to its liquified state, this is not fully accurate, as, in order to remain liquid, LNG requires a costly and complex infrastructure to remain at ultra-low temperatures and not evaporate. Without this expensive, sunk-cost infrastructure, LNG would simply revert to a gaseous state and evaporate.) Importantly, physical state at ambient temperature also affects the way a good will behave in the energy supply system as a whole. This relates to “networkness,” the degree to which the overall functioning of the system is predicated upon the network working properly and being in synchronous physical balance (that is, not overloaded or underloaded in its connecting parts) as a network. Although all energy types work in one way or another as part of a network, the physical structure and pressure load of different substances affects the way the network works. This is closely related to the issues of “physical balancing” and synchronicity/asynchronicity, both of which affect the degree of networkness required for the safe and effective functioning of an energy supply system as a system.

Oil and the materialities of other energy sources  37 In the case of natural gas, for example, pressure is essential as, being lighter than air, it needs to be under pressure; it also it needs to be physically contained: pressure increases its capacity to dissipate. For natural gas, such network balancing is also crucial in a very basic physical way: if the load and pressure in the pipeline system (which includes a variety of pipelines of different diameters and requiring different pressure levels) are off-balance, the entire system may come to a standstill or lead to serious accidents, given the fact that, in the case of natural gas, piped connections go all the way to individual residential consumers (the “burner tip”). A failure to properly monitor and control pressure may lead to dangerous large-scale accidents, with dozens of buildings exploding and catching fire within minutes; as happened in Andover, USA, in 2018 (US National Transportation Safety Board 2018). This key role of pressure-level regulation as well as the direct integration with end consumers also makes gas pipeline infrastructure more expensive than equivalent oil infrastructure (European Parliament 2009, p. 15). It was the pressure regulation issue, for example, which led to Germany’s need to retrofit hundreds of thousands of boilers and other home appliances in 2019‒20 so that they could run safely with higher methane-content Russian “H”, as opposed to lower-methane Dutch “L” gas, as each has different supply pressure levels at the inlet of appliances (see European Council 2018; Balmaceda et al. 2019). “Synchronicity” refers to situations where an energy source needs to be produced and used in close synchrony.2 While the natural gas supply system (as well as the closely related electricity system, often relying on natural gas) needs to work in high synchronicity, oil and especially coal networks work in an asynchronous manner. Oil does not need to be as “physically balanced” as does natural gas, so issues of synchronicity are not as important. Rather, as will be discussed below, issues of integration of various sub-markets (production, refining, and so on) become key. Coal in particular is an example of a resource whose material characteristics, in particular its low energy density, lends itself to slow, multi-node transportation and highly asynchronous use. This networkness element (which is also related to the way different types of energy can be produced, stored, transported, distributed, and used) also impacts on the autonomy/networkness of users, with potential political implications. On the one hand, a high-networkness system affects a state’s ability to successfully adjust to import supply disruptions, since such a disruption may wreak havoc in a highly networked system (with the additional complication that networks are not necessarily coterminous with national borders, and may also be the legacies of previous politico-economic configurations; on such “phantom borders,” see von Hirschhausen et al. 2019). Another side of the issue concerns domestic political relations, where communities with access to more autonomous sources of energy and energy services will have a better chance to withstand pressure from central providers (including the state, through state-directed companies) than those without such access. If we look at this from the perspective of European Union (EU) states, for example, we see that the high “networkness” of natural gas as compared with oil has had clear effects. For example, it made adding additional suppliers more complicated: with the natural gas transit and delivery system needing to be in physical balance, adding a new supplier (even an LNG supplier, LNG volumes would still need to go through regular pipelines after regasification) required careful planning. At the same time, its networkness raised natural gas to a level of interest (and Union-level legislation) never achieved by oil, in turn leading to big-impact regulations on issues from the unbundling of natural gas supply systems (the fact that single companies were prohibited from owning production, transportation, and supply assets) to official support for specific infrastructure

38  Handbook on oil and international relations projects intended to diversify supply. In the case of oil, in contrast, EU regulations “were not nearly as complex or stringent” and until 2013, oil was only marginally included as a priority area in the EU’s Trans-European Networks for Energy (TEN-E).3 “Given the variety of alternative transportation options open for oil transportation and distribution in addition to pipelines, the assumption in the European Union has traditionally been that oil constitutes an ‘open market’ and that, as such, no specific measures concerning third-party access to pipelines are needed, which may explain why oil infrastructure was not included in EU-supported Trans-European Networks [for Energy] until 2013”4 (Balmaceda 2021, pp. 336‒337, n. 135). Density Energy density refers to the amount of useful (extractable) energy per unit, usually measured in megajoules per unit of weight (kilogram) or volume (cubic meter). Crude oil has the highest energy density per unit of volume, at about 37 000 megajoules per cubic meter, compared with natural gas, at about 36 megajoules per cubic meter: a 1000-fold difference.5 While both have nearly equal densities in weight terms, the much lower volumetric energy density of natural gas clearly makes oil the most dense among commonly used fossil fuels (on energy density, see also Smil 2015). At the other extreme, coal—and in particular some of its sub-types such as brown coal—contains relatively small amounts of extractable energy per volume or weight unit, around 10‒17 MJ/kg.6 Energy density impacts on spatiality issues, as a higher energy density implies—even allowing for significant price fluctuations—lower transportation costs per unit of energy, making it economically attractive to transport oil over long distances, creating the preconditions for a global market reach. At the same time, as discussed below, in the case of oil this global market coexists with interrelated discrete markets (such as the market for refining services and refined products) shaped not so much by geography as by various technical stages in the value chain (see Hughes and Long 2015). This is a reminder of the need to pay much more attention not only to the “supply” element of fuel trade, but also to the processing fuels must undergo before they can be used by final users. Homogeneity/Variation Within the Good Homogeneity within the good refers to the degree of variation between sub-types of the same good; in particular that concerning calorific value and chemical composition affecting their safe use, fungibility (that is, the mutual replaceability of units), and marketing as commodities. This is a complex issue to tackle, given the fact that no fossil fuel is totally uniform, and that human-made classification blueprints (for example, branding and blending into brands) are used to manage this internal diversity so as to make possible the marketing of these goods as commodities (see Bridge and LeBillon 2013, pp. 71‒74). Although natural gas from different fields may differ slightly in composition, it is relatively homogeneous compared with oil and coal, and is typically not marketed separately as different goods. (Low-caloric value Dutch “L” gas, discussed above, is an exception.) Oil, in contrast, distinguishes itself by its relative heterogeneity, with oil from different areas exhibiting different quality characteristics also reflected in the fact that most oil brands (see below) are place-denominated. Differences between particular brands of oil are still very significant, as their unique characteristics, especially their sulfur level, have an important impact on the type of processing infrastructure that can be used with them; refineries are usually specified

Oil and the materialities of other energy sources  39 to work with specific types of oil (such as high-sulfur and low-sulfur oil). Thus the level of within-good variation matters, as it affects the ability to market and use the good as a single commodity, as well as the parameters of the specific downstream infrastructure (such as refineries and power plants) able to be used with it. In addition to the inherent homogeneity or heterogeneity of oil as a good, the oil denominations system’s ability to capture crude oil’s existing heterogeneity within well-defined brands is also relevant. In an echo of the previously noted reminder that resources “are not,” but “become” (De Gregori 1987), oil brands are not “given” but are co-created through blending. Given relatively broad variations in key characteristics (for example, viscosity and sulfur content), this blending to produce a number of standardized “brands” marketed as such allows producers to manage oil’s heterogeneity by channeling it into a smaller number of widely marketed benchmark brands. Key effects on actors down the value chain are price differentials between brands, as well as widely quotable prices (while dozens of geographically designated brands of oil exist, most oil is traded as one of three benchmark brands: West Texas Intermediate, Dubai and Brent, with the last of these used as a benchmark reference by nearly two-thirds of world contracts; Kurt 2019); all of which, together with the existence of a global market, should aid in promoting transparency in pricing. The technical possibility of batching—transporting oil via pipeline in batches separated by a buffer fluid (often a synthetic oil or light hydrocarbon), so that different types of oil may travel on the same pipeline without mixing—helps to strengthen such differentiation between brands. While expensive (as it requires building dedicated storage tanks for each type of oil at both ends of the pipeline), batching is key for maintaining price differentials between different oil brands, and thus protecting specific producers’ profits. Such a midstream-level segregation of different oil brands is something that is not equally seen in the case of natural gas. This is so for two reasons: first, as noted above, differentiation between sub-types is not as strong in the case of natural gas as it is in that of oil; second, even where significant differentials exist (as in the case of Dutch “L” gas as compared to “H” gas), batching is not an option due to the gaseous nature of natural gas and the “anonymity” of the methane molecule—the key component in natural gas—in the pipeline. Rather, in the case of natural gas, the only possibility of segregating flows is by using a separate set of pipelines and distribution infrastructure. This provides an example of how, in the case of natural gas, materiality issues may make it may harder for specific producers to gain market power by creating and maintaining unique, easily identifiable brands. While batching as a technical possibility is open to oil and not to natural gas, whether it will be used or not in the case of oil will depend on material, commercial, and political factors. Thus, for example, in Russia in the 2000s, attempts failed to implement a batching system in the state monopoly Transneft system feeding the Druzhba export pipeline in order to separate low-sulfur, “sweet” oil from Western Siberia from heavy, high-sulfur “sour” oil from the Volga-Urals region. It has been argued that the decision not to use batching was more a political decision than one dictated by technical necessity, and that Transneft’s refusal to segregate flows so as to maximize the value of the light oil portion was a result of political influence from the leadership of the Russian Republics of Tatarstan and Bashkortostan, whose state-controlled oil companies as well as budgets would have stood to lose if their lower-valued oil had been priced separately rather than mixed as part of the higher-priced Russian Export Blend Crude Oil (REBCO) brand. The REBCO denomination, “close to Urals in terms of the composition but meant exclusively for open trade,” was introduced as a separate brand in 2006

40  Handbook on oil and international relations as part of the Russian government’s attempts to secure a separate quotation for it (that is, not simply a quotation based on a set discount from Brent prices), in an attempt to increase prices and reduce the gap between the price of the Urals brand vis-à-vis the Brent oil quotation, but with limited success due to limited demand (see Annenkova 2012; Zajcev 2013).

MATERIALITY ISSUES AS REFLECTED IN OIL’S SECONDARY CHARACTERISTICS The differences in primary physical characteristics discussed above affect secondary features directly impacting on an energy good’s supply and value chain. Among these, key ones concern the spectrum of processing possibilities, interface with other value chains, and producers’ ability to engage in collective action. Materiality, Processing, and Spatiality An energy good’s physical characteristics and chemical composition also affect the type and location of processing it can undergo. This has both technical as well as more broadly spatial implications. In the case of natural gas, most processing takes place in proximity to the wellhead, not only because of economic and marketing issues (bringing that raw gas to the pipeline standard for a particular pipeline, extracting higher-value natural gas liquids, NGLs, for separate processing), but also to make it possible for natural gas to be transported safely and efficiently in the first place: raw natural gas that is straight from the well contains highly toxic substances (in particular, hydrogen sulfide) that must be removed at the well to prevent damage to humans, pipelines, and other equipment (Younger and Eng 2004, p. 21). In the case of oil, in contrast, there are no overwhelming economic or technical reasons requiring processing to take place close to the extraction point. This creates more flexibility in terms of where refining can take place, opening new opportunities for midstream players. This process has intensified in the last two decades due to changes in the refining industry, in particular its increasing globalization (see Andrews-Speed and Dannreuther 2011; Fattouh and Henderson 2012), including in areas such as Singapore and Curaçao, which are neither large producers nor consumers themselves. At the same time, refineries are usually specified to process one particular type or brand of oil (for example, light oil such as West Texas Intermediate or medium-sour oil such as Urals). In fact, because oil is relatively easily transported in crude form, refining often takes place close to the location of end markets, reflecting their oil product preferences. The comparison with the case of natural gas brings this into sharper focus: in that case, substantial processing near the production site leads to significantly less flexibility in how other players may become involved in the process. This spatial spectrum of processing possibilities also has an impact farther down the road, as different grades of oil have different refined product mix profiles, which has an impact on refining profits also affecting the distributional impact on upstream, midstream, and downstream players; whether a refinery uses light or heavy oil as main feedstock will affect the proportion of each key product (mainly gasoline, diesel, kerosene heating oil, aviation fuel, and asphalt) that it can produce from each barrel of crude oil through the fractional distillation column. Materiality, however, imposes limits: a refinery’s manager does not have full control

Oil and the materialities of other energy sources  41 over the slate of oil products produced, as it depends on the specific interface between the qualities of the crude oil feedstock and the refinery’s technology. Spatial Footprint: Materiality and Interface with Other Value Chains An important secondary characteristic going back to materiality differences concerns the different ways in which oil, natural gas, and coal interact with the value chains of non-energy products, which has important implications for relationships between players. Oil, natural gas, and coal all play an important role in non-energy industries. This may involve the use of fossil fuel-related feedstocks as direct feedstock in other production processes (as in the case of oil derivates and NGLs), and the use of a specific type of energy as heating sources in situations where, due to technical reasons, the type of heating source matters in the production process due to its specific properties as related to specific production processes (such as in the use of coal in kilns to calcinate limestone in cement production, or the use of coal coke in metallurgy). In addition, price, availability, and environmental considerations may make a particular fuel a key source of electricity generation in highly energy-intensive production, such as chemical fertilizer and cement production. Natural gas, coal, and oil also differ in terms of where in the value chain of the source fuel these sub-products and derivates typically start to be marketed separately. So, for example, these may be substances separated immediately after production (for example, NGLs7) or refined/processed from a fossil fuel (as in the case of ethylene derived from oil, or coke produced from coal in a midstream production process). In other words, natural gas, coal, and oil provide important feedstocks for other industries, but they typically “enter” these chains at different points and in different ways, with a variety of further implications. So, for example, while in the case of natural gas typically it is actors involved in immediate proximity to production that can reap the gains involved in the separation of NGLs, in the case of oil, actors spatially located in various midstream locations can reap the gains related to the role of oil derivates as feedstocks for other industries. Producers’ Ability to Engage in Collective Action One of the words most often used together with oil is “power,” and the discussion of oil as a possible means of coercion has a long history. One key element of this concerns producers’ power vis-à-vis consumers in terms of dictating price and restricting supply, both related to the ability to engage in collective action. Issues such as the degree of homogeneity within a good, its related fungibility, and the spatial footprint of typical markets (local, regional, global) play an important role in determining whether a cartel including a significant number of producers will be possible. On the one hand, the spatial footprint of oil reserves, low ubiquity, as well as widely ranging production costs, limit the possibility for collective action, as countries with significant spare capacity and low production costs (such as Saudi Arabia) have traditionally sought to maintain demand and market share even at the cost of reduced prices (on intra-Organization of the Petroleum Exporting Countries, OPEC, competition see: Dibooglu and Al Gudhea 2007; Perreault and Valdivia 2010; Goldthau and Witte 2011; Colgan 2014). On the other hand, fungibility and global markets make it easier for cartel members to agree on a cartel price (on which goods are more viable as objects for cartel building: see Spar 1994). In fact, geographers have paid attention to oil “scarcity” not as an objective, external reality,

42  Handbook on oil and international relations but as often “manufactured” with specific goals, including price support (Huber 2011) and the pursuit of commercial and geostrategic interests (Le Billon and Cervantes 2009). In addition, technical issues affecting how an energy good is produced and whether output can be reduced at will to manipulate prices will affect its exporters’ ability to establish an effective formal or informal cartel. This explains why it has been easier for oil exporters to develop a cartel than for gas exporters, because despite its larger degree of homogeneity, natural gas still lacks a truly global market.8 In an example of how the technical constraints of natural gas act as a filter between what producers may want to do with it and what they are actually able to, natural gas’s physical state limiting its transportation possibilities has made it harder for a global market to emerge, limiting producers’ potential cartel power. Moreover, the materiality of natural gas, its need for physical balancing, and related extraction techniques make it harder to quickly stop production at will than in the case of oil or, especially, coal; an important factor for a cartel to be able to agree on effective joint measures to decrease or increase supply as a means of managing prices. In addition, physical balancing issues (see above) affecting storage also make it harder to limit the supply of natural gas by storing it, than in the case of oil. Although the issue requires additional research, it is also possible that these or other relevant characteristics may also have an impact on importers’ ability to engage in unified action. Oil producers’ ability to engage in collective action is also related to materiality issues at the downstream end of the value chain, including transformation into electricity and energy services, and how this relates with the substitutability of various types of energy in various sectors of the economy. Oil and coal are less easily substitutable than natural gas, particularly in the transportation sector (oil) and some industrial uses (for example, coking coal use in the metallurgical industry). Thus, for example, oil—which is used for transportation, industrial uses, and to a lesser extent in heating and electricity generation—is a flexible type of energy but is not easily substitutable, in part because despite advances in electromobility, only limited commercial alternatives currently exist in areas such as truck freight.

MATERIALITY AND VALUE CHAIN CHALLENGES Although energy value chains have until recently been largely ignored in the global value chain (GVC) literature (see Bridge 2008; Baglioni and Campling 2017), which has focused largely on manufacturing industries less affected by sudden price and value fluctuations than the oil industry, a modified value and supply chain analysis can help us to focus on the impact of materiality. All energy value-added chains present challenges; among others, those related to coordination, efficiency, and management of risks. Prominent types of risk are related to price volatility, as well as investment risks such as sunk costs (costs that, once made, cannot be recovered) and, in particular, stranded assets (costly assets that may become economically obsolete before the end of their expected economic life9). These challenges, however, do not affect all value-added chains equally: the value chains of various goods, due to their materiality characteristics, present various unique challenges, which also influence the means used to deal with them (for example, contractual forms allocating risk between buyers and sellers, or specific forms of sectoral organization, the “governance of value chains” referred to by Gereffi and Kaplinsky 2001), with implications for actors’ relationships at all levels of the value and

Oil and the materialities of other energy sources  43 supply chain. Let me address three value chain challenges playing a key role in oil value chains, and how these relate to materiality considerations. Oil Value Chain Challenges: Materiality, Sunk Costs, and Investments Challenges related to the management of risks, including how to share risks between supplier and buyer when the infrastructure needed for such supplies is very costly (the issue of sunk costs) and inflexible (the issue of “asset specificity” and potentially stranded assets), are seen most clearly in those industries requiring high and unmovable investments due to their technical needs, for example those types of energy depending heavily on pipeline transportation, such as natural gas and oil.10 In particular, types of energy characterized by being both high volume but low value per volume, and gaseous in form (for example, natural gas), tend to have high transportation and storage infrastructure costs relative to the value of the goods, making them especially prone to risks related to stranded assets and sunk costs, in turn leading to producers’ needs to share these risks with buyers, for example through specific contractual forms such as take-or-pay clauses (Makholm 2012). These issues apply somewhat differently to the oil as opposed to the natural gas value chains. This is so because in the case of oil (in contrast with natural gas, for example) both producers (and consumers) have a broader range of midstream-level options available to them (in terms of transportation and processing, for example), and also because oil transportation infrastructure is less expensive to build than that for natural gas. Both issues go back to materiality considerations. Due to the very high pressure that natural gas pipeline walls need to withstand in order for it not to dissipate in the air, and for it to move at all in the pipeline, the steel alloy used to build gas pipelines needs to be much stronger than for oil pipelines: most large-diameter gas pipelines function at over 70 bar pressure, that is, 70 times conventional pressure; while most oil pipelines usually function at 50 bar or less.11 A similar situation affects the technical requirements of compressor stations—an important component in sunk-cost infrastructure—which, exactly because of its basic physical state, needs more complex and expensive technology in the case of natural gas than in the case of oil. Thus, while somewhat less prominent than in the case of natural gas, sunk costs are an important challenge in the oil value chain. Oil pipeline operators need to contractually disincentivize the possibility of empty pipelines through flight to other transportation means. Interestingly, it would seem that the sunk costs problem presents itself in an additional form in the oil industry: maintaining spare production, shipping and refining capacity, key for navigating price volatility, are expensive to maintain (see Lynch 2002, p. 140), and raise the complicated issue of who in a potential cartel would need to carry the burden of its financing. This ties in with the issue of price volatility discussed below through the issue of proration: the (ideally proportional) distribution of production quotas (see Bridge and LeBillon 2013) that a group of oil producers may coordinate in order to stop a decline in prices. Oil Value Chain Challenges: Market Integration Earlier in this chapter I discussed some of the ways in which oil’s own type of limited “networkness” has, paradoxically, contributed to the creation of a global oil market. At the same time, the oil value chain faces its own challenges in terms of market (networks) integration. This, first and foremost, has to do with the fact that bringing oil in a usable form to final users

44  Handbook on oil and international relations involves a number of technical steps (production, refining, storage, shipping, distribution), often accomplished in spatially distant areas, but also often constituting separate markets that then need to be coordinated. As noted by Hughes and Long (2015), the oil market is best understood as a series of discrete but interrelated linked segments. This often uneasy integration of various oil market segments, together with price volatility, can wreak havoc in the relationship between the upstream, midstream, and downstream segments of the value chain (see Inkpen and Ramaswamy 2017). An excellent example of such a situation was seen in Russia in the 2000s, where a misguided export tax policy based on inaccurate understandings of value addition (and, some would argue, overly influenced by Marxian perspectives on value-added) led to a situation where the refining sector was subsidized at the expense of the upstream sector, reducing oil companies’ financial capacity to explore and develop new fields (Balmaceda 2021, pp. 129‒131). This was so because these policies, based on the idea that more processing equals more value-added, and that the more processing a good undergoes in Russian Federation territory, the more value-added profits the Russian state is able to accrue,12 ignored the implications of oil sector price swings. This often led to a situation where a ton of Russian crude oil traded in, say, Rotterdam would fetch a price higher than that of the same barrel when sold as products, due to the large share of low-value refined products (for example, fuel oil, mazut) in an average ton of refined products (Gustafson 2012, p. 372). Oil Value Chain Challenges: Managing Value and Price Volatility Sharp price swings and the related occasional “value destruction” is a key characteristic of contemporary oil value chains. For example, these are situations where the price of crude oil or a refined product such as gasoline plummets so sharply as to not cover production costs and also to threaten the “destruction” of the sunk costs already invested in the producing or refining facility. In fact, such extreme swings have been identified by a key EU project (the SECURE: Security of Energy Considering its Uncertainty, Risk and Economic Implications) as the main obstacle to oil supply security (Observatoire Méditerranéen de l’Energie 2008, cited in Escribano and Valdes 2017, p. 703). These sharp price swings also challenge widely held understandings of value added, which has often, especially in Marxian understandings, failed to allow for possible differences between material additions to the product and an increase of value.13 Why do oil prices fluctuate so much, and how is this related to materiality issues? One initial way in which the two intersect is through the issue of the role of the oil market’s increased financialization. As noted by Bridge and LeBillion (2013), this financialization and increased futures speculation has been a key factor in oil price volatility. Especially interesting here from a materiality perspective is how such financialization largely seems to sever the connection with actual physical supplies as the material base for price discovery, with oil pricing increasingly reflecting “positions on paper oil rather than in physical oil markets” (Escribano and Valdes 2017, pp.  700‒701; see also Labban 2010, pp.  541‒542). A second connection concerns the issue of storage and how it affects price formation—without the ability to store an energy good, it becomes very difficult to turn it into monetary value—as was seen in April 2020, when oil futures prices went into a record negative value of minus $37.63 as excess production and lack of storage made some producers willing to pay buyers to get the oil off their hands.

Oil and the materialities of other energy sources  45

CONCLUSION: OIL AND THE DISCURSIVE USE OF MATERIALITY As discussed in this chapter on the case of oil as compared to other fossil fuels, the materiality characteristics of the goods with which actors deal will help to shape the constraints and options open to them. At the same time, it is important to keep in mind that the materiality associated with a good can be important not necessarily (or not only) because of materiality itself, but (also) because of the discourses (and their related policy preferences) that materiality characteristics may make possible (Wengle 2010, pp. 137‒138). While not as directly as, in the case of natural gas, bound up with issues of networkness and the “naturalness” of “natural monopolies” (see Makholm 2012), in the case of oil as well some of its physical characteristics have been utilized discursively to support narratives of power, national purpose, and “resource nationalism.” Resource nationalism discourses in particular may be related to oil’s easy fungibility, while we may be seeing moral geographies of nationmaking being created around oil (see Perreault and Valdivia 2010); in reality, the view of a unified national front coalescing around oil and set against “othered external forces” (Kennedy 2014, p. 270) may be more of a misleading symbol than a reflection of reality (Emel and Huber 2008, p. 1405; Emel et al. 2011, p. 76ff.); this is also related to the “fetishization” of oil (Watts 1999, p. 7) which, interestingly, is something both the proponents of resource nationalism and academic critics of petrostates as polities can be seen as engaging in (see Watts 2009), and which in populist representations is also directly brought back to oil’s materiality characteristics.

NOTES 1. 2. 3.

4. 5.

6. 7.

In their study of fossil fuels as a whole, Kartha et al. (2016) found that, between 1970 and 2010, 10 percent of the world’s population lived in countries that received more than 65 percent of the total fossil fuel rents during that period (Kartha et al. 2016, p. 5). On the very different implications of synchronous as compared with asynchronous international energy collaborations, and a comparison between them, see Lagendijk and van der Vleuten (2013). Given the variety of alternative transportation options open for oil transportation and distribution in addition to pipelines, the assumption in the European Union has traditionally been that oil constitutes an “open market” and that, as such, no specific measures concerning third-party access to pipelines are needed, which may explain why oil infrastructure was not included in EU-supported TEN-E until 2013. See European Union, Regulation (EU) No. 347/2013 of the European Parliament and of the Council, April 17, 2013, http://​eur​-lex​.europa​.eu/​legal​-content/​EN/​TXT/​?qid​=​1489667585678​ &​uri​=​CELEX:​32013R0347. See European Union, Regulation (EU) No. 347/2013 of the European Parliament and of the Council, April 17, 2013, http://​eur​-lex​.europa​.eu/​legal​-content/​EN/​TXT/​?qid​=​1489667585678​&​uri​ =​CELEX:​32013R0347. Data from Demirel (2012, p. 40, “Table 2.9 Energy densities of some fuels”). See also World Nuclear Association, “Heating Values of Various Fuels,” December 2021, available at https://​ www​.world​-nuclear​.org/​information​-library/​facts​-and​-figures/​heat​-values​-of​-various​-fuels​.aspx. Accessed December 15, 2020. Source: World Nuclear Association, “Heating Values of Various Fuels,” December 2021, available at https://​www​.world​-nuclear​.org/​information​-library/​facts​-and​-figures/​heat​-values​-of​-various​ -fuels​.aspx. Accessed December 15, 2020. Natural gas liquids (NGLs), which are often also referred to as “condensates,” exist “in a gaseous state at underground pressures” but become liquid at normal atmospheric pressure due to condensation and, after removal, are “fractioned” into their various components, which usually fetch higher

46  Handbook on oil and international relations

8.

9.

10.

11. 12. 13.

prices than natural gas in general. See EIA (2006, p. 2). NGLs such as propane, butane, and methane provide important feedstock for other production processes, in particular chemical companies, especially through ethylene produced from NGL ethane, which is a key component of plastic, paint, glue, and other products. NGLs can also be re-added to natural gas so that it can reach the BTU level contractually required by that pipeline or contract. Despite multiple discussions in the 2000s about the possible creation of a “natural gas cartel” led by Russia, no such cartel took shape. Although Russia is not a member of the OPEC, on a number of occasions (at the time of writing in November 2021, most recently April 2020) it has reached an agreement with several other large oil producers to cut production in an attempt to limit a fall in prices. The International Energy Agency defines stranded assets as those investments that are made but which, at some time before the end of their economic life (as assumed at the investment decision point) are no longer able to earn an economic return (see IEA 2013, p. 436). Assets may become “stranded” as a result of a variety of factors: changes in technology, regulations, and societal preferences, or the discovery of new gas and oil fields leading to unused pipelines or other infrastructure. For examples, see Makholm (2012). Stranded assets differ from sunk costs, in that sunk costs are assets that can possibly still yield a revenue stream; once that revenue stream ceases they become stranded assets. Economists (see Makholm 2012; Neumann et al. 2015) have discussed a number of alternative ways of dealing with these challenges—for example, vertical integration, contractual forms intended to share the risk between buyers and sellers, and short-term trading in anonymous spot markets—each of which also imply different types of relationships between actors in the chain. Some high-pressure petroleum liquids pipelines exist, but in that case 70 bar is the upper limit rather than the operating standard (see Natural Resources Canada 2019). Thus Gustafson (2012, p. 372) refers to this goal as “a policy objective essentially based on ideological grounds.” A good example of these differences comes from a hot fashion item of the 2000s: pre-torn jeans. In this example, the highest value-added in terms of price is achieved when the jeans are torn before sale, even when, from a material perspective, this tearing of the jeans fabric would be seen as a destruction of material value.

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Oil and the materialities of other energy sources  47 Balmaceda, M., P. Högselius, C. Johnson, H. Pleines, D. Rogers, and V.P. Tynkkynen (2019), ‘Energy materiality: a conceptual review of multi-disciplinary approaches’, Energy Research and Social Science, 56, 101220. Beblawi, H. and G. Luciani (1987), The Rentier State: Nation State and the Integration of the Arab World, London: Croom Helm. Bridge, G. (2008), ‘Global production networks and the extractive sector: governing resource based development’, Journal of Economic Geography, 8 (3), 389–419. Bridge, G. and P. LeBillon (2013), Oil, Cambridge: Polity Press. Colgan, J.D. (2014), ‘The emperor has no clothes: the limits of OPEC in the global oil market’, International Organization, 68 (3), 599–632. Collier, S.J. (2011), Post-Soviet Social: Neoliberalism, Social Modernity, Biopolitics, Princeton, NJ: Princeton University Press. De Gregori, T.R. (1987), ‘Resources are not; they become: an institutional theory’, Journal of Economic Issues, 21 (3), 1241–1263. Demirel, Y. (2012), Energy, Green Energy and Technology, London: Springer. Dibooglu, S. and S.N. Al Gudhea (2007), ‘All time cheaters versus cheaters in distress: an examination of cheating and oil prices in OPEC’, Economic Systems, 31 (3), 292–310. Emel, J. and M.T. Huber (2008), ‘A risky business: mining, rent and the neoliberalization of “risk”’, Geoforum, 39 (3), 1393–1407. Emel, J., M.T. Huber, and M.H. Makene (2011), ‘Extracting sovereignty: capital, territory, and gold mining in Tanzania’, Political Geography, 30 (2), 70–79. Energy Information Administration (EIA) (2006), ‘Natural gas processing: the crucial link between natural gas production and its transportation to market’, accessed on September 29, 2021 at https://​ www​.eia​.gov/​pub/​oil​_gas/​natural​_gas/​feature​_articles/​2006/​ngprocess/​ngprocess​.pdf. Escribano, G. and J. Valdes (2017), ‘Oil prices: governance failures and geopolitical consequences’, Geopolitics, 22 (3), 693–718. European Council (2018), ‘Types of gas and the corresponding supply pressures according to Article 4(1) of Regulation (EU) 2016/426 of the European Parliament and of the Council on appliances burning gaseous fuels and repealing directive 2009/142/EC’, Official Journal of the European Union, June 14, 2018, C 206/1- 206/28. Accessed on September 29, 2021 at https://​eur​-lex​.europa​.eu/​legal​ -content/​EN/​TXT/​PDF/​?uri​=​CELEX:​52018XC0614(02)​&​rid​=​4. European Parliament (2009), Gas and Oil Pipelines in Europe, IP/A/ITRE/NT/2009-13, November 2009. Accessed on September 29, 2021 at http://​www​.europarl​.europa​.eu/​RegData/​etudes/​note/​join/​ 2009/​416239/​IPOL​-ITRE​_NT(2009)416239​_EN​.pdf. Fattouh, B. and J. Henderson, (2012), ‘The impact of Russia’s refinery upgrade plans on global fuel oil markets’, Oxford Institute for Energy Studies, July 12, 2012, doi:​10​.26889/​9781907555541. Fischer-Kowalski, M. (1998), ‘Society’s metabolism: the intellectual history of materials flow analysis, Part I, 1860–1970’, Journal of Industrial Ecology, 2 (1), 61–78. Forsyth, T. (2004), Critical Political Ecology: The Politics of Environmental Science, London: Routledge. Gereffi, G. and R. Kaplinsky (2001), ‘Introduction: globalisation, value chains and development’, IDS Bulletin, 32 (3), 1–8. Giampietro, M. (1997), ‘Linking technology, natural resources, and socioeconomic structure of human society: a theoretical model’, Advances in Human Ecology, 6, 75–130. Goldthau, A. and J.M. Witte (2011), ‘Assessing OPEC’s performance in global energy’, Global Policy, 2, 31–39. Gustafson, T. (2012), Wheel of Fortune: The Battle for Oil and Power in Russia, Cambridge, MA: Bellnap Press of Harvard University Press. Haberl, H. (2001), ‘The energetic metabolism of societies part I: accounting concepts’, Journal of Industrial Ecology, 5 (1), 11–33. Huber, M.T. (2011), ‘Enforcing scarcity: oil, violence, and the making of the market’, Annals of the Association of American Geographers, 101 (4), 816–826. Hughes, L. and A. Long (2015), ‘Is there an oil weapon? Security implications of changes in the structure of the international oil market’, International Security, 39 (3), 152–189.

48  Handbook on oil and international relations Inkpen, A. and K. Ramaswamy (2017), ‘Breaking up global value chains: evidence from the global oil and gas industry’, in A. Camuffo, T. Pedersen, T. Devinney, M. Timothy and L. Tihanyi (eds), Breaking up the Global Value Chain, Bingley: Emerald Publishing, pp. 55–80. International Energy Agency (IEA) (2013), World Energy Outlook 2013, Paris: IEA. Kartha, S., M. Lazarus, and K. Tempest (2016), ‘Fossil fuel production in a 2°C world: the equity implications of a diminishing carbon budget’, SEI Discussion Brief, accessed on September 29, 2021 at https://​www​.sei​.org/​publications/​equity​-carbon​-budget/​. Kennedy, E. (2014), ‘From Petro-States to “new realities”’: perspectives on the Geographies of oil,’ Geography Compass, 8 (4), 262–276. Krasner, S.D. (1974), ‘Oil is the exception’, Foreign Policy, 14, 68–84. Kurt, D. (2019), ‘Benchmark oils: Brent Crude, WTI and Dubai’, Investopedia, June 25, 2019, accessed on December 1, 2020 at https://​www​.investopedia​.com/​articles/​investing/​102314/​understanding​ -benchmark​-oils​-brent​-blend​-wti​-and​-dubai​.asp. Labban, M. (2010), ‘Oil in parallax: scarcity, markets, and the financialization of accumulation’, Geoforum, 41 (4), 541–552. Lagendijk, V. and E. van der Vleuten (2013), ‘Inventing Electrical Europe: interdependencies, borders, vulnerabilities’, in E. van der Vleuten, A. Kaijser, A. Hommels, and P. Högselius (eds), The Making of Europe’s Critical Energy Infrastructure, London: Palgrave, pp. 62–104. Le Billon, P. (2001), ‘The political ecology of war: natural resources and armed conflicts’, Political Geography, 20 (5), 561–584. Le Billon, P. and A. Cervantes (2009), ‘Oil prices, scarcity, and geographies of war’, Annals of the Association of American Geographers, 99 (5), 836–844. Lynch, M. C. (2002), ‘Causes of oil price volatility’, The Journal of Energy and Development, 28 (1), 107–141. Mahdavy, H. (1970), ‘The pattern and problems of economic development in rentier states: the case of Iran’, in M.A. Cook (ed.), Studies in the Economic History of the Middle East, Oxford: Oxford University Press, pp. 129–135. Makholm, J.D. (2012), The Political Economy of Pipelines: A Century of Comparative Institutional Development, Chicago, IL: University of Chicago Press. Mitchell, T. (2011), Carbon Democracy: Political Power in the Age of Oil, London: Verso. Natural Resources Canada (2019), ‘Frequently asked questions (FAQs) concerning federally regulated petroleum pipelines in Canada’, accessed on September 29, 2021 at https://​www​.nrcan​.gc​.ca/​energy/​ infrastructure/​5893​#h​-1​-1. Neumann, A., S. Rüster, and C. von Hirschhausen (2015), Long-Term Contracts in the Natural Gas Industry: Literature Survey and Data on 426 Contracts (1965–2014) (No. 77). DIW Data Documentation. Observatoire Méditerranéen de l’Energie (OME) (2008), ‘A report on final policy recommendations, SECURE project, Deliverable 6.4’, accessed on September 29, 2021 at http://​www​.feem​-project​.net/​ secure/​plastore/​Deliverables/​SECURE​_D6​-4​.pdf. Perreault, T. and G. Valdivia (2010), ‘Hydrocarbons, popular protest and national imaginaries: Ecuador and Bolivia in comparative context’, Geoforum, 41 (5), 689‒699. Rees, J. (1990), Natural Resources: Allocation, Economics and Policy, London: Routledge. Rogers, D. (2015), The Depths of Russia: Oil, Power, and Culture after Socialism, New York: Cornell University Press. Ross, M.L. (2003), ‘Oil, drugs and diamonds: the varying roles of natural resources in civil war’, in K. Ballentine (ed.), The Political Economy of Armed Conflict: Beyond Greed and Grievance, Boulder, CO: Lynne Rienner Publishers, pp. 47–70. Sayer. R. A. (1992), Method in Social Science: A Realist Approach, London: Hutchinson. Smil, V. (2015), Power Density, Cambridge, MA: MIT Press. Spar, D.L. (1994), The Cooperative Edge: The Internal Politics of International Cartels, New York: Cornell University Press. Tynkkynen, V.P. (2018), ‘Introduction: contested Russian Arctic’, in V.P. Tynkkynen, S. Tabata, D. Gritsenko, and M. Goto (eds), Russia’s Far North: The Contested Energy Frontier, London: Routledge, pp. 1‒8.

Oil and the materialities of other energy sources  49 US National Transportation Safety Board (2018), ‘Safety recommendation report natural gas distribution system project development and review (urgent)’ December 6, 2018, accessed on September 21, 2021 at https://​www​.ntsb​.gov/​investigations/​AccidentReports/​Reports/​PSR1802​.pdf. von Hirschhausen, B., H. Grandits, C. Kraft, D. Müller, and T. Serrier (2019), ‘Phantom borders in Eastern Europe: a new concept for regional research’, Slavic Review, 78 (2), 368‒389. Watts, M.J. (1999), ‘Petro-violence: some thoughts on community, extraction, and political ecology’, accessed on September 21, 2021 at https://​escholarship​.org/​uc/​item/​7zh116zd. Watts, M.J. (2009), ‘Crude politics: life and death on the Nigerian oil fields’, Niger Delta Economies of Violence Working Papers, 25, 1–27. Wengle, S.A. (2010), ‘Power politics: the political economy of Russia’s electricity sector liberalization’, PhD diss., University of California, Berkeley. Accessed on September 21, 2021 at https://​escholarship​ .org/​uc/​item/​2pz5w0xh. Younger, A.H. and P. Eng (2004), ‘Natural gas processing principles and technology—part 1’, Gas Processors Association, Tulsa, Oklahoma. Zajcev, V. (2013), ‘Kak pojavilis’ sorta Brent, WTI i Urals (Deržatʹ marku)’, Kommersant Vlast’, 13, 43. Zimmermann, E. (1951), World Resources and Industries: A Functional Appraisal of the Availability of Agricultural and Industrial Resources, New York: Harper Brothers.

4. Oil, culture and modernity Caleb Wellum

If the twentieth century was an “Age of Extremes,” it was also an “Age of Oil” (Hobsbawm 1994; Mitchell 2011). Ever since Winston Churchill and First Sea Lord John Fisher shifted the British navy from coal to oil in the years before World War I, oil has remade great power politics and war. The century’s geopolitical hegemons—the United States, the Soviet Union, the United Kingdom, France, Germany, and Japan—were also its most oil-hungry. All struggled for access to oil to power their economies, empires, and war machines. That intense oil use helped to extend the scale and destructive scope of wars in the first half of the century and accelerated globalization in its second half. It comes as no surprise, then, that scholars have historically treated oil primarily as a matter of geopolitics and economics, where its role is most clear. The standard history of oil, Daniel Yergin’s (1990) magisterial tome The Prize, appeared in the aftermath of the 1970s oil crises and the Persian Gulf War with a clear focus on oil’s role in wars and international crises, and as a key commodity for which states fight to secure access. For many economists and politicians, higher oil consumption is sign of economic growth and rising standards of living. Even as modern environmentalism challenges the necessity of linking oil and economic health, climate change drives efforts to transition away from oil, and Green New Deal boosters promise growth through alternative energy, the price of West Texas Intermediate oil (the world’s benchmark oil price) remains a key indicator of economic vitality. High oil prices signal economic recovery and dynamism. Indeed, the analysis of oil has been so firmly ensconced in the domains of international relations and economic policy that some experts have explicitly cordoned off culture and aesthetics from the history and implications of energy. For Vaclav Smil (2004) and others, energy is a technocratic matter with little relevance to culture. The rise of energy humanities (EH) scholarship in recent years has upended this tendency by uniting the analysis of culture and energy in ways that few scholars had previously attempted. “Energy,” as Imre Szeman and Dominic Boyer (2017, p. 1) note in a collection devoted to gathering key energy humanities work, “is absolutely necessary for modern societies. To be modern is to depend on the capacities and abilities generated by energy. Without the forms of energy to which we’ve had access and which we’ve come to take for granted, we would never have been modern.” Szeman and Boyer are not merely making this claim for modern war, diplomacy, trade, or economic policy. Their point, and that of energy humanities researchers more broadly, is that modern cultures and the subjects who participate in them are shaped by the energies to which they have access. Or, as Ross Barrett and Daniel Worden (2014a, p. xx) argue, oil “satur[ates] modern social life and thought” and influences “common ways of thinking and acting in the oil guzzling West.” Modernity is not reducible to energy in a deterministic way, but its story cannot be told without a prominent role accorded to energy and the sociotechnical worlds to which it gives rise. The implications of this claim are potentially very far-reaching. If it is true that modernity as we know it is irrevocably indebted to certain forms of energy, we must ask which parts of ourselves and our cultures are unsustainable manifestations of oil culture, and which are not. 50

Oil, culture and modernity  51 My task in this chapter is to explore more specifically how a cultural approach to energy provides insights into the global politics of oil more broadly. How are the materiality of oil and culture related? I argue that cultural analyses of oil have shown energy to be as deeply cultural as it is geopolitical or economic. Far from being a semiotically blank input into economic or international systems, oil, and energy more broadly, exerts a deep influence on culture. As much as they are technical, infrastructural, and economic, energy regimes are also cultural. The point is not to replicate a crude determinism with oil at the base, and aesthetics, assumptions, values, and understandings as a mere superstructure wholly dependent on oil. Reality and history are far messier than such a scheme allows. Rather, it is to acknowledge that culture has a material component that is utterly important to grasp if we are truly to understand what it means to live in oil-dependent societies. This chapter surveys the historical antecedents to and core insights of EH scholarship over recent years, most of which has insisted on energy as a cultural force. First, I explore the materiality of culture in broad terms, then I explore early efforts to link energy and culture. I end by discussing the insights that recent cultural studies of oil have produced, under three headings: modernity, imagination, and practice.

CULTURE AND MATERIALITY What are we talking about when we use the lens of culture to examine oil? Culture is a complex and contested concept that has often frustrated attempts at a clear definition. One of the most useful accounts of culture comes from the British critic Raymond Williams (1961, p. 41), who developed a tripartite definition: a process of individual development to become “cultured” in certain universal values; the corpus of “intellectual and imaginative work” including art and literature; and the “way of life” of a group of people through which shared meanings and values are manifest in attitudes, institutions, behaviors, ideas, art, and common sense notions. Williams (1961, p. 43) insisted on retaining all three senses of culture in order to capture its complexity, which inheres in the interactions between each element. EH scholars, many of whom are literature scholars, have largely adopted Williams’s definition, whether consciously or unconsciously. Their analyses primarily focus either on cultural artifacts such as film or literature, or on the ways in which energy forms shape the way of life of a group of people, including their shared practices, values, assumptions, and meanings. So, when we speak about a cultural approach to energy, we mean analyzing the practices and discourses related to energy through which shared meanings and values linked to its various facets become apparent. The force of analysis is not, for instance, on the quantitative relation between oil consumption and economic growth, but rather on how mass oil consumption may support the very notion and value of economic growth that marked the late twentieth century, as well as the ideal of progress that accompanied it. To claim that oil, or energy more broadly, is culturally active is to claim that materiality and culture are intermixed. Culture is not merely ideas and ideals detached from the soil, the factory, or the freeway. It takes shape in relation to its material conditions, just as a tree planted beside a freeway differs from another on the edge of a glade. As the American agrarian writer Wendell Berry (1977, pp. 90‒91) has pointed out, “culture” shares etymological ground with cult, cultivation, and agriculture, all of which derive from an Indo-European word meaning “to revolve” and “to dwell.” For more than a century, oil has remade the material conditions for culture in North America and Western Europe, and in other places as well. It has fundamen-

52  Handbook on oil and international relations tally changed how millions of people dwell together on the earth. To understand how that has been the case, it is important to understand the nature of energy and of oil itself. “Energy” is an abstract term that “seems to invite grand thinking,” as historian Cara Daggett (2019, p. 1) has recently observed. In its most widely known definition, from physics, energy describes the capacity to do work. Its materiality resides in the work that comes from living bodies nourished by food; or from mineral energy resources such as oil, coal, and natural gas burned to move machines; or in the form of electricity converted by technology from nuclear reactions, wind, sunlight, waves, or running water. But energy is also more than work in an isolated sense. In his account of the discovery and development of the concept of energy in the nineteenth century, cultural historian Anson Rabinbach (1992, p. 12) shows how notions of energy as a universal force transformed into work by human bodies helped to establish a new “social modernity” centered around work, fatigue, and machines. Moreover, in her recent study of “the birth of energy,” Daggett (2019, p. 18) argues that the Western conception of energy has always paired the material with the moral. Nineteenth-century thermodynamics blended the material sense of energy as work capacity with older and persistent notions of “life force,” which inspired early twentieth-century vitalist philosophers such as Henri Bergson (1911), and more recently the “vibrant materialism” of the political theorist Jane Bennett (2010) (Daggett 2019, p. 20). Oil is a particularly important resource from which modern societies harness energy, and it, too, is laden with cultural associations. Oil’s materiality is distinguished by four features: its energy density, its liquidity, its subterraneous character, and its greenhouse gas (GHG) emissions profile. First, although it can vary, oil’s energy density—“the amount of energy per unit mass of a resource”—is generally higher than all other fossil fuels and renewable forms of energy (Smil 2017, pp. 9‒10, 12, 16‒17). Burning oil provides the most energy relative to the amount of fuel used, making easily accessible oil cost-efficient to use. Second, oil’s liquidity makes it, and derivatives such as gasoline, a portable fuel suitable for transportation. Third, and perhaps most importantly, oil is a subterranean resource. It exists underground—the product of organic matter compressed over eons of time—and is transported virtually unseen through remote or buried pipelines, refined out of sight in industrial facilities, and consumed in the form of gasoline or jet fuel that users rarely see, or in the form of materials that hardly resemble the original resource (plastics, asphalt). This subterraneous materiality is what enables the apparent invisibility of oil in cultural discourse that EH scholars have noted now for more than a decade. This aspect of oil’s materiality also exerts a political force distinct from that of coal, as political theorist Timothy Mitchell argues. Coal was far more amenable to working-class resistance through mining strikes or railroad blockades than the highly engineered, technoscientific network of wells, pipelines, and refineries involved in the production and consumption of oil (Mitchell 2011, pp. 12‒42). Lastly, as a fossil fuel, the production and consumption of oil involves GHG emissions, contributing substantially to climate change. Oil drilling can release methane, a potent GHG; while burning oil releases carbon dioxide and other pollutants. These material characteristics add up to a powerful and convenient energy resource that often hides in plain sight. The power of oil, paired with its paradoxical ubiquity and invisibility, means that those of us who have become accustomed to the capacities it offers are easily fooled into naturalizing those capacities, or taking them for granted, or not seeing them and their effects on us. The project of EH and other cultural critics of energy over the past decade or so has been to excavate the cultural dimensions of oil, to make its effects and its importance

Oil, culture and modernity  53 newly visible to aesthetic life and to the ways of life it has created and disrupted over the past century.

EARLY ACCOUNTS OF ENERGY AND SOCIETY Although the study of energy in general, and of oil in particular, has tended to be the domain of scientists and political economists, these experts have at times commented on the social dynamics of energy. For instance, nineteenth-century German scientists Hermann von Helmholtz and Rudolf Clausius articulated what Rabinbach (1992, pp.  1‒3) calls “a vision of society powered by universal energy” in which bodies and machines convert Kraft into work.1 The distinction between the social and the natural dissolved for these scientists as they reworked their understanding of both in the light of industrialization and the new science of thermodynamics. Their ideas about work, bodies, and labor power informed the social vision of the early twentieth century’s dominant political and organizational movements, from Fascism and Bolshevism to Taylorism and Fordism (Rabinbach 1992). Nevertheless, their thinking about energy in the age of coal-powered industrial might often elided the social force of energy abundance and of particular energy resources, as well as largely ignoring, as Imre Szeman and Jordan Kinder (2020) argue, the cultural work of energy. The early theorists of thermodynamics thought about the social implications of their discoveries and ideas, but they did so in a determinist and scientistic manner that cultural critics try to avoid. Attempts to reckon with the social effects of energy also dotted the early twentieth century, including the work of the mathematician and demographer Alfred J. Lotka, and Howard Scott, a key figure in the 1930s technocracy movement. But it was not until the mid-twentieth century that thinkers and writers of a more humanistic bent began to think seriously about energy.2 The first such attempt arrived on the brink of the Atomic Age with the publication of anthropologist Leslie White’s (1943) article, “Energy and the evolution of culture,” which posited the ability to harness flows of energy as the primary engine of human cultural development. In a later work, White (1949, pp. 362, 369) even reductively imagined culture as “a mechanism for harnessing energy” that required ever greater amounts of energy to grow and evolve.3 Energy in this configuration is the foundation upon which social relations are constructed, whether they be capitalist, socialist, agrarian, or something else. Implicitly, this meant that a certain level of energy consumption was a precondition for cultural modernity, understood as a function of energy flow. Indeed, White (1943, p. 348) surmised that cultural progress would cease without ever-increasing access to more and better forms of energy. His was an argument for America on the cusp of atomic power. Although anthropologist Dominic Boyer (2014, p. 311) sees in White’s work a vision of modern capitalism as a “fuel society to its core,” White’s contemporary, the sociologist Fred Cottrell, devoted more attention to capitalism as a system that tends to centralize power in order to satisfy its existential need for high energy yields (Nikiforuk 2012).4 In Energy and Society, Cottrell developed the concept of “surplus energy”—defined as “the energy available to man in excess of that expended to make more energy available”—both to analyze human history and to critique capitalism in energy terms (Cottrell 1955, pp. 11‒12). Cottrell extended his critique to nuclear power as the ultimate form of destructive energy surplus. Rather than fostering peace and unity, it had created “the heightened prospect that any one industrial elite will find itself weaker at the end of a war than it was at the beginning” (Cottrell 1955, p. 310).

54  Handbook on oil and international relations Like White, Cottrell conceived of energy as a fundamental factor in social development that set limits and generated new possibilities. Both laid a foundation for future forays into the social and cultural dynamics of energy. It would take some decades, however, before scholars would begin to realize the potential inherent in the analytic foundation that White and Cottrell had established. The overlapping developments of nuclear power, environmentalism, and the energy crisis created a wave of thinking and writing about energy and society in the 1970s, most of it from scientists and engineers trying to understand the consequences of high energy use, that failed to escape energy determinism. In Environment, Power, and Society, American ecologist Howard T. Odum (1970) built on the framework established by Lotka in the 1920s to develop a technocratic theory of energy and society in which energy is the common currency of society and nature, and culture an adaptation to differential flows of energy. In Man, Energy, and Society, geologist Earl Cook posited a historical correlation between “the forms and amount of energy available to man, the forms of his society, and the size of his communities” (Cook 1976, p. 166), though he rather simplistically attributed the ills of modern United States (US) society (for example, family breakdown, obesity, and social disorder) to its status as a “high energy society” (ibid., pp.  206‒222). The physicist and alternative energy theorist Amory Lovins (1977) similarly viewed the energy‒society relation hierarchically, as one in which forms of energy and their attendant technologies lead toward certain kinds of social relations: centralization versus decentralization; hierarchy versus democracy; dependence versus independence. Lovins characterized these binaries as a choice between “hard energy paths” and “soft energy paths.” Despite the persistence of determinism, the energy crisis marked a turning point in thinking about energy. It exposed a profound, existential dependence on oil in North American and Western European societies that unnerved many experts and citizens alike, and encouraged reflection on the implications of that dependence at every level of society. Much of this reflection, as noted above, continued the tradition of scientistic and technocratic determinism of thinking about energy begun with the advent of thermodynamics. But in restricting the Organization of the Petroleum Exporting Countries (OPEC) oil spigot, the energy crisis also opened the floodgates to new ways of understanding what it means to be an oil culture. This initial wave of energy analysis subsided in the 1980s, but the US‒Iraq war and the growing threat of climate change in the 2000s inspired another wave of interest in energy affairs that has yet to crest, and has deepened our understandings of energy‒culture relations. The rest of this chapter will examine three key themes arising from that work.

OIL AS CULTURE: MODERNITY, IMAGINATION, AND PRACTICE Since it is not possible—and most likely not helpful—to summarize all the insights that cultural analyses of oil have generated over the last few decades, I focus on three key themes: modernity, imagination, and practice. The insights gathered under these headings add up to seeing oil as a cultural force, and thus reframing the values, lifeways, dreams, expectations, and politics of fossil fuel-reliant societies as inextricably bound up in that dependency.

Oil, culture and modernity  55 Modernity The cultural analysis of energy reveals firstly how the history and experience of modernity is entangled with fossil fuels, beginning with Age of Coal, and extending into the Age of Oil. Since the Industrial Revolution, the evolution of energy use has corresponded with changes in how societies think about themselves and the world. This is one of the core insights of the various fields that comprise the energy humanities. Modernity was not a natural or inevitable development, and its history cannot be understood without reference to the energies that made it possible. Fossil fuels were integral to its history, and to the experience of what it means to be modern. A corollary of this insight is that perhaps our greatest challenge going forward is to forge forms of modernity apart from oil, coal, and natural gas. Modernity’s energy dependence began to seep into scholarly awareness in the years after the 1970s energy crisis. The publication of Stephen Kern’s The Culture of Time and Space, 1880‒1918 in 1983 is an underappreciated landmark in thinking about energy and the culture of modernity. A cultural historian of European modernism, Kern explored how perceptions of space and time had changed in Europe and the United States across a broad swath of society, from psychoanalysis and cinema, to Cubism and war. Inspired by the new awareness of the “disastrous consequences of a long-range depletion of energy sources” that the 1970s energy crisis had aroused, Kern realized that the advent of modernism in the late nineteenth century could be recontextualized in terms of its own energy crisis that he termed “a crisis of abundance” (Kern 1983, p. 9). Awash in energy from coal and oil, and the many new technologies that used these resources, American and European cultural artifacts bespeak a revolutionized experience of time (acceleration) and space (compression). The excitement generated by these new technologies and experiences fueled lambent hopes about future progress that dissolved in the machinic destruction of the Great War. Kern did not belabor the connection between energy resources and cultural perceptions of modernity, but his framing of cultural history in relation to energy showed how access to fossil fuels had profound and multiscalar influences on cultural values and activities by altering the basic categories of experience. If access to energy could help to accelerate modernity in the early twentieth century, for the American Agrarian thinker Wendell Berry, oil birthed a moral order of fossil-fueled modernity dominated by “machine power.” Writing in the 1970s, Berry diagnosed a cultural turning point in the United States in the shift from technologies reliant upon muscle power to fossil-fueled machinery wherein “machines ceased to enhance or elaborate skill and began to replace it” (Berry 1977, p. 86). The moral order of agrarian societies, reliant on what Berry calls “biological energy,” involved “production, consumption, and return.” Fossil-fueled machinery eroded this cyclical moral economy of restraint, which had been an outgrowth of the acceptance of human limits and biological constraints, in favor of an order that always seeks to transcend limits (Berry 1977, p. 89). The dominance of machines also encouraged machinic understandings of soil, of humans, of the world. Machines using energy stocks appeared to provide liberation and unlimited abundance, but the price of this abundance was deskilling and alienation amid ever-escalating consumption. Berry’s depiction of a past moral economy of restraint ignores the resource excesses of European colonialism in the New World, but his work is important for thinking through the relation between values, machine power, and modernity. Berry’s contemporary, the heterodox theorist Ivan Illich (1974), advanced a similar argument about modern energy regimes, noting that beyond a certain threshold the use of more energy deepened inequality and created dependence rather than liberation for most

56  Handbook on oil and international relations people. Both Berry and Illich discerned in modernity a shift in values and possibilities directly tied to the dominance of oil-powered networks and machinery. In addition to cultural critiques of carbon modernity, energy histories, as Casey Williams (forthcoming) argues, are a key component of EH research. One of the first energy histories, In the Servitude of Power by French historians Jean-Claude Debeir, Jean-Paul Deléage, and Daniel Hémery (1991 [1986]), wrestled directly with the problem of energy determinism in order to develop an empirically rigorous and historically rooted approach to the study of energy’s role in society. Debeir, Deléage, and Hémery criticized the crude determinism of scientists such as Odum and E.O. Wilson, in which “the search for social alternatives is reduced to the search of energy alternatives,” and supplanted it with a historical theory of energy‒society relations focused on the interplay between environment, culture/society, and economy. Their hierarchical energy system concept, consisting of the biosphere → social sphere → economic sphere, formulized their approach to energy history, which foregrounded the “powerful energy determination at work in all societies” (Debeir et al. 1991 [1986], pp. 1, 13). Through historical examples ranging from the energy capital of the medieval Church to the nuclear power system of the modern French state, the trio highlight energy as a mediator in the human relation to nature and a driver of cultural-economic change. For instance, they argue that twentieth-century capitalism grew in tandem with fossil-fueled energy networks, which fed expansive technical systems and “social systems whose dynamics are based on unlimited growth of material goods”: “From childhood, individuals are conditioned to appreciate the superlatives: the largest city, the tallest building, the fastest car, the biggest salary …” (Debeir et al. 1991 [1986], pp. 108, 166, 237). At the turn of the new millennium, the American environmental historian J.R. McNeill (2000) used the term “energy regime” instead of “energy system” to describe the sociotechnical arrangements whereby societies harvest and consume energy. Both concepts helped to reframe the story of modernity as a story of access to energy, and the development of energy procurement and consumption systems that deeply shaped their societies. Recent energy histories by Matthew T. Huber (2013), Andreas Malm (2016), and others have expanded this theme, often by focusing on the growing gaps between the temporalities and demands of societies run by “fossil capital” and the resources and rhythms of non-human nature. The rapid development of the energy humanities in the 2010s continued to expand our understanding of the entanglements between modernity and oil. The end of the Cold War and the critical concern with globalization in the oil-soaked 1990s caused the energy insights of Berry, Illich, Debeir, Deléage, Hémery, and others largely to be forgotten. But the 2000s Iraq War, renewed and intensifying concern about climate change, and escalating tar sands development in Alberta, Canada, inspired a new generation of researchers to revisit questions of energy and society with a renewed sense of urgency and moral purpose. Their work has deepened the project of rewriting the history, institutions, and values of modernity in relationship to energy. One of the core texts of this effort is Timothy Mitchell’s (2011) Carbon Democracy, which linked the very practice and institutions of modern democracies to the materialities of fossil fuels, by arguing that coal made possible the emergence of mass democracy, and oil set its limits. Attending to the affordances and restrictions inherent in the material properties of coal and oil—as well as the sociotechnical systems required to bring them to market— Mitchell reframed mass democracy, one of the signal features of twentieth-century modernity, in relation to the mass provision of energy. Moreover, Mitchell’s argument about the relatively recent (1930s to 1950s) birth of “the economy” as an object of governance dependent on cheap

Oil, culture and modernity  57 and abundant oil tied the financial flows that inhere in the experience of modernity to oil as well. Mitchell helped us to see Western democracy and economy as embroiled in histories and unsustainable systems of energy extraction, transportation, and production that will not last forever in an endless post-historical epoch. One of Mitchell’s key arguments about the differential effect of coal and oil on democracy revolves around its invisibility: oil flows unseen in pipelines, managed by middle-class engineers and technicians who are less likely and less able to arrest its flow than working-class coal miners, who can sabotage coal’s flow in the mine or on rail transport networks. Cultural theorist Imre Szeman, one of the first and leading energy humanities researchers, has made the “epistemology and social ontology of energy”—the problem of oil’s visibility—central to his work on how oil shapes culture. Fossil fuels, he argues, have long hidden “in plain sight” in the history and culture of modernity (Szeman 2019, p. 6). But upon closer examination, it becomes apparent that progress, “democracy, belonging, and community … colonialism and postcolonialism, and indeed, even the constitution of subjectivity,” the core elements of how many understand modernity, must be reimagined. This is what Szeman (2019, p. 10) calls “the fundamental challenge that energy poses” to our understandings of how society and subjectivity work in the past and present. Szeman coined the term “petroculture” to describe a society whose institutions, economic and social relations, and culture are deeply shaped by the capacities and tendencies afforded by oil. Access to oil and fossil-fueled technologies alters the experience of space and time, as Kern noted in 1983, creating new expectations about where and how one can live, travel, work, or have vacations, as well as a slew of values, assumptions, and dependencies supporting these things. Much of Szeman’s work has taken the form of petrocultural criticism, highlighting buried assumptions about oil and the struggle to represent its structuring role in culture, including critiques of common narratives about a post-oil world, and close analyses of artistic attempts to reckon with oil, from Werner Herzog’s Lessons in Darkness to Edward Burtynsky’s sublimely apocalyptic oil photography (Szeman 2007, 2010, 2013). Szeman’s foundational insights into oil’s subtle cultural centrality to modernity have been accompanied by a growing body of work excavating how the norms and values of modern societies bear some relationship to oil. Dipesh Chakrabarty, in his influential reflection on the historiographical import of the climate crisis (Chakrabarty 2009) which is included in his recent book (Chakrabarty 2021), notes that the “mansion of modern freedoms” developed since the Enlightenment “stands on an ever-expanded base of fossil-fuel use.” Since “most of our freedoms so far have been energy intensive,” Chakrabarty (2009, pp. 207‒208) insists that humanist histories of modernity and globalization stand in need of significant qualification. Progress, perhaps the core value and assumption of modernity, is revealed by historian Bob Johnson to be inseparable from a “global infrastructure of carbon flows” that condition many modern lives. By liberating their beneficiaries from the organic constraints of past societies, fossil fuels created the conditions in which it is possible to imagine endless material improvement. Johnson’s book Mineral Rites traces the quotidian rituals and activities through which people living in oil-soaked societies form their sense of self and society in relation to the capacities afforded by fossil fuels. Attached to notions of progress and this self-formation, moreover, is “modernity’s faith … in the sufficiency of science as epistemology and technology as theocracy” (Johnson 2019, pp. 11, 14). Daggett’s (2019, p. 4) “genealogy of energy” takes on yet another brick in the wall of modernity, linking its high valuation on work to the “ruling logic of energy” made possible first by coal, and later by oil. By taking energy seriously in

58  Handbook on oil and international relations cultural-historical investigations of modernity, these and other scholars have demonstrated the truth of Chakrabarty’s insight that attention to nature—in this case, energy resources—means rewriting humanist histories and understandings of what it means to be modern, revealing the radical contingency and perhaps limited time horizons of modernity as we know it. Recent efforts to articulate a vision of a solar future denote the potential for a solar modernity, as well as the difficulty of imagining a world “after oil” while oil largely retains its vice-like grip on the experience and values of modernity and many of the imaginaries that sustain it.5 Imagination In addition to explicating modernity’s existential dependence on energy, critics and historians have tied hegemonic cultural perceptions and ways of seeing the world to the material infrastructures and individual and collective capacities indebted to oil. As American literature scholar Stephanie LeMenager (2014, p. 4) argues in Living Oil, “the story of petroleum has come to play a foundational role in the American imagination and therefore in the future of life on earth.” Through four case studies, LeMenager explores the ways in which oil informs how many Americans understand themselves as modern, and mediates their experience of other human beings and the non-human world. The allure of the American way of life for those who do not live it, but aspire to its material comforts, further expands the imaginative power of oil far from American shores. Like all energy systems, the system of oil provision that powers American modernity is “shot through with largely unexamined cultural values,” LeMenager (2014, pp. 4‒5) says, including the separation of labor from notions of work and contact with nature. Indeed, LeMenager melancholically notes “the expansion of the US middle class in the mid-twentieth century into a mass culture, inclusive of working-class arrivistes, the cultivation of the world’s greatest system of public education, and essentially middle-class movements such as feminism, anti-war activism, and environmentalism presumed access to cheap energy” (ibid., p. 5). What will happen to these cultural formations in a post-oil future remains an open question. One of the more powerful forces forming the imaginaries of US petroculture is the set of rituals, assumptions, and perceptions built around dependence on automobiles, roadways, and the experience of driving. Driving, in film, novels, and advertisements, has often been associated with life itself. To drive, in American cultural discourse, is to be alive. Consider, for example, how in the early twentieth century architects, writers, and designers imagined driving as “a means of environmental education.” In LeMenager’s reading of Upton Sinclair’s novel Oil!, the car enables ecological encounters for the book’s young narrator. Jack Kerouac’s On the Road similarly expresses “the longing to really see the land, that sharp desire to be more alive through its life”; a powerful association with automobility that characterized twentieth-century American life, evident not only in literature but also in countless car commercials (Kerouac 2014, pp. 80‒89, in LeMenager 2011). The imagination of the good life in recent American memory—a detached house with at least one car, abundant opportunities for long-distance travel, and access to consumer goods—is unthinkable without oil. It is such a powerful imaginary, so laden with affective associations, that LeMenager (2011) coined the term “petromelancholia” to describe the mourning process that must occur in order to leave behind oil and perhaps many of the genuine pleasures it affords. Where LeMenager articulates the powerful imaginative links between oil and life, the imaginative power of fossil-fueled suburban life is also central to the work of geographer Matthew

Oil, culture and modernity  59 T. Huber, who explores particular ideas about the specific forms of life and attendant sociopolitical structures that oil and its boosters fostered in the twentieth-century United States. In Lifeblood, Huber (2013, p. 73) argues that “petroleum products became the condition of possibility of an individuated freedom to control space at three critical scales of lived experience – mobility, the home, and the body itself.” Oil companies in post-war America went to great lengths to tie oil to the living of life, as exemplified by a mid-century Esso commercial claiming that oil “helps you build a better life” (ibid., p. 76). Oil companies intentionally positioned their products at the center of a potent vision of entrepreneurial life—what Huber calls the “ecology of entrepreneurial individualism”—while oil underwrote a large-scale reimagining of life, self, and society in which one’s life becomes a series of investment choices, the private home embodies success, and space evolves into “open territory subject to individual choices over where to live and spend leisure and vacation time” (ibid., p. 75). Without oil and the efforts of oil capital to entrench it in the interstices of everyday life, how North Americans and other oil-soaked populations imagine the “good life” and the relation of self to society would likely be much different. Although Huber’s argument, perhaps owing to the constraints of space, ignores older notions of home, self, and society, his articulation of the ecology of entrepreneurial life and the role of oil in creating it is important for understanding how energy systems shape ideological structures that were previously taken to exist independently of oil. The oil-soaked cultural perceptions highlighted by LeMenager and Huber demonstrate the point of literature scholar Frederick Buell (2012, p. 273), that energy history and “symbolic cultures” are inseparable. For Buell, “energy history is … entwined with changing cultural conceptualizations and representations of psyche, body, society, and environment intertwined.” Building on Debeir et al.’s concept of an energy system, Buell (2012) highlights the recurring literary motifs of “catastrophe” and “exuberance” in American literature to trace the imaginative, symbolic shifts that unfolded in the transition from “coal capitalism” to “oil-electric capitalism” in the United States. Coal capitalism represented a profound break with humanity’s previous “organic regimes,” as many scholars have noted, inciting both exuberant faith in technologically driven progress, and narratives of industrialization as catastrophe for workers and nature. With oil, “everyman seemed to have now individual access to real power” (ibid., p. 283). Abundant oil and electricity restructured “people’s private worlds, identities, bodies, thoughts, sense of geography, emotions”; changes symbolized most potently in the emergence of mass consumerism in the early twentieth century (ibid., p. 284). Buell notes how in art and other forms of cultural discourse, bodies and psyches were reimagined as “oil-energized systems” through the development of new metaphors, aesthetic movements, and even mediums of expression such as film (ibid., pp. 286‒289). But oil’s seemingly mystical, imaginative powers extended to the powers of the state, too. In his path-breaking work on oil in Venezuela, anthropologist Fernando Coronil (1997) coined the term “the magical state” to describe how control over oil profits lent political legitimacy and real power to a Venezuelan state that generated collective fantasies of progress through modernizing developments to entrench its power. With the influx of wealth from the 1973 oil price increase, instant modernization seemed to be at hand in Venezuela, further enlarging “state power and collective expectations.” Nearly a decade after Coronil articulated the state’s exploitation of the apparent “magic” of oil (that is, wealth without work), literature scholar Jennifer Wenzel (2006, pp. 456‒457) coined “petro-magic realism” to describe how Nigerian writers dealt with the “pressure of petroleum on literary representation” in a violent petrostate by puncturing the state’s oil illusions using literary techniques.

60  Handbook on oil and international relations Just as oil has reshaped the imaginations of its users, so cultural imaginaries helped to construct what Ross Barrett and Daniel Worden call an “oil culture” in the first place. Barrett and Worden argue that the development of an oil economy and its concomitant lifeways relied on a “dynamic field of representations and symbolic practices” to help drive their development. “Cultural signification,” they argue, was a “fundamental process of the expansive economic system that has arisen around oil.” The relation of oil to imagination thus runs two ways. Invoking French philosopher Guy Debord’s conceptualization of the “society of the spectacle,” Barrett and Worden note the centrality of cultural signification to the history and continued existence of the spectacular global oil system (Barrett and Worden 2014a, p. xxiv). As Szeman (2010, p. 34) notes, oil has become “the structuring real of contemporary social-political imaginary,” even as it has been stalked by critique, ambivalence, and resistance. The chapters in the collection Oil Culture (Barrett and Worden 2014b) explore early oil boosterism, cultural artifacts that celebrated its role in fostering family life and a liberal social order, oil’s role in reinforcing certain gender roles and expectations, and efforts to memorialize oil. Tracing the central role of cultural imaginaries in the establishment, development, entrenchment, and perhaps the end of oil, the chapters in Oil Culture wrestle with black gold as far more than a mere economic input or value-neutral substance. It always was cultural, and always will be. Practices Oil’s structuring relationship to imagination grows out of its influence on social practices: the common or habitual activities that human beings do as we make and sustain our social worlds. The availability of cheap and abundant oil dramatically altered the set of practices comprising the daily lives of millions of people, particularly in the Global North. Fossil-fueled lives in the twentieth century featured new practices of eating, traveling, working, relaxing, and relating that co-created new social networks that helped to circulate and entrench them. As sociologist John Urry (2011, pp. 64‒65) argues, “high carbon social practices” extended daily life activities far beyond the gamut of the neighborhood, thereby fostering dependence on evermore spatially extended systems of provision. This resulted in cultural path dependency on energy-intensive social practices that spread from the United States to reshape Europe and beyond. Urry zeroes in on how oil entrenched mobility—of people, goods, services, and ideas—as socially possible, desirable, and, over time, necessary. The practice of mobility expanded dramatically in lock step with access to oil; contributing, for example, to the rise to notions about the freedom of movement as a fundamental human right (as enshrined by the United Nations and European Union constitutions). The spread of energy-intensive mobilities turned the automobile into a status symbol, a rite of passage, and a necessity in increasingly suburbanized landscapes, which in turn further entrenched dependency on car travel. But the practice of mobility was not restricted to cars: Urry lists 12 mobility practices that comprised an emergent “mobile society” which remade the self, everyday activities, social relations, and larger connections with the world (ibid., p. 70). This “life on the move” characterized by distance from others also “presuppose[s] many other people whose lives can often be relatively immobilized,” such as hotel staff, pipeline workers, and sweatshop workers, while also empowering the experts who design and managed the various mobility-enabling systems (ibid., p. 71). Practices of mass mobility also helped to remake space, for instance by giving rise to energy-intensive places designed to facilitate the encounters and pleasures promised by con-

Oil, culture and modernity  61 stant movement. Artificial, thematically unified places such as Dubai, Las Vegas, or tourist enclaves in global cities grew to meet the demand of newly mobile tourist subjects. Many of these places featured behavioral norms unmoored from the familial or the neighborhood, mass infrastructure development to facilitate movement, “starchitect” vanity projects, and an increasingly bifurcated spatial reality in which the wealthy enjoy life in gated communities and the poor languish in low-wage service jobs (Urry 2011, p. 75). The highest echelons of mobility are reserved for the rich; but, as Urry notes, everyone participates to some degree in the practices and consequences of a mobile society, through middle-class practices that imitate the mobility of the rich (that is, through expanded access to air travel), declining tax revenues resulting from the mobility of the wealthiest, and the fragmentation of urban landscapes. Thus, as Urry concludes: “many forms of mobility are centrally implicated within the social practices of high carbon living. Those practices are dependent on regular and fast movement. Such a dependence came to be locked-in during the twentieth century, the century of oil” (ibid., p. 85). Indeed, practices of mobility and their myriad social, economic, and environmental reverberations would be unthinkable without oil, which in its liquidity was uniquely suited to powering a revolution in transportation that has remade the world. The practice of driving was and remains a central feature of the “mobile lives” that Urry describes. Mass access to the steering wheel was integral to the emergence of “automobility” in the twentieth century, as well as the larger systems of technologies, infrastructures, resources, and attitudes that developed around cars and driving. In his history of American automobility, cultural theorist Cotton Seiler (2008) argues that the practice of driving produces certain effects that have variously been instrumentalized by shifting political regimes over time. Early in the century, mass automobility facilitated a new kind of consumerist individualism suited to a corporate capitalist order of mass consumption. In the era of Taylorist industrial labor, workplaces and their systematizing expert managers controlled individual labor to such an unprecedented extent that they threatened ideals of Republican selfhood at the heart of US political culture. Mass access to the practice and promise of driving averted a political-cultural crisis of legitimacy by fostering an expressive individualism in which the self is fulfilled through consumption. Rather than practicing freedom and agency through work, Americans could realize their new consumerist “sovereign self” freedom by driving. Automobility, in addition to shaping public policy, social life, and economic relations, was thus a “forge of citizens” (Seiler 2008, p. 3). In the Cold War era, “a range of powerful institutions extol[led] driving as an antidote to an alleged ‘crisis of the individual’—which was also a crisis of patriarchy—and an illustration of the superiority of the ‘American way of life’” (ibid., p. 14). The practice of driving both symbolized and materially enacted ideals of American individuals at a time of anxiety about the status of the individual in a modern society. As driving reshaped daily life, the practice itself became ritualized and gave rise to other new behaviors and rituals, as explored most potently in George Lucas’s energy crisis-era film American Graffiti. But a whole range of social rituals reflected oil’s influence, from work to worship. The advent of the American megachurch, for instance, was entangled with the history, interests, and capacities afforded by oil, and arguably altered how millions of Americans approached worship (Dochuk 2018). The cinema and other vectors for spectacular entertainments presupposed oil in their very materiality, creation, and the formation of audiences (Bozak 2012). Kim Richards’s (2019) analysis of the century-old Calgary Stampede shows how the rituals and spectacle of the annual festival actively romanticize Alberta’s oil

62  Handbook on oil and international relations frontier, strengthen affective attachments to the province’s oil industry, and legitimize the dispossession of indigenous people. Finally, social practices related to oil exerted pressure on gender and sexuality. For instance, historian R.W. Sandwell’s (2018, p. 65) research on energy transition in rural Canada shows how new industrialized networks of energy production and transportation gave birth to “new energy practices in the home” in patterns that varied by region and socio-economic status. The shift from domestic energy practices of heating and food preparation centered on the open hearth to those centered on the cast iron stove (a product, Sandwell says, of the fossil economy) required the construction of infrastructure, salesmanship, and the development of new knowledge. Older habits and practices of the hearth did not immediately fall away with the arrival of new technology (Sandwell 2015). But as coal and gas replaced wood for heating and cooking, gender relations and expectations changed along with them. For instance, the distribution of more efficient stoves, and eventually of coal, oil, or electric heating and cooking technologies, saved men’s labor of cutting wood while further isolating women’s labor and connecting it to far-flung economics of oil and natural gas (Sandwell 2018, p. 78 n. 22). More recent petroculture, especially in oil industry advertisements, built on this material shift in the distribution of gendered labor by encouraging a wholly domesticized and consumerist vision of femininity in relation to industry’s many domestic products and services.

CONCLUSION Cultural analyses of oil pay attention to the interplay between oil and historical narratives, representation, and ways of life, but they are relatively recent. Humanities scholars largely ignored oil for much of the Age of Oil, leaving its analysis to economists and political scientists, and reproducing the invisibility of energy that the materiality of oil and its systems of provision enabled. Oil wars, energy crises, climate concerns, and other events have periodically revived interest in energy as a cultural force, which has recently grown into a vibrant interdisciplinary discipline called the energy humanities. Scholars in this field blend textual and discourse analysis with focus on materiality and history. Their insights have revealed the radical contingency of modernity by virtue of its dependence on fossil fuels, as well as the ways in which the capacities, infrastructures, and practices adjacent to oil abundance have shaped hegemonic cultural imaginaries and everyday practices, with far-reaching implications. What does this have to do with international relations? Understanding the cultural dynamics of oil can, in the first place, illuminate the deeper roots of the oil dependence that informs state interests. As the Central Intelligence Agency (CIA) Deputy Chief claims in the 1970s conspiracy thriller 3 Days of the Condor (1975), the American people “just want” oil at any cost, and the state is compelled to provide it or risk losing legitimacy. But the potential overlaps between a clear understanding of oil as culture, and oil as security or commodity, run even deeper. Oil as culture suggests the challenge ahead in combating climate change adds new dimensions to how states and state actors define their interests and understand the world, and raises the possibility of analyzing the differential cultural dynamics of oil between different states, which could yield potential dividends. Ultimately, culture is about the creation and practice of meanings and narratives that lie beneath issues of economic value or the articulation of state interests. Studying oil as culture reveals oil as a far more complex, strange, and embedded

Oil, culture and modernity  63 resource in the life of people and nations that has profoundly shaped the past and the present and is unlikely to fade quietly in the future.

NOTES Kraft refers to the notion of the energy inherent in nature that cannot be created or destroyed, as portrayed in the principle of the conservation of energy in thermodynamics. 2. On Lotka, see Kingsland (1994, p. 235). On Scott, see Nye (1990, pp. 343‒344). 3. White drew on the work of the German chemist Wilhelm Ostwald. See Stewart (2014). 4. It is important to note that White saw mass energy consumption as a good thing. He credited what he called the “Power Age” with dissolving the old monarchies and aristocracies, and he looked for still greater energy consumption from a variety of sources to drive a cultural revolution. (See White 1943, pp. 349‒350.) 5. See Petrocultures Research Group (2015), and Barney and Szeman (2021). 1.

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5. Oil securitisation: an analysis of oil security discourse and materiality in Azerbaijan Aurora Ganz

INTRODUCTION Oil is black gold. Oil is money. Oil is a dirty business. Oil brings conflict. Oil is blood. Oil is a curse. As simplistic as they may sound, these catchphrases rely on widespread and well-established imaginaries of the oil industry, which have long influenced how we understand the relationship between oil and security. In its historical and genealogical trajectory, the concept of oil security has focused on certain aspects of oil materiality – specifically, the unequal allocation of resources worldwide, the enormous economic value of oil, and its centrality in most industrial processes – that have traditionally been perceived as drivers of conflict. A specific understanding of oil security as the access to and affordability of supplies developed following the oil crises of the 1970s and centred around Western anxiety and fear over import dependence: as the United States (US) and most European states lacked domestic oil resources, their increasing consumption of oil rendered them dependent on oil imports, especially from countries in the Middle East. In turn, oil provided suppliers with enormous leverage and a political asset to negotiate and advance their foreign policy goals. As a result, oil has become an expression of material power politics: access to oil means access to power. Oil security has been largely viewed through this lens. More accurately, the insecurity connected to oil has come to identify the economic, political and military competition that has historically characterised the relationships between those who own oil resources and those who do not and who need them. The alleged deterministic causality between oil and conflict has attached a force-oriented connotation to oil security, which semantically, culturally and politically situates the concept in the realm of (inter)national security. As a subset of (inter) national security, oil security embraces a conventional geopolitical culture, which is openly state-centric and conceives security in terms of military significance. Nonetheless, oil security – like its sister concept of energy security – is not a self-evident and given phenomenon: oil security means different things to different people and each of its meanings reflects a specific way of thinking – a distinct rationale, a logic – about the problem. Oil security as an embodiment of material power politics and geopolitics is only one way of understanding and problematising the nexus between oil and security. For instance, attention towards the environment, sustainability, safety, infrastructure or labour rights can sensibly shift what aspect of oil is a security concern, and what security measures need to be applied. Recognising the multifaceted, constructed and relational character of the concept implies rethinking the relationship between oil and security beyond the putative objectivism of mainstream theories. Rather than considering purely material factors, a growing body of energy security studies has shifted its attention towards the importance of ideational factors to define energy choices and policies. According to these perspectives, oil security does not only respond to technical 66

Oil securitisation  67 and material needs but also accounts for ideational dynamics, such as perceptions of (in)security, ideas of progress and technology, imaginaries of energy futures, and norms of sustainability and resilience, among others. One of the frameworks that have embraced and explored the ideational dimension of oil security is securitisation theory. Securitisation assumes that threats are not objectively given, but constructed as such by appealing to a sense of emergency that transforms the way we deal with a problem. This has been exceptionally useful to reflect on the implications of merging oil with mainstream renderings of security, which tend to locate it into the realm of (inter)national security and its military orientation. Through securitisation theory, scholars have been able to expose the unique character of security, namely its ability to give criticality and priority to certain objects, allocate authority to specific subjects, and enact extraordinary measures in the name of survival. The theory provides a critique of security, which explains how security – as both a concept and a policy – differs from other types of politics because it ‘takes politics beyond the established rules of the game and frames the issue either as a special kind of politics or as above politics’ (Buzan et al. 1998, p. 23). Securitisation theory offers a tool to question what oil security does, rather than trying to define what it is. From a disciplinary perspective, the analysis of oil securitisation implies shifting the attention from the semantic and policy diversity of oil security to the fixation of and on a specific way of problematising oil security as a subset of traditional (inter)national security. This changes the questions that we ask when analysing oil security: instead of wondering what oil security is and how it can be achieved, securitisation interrogates what happens when oil becomes a matter of (inter)national security. By accepting that oil security is a fuzzy, ambiguous and contextual label, securitisation exposes what and who makes oil security, under what circumstances and with what implications. Drawing on securitisation, this chapter aims at contributing to the discussion on how to appropriately interrogate and reconceptualise oil security and its policies by questioning how oil security threats are constructed and managed. Its central task is to explain the theoretical and political significance of the securitisation of oil, outlining its modalities (how oil is securitised) and its implications (what effects it brings). As a framework, securitisation has been evolving from the early conceptualisation formulated by the School of Copenhagen in the 1990s, thanks to a series of interventions that sought to address some of its major limitations, refine and strengthen its conceptual tools, and overcome its theoretical rigidity. Willing to move beyond the boundaries of state ontology and speech act theory, a branch of the critique of securitisation warns against the attachment of the theory to forms of security governance that only consider the nation-state, and condemns the restriction of the analysis to language and purely ideational dynamics. The case of energy proves the limitations of the original framework: the empirical analysis of oil securitisation has been constrained by state-centrism, attention to sensationalist rhetoric and exceptional policies, and the emphasis on the military. This early philosophical tradition has ignored the importance of materiality, non-discursive practices and the everyday and banal dimension of oil securitisation. A reconceptualisation of the framework suggests moving away from the structuralist impositions and false binaries of the original theory to embrace the complexity and vibrancy of oil securitisation as a heterogeneous sociotechnical process. This chapter outlines the contribution of securitisation as a theoretical framework to our understanding of oil security and its related policies; it takes the development of the concept seriously and analyses how moving beyond its original scheme can provide a more rounded understanding of the process. As I will explain later, the revision of securitisation theory

68  Handbook on oil and international relations enables the accommodation of the ontological and epistemological tension between material and ideational factors, without falling into the trap of privileging one dimension over the other. This chapter relies on my detailed empirical study of energy securitisation in Azerbaijan. In this research (Ganz 2021), I explored the broad network of practitioners and the wide set of practices (including discourses) that have securitised the oil and gas industry in the country. To account for the heterogeneity of the process, I analysed three case studies that address the different social universes of oil securitisation, namely, the state of Azerbaijan to embody its national dimension, the North Atlantic Treaty Organization (NATO) to stand for its international dimension, and BP to represent its privatised dimension. In oil security, the traditional binaries that have driven international politics – namely, the contours between the external and the internal space of security, the separation between defence and enforcement, the boundaries between national and international, and the division between private and public – do not stand any more, and conflate in a disperse, extended and disorganised field of practices. This complex interplay across boundaries cannot, even analytically, be kept separate. This chapter is organised around three main steps. First, it outlines the early formation of securitisation theory and introduces the contribution of the existing literature of oil securitisation to broadening our understanding of oil security beyond predominant geopolitical knowledge. Second, it builds on the empirical analysis of oil security practices in Azerbaijan to put forward an alternative approach to oil securitisation, which aims at overcoming the limitations imposed by the early formulation of the theory, especially its state ontology and speech act theory. My work takes a sociological approach to investigate the manifold and diverse practitioners and practices that securitise oil in Azerbaijan, and expose the impact of materiality on oil securitisation. Third, it builds on the empirical evidence of my case study to reflect on the implications of oil securitisation, especially its ability to constrain emancipatory alternatives to how oil, security and their relationships can come into being.

FROM OIL SECURITY TO OIL SECURITISATION Oil security is not a new field of studies, but the attempts to move it away from its long-standing geopolitical tradition and technical jargon are fairly recent. Unlike the wider energy security field that has experienced increasing intellectual diversity, attention to oil has largely remained attached to long-standing stereotypes and knowledges that have limited the exploration of possible epistemological alternatives. In particular, the energy security debate has broadened and deepened its research agenda mostly in an effort to address a rising concern over climate change and global warming, which has pushed scholars to challenge the emphasis on hydrocarbons of traditional energy security studies. This has relegated the study of oil and oil security to the mainstream theorising of material power politics. Nonetheless, a critique of the geopolitics of oil is not only feasible, but advisable. Albeit still underutilised (Sovacool 2014), the contribution of social science to the broader field of energy studies has long been recognised, especially its effort to provide for the societal, cultural and political dynamics that affect how societies and governments deal with energy security. A sensitivity to imagined futures, discourses and representations of progress, historical contingencies and social dynamics have challenged the alleged determinism and objectivism of mainstream energy security normativities and offered an important gateway to the field of international relations and security studies to explore different theoretical pathways to inquiring the relationship between

Oil securitisation  69 oil and security. In particular, post-positivist approaches have moved away from the positivist ethos of technification and geopolitical eschatology. Their efforts re-orient the investigation of energy security towards the multiple ways in which the concept and its policies come about, and explore how representations of energy and security turn into tangible and actionable forms of power. As such, these new understandings of energy security can inform and inspire novel and alternative means to inquire about the relationship between oil and security. Building on this young but meaningful body of the energy security scholarship, this chapter applies a critical approach to oil security, which is particularly attentive to what happens when oil becomes a security issue. This chapter understands oil security as the result of a process of securitisation. Securitisation refers to the creation of a security concern that threatens the existence of a critical object and calls for exceptional moves to counter the danger. Securitisation theory builds on the acknowledgement of security as an essentially contested concept (Fierke 2015), whose significance is mutable and attached to contextual and ideological factors that cannot be contained by a one-size-fits-all definition. Thus, it rejects the idea that security threats are ‘out there’ and need to be discovered. The existence of a real threat is not a precondition for securitisation, which, as a framework, questions the possibility to objectively identify danger and univocally define security. Vuori (2011, p. 7) clarifies that securitisation theory aims at exposing ‘who (securitizing actors) can securitize (political moves via speech acts) which issues (threats), for whom (referent objects), why (perlocutionary intentions/ how-causality), with what kinds of effects (inter-unit relations), and under what conditions (facilitation/impediment factors)’. However, securitisation theory does not point exclusively to the constructed and contextual nature of security, but also to its political and performative character. The peculiarity of securitisation lies in its ability to suspend the course of normal politics: the construction of a threat instils a sense of urgency and the perception of an existential danger that justifies the break of ordinary political rules and the use of extraordinary measures. As Rita Floyd (2016, p. 678) explains, securitisation theory seeks to understand the ways in which certain objects are ‘framed as threatened in their existence and are subsequently lifted out of ordinary democratic politics and into the realm of emergency politics’. The power of securitisation lies in the actor’s ability to convince the audience that the threat exists and that extra security measures are necessary. In this sense, securitisation emerges as an exercise of authority: language is productive of political and social practices; its meaning-making ability is a powerful tool. When securitised, political issues are imbued with the dramatic rhetoric of survival, grave danger and serious urgency, which, according to securitisation scholars, deserve particular attention because of their ability to distort the political agenda and the exercise of authority. Oil security is inherently political, not only because it embodies certain political interests and needs, but also because it mobilises specific configurations of the world, enacts political agency and authority and defines the parameters of what matters and what needs to be done to protect it. Often moved by suspicion against security, securitisation scholars strip away all claim of neutrality and objectivity from ‘security’ and debunk the aura of alleged care and altruism that is usually assigned to its practices. Against the idea of security as a positive good, securitisation theory reveals how security and security practices embrace a logic of division, exclusion and categorisation: security determines what (and who) matters and deserves protection, against the definition of what (and who) represents a threat and needs to be annihilated. Thus, security can spread and normalise forms of antagonism, control and oppression. Securitisation

70  Handbook on oil and international relations theory develops a persuasive critique against the politics of security as a politics of insecurity and sacrifice, which tends to rely on exclusionary and often discriminatory actions. As a framework, securitisation theory embraces the linguistic turn of international relations, which ascribes to language the power to give signification to social phenomena and realities. In its original conceptualisation, the framework draws on linguistics and speech act theory to define security as the product of a discursive process. According to the School of Copenhagen, security concerns are created by labelling a certain issue as an existential threat for a specific referent object. In other words, securitisation implies that security is a performative utterance: ‘by saying the word [security], something is done’ (Wæver 1993, p. 55). Securitisation understands security as the result of a speech act: it is the language that ontologically makes oil an issue of security. In this sense, language is not just a communication device but is constitutive of reality and a defining force of social relations. Taking a step forward, securitisation suggests that the power of the speech act lies in its ability not only to make security, but also to determine its practice, creating a space for extraordinary mobilisation. Securitisation emphasises that the labelling of a specific issue, such as oil, as a security concern ascribes a priority and exceptional status to that problem and, in turn, legitimises and prioritises security practices that tend to be coercive and force-oriented. While the strict and exclusive focus on language limits the epistemological and methodological examination of securitisation ‘to the observation of speech acts through the analysis of texts that formulate political discourse’ (Adamides 2020, p. 14), the theory offers an important innovative tool to deepen our understanding of oil security. In the field of energy, the policy and theoretical focus of securitisation has remained on the oil and gas sector, where most instances of securitisation can be seen. This can be explained by two related factors. The first issue concerns the materiality of oil and the economic opulence connected to it, which keeps the political interests remarkably high and pushes governments to mobilise their security apparatus to counter any potential risk that could disrupt their interests. The second reason relates to the persistent tradition and widespread culture of the geopolitics of oil, whose reiterative discourse has concurred to fixate on a specific connection between oil and military security. This points to the performativity of oil security discourse, namely, its ability to re-enact specific threat construction and reproduce the values and interests that underpin it. In line with the School of Copenhagen, most works on the securitisation of energy and oil focus on discourse as the locus where threats are created, and policy options defined. These analyses identify specific linguistic and rhetorical choices that merge oil with national security and the attendant issues of nationalism, sovereignty and independence. While the case studies are diverse, securitisation scholars note that most states engage with oil security through the prism of national security. As a result, their discourse is moved by a logic of war that avows the importance of oil for state survival, and centres on the risks and threats connected to oil management and oil trade. Research shows that states’ oil security discourses tend to insist on the negative reverberations of oil security on interstate relations, emphasise the instability and vulnerabilities connected to the oil market and raise serious concern over the risk of terrorist and armed attacks against oil infrastructure (Crystal 2018; Nyman 2014; Janeliūnas and Tumkevič 2013; Phillips 2013). In their analyses, securitisation scholars explain that oil security discourses reproduce state-centric understandings of security, rival logics of state competition and national security-focused policies. Despite the variety of the states analysed, these studies indicate

Oil securitisation  71 a common thread: oil security is constructed on the idea that threats to oil are extraordinary dangers and, as a result, they require exceptional countermeasures. The criticality of oil implies that the potential disruption of its supplies needs to be avoided by all means. As previously explained, the process of securitisation is seen in conjunction with the establishment of extraordinary measures and exceptional politics, which remove an issue – such as oil – from public oversight in favour of centralised and often military responses. Given the recognised difficulties in determining the boundaries of exceptionalism (Neal 2008), different energy and security policies have been considered out of the ordinary trajectory of political affairs. Certain studies have argued that the pursuit of security as oil independence has led some states to launch unusual and expensive energy programmes, such as building or consolidating nuclear and liquefied natural gas (LNG) projects, or taking energy decisions behind closed doors and outside the normal democratic process of public and parliamentary scrutiny (Nyman 2018; Janeliūnas and Tumkevič 2013). Other scholars have focused on security practices and have recorded a growing presence of military and security personnel around energy sites, more assertive and belligerent diplomacy, and a rise in authoritarian tendencies. Most research findings (Crystal 2018; Trombetta 2018; Nyman 2014; Phillips 2013) indicate that oil securitisation has several negative implications: it enacts conflictive and belligerent logics that worsen regional tensions; it fixates and replicates stereotyped understandings of enemies and threats; it favours competition over cooperation, especially between suppliers and importing countries; it formulates energy policies around oil and fossil fuels, downgrading alternative energy sources and neglecting the possibilities for energy transitions; and it eclipses alternative oil security problems, from the reliability of energy services, to workers’ safety, infrastructure decay and environmental concerns. The bulk of these works show that oil securitisation is often tied to the emergence and consolidation of multiple forms of insecurity. Recently, a pressing concern over the Anthropocene has revamped the critique and criticism of oil security in the name of green energy policies that could mitigate climate change and global warming by transitioning out of fossil fuels (Judge and Maltby 2017; Nyman 2014; Christou and Adamides 2013). Drawing on a broader body of literature on the relationship between security/securitisation and the environment, scholars have warned about the incompatibility of national security, energy securitisation and environmental care. Since the 1990s, national security has emerged as a misleading paradigm of environmental policies. It has been noted (Trombetta 2013; Gilbert 2012; Dalby 2010, 2013; Elkind 2010; Deudney 1990) that while security logics and practices have proliferated in the environmental sector, these have distorted the means and the outcomes of environmental policies, causing more harm than good. Although security has increased public interest and governmental mobilisation for the environment, it has also introduced military mindsets and tools that have proved to be inappropriate for and even counterproductive to environmental protection. My study of oil securitisation in Azerbaijan confirms most of the above-mentioned concerns and dilemmas connected to oil securitisation. A large oil producer and exporter, Azerbaijan has grounded its economy, society and politics on oil management since its independence from the United Socialist Soviet Republic (USSR) in 1991. The enormous wealth and the magnitude of its infrastructure complex have made the oil industry the country’s economic backbone, material spine and a quintessential part of its national identity. Proud of its oil wealth, the country has branded itself as the ‘Land of Fire’ to pay homage to the abundance of resources of its soil and waters. In this context, oil security is a recurring national security mantra. Based on the discourse analysis of Azerbaijan’s National Security Concept, Military Doctrine and

72  Handbook on oil and international relations Maritime Security Strategy, my research (Ganz 2021) indicates that oil security emerges as a fundamental piece of the security of the state, and threats to oil security are framed as an existential danger that looms over Azerbaijan’s survival, economic independence, territorial sovereignty and international recognition. Discursively, oil is highly securitised in the country. The analysed texts point to several threats – from the disruption of the global oil trade to regional tensions, terrorism and the sabotage of the industry – which emerge as a menace to both the physical security of the country, as well as its values and international reputation. Terrorism recurs often in the texts, usually in relation to the possibility of Armenian separatists’ actions linked to the war in the Karabakh, which has preoccupied Azerbaijan for half a century. Oil facilities materialise as a bodily extension of the country’s territory and sovereignty; the protection of the oil trade appears as the guarantor for Azerbaijan’s economic success, ensured by its integration and participation in the Western, (neo)liberal economic order; the history of the national oil industry intersects with those events that hold the highest emotional charge and symbolic power in the process of Azerbaijan’s nation-building, namely the signature of the ‘Contract of the Century’, the conflict against Armenia and the leadership of Heydar Aliyev. This securitised discourse shows that the construction of oil security and the formation of Azerbaijan’s national identity are co-constituted in an ontological but also a political way. Besides discourse, I noticed that oil securitisation has had several implications in the country: it has expanded the involvement of security and military professionals into and beyond the country’s energy sector; it has validated processes of militarisation and power centralisation; it has legitimised the Aliyev family’s regime and has instilled a political culture of obedience; and it has provided the local powerful elites with abundant financial resources, larger mandates, increased responsibilities and, finally, greater political power. In a country where social divides are high, power clusters around elite poles and the leader holds a grip on power, oil securitisation has fuelled a system of fear, violence, oppression and control. Nonetheless, the case of Azerbaijan points to a continuation of Azerbaijan’s ordinary politics, rather than an exceptional rupture. My work argues that securitisation theory as conceptualised by the School of Copenhagen misses many important aspects of what the process entails, and overlooks what falls outside the exercise of governance by the nation-state. Moreover, given their emphasis on discourse, securitisation studies remain blind to the profound diversity of ordinary securitised practices and their wider implications. It has overshadowed a large number of practices of control, coercion and discrimination that have fuelled insecurity within and beyond the oil sector and, rather than being exceptional, belong to the everyday and banal exercise of authority. Finally, while securitisation helps to reveal the problematic nature of security, the literature on energy and oil securitisation have not reflected much on the impact of oil itself on the definition of security practices. I therefore suggest an alternative approach to oil securitisation that, unlike the traditional framework, can grasp the complexity and heterogeneity that characterises the process. The following section outlines the theoretical and epistemological tenets of my study and explains the importance of materiality, practices, the everyday and non-national and non-state actors in securitising oil.

RECONCEPTUALISING OIL SECURITISATION Securitisation theory has provided a major venue to counter a dominant and oppressive geopolitical culture that has monopolised the field of energy security for decades. In particular, it has

Oil securitisation  73 been useful to show the hidden and unique characters of security and security politics, and to question their suitability for the energy field. Securitisation acknowledges security as an intersubjective process of construction, socially enacted and politically consequential, rather than as a universal and neutral value (Ganz 2021, p. 38). As such, approaching oil security through the lens of securitisation allows understanding of its inherently political nature, and raises the question of what is at stake in oil security – including the related forms of insecurity that security generates – and the conditions that make it possible. Yet, the original conceptualisation of securitisation oversimplifies the social diversity and complexity of oil security by ignoring the manifold practices it enacts; the variety of actors involved; the many and not always coherent interests, priorities and logics that underpin it; and the impact of oil and its materiality on securitisation. This section focuses on these three elements (actors, practices and materiality) to suggest an alternative pathway to analysing and understanding oil securitisation. This work relies on my empirical research on energy securitisation in Azerbaijan, especially the findings that emerged through the method of mapping, which served to locate and outline practices and practitioners of energy and oil security, and the semi-structured interviews I conducted with energy stakeholders and security professionals. Theoretically, my study drew on the sociological approach to securitisation (Bigo and McCluskey 2018; Balzacq 2010), which aims at shifting from the presumed uniform character of the ideal type of securitisation, towards the recognition of the essential mobility and instability of its contours. In particular, the sociological approach emphasises that threat construction and management result from daily routines and interactions among security practitioners, experts and professionals. Oil securitisation has mainly been approached and understood as a national and nationalist phenomenon, centred around the provision of state security by the state security machine. Nevertheless, far from being exclusively national, oil security also relies on a vast network of non-national and non-state professionals. A glance at Azerbaijan’s oil security field shows that the practitioners involved are not only national agents and the highest representatives of the state. Following the signature of the Contract of the Century in 1994, which opened the country’s oil and gas sector to international investors, foreign and multilateral initiatives to ostensibly secure the country’s oil assets – especially flows and infrastructure – proliferated. In the country, the non-national and non-state security and military professionals that secure oil are are estimated in their thousands. Beyond national armies and law enforcement agencies, oil security involves multilateral platforms, for example, the trilateral cooperation between Azerbaijan, Georgia and Turkey; international security organisations, especially NATO and the Organization for Security and Co-operation in Europe (OSCE); third states’ security and military professionals, such as the US Department of Defense and the United States European Command (US EUCOM); energy companies such as BP and SOCAR and their security departments; and private security contractors, among others. This has important implications for understanding the modalities and implications of oil securitisation. When oil security is approached as a critical component of global security and a vital aspect of private, corporate business, its ontology (the nature and scale of oil security threats are amplified and disaggregated from state ontology) is transformed, as well as its politics (the forms of governance and the skein of authority and expertise it creates are enlarged). How the state securitises oil is subject to its interactions with the other, non-national and non-state agents that operate in the field. The case of Azerbaijan indicates that energy companies and security firms offer services that have traditionally been considered as under the exclusive remit of national armies and agencies. Similarly, international organisations are

74  Handbook on oil and international relations reinventing themselves, expanding capacities and creating forms of transnational governance that states adapt to. In my analysis, I show that NATO has been able to create and sustain multiple energy security programmes, enlarge its institutional architecture with ad hoc energy security units, establish itself as a leading expert and intervene in the country by establishing best practices, training and initiatives of capacity building. In a similar vein, the case of BP indicates that oil securitisation has expanded the company’s corporate structure to institute a security department, enlarged its business portfolio, increased its resources, expanded its remits, spread its network, deepened its ties with the state, boosted its role and power in the country, and established itself as a source of expertise and a legitimate administrator of force. Oil securitisation enacts different forms of polity and governance based on the involvement of international and private actors to secure and securitise oil. The growing engagement of international and non-state actors in securing energy creates complex configurations of global‒local, national‒international and public‒private arrangements, which escape the traditional contours of international politics. The comparative analysis shows that different actors securitise oil by pointing to the existential and extraordinary level of its threats. However, the multiplicity of actors involved in oil security also reveals a diversity of interests, perceptions and priorities, which can result in different policy objectives and outcomes. This is reflected in the practice of oil securitisation. Rather than the mere analysis of linguistic acts, a sociological approach to securitisation recognises the importance of practices, intended as ‘competent performances … socially meaningful patterns of action’ (Adler and Pouliot 2011, p. 4), ‘routinised type of behaviour’ (Balzacq et al. 2010, p. 3) and ‘forms of bodily and mental activities’ (Reckwitz 2002, p. 249). In other words, practice identifies a wide set of meaning-making processes, which still includes discourse, but also opens the inquiry to what practitioners do, rather than say (Ganz 2021, p. 26). In this context, discourses are not the prime performative force behind securitisation; as Bigo (2014, p. 211) writes, ‘discourses are usually forged as forms of ex post facto justification of the everyday practices’. During my fieldwork, I found many inconsistencies, opposed interests and contradicting practices that coexisted often thanks to intentional silences, ambiguity and neglect. Oil security strategies and operations often lack coordination; frequently, mandates overlap and practices are duplicated, as the allocation of responsibilities between agencies and sectors is confused; additionally, distrust among professionals from different agencies and sectors is not uncommon. Actors’ tendency to ignore the areas of disagreement, even – or especially – when irreconcilable, is a finding in itself, which exposes how the complexity of oil security affects the definition and exercise of authority. Oil securitisation in Azerbaijan mirrors other cases (Bigo 2000, 2006), whereby actors’ differences are overcome by the shared objective of prioritising security and expanding their authority. In my analysis, I realised that the role of international and foreign actors in securitising energy in Azerbaijan has empowered the domestic political and economic elites, conferring legitimacy to the leadership, promoting a strong authoritarian state machine, and further centralising force, economic assets and authority around well-established poles. Oil securitisation is not the mere result of a speech act and its spectacular rhetoric, but is the result of a stable and diffuse deployment of security and military professionals on large territories. Their practices are heterogenous and diffused, and span from defence to risk management, policing, maritime security, counterterrorism, land expropriation and due diligence. Rather than extraordinary moves, these practices are normalised as everyday, round-the-clock

Oil securitisation  75 activities. In my projects, I mapped a wide and diverse arrange of practices that are in place in Azerbaijan to secure its oil industry. The analysis reveals that oil security practices may share the same desire for securitisation, but they have distinct focal points that affect how oil is securitised, against what threats, through what means, for what purpose and with what effect. To cite a few of these assorted practices, certain activities provide for the physical protection of oil facilities through the deployment of armed personnel on the ground and patrolling operations; others institute intelligence operations, counter-espionage activities and due diligence, including to control energy workers; further activities have a pedagogical intent, such as interagency training, drillings and research activity; additional practices include enforced expropriation and the suffocation of any form of dissent against energy projects, energy poverty and bad labour conditions at the energy sites. Moreover, the role of practices in securitising oil indicates that the process is an inherently cultural practice that can be taught, passed on and even inculcated in other institutions, agencies and even states. The observation of practices is a crucial step in the inclusion of the material in the analysis of oil securitisation, as they hold a clear material dimension: practices are also deeds performed in the world. Given its interest in unpacking the constructed nature of security, securitisation tends to pay most attention to the ideational factors that affect the process. However, in my research, I realised that oil materiality – especially the vastness, mobility and complexity of its physical space – had an enormous impact on the securitising practices, by determining, enacting and constraining what can be said and done to secure oil, and how. Oil materiality is a large and unique space, whose sectorial, geographical and temporal boundaries are mobile. For instance, petroleum deposits and oil facilities are geographically situated, but once processed, oil travels across territories. The oil sector is one of the most globalised industries in the world. Its systems are highly interconnected, integrating local elements into complex regional and transregional networks. National and foreign interests coexist; national energy policies cannot prescind from considering the exogenous dynamics determined by the global market and foreign traders. National and local governments constantly interact with their foreign counterparts, as well as with international organisations, multinational corporations and local firms, among others. Oil materiality is also distinctive for its complex ownership arrangements: while resources are mostly nationally owned, the infrastructure used to extract, process and transport the oil worldwide is mainly private and managed by large corporations. As such, oil is both a public good and a privately owned and managed commodity. Oil materiality facilitates the expansion of the space of its security, and justifies the presence and proliferation of different actors, who claim a legitimate right in intervening. Oil securitisation is not simply about defining threats to specific energy objects but refers to a much more complex and heterogeneous sociotechnical process that centres around diverse practices of coercion and control and embeds the logic of security into the technical, economic and material domains of the oil and gas industry. Through the analysis of oil securitisation in Azerbaijan, it has emerged that despite the fixation on security as the use of force, oil securitisation is marked by diversity. Rather than a loose enlargement of national security, oil securitisation is a much wider process, grounded in the constant intersections between and among local, national, global and private forms of authority. Its strategic objectives might vary between actors, as well as the normativities, interests and cultures that underpin it. Exceptional narratives coexist with and may follow routinised everyday practices.

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CONCLUDING REMARKS ON RESEARCHING OIL SECURITISATION The analysis of oil securitisation in Azerbaijan shows that a deeper understanding of the phenomenon requires more than just observing political leaders’ sensational statements or recording the state’s exceptional security responsibilities. My empirical work points to a degree of heterogeneity and complexity that escapes the narrow and strict boundaries of securitisation theory. The ideational and material expressions of oil security are transversal, transnational, trans-sectorial and transborder. Because most literature has not paid attention to spatiality, securitisation theory has not been able to fully grasp how oil securitisation transforms the space of security. In particular, the spatiality of oil securitisation needs to be reconsidered at least on two levels: one that accounts for transnational arrangements and a larger, more encompassing view of space and scale; and the other that is attentive to the mobility of the contours of the national and the blurriness of its internal and external confines. Additionally, oil securitisation is diverse in terms of the actors it involves, the processes it enacts, and its ramifications. While this might sound obvious, this diversity demands an alternative epistemology that can overcome the binaries that drive securitisation theory. The ideal type of securitisation is too reliant on state ontology and speech act theory to pay attention to the actual social complexity of oil securitisation and the disordered ways in which its numerous elements entangle. Theoretically, my work approaches energy securitisation as a sociotechnical assemblage, intended as ‘an unstable and contingent collection of heterogeneous elements’ (Latour 2005, p. 541), generated from the entanglement and disentanglement of ideational, material, social and technical elements. In the case of oil securitisation, the process assembles internal security with external security, military with civil security, defence with enforcement, coercion with control; it relies on surveillance and policing technologies as much as on maritime defence and counterterrorism; it intertwines the national and the international, as well as the public and the private domains; it builds ties among different security actors and institutions that belong in different social universes; it merges security logic and neoliberal rationales, as well as security techniques and neoliberal modi operandi; it intersects energy security with local dynamics, power structures and histories while also embedding it into patterns of international cooperation and corporate strategy. The variety of elements and processes implies that empirical research should seek to understand what oil securitisation does, and how, rather than looking to contain its definition in pre-established categories. Analytically, this implies a methodology that accounts for both the ideational and the material dimensions of securitisation. To do so, I designed my research on the use of three methods: discourse analysis, semi-structured interviews and mapping. This combination accounts for both material and ideational factors and, compared to the existing literature, it gives more latitude to the engagement with oil securitisation and its extensive and intricated modalities. Recent contributions, especially from the broader critical security scholarship, indicate that practice-oriented research welcomes methods that are still relatively new to international relations and security studies, such as ethnographic interventions and actor-network theory. In my case, Azerbaijan’s political context imposed certain limitations to my immersion into the field. Finally, I want to emphasise that while my work is not openly prescriptive, its shift from oil security to oil securitisation has a strong political intent and is moved by a normative sensitivity that defies the idea of security as an inherently positive policy principle. My research

Oil securitisation  77 on Azerbaijan has revealed a large number of insecurities tied to the securitisation of energy. As an overcrowded security field, oil securitisation materialises as a top-down process, which enhances power centralisation and militarisation, while disempowering most of the population. Through my empirical research, I recorded common cases of abuse committed by security professionals against energy workers, the local communities that live near the energy sites and the citizens that demand better energy policies. Securitised practices have enabled and consolidated land grabbing and expropriation, as well as the proliferation of state surveillance. In my work, I explain how oil securitisation has altered the demographic composition of Azerbaijan’s villages, amplified economic divides, and contributed to gender violence, the spread of diseases and illegal trafficking. Moreover, despite the criticality attached to oil and gas, Azerbaijan’s energy system is too reliant on export. Domestically, the country records poor levels of energy access, availability, affordability and sustainability against high rates of pollution and environmental degradation. Unlike the large financial resources given to the security sector, the energy industry lacks systemic investment, condemning the country to outdated energy infrastructure, often subjected to breakdowns and electricity power cuts. The rhetorical emphasis on oil security as existentially critical, and the routinised character of its security practices, have trivialised and normalised oil securitisation. This has not only thwarted the development of viable alternatives but has also made invisible the effects that oil securitisation have beyond the egoistic interests of those actors that benefit from that process. The theoretical and policy emphasis on oil security has long constrained our imagination in terms of alternative forms of security, as well as different ideas of energy production and consumption. Thus, a critical analysis of the modalities and hidden implications of oil securitisation invites us to challenge the limitations of our ability to think about and do (energy) security outside securitised politics.

REFERENCES Adamides, C. (2020), Securitization and Desecuritization Processes in Protracted Conflicts, Cham: Springer International Publishing. Adler, E. and V. Pouliot (eds) (2011), International Practices (Vol. 119), Cambridge: Cambridge University Press. Balzacq, T. (ed.) (2010), Understanding Securitisation Theory: How Security Problems Emerge and Dissolve, London: Routledge. Balzacq, T., T. Basaran, D. Bigo, E.P. Guittet and C. Olsson (2010), ‘Security practices’, in Oxford Research Encyclopedia of International Studies, accessed on 21 September 2021 at https://​oxfordre​ .com/​internationalstudies. Bigo, D. (2000), ‘When two become one: internal and external securitisations in Europe’, in M. Kelstrup and M. Williams (eds), International Relations Theory and the Politics of European Integration, Power, Security and Community, London: Routledge, pp. 171–205. Bigo, D. (2006), ‘Security, exception, ban and surveillance’, in D. Lyon (ed.), Theorizing Surveillance: The Panopticon and Beyond, London: Routledge, pp. 46–68. Bigo, D. (2014), ‘The (in)securitization practices of the three universes of EU border control: military/ navy–border guards/police–database analysts’, Security Dialogue, 45 (3), 209–225. Bigo, D. and E. McCluskey (2018), ‘What is a Paris approach to (in)securitization? Political anthropological research for international sociology’, in A. Gheciu and W.C. Wohlforth (eds), The Oxford Handbook of International Security, Oxford: Oxford University Press, p. 1–16. Buzan, B., O. Wæver and J. De Wilde (1998), Security: A New Framework for Analysis, Boulder, CO: Lynne Rienner Publishers.

78  Handbook on oil and international relations Christou, O. and C. Adamides (2013), ‘Energy securitization and desecuritization in the New Middle East’, Security Dialogue, 44 (5–6), 507–522. Crystal, J. (2018), ‘The securitization of oil and its ramifications in the Gulf Cooperation Council states’, in H. Verhoeven (ed.), Environmental Politics in the Middle East, Oxford: Oxford University Press, pp. 75–98. Dalby, S. (2010), ‘Environmental security and climate change’, in Robert Denemark (ed.), Oxford Research Encyclopedia of International Studies, accessed on 21 September 2021 at https://​oxfordre​ .com/​internationalstudies. Dalby, S. (2013), ‘Biopolitics and climate security in the Anthropocene’, Geoforum, 49, 184–192. Deudney, D. (1990), ‘The case against linking environmental degradation and national security’, Millennium, 19 (3), 461–476. Elkind, J. (2010), ‘Energy security: call for a broader agenda’, in C. Pascual and J. Elkind (eds), Energy Security: Economics, Politics, Strategies, and Implications, Washington DC: Brookings Institution Press, pp. 119–148. Fierke, K.M. (2015), Critical Approaches to International Security, Hoboken NJ: John Wiley & Sons. Floyd, R. (2016), ‘Extraordinary or ordinary emergency measures: what, and who, defines the “success” of securitization?’, Cambridge Review of International Affairs, 29 (2), 677–694. Ganz, A. (2021), Fuelling Insecurity: Energy Securitisation in Azerbaijan, Bristol: Bristol University Press. Gilbert, E. (2012), ‘The militarization of climate change’, ACME: An International E-Journal for Critical Geographies, 11 (1), 1–14. Janeliūnas, T. and A. Tumkevič (2013), ‘Securitization of the energy sectors in Estonia, Lithuania, Poland and Ukraine: motives and extraordinary measures’, Lithuanian Foreign Policy Review, 30, 65–90. Judge, A. and T. Maltby (2017), ‘European Energy Union? Caught between securitisation and “riskification”’, European Journal of International Security, 2 (2), 179–202. Latour, B. (2005), Reassembling the Social: An Introduction to Actor-Network-Theory, Oxford: Oxford University Press. Neal, A.W. (2008), ‘Exceptionalism: theoretical and empirical complexities’, International Political Sociology, 2 (1), 87–89. Nyman, J. (2014), ‘“Red storm ahead”: securitisation of energy in US–China relations’, Millennium, 43 (1), 43–65. Nyman, J. (2018), ‘Rethinking energy, climate and security: a critical analysis of energy security in the US’, Journal of International Relations and Development, 21 (1), 118–145. Phillips, A. (2013), ‘A dangerous synergy: energy securitization, great power rivalry and strategic stability in the Asian century’, Pacific Review, 26 (1), 17–38. Reckwitz, A. (2002), ‘Toward a theory of social practices: a development in culturalist theorizing’, European Journal of Social Theory, 5 (2), 243–263. Sovacool, B.K. (2014), ‘What are we doing here? Analyzing fifteen years of energy scholarship and proposing a social science research agenda’, Energy Research and Social Science, 1, 1–29. Trombetta, M. (2013), ‘Environmental security and climate change: analysing the discourse’, in P.G. Harris (ed.), The Politics of Climate Change: Environmental Dynamics in International Affairs, London: Routledge, pp. 129–145. Trombetta, M. (2018), ‘Fueling threats: securitization and the challenges of Chinese energy policy’, Asian Perspective, 42 (2), 183–206. Vuori, J.A. (2011), How to Do Security with Words: A Grammar of Securitisation in the People’s Republic of China, Turku: University of Turku Press. Wæver, O. (1993), Securitization and Desecuritization, Copenhagen: Centre for Peace and Conflict Research.

6. Oil, materiality, and interstate war Emily Meierding

During an April 2021 appearance in Oakland, California, Vice President Kamala Harris made a striking assertion: “For years there were wars fought over oil; in a short time there will be wars fought over water” (CBS SF Bay Area 2021). She did not explain the initial claim. Nor did she have to. The idea that wars are fought for oil is taken for granted by politicians, policymakers, journalists, the general public, and many scholars. Meanwhile, strikingly little international relations (IR) research has attempted to disentangle the exact relationships between oil and interstate war.1 Instead, all types of oil-related conflict are commonly subsumed under the general heading of “oil wars,” which are presumed to be common events in the international system (Klare 2001). This chapter proposes that greater attention to the materiality of oil would clarify the relationships between oil and interstate war. Adopting Gavin Bridge’s definition, “the materialities of oil … refer to the biophysical characteristics and material forms of oil as it flows in and through society and the way these are productive of particular forms of social relations” (Bridge 2011, p. 316). Scholars have examined how oil’s materiality influences various elements of international relations, including the global economy, institutions, and governance (Bunker and Ciccantell 2005; Mitchell 2013). They have also explored how oil’s material characteristics shape its contribution to intrastate war (Le Billon 2001; Lujala 2010). However, in studies of interstate war, oil’s materiality is largely neglected. To the extent that researchers do consider oil’s material forms, they focus on in situ resource stocks, which they identify as an incentive for interstate competition and armed conflict (Caselli et al. 2015; Nyman 2015; Schultz 2017; Strüver and Wegenast 2018). Later stages in the hydrocarbon commodity chain are neglected. By relying on this circumscribed conceptualization of oil’s materiality, IR has been unable to accurately answer a question posed 15 years ago by Shannon O’Lear and Paul Diehl (2007, pp. 170–171): “When two states fight over resources, where does that conflict occur?” In contrast, “following the oil” from in situ crude to petroleum product consumption illuminates the ways that oil does—and does not—influence interstate war (Le Billon 2007, p. 176).2 Considering the entire hydrocarbon commodity chain highlights the temporal and geographical gaps between in situ crude and the realization of oil’s use and exchange values, which occurs only when oil is consumed or sold. These gaps create abundant opportunities to interrupt the commodification process. This potential for interruption shapes oil–war relationships in at least three ways. First, it discourages classic oil wars: “severe militarized interstate conflicts driven largely by participants’ desire to obtain petroleum resources” (Meierding 2020, p. 16). Although states may be able to seize oil-endowed territories, they have difficulty benefitting from them. Accordingly, they are unlikely to initiate wars to grab oil resources. Second, the ease of hydrocarbon commodity chain interruption shapes the trajectories of wars that are launched for other, non-oil reasons.3 Specifically, it elevates oil denial and defense as key strategic priorities. If denial attempts succeed, belligerents may also be compelled to resort to “oil campaigns” within their ongoing wars. Third, concerns about interruptions to the 79

80  Handbook on oil and international relations hydrocarbon commodity chain influence some states’ peacetime military activities, as they attempt to defend or interfere with global oil flows. The chapter illustrates these dynamics by examining six of the last century’s most prominent interstate wars: World War I (1914–18), the Chaco War (1932–35), World War II (1939–45), the Iran–Iraq War (1980–88), the Gulf War (1990–91), and the Iraq War (2003–11). Previous authors have labeled many of these as classic oil wars. The chapter calls those interpretations into question, while also demonstrating that oil shaped the trajectories of all six conflicts, once they were under way. Oil has also influenced the United States’ peacetime uses of military forces, especially in the Persian Gulf. The chapter’s final section concludes by discussing the consequences of IR’s oversimplification of oil’s materiality. In addition to encouraging misrepresentations of the causes of interstate war, with negative academic and policy effects, IR’s overemphasis on oil as a casus belli naturalizes armed conflict, reducing interstate war to a Darwinian struggle for scarce resources. In doing so, it depoliticizes interstate conflict, erasing the actual, social motives for international aggression, such as hegemonic aspirations, status concerns, and fear.4

ESCAPING CRUDE ANALYSES Crude oil is the product of marine organisms and time. Formed in the “oil window,” usually 2000–4000 meters below the Earth’s surface, it is composed of hydrogen, carbon, and small amounts of sulfur, nitrogen, and metals, including nickel, copper, and iron. Crudes with relatively high sulfur content are described as “sour,” while those with low sulfur content are “sweet.” Crudes vary significantly in density, from “light” oils that float on water to “heavy” oils that sink, and “extra heavy” oils such as tar and pitch that flow only if heated.5 Because of these natural discrepancies, each crude oil can be refined into a different slate of petroleum products, through varying degrees of effort. These differences lead to disparities in crude oil prices: light, sweet crudes costs more than heavy, sour ones. Most crude oil is physically located in subterranean reservoirs: relatively porous rock formations, bounded by less permeable formations. Reservoirs vary in terms of their depth below the Earth’s surface, since crude oil can migrate away from the locations where it was formed. Reservoirs also vary in size, contents (the proportion of crude oil, relative to natural gas and water), and porosity. Crudes move relatively easily within highly porous formations, but “tight” formations must be fractured to permit oil to flow. Reservoirs can be located onshore, under the continental crust, or offshore, below the oceanic crust. Water depths above offshore reservoirs also vary substantially. As a result, while crude oil is always a “point” resource, located in specific, concentrated geographic areas, oil reservoirs’ accessibility varies widely. Consequently, so do the strategies used to capture different crudes (Bridge 2008, p. 394).6 Some crude oil is found at the Earth’s surface, in seeps. These are easily visible and accessible, with limited human intervention. However, accessing subterranean oil reservoirs requires geophysical exploration, exploratory drilling, well completion, reservoir development, and lifting crude to the Earth’s surface. From start to finish, this extractive process usually takes many years.7 Additionally, the enormous capital investments required to complete the process encourage oil companies to remain involved in upstream projects for decades. Thus, crude oil is not a quickly or easily lootable resource (Ross 2003, p. 54).

Oil, materiality, and interstate war  81 Once a reservoir’s contents are lifted to the Earth’s surface, they undergo preliminary processing, usually fairly close to extraction sites, to separate crude oil from natural gas and groundwater. The crude is subsequently transported to refineries, via pipelines or maritime tankers. These transit routes may be fully contained within one state. However, crude frequently traverses international boundaries and regions, traveling hundreds or thousands of miles to reach the refineries where it is processed into petroleum products. These products, including gasoline, jet fuel, lubricants, and hydrocarbon gas liquids, are then distributed to consumers, including manufacturing industries, airlines, and individual car owners. This entire process, from exploration to consumption, is the hydrocarbon commodity chain (Bridge 2008, p. 395).8 The petroleum products that are generated through this commodification process possess use and exchange values. Oil’s most prominent use value is fueling the transportation sector. However, generating heat and electricity, lubricating machinery, and feeding the petrochemical industry are also core use values. Oil’s extraordinary energy intensity magnifies many of these; it is a more efficient energy source than coal, natural gas, or renewables. Oil’s utility to modern economies and militaries, coupled with disparities between the geographic distribution of in situ crude oil and petroleum product demand, also give oil exceptional exchange value. Oil companies and the governments of oil-endowed states can amass enormous revenue by selling crude oil and petroleum products, and by taxing those resource sales. Governments can also sell the rights to exploit crude oil resources by licensing oil exploration or production. Importantly, oil’s use and exchange values are only realized if the resource is consumed. Resources’ use values are realized at the moment of consumption (Marx 2011 [1867], p. 42), when petroleum-based fuels are burned, lubricants are applied to machinery, or feedstocks are transformed into other products. Oil’s exchange values are realized in the moment of transaction, when crude oil, petroleum products, or exploration rights are sold (Labban 2010, pp. 542, 545, 550). However, oil’s exchange values arise from the expectation that oil will eventually be consumed (Bina 1989, p. 86). Exploration and production rights will be exploited to discover, extract, and process crude oil; the crude will be refined; and the resultant petroleum products will be used. If this process is not completed, crude oil possesses neither use nor exchange values. The completion of this process is far from guaranteed. The temporal and geographical distance between in situ crude oil and its eventual consumption create abundant opportunities to interrupt the hydrocarbon commodity chain (Bridge 2011, pp. 317, 319; Le Billon 2001, p. 569; Mitchell 2013, pp. 144, 163; Watts 2004). These opportunities are heightened by oil’s status as an “un-cooperative commodity,” which is challenging to discover, extract, and process (Bakker 2004; Bridge 2011, p. 318), and by its high value-to-weight ratio, which increases the “obstructability” of oil transportation (Ross 2003, p. 54). Because of the ease of interrupting the hydrocarbon commodity chain, an actor may control oil reservoirs, but fail to realize oil’s use or exchange values. Interruptions to the hydrocarbon commodity chain take many forms. The most obvious are physical. Actors, including national military forces, insurgent groups, oil industry employees, and local populations, can physically interfere with oil extraction, processing, refining, or transportation. They can damage drilling equipment, set wells on fire, bomb pipelines, and attack processing facilities, refineries, and export terminals. These attacks can be conducted on the ground or through missile strikes, drone strikes, or aerial bombing campaigns. Actors can also interrupt seaborne oil transportation by intercepting oil tankers or imposing blockades that

82  Handbook on oil and international relations prevent oil shipments from reaching their intended destinations. In addition, actors can assault the oil industry’s human capital: kidnapping, injuring, or killing oil company employees or tanker operators. Some actors can also use commercial mechanisms to prevent the realization of oil’s use and exchange values. States and international organizations can impose trade restrictions on a targeted country’s oil purchases or sales. The United States has used its dominant position in the global financial network to block oil-related financial transactions (Meierding 2021). Threatening primary or secondary sanctions against actors that facilitate oil’s extraction and movement, such as oil companies that invest in upstream oil projects, tanker companies, insurance companies, and pipeline certification companies, is another means of impeding oil movements. These physical and commercial impediments shape the relationships between oil and interstate war in at least three ways. First, they discourage classic oil wars. Although many countries are capable of grabbing control over another state’s oil-endowed territories, potential interruptions to the hydrocarbon commodity chain makes initiating such conflicts a highly dubious adventure. In the short run, classic oil wars are likely to damage oil infrastructure. In the long run, local populations and insurgent groups are likely to resist foreign occupation by attempting to interrupt oil production and transportation. Additionally, third party states and international organizations are likely to sanction aggressors, preventing them from selling seized resources internationally. They may also use military force to block oil movements or compel aggressors to withdraw from conquered, oil-endowed territories. Finally, international oil companies are reluctant to invest in conquered territories because of potential interruptions to the hydrocarbon commodity chain. As a result of these invasion, occupation, international, and investment obstacles, classic oil wars are not worth the effort (Meierding 2020). Second, the temporal and geographical distances between in situ crude and the realization of oil’s values shape the trajectories of ongoing interstate wars, which were started for other, non-oil reasons. Here, oil has at least two specific effects. First, belligerents are likely to target each other’s energy infrastructure to deny petroleum products or revenue to their adversary, in order to increase their own chance of victory. This denial strategy includes the destruction of extraction and refining equipment and facilities prior to an invader’s arrival, as well as local attacks on oil production and transportation networks during a foreign occupation. It also includes artillery strikes and aerial bombing campaigns that target an adversary’s oil processing, refining, and storage facilities, along with its transportation infrastructure, including pipelines, railroads, export terminals, and tankers. Navies are likely to implement blockades to impede their adversaries’ maritime oil imports or exports. Commercially, belligerents, third party states, and international organizations can impose international sanctions that deny their targets access to petroleum products or revenue. If these initiatives successfully interrupt a belligerent’s access to petroleum products, oil may have a second specific effect on ongoing interstate wars: it can inspire oil campaigns. These are major military attacks that target oil-endowed territories, which occur in the midst of ongoing interstate wars. Belligerents are unlikely to initiate oil campaigns early in a war, since they recognize the obstacles to effectively exploiting seized oil reservoirs in contested territories. Instead, they prefer to satisfy their national energy needs through alternative strategies, such as developing domestic reservoirs, stockpiling, international trade, or developing domestic substitutes for imported oil supplies (Meierding 2020). However, alternative strategies may eventually fail to satisfy a belligerent’s oil needs, due to its adversaries’ effective denial

Oil, materiality, and interstate war  83 efforts, coupled with the state’s heightened oil consumption during wartime. If alternative means of accessing oil prove to be inadequate, a belligerent may initiate an oil campaign to seize foreign resources and—it hopes—satisfy its oil needs. Third, the possibility of interruptions to the hydrocarbon commodity chain can shape states’ peacetime usage of military force. The governments of oil-producing states may task segments of their national security forces with oil industry protection: defending oil fields, processing and refining facilities, and domestic pipeline routes. Additionally, third party states may deploy military forces to major oil-producing regions or transit chokepoints to deter interference with oil production and transportation. In summary, there are substantial relationships between oil and interstate war, as well as between oil and peacetime uses of military force. However, conflating in situ crude with the realization of oil’s use and exchange values obscures these connections. In particular, it exaggerates the likelihood of classic oil wars. In contrast, incorporating the entire hydrocarbon commodity chain reveals the opportunities for interruption created by its temporal and geographic gaps. The risk of interruption explains why oil does not cause interstate wars, yet strongly influences their trajectories, as well as states’ peacetime usage of military force.

OIL WARS: A REASSESSMENT To assess these expectations, this section examines oil’s contributions to six major modern interstate wars: World War I, the Chaco War between Bolivia and Paraguay, World War II, the Iran–Iraq War, the Gulf War, and the Iraq War. Many of these conflicts have been labeled classic oil wars. However, this analysis challenges those interpretations of all six conflicts. With one possible exception, oil did not cause any of these wars. However, it did shape all of their trajectories, as well the United States’ peacetime usage of military force, especially in the Persian Gulf. World War I (1914–18) When World War I began, the modern oil industry was over a half-century old, having emerged in the 1860s with the discovery of commercial oil reservoirs in western Pennsylvania. However, until the twentieth century, oil’s leading use value was as an illuminant, in the form of kerosene. Its use value as a transportation fuel emerged with the invention of the automobile in the 1880s and was amplified when the Ford Motor Company began mass production of the Model T in 1908. A few years later, the government of the United Kingdom decided to change the Royal Navy’s primary fuel source from coal to oil. Concerns about securing fuel access prompted the UK government to purchase a majority stake in the Anglo-Persian Oil Company (now BP) in 1914 (Winegard 2016, p. 63). However, it did not inspire any countries to enter World War I. Although the conflict’s causes continue to be debated, oil is never identified as one of them. World War I did confirm oil’s strategic significance. The increased use of automotive transportation freed armies from conducting “wars by timetable” using the railways, while the invention of the tank transformed the war on the Western Front by allowing the Allies to break through German lines (Yergin 1991, p. 171). The rapid development of air power also fundamentally shifted the character of modern war, by facilitating first reconnaissance

84  Handbook on oil and international relations and observation missions, then air combat and tactical and strategic bombing (Yergin 1991, p. 172). All of these new transportation technologies ran on petroleum-based fuels. This rising awareness of oil’s strategic value shaped the trajectory of World War I in multiple ways. First, many of the war’s participants undertook operations to defend their resource access or deny it to their adversaries. Within a month of the war’s outbreak, the United Kingdom had deployed forces to protect the Abadan refinery in Persia. The next year, a small German force arrived in the region and attempted to interrupt the hydrocarbon commodity chain by repeatedly attacking local pipelines (Winegard 2016, p. 66). More significantly, Germany attempted to interrupt the United Kingdom’s and France’s maritime oil imports, through its submarine warfare campaigns. These unrestricted campaigns would eventually contribute to the United States’ decision to enter the war. The Entente also attempted to deny oil supplies to Germany. In 1915, retreating Russian forces destroyed oil facilities in Galicia (southern Poland) before the German army arrived (Winegard 2016, p. 95). In 1916, as German forces approached Romania’s oil fields in Ploieşti, industry employees inflicted extensive damage on local oil infrastructure. The Entente also imposed its own blockade in the Atlantic, interrupting oil shipments bound for Germany (Yergin 1991, pp. 179–182). By 1918, the oil shortages precipitated by this blockade were severe enough to prompt Germany to reach an oil agreement with Russia, which had withdrawn from the war in March 1918. The parties agreed in late August that Russia would supply Germany with 25 percent of the output from Baku’s oil fields, in present-day Azerbaijan, if Germany prevented advancing Ottoman forces from seizing control over the city and its industry. The Turks, meanwhile, aspired to seize Baku in order to acquire its oil fields, expand their pan-Turkic empire, and protect Azerbaijani Muslims. The United Kingdom attempted to deny Baku’s oil to both of its adversaries by sending forces to assist the local Bolshevist authorities with the city and industry’s defense (Winegard 2016, pp. 191, 197–199, 201, 205). The United Kingdom did not plan to hold Baku after the war ended (Winegard 2016, p. 191). However, in the conflict’s closing months, British forces did launch an oil campaign in Mesopotamia to strengthen their country’s post-war access to oil resources. The campaign to capture Mosul province was organized in September 1918 and British forces secured control over the region from 2 to 4 November, after hostilities with Turkey had formally ended (Kelanic 2020, pp.  90‒91; Winegard 2016, pp.  114–115). Contrary to the chapter’s predictions, this oil campaign was not initiated as a last resort. However, future oil campaigns would be. The Chaco War (1932–35) The Chaco War is the earliest conflict that is commonly labeled a classic oil war: Bolivia and Paraguay were purportedly fighting over oil resources in the Chaco Boreal, which now comprises northwestern Paraguay. However, this interpretation of the conflict is inaccurate. Neither belligerent believed that the Chaco contained valuable oil resources. Bolivia did possess an active oil industry just east of the contested region, in the foothills of the Andean mountains between Santa Cruz de la Sierra and Yacuiba. However, neither the belligerent governments nor the Standard Oil Company, which had explored the region before the war, believed that these deposits continued into the plain. Confusion about the war’s causes arose largely because of the commentary of Louisiana Senator Huey P. Long, who deliberately

Oil, materiality, and interstate war  85 obfuscated the conflict’s geography in order to blame the war on his political nemesis, Standard Oil (Meierding 2020, pp. 84–8). Oil did influence the war’s trajectory, once it was under way. After unexpectedly routing Bolivia’s forces in the Chaco itself, Paraguayan troops attempted to seize their adversary’s oil infrastructure, at the edge of the Chaco Boreal. However, the aim of these attacks was not to permanently grab Bolivian oil. Instead, Paraguay was attempting to bring the devastating conflict to an end, and hoped that threatening Bolivia’s oil industry would prompt La Paz to sue for peace. In the states’ 1938 settlement, Paraguay willingly relinquished control of the oil fields (Cote 2016, pp. 82–83). World War II (1939–45) World War II is commonly identified as a classic oil war. These interpretations of the conflict emphasize Japan’s invasion of the Dutch East Indies and British Borneo (1941–42), and Germany’s attacks on the Soviet Union (1941–42). However, labeling this conflict a classic oil war conflates the war’s causes and the factors that shaped its trajectory. Germany initiated the European war to pursue continental—if not global—hegemony, not to seize foreign oil. Neither the state’s pre-war annexations of Austria and the Sudetenland, nor its military operations during the conflict’s opening years (in France, Belgium, the Netherlands, and Poland) focused on oil resources (Meierding 2020, pp. 131–133).9 Japan’s invasion of the Dutch East Indies was also a continuation of an ongoing war. Although, for the United States, the war in the Pacific began on 7 December 1941, Japan had been at war with China since at least 1937. This conflict—the Second Sino-Japanese War— was the culmination of multiple decades of Japanese expansionism in East Asia, beginning with the state’s annexation of Korea (1910), followed by its occupation of Manchuria (1932), and other provinces in northern China (1933). This early territorial aggrandizement was not driven by a desire to seize oil resources.10 Instead, Japan’s goal was to establish its hegemony in East Asia, so that it could effectively compete with other great powers, including Russia, the United Kingdom, and the United States (Meierding 2020, pp. 119­–121). Germany and Japan’s early acts of aggression actually constrained their access to oil, rather than enhancing it. After Germany invaded Poland, France and the United Kingdom blockaded the country, again obstructing its access to crude oil and petroleum products from the United States and the Caribbean. Since up to 85 percent of Germany’s oil resources had arrived from overseas before the war (USSBS 1947, p. 15), the blockade significantly impeded the country’s resource access. The Allies also attempted to deny oil to Germany by purchasing Romania’s resource output and booking all available means of transporting it, including rail tanker cars and river barges (Pearton 1971, pp. 244–245, 248). The Soviet Union became Germany’s leading source of foreign oil in 1939–40, due to the Allied blockade. However, while the Soviets were not yet German adversaries, they proved to be unreliable suppliers. Their oil deliveries often arrived late or fell short of promised volumes (Ericson 1999). In East Asia, the United States responded to Japanese aggression by progressively restricting the state’s access to US petroleum products. In September 1939, the Roosevelt administration extended the “moral embargo” on Japan to include the technological information and material required to manufacture aviation fuel. In August 1940, the United States limited exports of lubricants and aviation fuel. The following spring, it restricted exports of oil drums and drilling and refining equipment. Finally, in July 1941, the United States retaliated for Japan’s invasion

86  Handbook on oil and international relations of southern Indochina by freezing all Japanese assets in the United States. This policy became a de facto oil embargo, which immediately blocked Japan’s access to 80 percent of its previous oil imports (Meierding 2020, pp. 121–122, 129). Oil therefore affected the trajectory of the war in Europe and Asia, as the Allies used denial strategies to punish and constrain the Axis powers.11 The success of this denial eventually prompted Germany and Japan to launch oil campaigns, although they refrained from initiating these operations until they had exhausted all other means of obtaining needed petroleum supplies, including courting friendly oil producers, establishing barter-based oil trade agreements, developing synthetic fuel industries, and in Japan’s case, trying to persuade the United States to lift its embargo (Meierding 2020, pp. 124–30, 134–139). Japan invaded the Dutch East Indies and British Borneo from December 1941–January 1942, while also attacking Pearl Harbor and the Philippines to impede a US military response. Germany invaded the USSR in June 1941. During Operation Barbarossa, most of the German army advanced towards Leningrad and Moscow. However, Army Group South aimed to occupy the Donets industrial region, then to proceed to the oil fields of the Caucasus. The next year, Germany initiated Case Blue. One component of the campaign targeted Stalingrad, while the other, Operation Edelweiss, focused on Soviet oil resources in the Caucasus. In addition to attempting to capture oil fields for Germany, these oil campaigns aimed to deny petroleum products to the Soviet war machine (Trevor-Roper 1964, pp. 85, 89, 93, 98). The Allies responded to the oil campaigns by intensifying their efforts to deny Germany and Japan access to petroleum products. The USSR retaliated for Operation Barbarossa by deploying bombers from Odessa to attack Romania’s oil infrastructure at Ploieşti, which Germany had acquired by the end of 1940, through a “bloodless invasion.” Retreating Soviet forces also destroyed oil facilities in Maikop, in the Caucasus, to deny them to German forces (Hayward 1995, pp. 123–124, 126; Levy 1982, p. 16). The United States bombed Romanian oil facilities in 1943 in Operation Tidal Wave and intensified these attacks, along with its strategic bombing campaign against Germany’s synthetic fuel plants, in 1944 (Cooke and Nesbit 1985). In the Pacific, oil company employees destroyed oil wells and infrastructure before Japanese forces arrived (Goralski and Freeburg 1987, pp. 141–142, 182). In 1943, US aircraft carrier-based planes began to attack Japanese tankers transporting oil resources along the 5500 km route from the Dutch East Indies to Japan’s home islands (Cohen 1949, p. 142). The shortages caused by these denial strategies contributed to the defeat of the Axis. The Iran–Iraq War (1980–88) Much of the Iran–Iraq War was fought in Khuzestan, Iran’s primary oil-bearing province. As a result, some commentators have labeled the conflict a classic oil war. However, this interpretation misrepresents Iraq’s territorial war goals. Rather than aspiring to permanently annex Khuzestan, the Iraqis aimed to regain control over approximately 330 km2 of territory along the states’ shared border, which they believed that the Iranians had unlawfully occupied. They also aspired to reassert full Iraqi authority over the Shatt al-Arab, the waterway that makes up the southernmost portion of the states’ boundary, which Iraq had lost in the 1975 Algiers Agreement (Meierding 2020, pp.  94, 99‒100). Most importantly, Iraqi president Saddam Hussein aimed to defend his state against Iran’s revolutionary Islamist government, which was adopting an increasingly threatening posture towards Iraq (Gause 2002).

Oil, materiality, and interstate war  87 Oil did contribute to the war’s trajectory. The Iraqis believed that they needed to exert significant pressure on the Iranian regime in order to compel it to concede control over the contested border territories and the Shatt al-Arab. The best way to achieve that would be to deny the regime access to oil revenue and resources by temporarily seizing control over Khuzestan. Additionally, threatening Iran’s oil industry and drawing Iranian forces away from Tehran might precipitate the regime’s overthrow by facilitating a domestic coup (Meierding 2020, pp. 94, 102). To immediately interrupt Iranian oil output, during the opening week of the war, Iraqi artillery struck Iran’s massive oil refinery in Abadan and its air force bombed the state’s export terminal on Kharg Island. The Iranians retaliated by striking Iraqi oil infrastructure in Kirkuk and Sulaymaniyah. They also shut down the Iraqi port at Fao and seized oil-loading facilities in Khor al-Amaya and Mina al-Bakr (Cordesman and Wagner 1990, pp. 92­–93). The states’ attacks on each other’s oil installations would continue throughout the war. Both belligerents also targeted oil tankers in the Persian Gulf. Iraq perpetrated the first of these attacks, striking a Turkish-flagged tanker in May 1982. Both states substantially increased their strikes in 1984, with Iraq targeting tankers near Kharg Island, and Iran focusing on tankers traveling to or from Kuwaiti or Saudi ports, in order to discourage those states from supporting Iraq. In response to the Iranian attacks, in January 1987, Kuwait formally requested that the United States protect its tankers. For the last two years of the war, the US Navy reflagged and escorted Kuwaiti-owned tankers through the Persian Gulf. On two occasions, US forces attacked Iranian oil platforms, to retaliate for Iran laying mines in the Gulf and striking a reflagged Kuwaiti tanker (Cordesman and Wagner 1990, pp. 277–80, 295–302, 533–539, 569–570). Gulf War I (1990–91) Iraq’s invasion of Kuwait in 1990 is often identified as the quintessential classic oil war. The Iraqi government seized oil-endowed Kuwaiti territory, after complaining about Kuwait slant-drilling into the transboundary Rumailah oil reservoir and stealing Iraq’s oil resources. When the war began, Iraq was also facing a domestic economic crisis, intensified by low oil prices that it blamed partly on Kuwait and the United Arab Emirates (UAE) exceeding their OPEC oil production quotas. By seizing Kuwait’s oil, Iraq could control the state’s output, boosting Iraq’s share of global oil production and possibly precipitating an increase in international oil prices (Karsh 1996). These economic concerns contributed to Saddam Hussein’s decision to invade Kuwait. However, the leading aim of Iraq’s aggression was to resist a perceived threat from the United States. The Iraqi president had been suspicious of US intentions towards his regime since the 1970s. American actions from 1988–90, including remaining in the Persian Gulf after the Iran–Iraq ceasefire, threatening sanctions against the Iraqi regime, interfering with its weapons programs, and limiting Iraq’s access to the US Commodity Corporation Credit program, which allowed the government to feed its population by purchasing American agricultural products, appeared to confirm these misgivings. Saddam Hussein believed that the United States was pushing Kuwait to exceed its OPEC quota and, if the ongoing economic crisis failed to remove him from power, it would turn to other strategies, including assassination attempts and missile strikes, to overthrow him. He therefore perceived the invasion of Kuwait as defensive. And, after the conflict, he believed that he had won. Although he had lost control of Kuwait’s oil fields, he had confronted the United States in “the mother of all battles” and

88  Handbook on oil and international relations survived (Meierding 2020, pp. 144–151, 157–159). This conviction, alone, calls classic oil war interpretations of Iraq’s invasion into question. Oil did substantially affect the Gulf War’s trajectory. The fear that Saddam Hussein would interrupt regional oil movements was a leading incentive for international intervention in the conflict. As US President George H.W. Bush stated to a joint session of Congress six weeks after the invasion: Iraq itself controls some 10 percent of the world’s proven oil reserves. Iraq plus Kuwait controls twice that. An Iraq permitted to swallow Kuwait would have the economic and military power, as well as the arrogance, to intimidate and coerce its neighbors: neighbors who control the lion’s share of the world’s remaining oil reserves. We cannot permit a resource so vital to be dominated by one so ruthless (Washington Post 1990).12

Other world leaders concurred. They responded to the invasion by attempting to deny Iraq access to oil revenue. On August 6, the United Nations passed Resolution 661, prohibiting imports of all Iraqi and Kuwaiti goods, including oil. The United States and its Coalition partners also deployed naval forces to the Persian Gulf, where they interdicted Iraqi shipping, including oil tankers (McCausland 1993, pp. 8–9, 15, 36). After these initiatives failed to compel Iraq to withdraw from Kuwait, the Coalition forcefully expelled Iraq from its neighbor’s territory. Iraq responded to these international activities by attempting to deny oil revenue to Kuwait. Occupying Iraqi forces had begun wiring Kuwait’s oil fields with explosives soon after invading the country. They started to experiment with these explosives in December 1990 and, when the Coalition initiated Operation Desert Storm in mid-January, the Iraqis deliberately burned some wells and released oil from Kuwait’s Sea Island export terminal into the Persian Gulf. When the Coalition launched its ground offensive on 24 February, Iraq accelerated this destruction, setting fire to more than 700 oil wells. The Iraqis hoped that, in addition to denying oil to Kuwait, this sabotage might produce a military advantage, as the smoke from burning oil wells could impede air strikes and shield Iraqi military movements (US DoD 1998, section III). The Iraq War (2003–11) After the Gulf War, the United States maintained a large, permanent military presence in the Persian Gulf to monitor the no-fly zones in Iraq and deter further acts of aggression. This represented a continuation of US regional policy since 1980, when President Jimmy Carter increased the American military presence in the region in response to the Iran hostage crisis and the Soviet invasion of Afghanistan, and announced that the United States would defend the free flow of oil in the Persian Gulf against local and extra-regional threats, using military force if necessary (Rovner and Talmadge 2014, pp. 568–575).13 In 2001, the United States still had over 20 000 troops deployed to the region, mostly operating out of Kuwait and Bahrain (Prados 2002, p. 8). These force levels ratcheted up as the United States and its partners prepared for war in Iraq. Many observers of the United States’ 2003 invasion of Iraq accused the country of going to war for oil. However, this conflict was not a classic oil war. Contrary to popular perceptions in the United States and the Arab world (Banerjee 2003), the George W. Bush administration did not aim to seize long-term control over Iraq’s oil resources. Officials were aware that

Oil, materiality, and interstate war  89 a resource grab would alienate Iraqis, as well as the region’s broader population, provoking intense local pushback that could target the oil industry. In addition, international oil companies would not establish contracts with an occupying authority, due to the risk of physical attacks to oil infrastructure and the commercial risk that, once a sovereign Iraqi government returned to power, it would abrogate the agreements. Accordingly, the Bush administration’s pre-war oil plan was to restore Iraq’s control over the industry as soon as possible (Meierding 2020, pp. 160–164).14 Although the Iraq War was not an international oil grab, broader concerns about regional oil flows may have contributed to the Bush administration’s decision for regime change in Iraq. By 2002, prominent energy analysts were predicting that global oil demand would soon outstrip global oil supplies, leading to shortages (Morse and Jaffe 2001). Lifting international sanctions on Iraq and restoring the country’s oil production could avert—or at least delay— this scenario. However, if Saddam Hussein remained in power, any increase in Iraq’s oil revenue was dangerous, as the Iraqi leader could use the windfall to finance threatening activities, including weapons programs. Removing Hussein would eliminate that obstacle, as well as the risk of future Iraqi aggression that could destabilize regional oil flows (Muttitt 2012). Empirical assessments of this oil motive have been inconclusive. However, it would align with one of the United States’ leading goals in the Persian Gulf since at least 1980: securing the hydrocarbon commodity chain. Oil also influenced the war’s trajectory. During the lead-up to the conflict, members of the Bush administration highlighted the dangers of local attacks on oil industry infrastructure (Woodward 2004, pp. 244, 258, 381). To limit this damage and preserve Iraq’s oil output and revenue, during the invasion the United States and its partners prioritized seizing oil facilities, including export terminals on the Persian Gulf, the Rumailah oil field, and, notoriously, the Ministry of Oil in Baghdad (Gordon and Trainor 2006, pp. 182–196, 427). As the war persisted, insurgent groups also targeted oil infrastructure in order to deny resource revenue to the US-led occupying authority and, subsequently, to the Iraqi government. By the end of 2003, insurgents were regularly targeting the pipeline exporting crude from Iraq’s northern oil fields to Turkey, as well as the pipelines carrying crude to refineries around Baghdad. In 2004, these attacks expanded to the Basra area and insurgents began targeting oil industry personnel (Luft 2004). The United States responded to the attacks by creating an Iraqi oil police force to protect the pipeline network and a “pipeline exclusion zone” from Kirkuk to Baiji (Sabbagh 2007; Spinner 2004).

CONCLUSION Oil influenced the trajectories of all six of the interstate wars discussed in this chapter. Belligerents attempted to deny each other access to oil reservoirs, petroleum products, or resource revenue by interrupting each other’s oil production and transportation. They also defended their own energy infrastructure against these threats. During both world wars, some states that were denied access to oil—or feared such interruptions in the future—launched oil campaigns. Additionally, concerns about interruptions to global oil flows shaped the United States’ peacetime usage of military force in the Persian Gulf. Oil was not, however, a casus belli. Of the six wars discussed in the chapter, none clearly qualifies as a classic oil war, initiated to gain direct control over foreign oil resources. Even the

90  Handbook on oil and international relations Gulf War was driven primarily by Saddam Hussein’s belief that the United States was determined to overthrow his regime. In the subsequent 2003 Iraq War, global oil supply concerns may have contributed to the Bush administration’s decision to invade. Yet, the goal was not to seize Iraqi oil. Oil’s materiality explains these divergent dynamics. Because of the ease of interrupting the hydrocarbon commodity chain, classic oil wars do not pay. An aggressor may be able to seize foreign oil-endowed territories. However, it is unlikely to benefit from them. In contrast, the ease of interruption makes oil production and transportation networks a highly appealing target in ongoing interstate wars, because denying an adversary access to oil resources or revenue can substantially increase a belligerent’s prospects for victory. In addition, the exigencies created by these interruptions—coupled with the normative latitude that can emerge during wartime—may prompt belligerents to launch oil campaigns. Projecting forward, until oil is displaced by other energy sources, it is likely to shape the trajectories of future interstate wars. However, it will not cause them. Given the infrequency of interstate wars in the contemporary international system, these conclusions may appear inconsequential or anodyne. However, clearly delineating oil’s contributions to interstate war is vital, for three reasons. The first is academic precision: identifying the causes of war has been a core goal of IR scholarship. The second is policy effectiveness: even if interstate wars are rare events, effective conflict mitigation requires an accurate understanding of why these conflicts begin. Third, attributing wars to oil depoliticizes interstate conflict (Bridge 2011, p. 316). It erases the social and ideational incentives for war, presenting it as an inevitable, natural struggle for survival in a world of scarcity, rather than a product of human choice. This absolves aggressors of responsibility or casts them simply as villains, yielding to their baser instincts. Meanwhile, oil itself is granted a curious causal power, as if it can provoke war on its own, without human involvement (Huber 2011). Matthew Huber (2011) describes this perspective as “oil fetishism,” and critiques scholars that express it for falling into a “vulgar materialist trap.” He asserts that, to escape this trap, writers must embed oil in the “webs of relations and cultural meanings through which [it] is imagined as a ‘vital’ and ‘strategic’ resource in the first place” (ibid., p. 36).15 This chapter does not argue with Huber’s instruction. However, it also indicates that the problem with existing research on oil and interstate war is not too much emphasis on oil’s materiality, but too little. Until researchers integrate the entirety of the hydrocarbon chain, from in situ crude oil to petroleum product consumption, into their analyses, they will continue to misrepresent the relationships between oil and interstate war.

NOTES 1. For recent exceptions, see Colgan (2013), Kelanic (2020), Meierding (2020). 2. As discussed in Huber (2011, p. 36), Mitchell (2009) also uses the terminology of “following the oil.” 3. Le Billon (2001, p. 580) makes this point with regard to intrastate resource wars. 4. For related arguments, see Bridge (2011), Huber (2011), Le Billon (2001, 2007). 5. Crude oil density is measured in terms of “API gravity”: the higher the number, the lighter the crude. 6. See Boyes (2020) for a broader examination of the “extractability” of mineral resources. 7. Tight oil reservoirs can be developed more quickly. 8. Bridge also includes a final step: carbon capture.

Oil, materiality, and interstate war  91 9. Poland did possess a substantial oil industry, but Germany allowed Russia to occupy 70 percent of these fields (Goralski and Freeburg 1987, pp. 30–31). 10. Manchuria contained some shale oil resources, which Japan exploited. However, these fulfilled a very small share of Japan’s oil needs (Porter 1936, p. 11). 11. Germany also attempted to repeat its World War I denial campaign by attacking oil tankers traveling from the Caribbean to Europe (Bercuson and Herwig 2014). 12. Other incentives included a desire to defend the international norm against conquest and reinforce the “new global order” created by the fall of the USSR. 13. The Carter Doctrine was announced in the 1980 State of the Union address. 14. Claims that the United States and United Kingdom invaded Iraq to specifically benefit US or UK oil companies are also inaccurate. A sovereign Iraqi government would be able to select its preferred international partners. 15. Bakker and Bridge (2006, pp. 8, 14) express a similar concern. See also Le Billon (2001, 2007).

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Oil, materiality, and interstate war  93 Schultz, K.A. (2017), ‘Mapping interstate territorial conflict: a new data set and applications’, Journal of Conflict Resolution, 61 (7), 1565–1590. Spinner, J. (2004), ‘Iraqi oil gets its own police force,’ Washington Post, January 17. Accessed April 3, 2021 at https://​www​.washingtonpost​.com/​archive/​business/​2004/​01/​17/​iraqi​-oil​-gets​-its​-own​-police​ -force/​fd0e672e​-88dc​-4e84​-8eb6​-f2e8239c78e1/​. Strüver, G. and T. Wegenast (2018), ‘The hard power of natural resources: oil and the outbreak of militarized interstate disputes’, Foreign Policy Analysis, 14 (1), 86–106. Trevor-Roper, H.R. (ed.) (1964), Hitler’s War Directives, 1939‒1945, London: Sidgewick & Jackson. United States Department of Defense (US DoD) (1998), Environmental Exposure Report: Gulf Well Fires, last updated October 13. Accessed April 12, 2021 at https://​www​.gulflink​.osd​.mil/​oil​_well​ _fires/​index​.html. United States Strategic Bombing Survey (USSBS) (1947), The German Oil Industry, Ministerial Report, Team 78, 2nd edn, United States War Department. Washington Post (1990), ‘Bush: “Out of these troubled times … a new world order”’, September 11. Accessed on April 10, 2021 at https://​www​.washingtonpost​.com/​archive/​politics/​1990/​09/​12/​bush​ -out​-of​-these​-troubled​-times​-a​-new​-world​-order/​b93b5cf1​-e389​-4e6a​-84b0​-85f71bf4c946/​. Watts, M. (2004), ‘Resource curse? Governmentality, oil and power in the Niger Delta, Nigeria’, Geopolitics, 9 (1), 50–80. Winegard, T.C. (2016), The First World Oil War, Toronto: Toronto University Press. Woodward, B. (2004), Plan of Attack, New York: Simon & Schuster. Yergin, D. (1991), The Prize: The Epic Quest for Oil, Money, and Power, New York: Simon & Schuster.

7. Oil and Asian maritime security in the Indian Ocean Christopher Len

INTRODUCTION The ocean plays an important role in the global economy with the shipment of goods and resources from production areas to consumer markets. The security of energy supply is inextricably linked to a country’s economic functioning and growth. Even as the world undergoes a low carbon energy transition, oil is expected to remain one of the key energy resources that will be used by countries around the world. A large portion of the crude oil exported to international markets is transported by sea using tankers. Disruption to the global energy transport system, especially at maritime choke points, could seriously affect physical supplies and result in increases and volatility in the price of energy (Emmerson and Stevens 2012). As a result, maritime security has become a key national security consideration for countries that rely heavily on imported oil. This chapter examines the relationship between oil and maritime security with a focus on the major Asian economies, namely China, Japan and India, which are heavily dependent on oil imports via the Indian Ocean, as well as the role of the United States (US) as a maritime security provider. The heavy and growing reliance of these Asian economies on energy imports will make them increasingly dependent on the seaborne energy trade. Given such reliance on the sea lines of communications (SLOCs) in the Indian Ocean, China, India and Japan regard this maritime space as a national security prerogative. The issue of freedom of navigation and a safe maritime energy transportation system is a key concern for these Asian importing countries given their heavy reliance on shipping. Likewise, the US recognizes the importance of the Indian Ocean for its global energy and trade flows and its critical nature to US global interests (Schaffer 2014, p. 163). These developments come at a time when the international geopolitical landscape is increasingly volatile and complex. In this context, the importance of maritime security and ocean governance will increasingly feature on the agenda of policymakers of stakeholder countries. Interest in maritime infrastructure connectivity is also growing as these Asian economies seek to diversify their energy import routes. The 2008 United Nations (UN) General Assembly Report to the Secretary-General noted that there is no universally accepted definition of ‘maritime security’, as different meanings apply depending on the context and the users. The concept of maritime security can range from narrow interpretations involving the safeguarding of territorial integrity of a state against direct military threats from the sea, to broader definitions that include crimes at sea such as piracy, armed robbery against ships and terrorism, as well as unlawful damage to the marine environment that affects the interests of coastal states such as illegal dumping and the discharge of pollutants. The report further notes that maritime security threats today are transnational and interconnected in nature, which could potentially undermine human security, and argues that a new vision of collective security is required for the twenty-first century 94

Oil and Asian maritime security in the Indian Ocean  95 (United Nations 2008, pp. 15–16). In this vein, maritime security in the Indian Ocean is to be understood in the broadest terms, given the complicated nature of the Indian Ocean dynamics due to its geographically expansive nature and the number of stakeholders and extra-regional actors engaged in this maritime space. In Asia, the strategic competition for regional leadership between competing regional powers is under way, affecting maritime security dynamics, including the scope and nature of cooperation between the different actors. From a neoliberal perspective, the sharing of common interests and potential economic benefits serves as a motive for cooperation. However, this is not a sufficient condition for cooperation to take place among the Indian Ocean actors. From a realist viewpoint, considerations toward relative power among competitive nation-states focused on self-interest would determine the level of cooperation and explain the current regional dynamics. However, such rationalist thinking would only form part of the explanation. Both neoliberalism and realism share a common assumption that states are rational actors functioning within an anarchic international system, which can sometimes result in cooperative behaviours between states based on the logic of self-interest. Social constructivists would further add that the perception of common interest and relative power capabilities are dependent on the social relations among the actors. In other words, how actors relate to and identify with each other is based on their level of shared beliefs and norms, and attitudes towards one another, and this would, in turn, determine their willingness to cooperate (Wendt 1999; Gupta 2010, p. 79). In the case of the Indian Ocean, the combination of interests, power and ideational factors explain the lack of a strong regional maritime regime in place. While there is recognition of the need to develop a new cooperative regime in view of the growing importance of the ocean as an economic driver, divergences in political, economic, social, cultural and religious profiles, historical interstate mistrust and sensitivities over state sovereignty, as well as the lack of resources and disagreement on burden sharing, have stifled multilateral cooperation among the littoral states (Gupta 2010, pp. 60, 265). This chapter, which focuses on the role of the regional actors, proceeds in three main sections. The first examines the Indian Ocean as a strategic maritime space, focusing on the role of the United States as a security provider, and how this adds context to the concept of maritime cooperation in the Indian Ocean. The second section examines future global demand of crude oil, the energy profiles and the role of oil imports for the three major economies of Asia – namely, China, Japan and India – in order to explain the importance of the Indian Ocean to these three major Asian economies. The third section examines the growing strategic distrust and maritime contestation taking place in the Indian Ocean, covering the approaches, attitudes and responses of China, India, Japan and the United States within this maritime space. As will be explained in this section, China warrants the most attention given its proactive efforts at securing its maritime energy supply chain. A final section summarizes the argument and provides a conclusion.

THE INDIAN OCEAN AS A STRATEGIC MARITIME SPACE The Indian Ocean is a macro-region which connects East Africa, the Middle East, South Asia and Australasia (Southeast Asia and Australia). It is also an enclosed strategic maritime space linked to four key international maritime choke points that are critical to global energy

96  Handbook on oil and international relations security. There is the Suez Canal (Egypt), which connects the Middle East to Europe; Bab el Mandeb (Djibouti‒Yemen) between the Horn of Africa and the Middle East; and the Strait of Hormuz (Iran‒Oman) leading out of the Persian Gulf. Finally, there is the Straits of Malacca and Singapore (SOMS) located between the Malay Peninsula and Sumatra – under the maritime authority of Indonesia, Malaysia and Singapore – linking the Indian and Pacific Oceans, which also serves as the shortest route between the African and Persian Gulf oil and gas shipments and the Asian consumers (EIA 2014b). The littoral states surrounding the Indian Ocean have fast-growing economies with densely populated coastal cities, and a population dependent on the sea for its livelihood. They face a range of challenges, from civil war and interstate conflict, to non-traditional transnational challenges such as natural and man-made disasters, environmental degradation, migration, piracy and terrorism. The region’s strategic maritime landscape is being shaped by two key trends at sea. The first is the growing importance of the Indian Ocean as a pre-eminent shipping route and major conduit for the global energy and trade routes, with some of the most critical SLOCs and choke points. The second is China’s rise as a maritime power and its ongoing efforts to develop a network of military and commercial facilities and relationships in this maritime space – which rising middle power India regards as its ‘backyard’ – as a means to safeguard its energy and trading routes. The United States is the traditional principal global actor protecting international energy markets and SLOCs, and acting as the regional stabilizer in the Indo-Pacific. However, its interest and ability to perform these roles, particularly in the Indian Ocean, have been called into question, with a rising China challenging American dominance on various fronts. Japan as a middle power has been reaching out to like-minded partners across the region to balance against Chinese’s growing influence (Suzuki 2020). Meanwhile, India’s maritime consciousness has also increased since the 1990s, with the Indian navy expanding its sphere of operations after realizing the importance of safeguarding the Indian Ocean SLOCs (Hiranandani 2018). In light of the rise of both China and India and the growing roles of the United States and Japan, both the Indian and the Pacific Oceans are now regarded as integral strategic spaces within the Asian region, from the perspective of improving military and economic connectivity, including the securing of SLOCs. The Chinese have the Belt and Road Initiative (BRI), while the concept of an ‘Indo-Pacific’ region – geographically referring to the connection between the Indian and Pacific Oceans – has emerged as a strategic and geopolitical counter-concept among like-minded democratic states seeking to counter China’s BRI (Suzuki 2020). As a result, this is the most likely arena where India and China will enter into a dynamic great-power rivalry in the twenty-first century (Kaplan 2009). Such competition is reshaping Asia’s wider strategic landscape. The Role of the United States The United States is the traditional security provider in maritime Asia through its naval presence, and has an interest in protecting the international energy markets by ensuring freedom of navigation and the security of SLOCs. However, it lacks a coherent strategy in the vast Indian Ocean. First, the three regional commands – namely the Indo-Pacific Command (Third and Seventh Fleet), Africa Command (Sixth Fleet) and Central Command (Fifth Fleet) – cover different parts of the Indian Ocean. Besides such fragmented commands, the United States also lacks the alliance structure in the Indian Ocean that it has in the Pacific (Len 2017, p. 52).

Oil and Asian maritime security in the Indian Ocean  97 US involvement in the Indian Ocean only grew after the Second World War as this maritime space was essentially under the control of the British Empire during the nineteenth century and the first half of the twentieth century (Pillailamarri 2015). US naval presence in the Indian Ocean expanded – focused mainly on the Arabian Sea portion of the Indian Ocean – from the 1960s onwards, following three developments. First was the establishment of the US naval and military base in Diego Garcia, located in the southern Indian Ocean, from the 1960s. Second was the withdrawal of the British from east of the Suez Canal in 1971. The third development relates to the First Persian Gulf War in 1991. Naval operations during this war were primarily undertaken by the Seventh Fleet based in the Pacific Ocean, under the US Pacific Command. Subsequently, the Fifth Fleet – which was initially established in 1944 for operations against the Japanese during the Second World War in the Central Pacific, and subsequently deactivated in 1947 after the war ended – was reactivated in 1995 to demonstrate increased US commitment in the Middle East, with it being responsible for operations in the Persian Gulf, Red Sea, Arabian Sea and parts of the Indian Ocean under the US Central Command in Bahrain (Pillailamarri 2015). More recently, in May 2018 the US Pacific Command was symbolically renamed the US Indo-Pacific Command in recognition of the increasing connectivity between the Indian and Pacific Oceans and the growing strategic importance of India to the United States. In April 2020, the outgoing US Secretary of the Navy, Kenneth Braithwaite, proposed the re-establishment of the First Fleet in or closer to the Indian Ocean to bolster US presence in this part of the Indo-Pacific. However, it remains to be seen whether the United States has the resources and support of regional partners to do so (Rej 2020; Khan 2021). It has been pointed out that US presence in the Indian Ocean is not as old or as deep when compared to its presence in the Atlantic and Pacific Oceans (Pillailamarri 2015). Furthermore, while still the dominant power, the US military’s relative decline, its global retreat and wavering security commitment espoused during President Donald Trump’s administration, coupled with US domestic political distractions and economic woes, plus the rise of China as a strategic competitor, means that the United States is no longer perceived as the pre-eminent global leader that is able to rally the resources to create an Indian Ocean regime. Nonetheless, these latest developments described above make it clear that the United States is paying more attention to the Indian Ocean amid China’s rise as a strategic competitor and its growing influence in the Indian Ocean. US‒India Engagement There is now a concerted effort to engage India under the new Biden administration, and a new willingness by India to develop bilateral stronger ties in response to the escalating rivalry towards a more assertive China. While India still has a traditional policy of non-aligned strategic autonomy – and there remains lingering scepticism among some concerning the reliability of the United States as a partner – a growing number of Indian strategists are starting to argue over whether India’s strategic autonomy would be enhanced by a strategic partnership with the United States, since it would reinforce India’s regional status and influence in the Indian Ocean. There is bipartisan support in Washington, DC for US‒India ties (Smith 2020). The two sides had crafted the US‒India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region in January 2015, under President Barack Obama, ‘as leaders of the world’s two largest democracies that bridge the Asia-Pacific and Indian Ocean Region’ (White House 2020).

98  Handbook on oil and international relations Subsequently, under the Trump administration, they had also agreed on a number of arms deals – ranging from military helicopters to short-range air defence systems and maritime patrol aircraft – and signed military cooperation agreements. Of significance are the four foundational agreements for strategic ties that demonstrate the growing relationship between the two sides over the years, namely the General Security of Military Information Agreement (GSOMIA) signed in 2002, with an extension, the Industrial Security Annex (ISA), signed in 2019; the Logistics Exchange Memorandum of Agreement (LEMOA) signed in 2016; the Communications Compatibility and Security Agreement (COMCASA) signed in 2018; and the Basic Exchange and Cooperation Agreement for Geo-Spatial Cooperation (BECA) signed in October 2020 (PTI 2020). They have also carried out a diverse series of increasingly advanced military naval exercises, from hunting submarines to refuelling at sea (Smith 2020). This is in addition to Exercise Malabar, which started as bilateral naval exercises in 1992 and has been annual since 2002, and which has also involved other key US strategic allies: Japan (in 2007, 2009, 2011 and annually since 2014) and Australia (in 2007 and 2020). Despite the growing ties, it is unlikely that bilateral relations will develop into a full-fledged alliance. First, there has been disagreement between the two sides towards the United Nations Convention on the Law of the Sea (UNCLOS) with regard to freedom of navigation and the need for consent from coastal states, and this divergence in legal stance may impact on the scope of their maritime security cooperation (Singh 2016). In fact, the United States has been conducting freedom of navigation operations (FONOPs) worldwide towards many states, including its partners and allies. In this regard, it has also targeted what it perceives as India’s excessive maritime claims since at least 1992, with the latest – at the time of writing in April 2021 – FONOP conducted on 7 April 2021 (Purohit 2021; Smith 2021). Another factor that may limit cooperation between the two sides is India’s traditional dependence on Russian arms, which could cloud military ties with Washington, especially after the United States imposed sanctions on Russian military exports (Miglani 2018; Detsch and Gramer 2021). Maritime Security Cooperation Aside from US‒India bilateral relations, a larger question to consider, in the context of the non-traditional challenges facing the Indian Ocean littorals, is to what extent India, as the resident power, together with China and Japan, as the extra-regional powers, can be prepared to initiate a new collective security regime; and what role the United States would perform under such an arrangement. As major stakeholders of the Indian Ocean, and regional Asian powers, India, China and Japan share a common interest to ensure that the Indian Ocean SLOCs remain unimpeded, safe and secure from disruptions. An ideal situation would be the formation of a maritime security community involving all the actors in the maritime sector in the Indian Ocean (Bueger 2015, p. 163). This draws on the idea of a security community first proposed by Deutsch et al. in 1957. This is when a group of states integrate to a point where a collective identity drives political cooperation, with a fundamental convergence of interests in the avoidance of military conflict as a means to settle disagreements and disputes (Deutsch et al. 1957; Deustch 1968, pp. 158–202). Bueger describes a maritime security community as one involving maritime stakeholders working together to identify common threats and determine collective responses, where actors share information and coordinate their activities on a day-to-day basis, and foster collective security based on a common understanding and

Oil and Asian maritime security in the Indian Ocean  99 tools. This is, therefore, a distinct form of security governance that sets itself apart from other security arrangements such as alliances (Bueger 2015, p. 163). In reality, maritime security cooperation and ocean governance tend to be based on mixed motives among the different stakeholders and can thus be described as hybrid in nature. This hybridity can be understood to describe ‘something that is mixed, unclear, or blurry, a mélange, a variety of elements bound or appearing interlinked and co-constitutive’ (Buitrago and Schneider 2020, p. 157). The mode and degree of cooperation is shaped by particular maritime environments, regional and interstate dynamics, whether there is a collective vision based on shared norms or urgent single issues that require practical compromises, as well as the presence and strength of flexible and adaptive structures that can accord legitimacy (Buitrago and Schneider 2020, p. 170). In the Indian Ocean, there are multinational frameworks, such as the Indian Ocean Rim Association (IORA), the Indian Ocean Naval Symposium (IONS) and the Western Pacific Naval Symposium (WPNS), but the diversity of actors and interests suggests limits to their effectiveness and a low level of common denominators. An example of an urgent single issue facilitating maritime security cooperation as an international public good in the Indian Ocean is the case of anti-piracy operations in the Gulf of Aden and off the Horn of Africa. Piracy and armed robbery off the coast of Somalia bolstered the common recognition of the importance of safe passage and freedom of navigation, and thus provided the legitimate basis for international cooperation (Buitrago and Schneider 2020, pp. 161–165). The United Nations Security Council adopted a series of UN Security Council Resolutions (UNSCRs) condemning (UNSCR 1816) and then requesting (UNSCR 1838, 1846, 1851) nations to fight piracy on the high seas of Somalia and with permission to act against piracy camps in Somalia (Henry 2016, p. 12). This led to the creation of a multinational naval coalition known as the Combined Maritime Forces (CMF) drawn from 34 nations, and the creation of a Maritime Security Transit Corridor (MSTC). The CMF is commanded by a US Navy Vice Admiral, who also serves as Commander US Naval Forces Central Command and US Fifth Fleet, and all three are located at the US Naval Support Activity in Bahrain. It is organized into three principal task forces, namely the Combined Task Force 150 (maritime security and counter-terrorism), Combined Task Force 151 (counter-piracy) and Combined Task Force 152 (Persian/Arabian Gulf Security Cooperation). The European Union (Operation Atalanta; formally known as the European Union Naval Force, or EU NAVFOR), India, China and Russia also have their own ongoing independent anti-piracy operations in the Gulf of Aden and the Horn of Africa. Between 2008 and 2016, the North Atlantic Treaty Organization (NATO) was also involved in anti-piracy initiatives in the Gulf of Aden and the Horn of Africa, working alongside the EU’s Operation Atalanta, the US-led CTF 151 and other individual countries such as China, Japan and South Korea (Athanase and Uranie 2016). The following section explains the importance of the Indian Ocean for the energy security of China, India and Japan.

THE FUTURE OF OIL AND DEMAND IN ASIA Oil Will Remain a Primary Fuel Source in Asia The primary global supply of energy has traditionally been based on fossil fuels. According to the BP’s ‘Statistical Review of World Energy 2020’, fossil fuels, excluding nuclear energy

100  Handbook on oil and international relations (4.4 per cent), made up 84.3 per cent of primary energy consumption in 2019, with oil accounting for the largest share, at 33.1 per cent, followed by coal at 27 per cent and gas at 24.2 per cent (BP 2020b, p. 4). While the global low carbon energy transition is under way, the switch to renewables will be a gradual and long process taking decades (Smil 2010, 2013). While there is an increasing sense of urgency in tackling global warming, with efforts towards decarbonization, the transition will take time given the huge amounts of fossil fuel-based infrastructure investments and embedded activity in the global economy (Takahashi 2020; Yergin 2020). The pace will be based on a range of factors, from the security of supply and demand, to affordability, environmental considerations, technological innovation, success at economic disentanglement from a carbon economy, public policy effectiveness and societal behaviour. The International Energy Outlook 2019 (EIA 2019) reference case released by the United States Energy Information Administration (EIA) in September 2019 projects an increase of nearly 50 per cent in world energy usage between 2018 and 2050, with strong economic growth driving demand, particularly in non-Organisation for Economic Co-operation and Development (OECD) Asia – a group that includes China and India – which makes up more than half of the projected increase in global energy consumption (EIA 2019; EIA 2020c, pp. 25–26). The report also notes that energy demand in non-OECD Asia is already greater than that in other regions in 2018, and it will be the largest and fastest-growing region in the world in terms of energy consumption between 2018 and 2050, due to population growth and the shift in energy-intensive manufacturing to the region, particularly India. This growth will in large part be driven by China and India, which have been the world’s fastest-growing economies for much of the past decade (EIA 2020c, pp. 25–26). In addition, the use of all primary energy sources will increase throughout the period, and while renewable energy is experiencing the world’s fastest growth, much of the world’s energy demand will still be met by fossil fuels (EIA 2020c, p. 32). According to the EIA report, as a share of primary energy consumption at the global level, petroleum and other liquids will see a decline from 32 per cent in 2018 to 27 per cent by 2050. However, on an absolute basis, oil consumption will experience an increase in the industrial, commercial and transportation sectors while seeing a decline in the residential and electric power sectors (EIA 2020c, p. 32). Based on this projection, the demand for oil is thus expected to remain resilient into the future; or at least to be difficult to write off. The International Energy Agency’s ‘World Energy Outlook 2020’ also stated that ‘in the absence of a larger shift in policies it is still too early to foresee a rapid decline in oil demand’ (IEA 2020, p. 18). Growing mobility patterns in the developing economies will lead to rising demand, offsetting reductions in oil use elsewhere. Furthermore, while the use of electric passenger vehicles will increase, the projected oil demand for use on long-distance freight and shipping would depend on the wider global economy and international trade. In addition, as demand for plastics rises, oil as a feedstock in the petroleum sector will also contribute to future demand (IEA 2020, p. 18). Natural gas will be the world’s fastest-growing fossil fuel, increasing by 1.1 per cent per year compared to the annual 0.6 per cent growth of liquid fuels and 0.4 per cent growth in coal. Renewables and natural gas are expected to replace coal, as a result of cost considerations and policy drivers. In the case of non-OECD Asia excluding China, coal use will increase in the 2040s, as a result of increased industrial usage and use in electric power generation (EIA 2020c, p. 32). The supply of liquid fuels – including crude oil, lease condensate, natural gas plant liquids (NGPLs) and other liquid fuels – will reach 121.5 million barrels per day (bbl/d) in 2050,

Oil and Asian maritime security in the Indian Ocean  101 marking an increase of 21 per cent from 2018. By 2050, non-Organization of the Petroleum Exporting Countries (OPEC) countries will account for 56 per cent of global crude oil production. With OPEC accounting for 44 per cent of global oil supplies in 2050, growth in OPEC crude oil and lease condensate production will largely concentrate in the Middle East, making it a critical region during the projected period (EIA 2020c, pp. 124–126). In sum, oil is expected to remain an important source of energy for China, India and Japan. They rank as the three largest oil consumers in Asia and are second, third and fourth in global ranking after the largest consumer in the world, the United States, which consumes 20 466 000 bbl/day (BP 2020b, p. 20). These three Asian economies are also the three largest liquified natural gas (LNG) and coal importers in the world. The country energy import profiles below reveal their heavy reliance on international primary energy imports by sea, and the importance of the Indian Ocean as a key energy lifeline; particularly so, given their long-term reliance on Middle Eastern and African hydrocarbon producers. China As a result of its steady and rapid economic growth, growing population and urban development and industrialization, China’s energy demand has been growing rapidly in the past four decades. In 2019, China accounted for more than three-quarters of net global energy growth (BP 2020a, p. 2), and it has been the largest contributor to global growth since 2001 (BP 2019). China’s total primary energy consumption in 2019 consisted of coal (57.6 per cent), followed by oil (19.7 per cent), hydroelectricity (8.0 per cent), natural gas (7.8 per cent), renewables (4.7 per cent) and nuclear energy (2.2 per cent) (BP 2020b, p. 9). It is the largest oil consumer in Asia at 14 127 000 bbl/day in 2019, and the second-largest consumer country of oil in the world (BP 2020b, p. 20). Its consumption volume has far outpaced domestic production since it first started importing crude oil and oil products in the 1990s. China became the largest net importer of crude oil and other liquid fuels in the world in 2014 (EIA 2014a). Its consumption growth accounted for an estimated two-thirds of incremental global oil consumption in 2019 (EIA 2020a, p. 3). China has made a concerted effort to diversify its oil import sources globally. In 2019, China’s crude oil imports came from a diverse range of sources internationally, with the Middle East constituting the largest source of imports at 44 per cent, followed by Africa at 18 per cent. Table 7.1 shows China’s crude oil imports by source. With the exception of imports via overland pipelines from the former Soviet Union, which is composed primarily of Russia (15 per cent), 84 per cent of its import volume is by sea, making China heavily dependent on the global maritime supply chain, particularly the Indian Ocean for oil imports from the Middle East and East Africa. China is also heavily dependent on maritime shipping for its natural gas imports. In 2018, China became the second-largest LNG importer after Japan (EIA 2018). In 2019, 62 per cent of China’s natural gas imports was in the form of LNG, with supplies from Australia (29 per cent of total gas imports), Qatar (9 per cent of total gas imports), Malaysia (7 per cent of total gas imports), Indonesia (5 per cent of total gas imports) and Papua New Guinea (3 per cent of total gas imports). China is also the world’s largest coal importer, with 46 per cent of its imports coming from Indonesia, followed by Australia (26 per cent).

102  Handbook on oil and international relations Table 7.1

China’s crude oil imports by source, 2019

Region

%

Country breakdown

%

Middle East

44

Saudi Arabia

16

Iraq

10

Oman

7

Kuwait

4

UAE

3

Iran

3

Others

1

Africa

Former Soviet Union

Western Hemisphere

18

16

15

Angola

9

Congo

2

Libya

2

Others

5

Russia

15

Others

1

Brazil

8

Colombia

3

Venezuela

2

Others

2

Asia-Pacific

3

Asia-Pacific

3

Europe

3

Europe

3

Source:  EIA (2020a, p. 6).

India India’s total primary energy consumption in 2019 consisted of coal (54.7 per cent), followed by oil (30.1 per cent), natural gas (6.3 per cent), hydroelectricity (4.2 per cent), renewables (3.6 per cent) and nuclear energy (1.2 per cent) (BP 2020b, p. 9). It is the second-largest oil consumer in Asia at 5 274 000 bbl/day in 2019, and the third-largest consumer country of oil in the world (BP 2020b, p. 20). As a rapidly developing country with a growing population, and increasing urbanization and industrialization, India has been witnessing significant increases in energy demand. Table 7.2 shows India’s crude oil imports by source. It shows that India is even more dependent on Middle Eastern crude oil than China, with 59 per cent of imports from the region in 2019, followed by imports from the Americas (17 per cent) and Africa (16 per cent). It thus relies almost entirely on maritime shipping, with all oil imports arriving via the Indian Ocean. India was the fourth-largest LNG importer in 2019. Having made recent efforts at diversification, its main suppliers in 2019 were from Qatar (41 per cent), the United Arab Emirates (11 per cent) and Oman (4 per cent) in the Middle East (56 per cent); Africa (23 per cent), the United States (8 per cent) and Australia (4 per cent) (EIA 2020b, 10). India is also the second-largest coal importer after China, although it has been making attempts recently to bolster domestic coal development so as to rely less on imports. In 2019, Indonesia (49 per cent),

Oil and Asian maritime security in the Indian Ocean  103 Table 7.2

India’s crude oil imports by source, 2019

Region

%

Country breakdown

%

Middle East

59

Iraq

22

Saudi Arabia

19

UAE

9

Kuwait

5

Iran

2

Others

2

Americas

Africa

17

16

Venezuela

7

United States

4

Mexico

4

Others

1

Nigeria

8

Others

8

Others

6

Others

6

Asia and Oceania

2

Asia and Oceania

2

Source:  EIA (2020b, p. 7).

Australia (20 per cent) and South Africa (16 per cent) were the three largest import sources, followed by the United States (5 per cent) and Russia (3 per cent) (EIA 2020b, p. 14). Japan Japan’s total primary energy consumption in 2019 consisted of oil (40.3 per cent), followed by coal (26.3 per cent), natural gas (20.8 per cent), renewables (5.9 per cent), hydroelectricity (3.5 per cent) and nuclear energy (3.2 per cent) (BP 2020b, p. 9). It is the third-largest oil consumer in Asia, at 3 827 000 bbl/day in 2019, and the fourth-largest consumer country of oil in the world (BP 2020b, p. 20). Japan’s energy demand has been levelling off, having passed its rapid post-Second World War industrial growth phase, and being a developed economy faced with a sluggish economy since the 1990s. As an island state lacking in significant reserves of fossil fuels except coal, Japan relies entirely on maritime shipping for its fossil fuel imports. Table 7.3 shows Japan’s crude oil imports by source. Among the three major Asian oil importers, Japan is the most dependent on Middle Eastern crude oil imports (at 84 per cent), followed by negligible imports from Russia (5 per cent) and the United States (2 per cent). Japan is almost entirely dependent on maritime shipping for its natural gas imports in the form of LNG, and was the largest LNG importer in 2019, accounting for 22 per cent of the global LNG market (EIA 2020d, p. 6). It has a diversified import portfolio from South East Asia (23 per cent), the Middle East (18 per cent), Oceania (44 per cent) – consisting of Australia (39 per cent) and Papua New Guinea (5 per cent) – Russia (8 per cent), the United States (5 per cent) and other countries (2 per cent). Japan was the third-largest coal importer in 2019, behind China and India. Besides being the largest source for LNG, Australia was

104  Handbook on oil and international relations Table 7.3

Japan’s crude oil imports by source, 2019

Region

%

Country breakdown

%

Middle East

84

Saudi Arabia

36

UAE

29

Qatar

9

Kuwait

8

Oman

2

Former Soviet Union

5

Russia

5

Americas

2

United States

2

Others

9

Others

9

Source:  EIA (2020d, p. 4).

also the largest coal importer to Japan, at 60 per cent in 2019. The other two key coal import sources were Indonesia (15 per cent) and Russia (11 per cent). Energy Supply Chains and Maritime Security This high level of energy import dependency by the major Asian economies has translated into concerns about the energy supply chain and recognition of the need to enhance maritime energy transport security. An energy supply chain can be understood as: a process under which oil, gas and petroleum products are transported from the point of origin, that is oil wells through refineries, to final destinations, that is consumers, and includes the movement of these goods on board carriers on road, on the rail, and over the seas including pipelines. The process also involves the transfer of shipping data both written and electronic and the associated processes, thus creating a dynamic link between different participants. (Sakhuja 2008, pp. 149–50)

An efficient energy supply chain is contingent on a safe and secure route. Any serious disruption along the energy transportation system would impact upon the global economy, interfere with business continuity and entail economic loss, particularly for the energy import-dependent economies. There are at least seven infrastructure systems that merit attention, namely: (1) gas and oil wells; (2) pipelines and pumping stations; (3) refineries and tank farms; (4) loading terminals and ports; (5) transportation systems; (6) information technology (IT)-related data exchanges; and (7) carriers both on land and at sea (Sakhuja 2008, pp. 150–152). These systems are susceptible to both traditional and non-traditional challenges, ranging from traditional conflicts involving deliberate acts by state actors, to non-traditional security risks such as natural disasters, accidents and hostile acts by non-state actors such as piracy and terrorism. From a maritime security perspective, the energy supply chain can be broadly separated into two categories, which constitute very different security challenges and require different approaches along the SLOCs: stationary energy facilities located on the coast or offshore, and components of the transportation systems that could include both deep sea pipelines (they do not apply to the countries covered here) and shipment by tankers (Averill 2010, pp. 13–14). Overland transit pipelines are comparatively more vulnerable than transportation by tankers. First, they are hard to protect, given that they extend across long distances and over

Oil and Asian maritime security in the Indian Ocean  105 remote areas. Second, the hydrocarbon flow can be significantly, if not completely, disrupted as a result of a single point of damage, whether accidental or intentional. Third, they are subject to obsolescing bargains. This refers to the shift in relative bargaining power between the investor and the host country over time. The investor initially holds stronger bargaining power when negotiating with the host government on the terms of the investment, but as the fixed asset develops, the bargaining power gradually shifts towards the host government, which can hold the asset hostage and impose more conditions or change the investment terms on the investor (Vernon 1971). For example, China has already encountered this, when the transit pipeline it built to deliver oil into Yunnan via Myanmar was completed in 2014 but did not start flowing until 2017 as the Myanmar authorities sought better terms of the deal (Len 2017, p. 50). Fourth, there are limits to direct action in rectifying pipeline disruptions as this would be perceived as interference in the domestic politics of the transit host states. In contrast, a single tanker that is damaged at sea will not result in any major disruption to the rest of the tanker fleet, resulting at most in diversification to alternative routes (Len 2017, p. 50). That said, the inability of tankers to transit a major choke point, even temporarily, can lead to substantial supply delays, higher shipping costs and higher world energy prices (EIA 2017). For instance, the March 2021 incident where a grounded container ship blocked the Suez Canal for six days disrupted the global seaborne trade. It resulted in a 47 per cent increase in cost to rent some tankers for voyages between the Middle East and Asia; and could have caused a greater impact on the global energy market beyond the increased cost of the diverted routes, to become security of supply issues, particularly for the LNG cargoes, had the disruption lasted longer (Faucon et al. 2021).

MARITIME CONTEST IN THE INDIAN OCEAN China’s Growing Maritime Presence and Influence The logic of cooperation to enhance energy security in the Indian Ocean through maritime security cooperation has been marred by great power rivalry, zero-sum thinking and ideational differences. Specifically, China’s growing engagement in the region has been viewed suspiciously by India, Japan and the United States. Among the three major Asian oil importers, China warrants the most attention when it comes to the securing of the maritime energy supply chain. First, it is the largest importer of oil and most dependent on the Indian Ocean SLOCs. While it has sought to diversify its supply sources using overland pipelines from Russia, analysts have long pointed out that these overland supplies by themselves are unable to increase China’s import security significantly (Erickson and Collins 2010, p. 2). Second, it has difficult security relations with the United States, India and Japan despite growing economic ties with them. Third, it has been the most vocal in expressing the need to enhance its overseas energy transport security. Since the 2000s, Chinese scholars have begun to identify China’s reliance on international SLOCs and potential disruption at key maritime choke points as a strategic vulnerability (Ji 2000). Chinese President Hu Jintao was reported to have directly expressed concern over China’s heavy reliance on the Malacca Strait and the consequences of a military blockade for oil and gas shipments to China (Len 2017, p. 43). Fourth, China’s maritime consciousness has been growing in tandem with its increasing international interests, including energy imports. China has been unable to attain energy

106  Handbook on oil and international relations self-sufficiency through domestic production due to its strong energy demand growth. As the country’s import dependence increased over the years, this sense of vulnerability – of being unable to protect its interests and assets along these critical SLOCs located in the far seas – became a serious concern given its traditional emphasis on self-reliance. This provided a powerful imperative for the Chinese to develop China’s naval capabilities to protect its overseas rights and interests, to ensure unimpeded access along the strategic SLOCs, and to diversify its energy import sources where possible (Erickson and Goldstein 2009). Like Japan and India, China has participated in the Gulf of Aden anti-piracy operations from 2008. In 2011, a People’s Liberation Army (PLA) navy frigate supported the evacuation of 35 000 Chinese citizens from Libya after the outbreak of civil war. These two cases reinforced China’s belief in the need to develop long-range naval capabilities to protect its rights and interests overseas, and to have a sustained naval presence in the Indian Ocean. These factors served as a key motivation for the official strategy to develop China into a maritime power, as announced in November 2012 at the 18th National Congress of the Communist Party of China (CPC). It also provided justification for the emphasis on the safeguarding of China’s overseas and maritime rights and interests, including its energy interests, in various Chinese defence White Papers, key BRI documents on energy and maritime cooperation and official speeches (Len 2015, pp. 5–6; Len 2017, pp. 44–49). Fifth, there are China’s global military ambitions. At the 19th Party Congress held in October 2017, CPC General-Secretary Xi Jinping announced China’s goal to complete national defence and military modernization by 2035, and to build a world-class military by the middle of the twenty-first century (Fravel 2020; Xi 2017). Kaplan has linked this process to the creation of a new Chinese empire based on roads, railways, energy pipelines and shipping ports that spans the lower Eurasian land mass from Central Asia to Iran, extending along the maritime edges of the Eurasian continent, from the South China Sea, across the Indian Ocean and ending in the eastern Mediterranean and the Adriatic Seas. Linked to this development is China’s effort as a traditional continental power to develop into a strong maritime power, where the heart of the new empire will be the Indian Ocean, which serves as what Kaplan characterizes as the ‘global energy interstate’ connecting hydrocarbon fields from the Middle East to East Asia (Kaplan 2019). With China’s strong emphasis on self-reliance, it is seeking to address its strategic vulnerability in the face of geostrategic disadvantages in the Indian Ocean (Brewster 2015). Its priority is therefore to develop a network of relationships and facilities that could provide it with greater strategic space and operational autonomy in the Indian Ocean, in order to ensure its SLOC security, particularly of its seaborne energy imports. China’s approach has been to unilaterally improve relations with the smaller littorals in the Indian Ocean, rather than focus on engagement with India and the other extra-regional actors such as the United States and Japan (Len 2017, pp. 47, 51) First, it is working to improve access port and logistical facilities for the PLA Navy in friendly littorals to bolster its power projection capabilities. These facilities can be in the form of military support or of a supply base. For instance, China opened its first overseas military base in Djibouti in 2017, around the Horn of Africa, close to the Bab-el-Mandeb choke point. As part of its BRI cooperation, China has also invested in commercial port facilities that have dual-use potential in Gwadar in Pakistan, Hambantota in Sri Lanka and Kyaukphu, Myanmar. It has also committed to various infrastructure and connectivity projects in the Maldives, the Seychelles and Bangladesh. These commercial relations and improved diplomatic ties

Oil and Asian maritime security in the Indian Ocean  107 are expected to facilitate port visits by the Chinese navy even if there are no formal basing agreements. Second, China has been seeking to diversify away from its reliance on the SOMS and to shorten delivery time by developing new land-based pipeline transit routes connecting shipments from the Middle East, Africa and the offshore fields in the Indian Ocean via friendly littorals such as Myanmar and Pakistan. The Myanmar‒China oil and gas pipelines, which in fact predate the BRI, start from the western coast of Myanmar in the Bay of Bengal, continue into China’s Yunnan Province and are already operational today. While delivery volumes are low in the context of China’s overall energy demand, one cannot rule out future investments to add capacity along this established route (Len 2017, p. 49). The China‒Pakistan Economic Corridor (CPEC), which was launched in 2015, aims to link Pakistan’s southern Gwadar port on the Arabian Sea with Xinjiang Province in China. It is one of the flagship projects of the BRI. There have been discussions on building oil pipelines along this route which, if realized, would reduce the oil transportation route from 10 000 km – based on oil tankers travelling from the Persian Gulf via SOMS – to a mere 2500 km using overland pipelines (Len 2017, p. 49). However, serious questions remain on its economic and technical feasibility (Garlick 2018). Strategic Distrust Impeding Cooperation As a rising power and extra-regional stakeholder in the Indian Ocean with an interest in safeguarding the regional order, China can contribute to the provision of public goods and services through its navy and infrastructure and connectivity plans. China is also perfectly entitled to develop relations with any state it chooses. Furthermore, China, India and Japan share a common interest to ensure the stability of the Indian Ocean. However, the prospect for cooperation among these major actors towards safe, secure and unimpeded SLOCs is overshadowed by larger geostrategic considerations and zero-sum thinking. China’s growing engagement strategy and influence in the Indian Ocean has stirred suspicion in India, Japan and the United States. Within the Indian strategic community there is widespread suspicion towards China’s presence in the Indian Ocean (Prakash 2011; Abraham 2015; Sokinda 2015; Kapila 2015; Khurana 2016; Upadhyaya 2017). Beijing’s ability to engage India is limited by Delhi’s own perception of being the natural and pre-eminent leader in the Indian Ocean, given its economic heft, political weight and geostrategic location on the South Asian continent (Andrews-Speed and Len 2016). The prevailing belief is that China, as an extra-regional power, is attempting to marginalize India in the Indian Ocean and thwart its rise through its active diplomatic, economic and military engagement of India’s littoral neighbours (Len 2018). Meanwhile, Japan also perceives China’s growing activities in the Indian Ocean as a form of power projection, and regards China as a strategic competitor of its alliance partner, the United States (Len 2017). Critics have accused Beijing of attempting to foster a client‒patron relationship of dependency with the smaller littorals in the Indian Ocean through the BRI (Singh 2015, p. 184). While there are potential synergies to work with China, India and Japan are concerned that, as China’s maritime capabilities grow and it manages to co-opt the smaller littorals in support of a Sino-centric regional vision, their own interests along the SLOCs will be negatively affected (Len 2017, p. 51). Critics also believe that China’s activities will provide military advantages for Chinese far-seas operations with the development of the PLA navy’s blue-water capabilities beyond the requirements of counter-piracy and humanitarian activities. This could, for

108  Handbook on oil and international relations instance, include maritime-based intelligence collection against state adversaries and resilient logistics networks critical to sustaining operations in a conflict environment (White 2020). Some analysts warn that China may become less deterred in the use of its military in times of confrontation in the Taiwan Strait, East China Sea and South China Sea if it is able to secure its energy lifelines across the Indian Ocean (Tata 2017). The overarching geostrategic concern is that China’s plan to create overland pathways to the Indian Ocean through infrastructure investments, and its efforts to develop a sustained – if not permanent – naval presence, have the potential to transform China from being an extra-regional power to a resident power in the Indian Ocean, thus enhancing its strategic deterrence capabilities. This would diminish the strategic advantage that India and the United States have as the dominant maritime powers in this enclosed strategic maritime space, and undermine their ability to control maritime access (Brewster 2017, p. 288). As a result, India and Japan have been developing their own bilateral strategic relationships, framed in the context of shared democratic values. There is also the parallel multilateral effort through the development of ‘The Quad’, which is a shorthand for the Quadrilateral Security Dialogue between the United States, India, Japan and Australia to promote the shared vision for a free and open Indo-Pacific and rules-based maritime order, anchored by democratic values (White House 2021). It marks a response to the growing concern among these Quad members towards China’s growing regional assertiveness and influence, and their perception of Beijing’s rising hegemonic aspirations against the regional interests of these key democracies. This has translated into a greater willingness among the Quad members to push back against China (Paskal 2021), and to offer their own development initiatives in the region. A key factor in such a rivalry would thus be how the smaller littorals along the Indian Ocean region respond and manage the great power rivalry and courtship.

CONCLUSION This chapter has examined the importance of Indian Ocean maritime security to the major Asian oil import-dependent economies in the context of these shifting geostrategic dynamics, as well as the role of the United States. It is noted that oil will feature as an important source for energy for China, India and Japan, and these importers will continue to rely heavily on maritime energy trade, with the Indian Ocean serving as the global energy connection, linking Middle Eastern and African producers with the major Asian economies. While China, India and Japan, together with the United States, share a practical and common interest to ensure the stability of the Indian Ocean, particularly in addressing non-traditional security challenges, larger geostrategic considerations, zero-sum thinking over traditional security issues and ideational differences – between China on one side, and pro-democratic India, Japan and the United States on the other – have overshadowed prospects for cooperation in the Indian Ocean. To put things in perspective, however, it is important to remember that China’s interest in the Indian Ocean is driven by a defensive logic of self-reliance, with the objective of rectifying its strategic vulnerability in the Indian Ocean as it seeks to secure its energy supply chain. Beijing has not expressed any desire to play any leadership role in the Indian Ocean. While the Chinese regard the Indian Ocean as a strategic maritime space providing essential energy lifelines, it has attached more attention and resources to core maritime interests involving state sovereignty and territorial integrity in the South China Sea, East China Sea and the Taiwan

Oil and Asian maritime security in the Indian Ocean  109 Strait which borders the Chinese coastline in East Asia. The question is whether Beijing’s intentions will evolve from protecting its own maritime energy lifelines, and transform into broader hegemonic aspirations with the improvement of its capabilities and through successfully entrenching its influence among the smaller littorals along the Indian Ocean. As a global energy connector, the Indian Ocean is more likely to develop as a venue for great power competition rather than a maritime security community.

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PART II OIL, POWER AND POLITICAL ORDER

8. The geopolitics of oil: the United States in the twentieth century Gregory Brew

Petroleum became a strategically important resource in the early twentieth century. Within 50 years, it had risen to become an element of unique significance in the strategic and economic calculations of nation-states. Oil products are essential to modern warfare, heavy industry, transportation, and a host of other activities. Secure access to adequate supplies of petroleum, otherwise known as energy security, has played a significant role in the international affairs of the great powers. In several crucial instances, it has been key to whether states are able to remain great powers or slide irrevocably into relative decline (Toprani 2019b; Kennedy 1987). The geopolitics of oil has changed considerably over the course of the last century (Toprani 2019a, 2019c). It has been affected by a combination of political and economic factors. The price and available supply of oil have historically been subject to frequent volatility (McNally 2017). While this is in part due to the nature of oil exploitation, political changes in oil-producing and oil-consuming areas often intervene to disrupt the global oil market. Furthermore, actors frequently collude to affect changes in the price and supply of oil: from 1900 to 1973 with private oil companies acting as an oligopoly, and after 1973 the Organization of the Petroleum Exporting Countries (OPEC) attempted to act as a producers’ cartel, albeit with limited success. While oil obeys certain market principles and displays a recognizable price cycle, geopolitics plays a significant role in shaping how the oil market functions (Jaffe 2020, pp. 1‒9). Several factors have remained relatively constant. The first is geography. Oil deposits are scattered unevenly across the globe, often in remote or thinly populated regions far from major industrial centers. For states that are not endowed with their own national petroleum reserves, accessing, securing, and exploiting distant reserves can pose an insurmountable challenge. The second is geology. Once production in a field begins, the field’s rate of production will decline until output falls to nothing, though advances in technology can extend the life of a field for a period of time. Oil never fully runs out (Adelman 1996, pp. 26‒27). But exploiting it in an affordable, sustainable fashion requires a mastery of geological conditions and access to the resources (capital, technology, and so on) needed to sustain that mastery. The third factor is the role of non-state actors—particularly private international oil companies (IOCs)—in the discovery, production, refining, transportation, and marketing of oil products. Though governments have historically exerted considerable control over oil policy, for much of the twentieth century private corporations played a key role in assisting national governments in their pursuit of energy security (Yergin 1991; Cowhey 1985; Sampson 1975; Jacoby 1974). The fourth and final factor is the shifting balance of power between oil-producing and oil-consuming states. With two major exceptions—the United States and the Soviet Union/ Russia—most great powers have lacked indigenous petroleum deposits and have attempted to overcome this obstacle by controlling the oil resources of another state or region. Throughout 114

The geopolitics of oil  115 the twentieth century, oil-producing states have pushed back against the coercive influence of great powers, resulting in either conflict or cooperation, depending on the circumstances (Garavini 2019). The notion of “wars for oil” has long fascinated scholars and readers, particularly when deployed in the context of the Middle East, the world’s most prolific oil-producing region (Klare 2002). Seldom do states go to war to seize the oil resources of other states (Meierding 2018). Yet it is often argued that oil lies at the heart of many interstate and intrastate conflicts (Colgan 2013). A desire for oil played a major role in the strategic decisions of the belligerent states in World War II, though it existed alongside other economic, ideological, or strategic interests. Whether conflicts can be defined as “oil wars” or whether they fall into another analytical category does not alter the fact that oil resources have generally inspired conflict and driven states and non-state actors to employ force. This chapter explores how the geopolitics of oil has changed over the course of the twentieth century. A brief conclusion suggests how the geopolitics of oil in the twenty-first century differs from the previous century. While access to oil has been a concern for all great powers, the United States has dominated oil internationally and utilized it as a means of advancing its strategic interests. This chapter emphasizes the ways in which oil contributed to the rise of the United States to the status of global superpower in the twentieth century.

COAL TO OIL: A STRATEGIC ENERGY TRANSITION Energy security was a prevalent concept during the nineteenth century, where the international coal market was dominated by the British Empire (Shulman 2015). Those states seeking to expand their industrial and military power had to secure adequate supplies of coal (Mitchell 2011). This was possible for the great powers—the United Kingdom, France, Germany, Russia, and the United States—due to the fact that they each possessed abundant domestic supplies as well as the capital resources, technology, labor, and infrastructure to exploit those supplies independently. A desire for markets, interstate competition, the growth of global trade, and a hunger for territory fed the expansion of European empires in the latter half of the nineteenth century, much of it facilitated by weapons forged in factories and moved in ships powered by coal. Yet utilizing coal to project power abroad came with some significant limitations. The fuel was bulky and difficult to move. Coal-fired ships needed large teams of stokers to shovel coal into the engines and consumed coal in large quantities, requiring frequent refueling stops. Empires facilitated this process by establishing overseas coaling stations situated along major trade routes. As the predominant maritime empire and naval power, Britain possessed the largest network of coaling stations. Yet the advantages of petroleum as a fuel, one that allowed for longer uninterrupted voyages and faster maneuvers during combat, were clear by the early twentieth century (Toprani 2019b, pp. 2‒3). In 1912, First Lord of the Admiralty Winston Churchill and Admiral John Fisher convinced Parliament to facilitate the conversion of the Royal Navy from coal to petroleum (Yergin 1991, pp. 153‒156). Other aspiring naval powers, including Germany and the United States, followed suit. Churchill’s decision mirrored the rise of a series of new technologies, including the automobile and the airplane, that relied on the internal combustion engine fed by gasoline, a byproduct of petroleum. The potential for these technologies to revolutionize warfare was

116  Handbook on oil and international relations made abundantly clear during World War I (1914‒18), where petroleum was consumed in large quantities and oil-powered weapons provided a crucial advantage in combat. The significance of coal as a source of energy did not decline in absolute terms, as coal remained the dominant fuel source in Europe until the 1960s. But petroleum had emerged as an important strategic resource necessary to the prosecution of modern warfare and the projection of power. And it was a resource which the United States possessed in abundance, unlike the other great powers (with the exception of Russia), which lacked domestic reserves of their own.

1900‒1941: OIL AND THE GREAT POWERS Commercial petroleum production in the United States began in 1859 with the discoveries in Titusville, Pennsylvania. By 1900 the United States possessed the world’s largest and best-developed petroleum industry. The United States made up the majority of global oil production in 1914. It would retain this dominant position for half a century, retaining roughly 60 percent of production until 1945 (Philip 1994, p. 29). The United States was also the world’s largest consumer of petroleum and petroleum products: oil accounted for one-fifth of the energy consumed in 1925, and one-third by World War II (Pobodnik 2006). The national industry was dominated during its early decades by the Standard Oil trust, a corporate assemblage founded and controlled by the industrialist John D. Rockefeller. Originally focused in the northeast and upper midwestern oil fields of Pennsylvania and Ohio, the center of the American oil industry shifted in the early twentieth century following discoveries in Texas in 1901 and California in the 1890s (Yergin 1991, pp. 65‒70). By 1911, when the Supreme Court of the United States ordered the Standard Oil monopoly to dissolve and broke the company into smaller units, the United States (US) industry was becoming focused in the Gulf of Mexico, while new sources of oil were developed outside the United States. Between 1880 and 1911, the world’s most prolific non-American oil fields were in Russia, Romania, Mexico, and the Dutch East Indies (Painter 1986, pp. 3‒10). All of these fields were developed by companies drawing on British or American capital, led by either Standard Oil (or, after its break-up in 1911, one of its successor firms) or Royal Dutch/Shell, an Anglo-Dutch company. Russia was briefly the world’s largest oil producer (from 1898 to 1901), though war and revolution caused Russian production to collapse by 1920, after which it slowly recovered (Goldman 1980, pp. 15, 22). While oil was not particularly scarce before 1914—markets were more often weighed down by persistent surplus, producing frequent price volatility—competition between the large international firms encouraged exploration, while strategic interest drove oil-poor states to secure overseas deposits that could prove useful in the future. This frequently took place within colonial territories, such as the Dutch East Indies, or areas where colonial powers could bring their influence to bear, such as the Middle East. In 1901, the British industrialist William Knox D’Arcy signed an agreement with the Qajar Shah of Iran. The agreement was a commercial concession granting D’Arcy the right to search for and exploit any oil he found within a 500 000 square mile area (Ferrier 1982, pp. 69‒106). British engineers discovered oil in Iran in 1908, and in 1914 the United Kingdom (UK) government purchased a majority stake in the fledgling commercial enterprise, the Anglo-Persian Oil Company (APOC, later British Petroleum or BP). The decision was made for strategic reasons. The United Kingdom was dependent on oil imported from the United States and

The geopolitics of oil  117 Mexico, and it was believed that reserves in the Middle East would be more useful during wartime, reducing British dependence on the United States (Toprani 2019b, pp. 34‒36). Interest in oil drove British policy in the Middle East after World War I. Having occupied the former Ottoman territory in Mesopotamia, the British formed the Kingdom of Iraq out of the provinces of Basra and Baghdad, combining them with the oil-rich region around Mosul (Jones 1977, pp. 647‒672; Kent 1976). The carving up of the Middle East’s oil fields aroused the suspicions of the United States, which was beset by its own post-war oil scarcity scare. The Wilson administration pushed US oil companies to enter the Middle East, demanding that an “open door” be granted to all commercial concerns regardless of their nationality. The United States, France, and the United Kingdom eventually came to an agreement in 1928, satisfying American concerns over commercial equitability while offering the United Kingdom and France access to the region’s oil deposits on favorable terms (Stivers 1983, pp. 23‒24; Hogan 1974, pp. 187‒205). Private companies acted as instruments of state power. The United Kingdom, for instance, supported BP’s efforts to expand its operations in Iran due to the strategic interest in retaining control of Iranian oil, and out of an effort to maintain influence in Iran and throughout the Persian Gulf region. Following a constitutional revolution in 1906‒11, Iran was beset by internal political upheaval and frequent foreign interventions. In this context, the British oil company created an enclave around the southern oil fields and the refinery city of Abadan. British-backed tribesmen and a powerful Arab sheikh in Mohammerah provided local security and insulation from the weak, disorganized central government. This allowed the company maximum security and autonomy. A similar pattern emerged in Mexico, where Anglo-American oil companies were able to secure favorable treatment from local elites without interference from the national government. These comfortable terms facilitated rapid increases in production. Mexican output grew from 476 000 barrels per day (bpd) to 1.36 million bpd between 1915 and 1920 (Philip 1982, p. 18). Local resistance to these terms of control complicated this security, however. In Mexico, rising nationalism in the wake of the 1910‒20 revolution inspired militancy in the Mexican oil fields. Labor unions put pressure on national leaders, who pushed back against the autonomy enjoyed by foreign companies (Santiago 2006, pp. 61‒147). In Iran, a new government emerged from the 1921 coup d’état led by Reza Shah Pahlavi. Following rounds of contentious negotiations, the shah cancelled BP’s concession in 1932 (Brew 2017, pp. 115‒148). In both instances, however, private capital supported by the great powers were able to outmaneuver local nationalists. In Mexico, declining productivity and rising local resistance encouraged companies to shift their investments elsewhere. Venezuela, ruled by a pliant authoritarian dictator, became the new focus of company attention during the 1920s, where output rose to 289 000 bpd in 1928, and exceeded 3 million bpd in 1931, allowing Venezuela to overtake the Soviet Union as the world’s second-largest oil producer and top crude exporter (Rabe 1982, p. 34). In Iran, the UK government put pressure on the Shah, demonstrating its military might in the Persian Gulf and arguing on behalf of BP in the League of Nations. The Shah eventually capitulated during negotiations, signing a new concession in 1933 (Brew 2017, pp. 138‒148). Despite these successes, energy security from access to overseas petroleum was not assured. The United Kingdom, for instance, invested heavily in Middle East oil and believed the oil fields of Iran and Iraq would give it security from dependence supplies from the United States and Venezuela. But long lines of communication and lack of sufficient tanker capacity made

118  Handbook on oil and international relations the Middle East an insecure source. By the late 1930s, it was clear to British policymakers that in the event of a major war, the United Kingdom would become dependent on American supplies of oil, just as it had been during World War I (Toprani 2019b, pp. 119‒133). Energy security for the British Empire rested on maintaining good relations with the United States. While the search for overseas oil before 1941 benefitted private corporations, in geopolitical terms the imbalance present in 1914 remained in effect. The only great powers that enjoyed secure access to oil were the United States and the Soviet Union, which each possessed indigenous oil industries with ample reserves securely within their own borders.

1941‒45: OIL AND TOTAL WAR Despite its dependence on the United States, the United Kingdom was fortuitously positioned to fight a war based on foreign oil supplies. The Royal Navy, together with Anglo-American diplomatic, commercial, and cultural links, mitigated the British weakness. While there was no guarantee of the United States entering a European war, the United Kingdom could hope for friendly economic and financial support from the Roosevelt administration by the summer of 1940, when the United States began a rearmament campaign in response to the German victories on the Western Front (Tooze 2007, pp. 402‒403). While dependence on the United States was clearly not tenable in the long term, in the event of a war the United Kingdom could be reasonably certain of adequate petroleum supplies from the Western Hemisphere. For other great powers, however, the geographic distribution of global oil reserves and the limited ability to project power into regions already dominated by British or American corporations represented impediments to strategic autonomy. France possessed a share of the joint concession in Iraq, but otherwise had to purchase oil from other sources. For revisionist powers such as Italy, Japan, and Germany, the imbalance in global oil presented obstacles which could conceivably only be overcome through military action, including territorial conquest. Like the United Kingdom, Japan in the 1930s depended on imported oil from the United States, a state of affairs which Japanese policymakers regarded as intolerable. As the only strategically obtainable petroleum reserves in the Pacific were in the Dutch East Indies, Japanese plans for a general war in the region were premised on occupying these islands, a course of action which would certainly precipitate war with the United Kingdom and the United States (Yergin 1991, pp. 333‒350). Italy did not target oil-producing regions per se, but the fascist government of Benito Mussolini did intend to expand Italian hegemony in the Mediterranean and Africa, threatening British access to Middle East oil after the Italian invasion of Ethiopia in 1935 (Toprani 2019b, pp. 101‒108). With no oil reserves of its own, Germany was equally hamstrung. Thanks to the technological ingenuity and capital resources in the private sector, particularly of the chemical giant IG Farben, Germany developed methods for producing synthetic petroleum products processed through coal hydrogenation (Tooze 2007, pp. 117‒119). This energy-intensive method was enough to secure gasoline supplies for Germany’s peacetime economy. However, after 1933 the Nazi government conceived of continental economic independence secured through conquest. Adolf Hitler envisioned extending German control to the oil fields of the Soviet Union, particularly the oil-rich regions of the Caucasus. While conquest was the basis of the long-term German strategy, producing synthetic oil and securing oil from friendly countries—most

The geopolitics of oil  119 notably Romania, which became a major German supplier after 1939—met German needs in the short term (Toprani 2019b, pp. 220‒225; Hayward 1995, pp. 94‒135). Initial successes were not enough to secure lasting energy security. The German victories in 1939 and 1940 saddled it with an immense and energy-starved continental empire, taxing its limited oil supplies. Offensives in North Africa and Eastern Europe did not yield much in the way of oil resources, and by 1944 Germany was fighting a multi-front war (in the East, West, and in the air) with dwindling fuel supplies. In the Pacific, the Japanese effort to secure adequate oil supplies faltered in the face of inadequate transportation and insecure lines of communication. Japanese tankers ferrying fuel were vulnerable to American submarines. The lack of secure transportation meant that Japan had to defend its sprawling Pacific empire with diminishing stocks of fuel. A turn towards kamikaze attacks in 1945 was encouraged in part because such attacks had a reduced impact on total fuel supplies, requiring only enough fuel for a one-way journey (Yergin 1991, pp. 359‒361). By contrast, the Allied powers were able to draw on the immense petroleum reserves available to the United States and Anglo-American companies in Latin America. In 1941, the United States accounted for 46 percent of global reserves and 63 percent of global production (Painter 1986, p. 9). While German submarines threatened Allied energy security for a brief period in 1942, Allied naval and air supremacy, convoy tactics, and improved methods for safeguarding supply routes mitigated the U-boat threat. These supplies gave the Allies a decisive edge over the Axis, as neither Germany nor Japan succeeded in securing accessible sources of petroleum (Stoff 1980).

1945‒54: THE COLD WAR AND THE POST-WAR PETROLEUM ORDER The immense pressure placed on American reserves, by both the war effort and the booming civilian economy, increased American interest in securing overseas deposits once the war was over. This interest was complicated after 1945 by the emerging geopolitical, economic, and ideological contest between the United States and the Soviet Union. The two superpowers were in radically different positions. The United States was both the world’s largest producer and consumer of petroleum products, accounting for 53.5 percent and 52.7 percent of the respective global totals in 1950. Total reserves grew from 20.8 billion barrels in 1945, to 30 billion barrels in 1955, thanks to continued exploration and discovery. The requirements of the war and a growing domestic economy threatened to sap domestic oil reserves, however, and by 1950 the American ratio of reserves to consumption had fallen from 14:1 to 11:1 (Painter 1986, p. 97). Fears of post-war shortage encouraged an active global oil policy. Preference was given to securing oil through private means, with the US government backing American companies in the major oil-producing regions of Latin America and the Middle East. Believing that access to cheap petroleum would help accelerate the economic reconstruction of Western Europe and Japan and act as a bulwark against the spread of political unrest (which the United States linked to the influence of the Soviet Union), the United States encouraged the companies to feed Middle East oil into the Marshall Plan. The US government financed $1.2 billion in oil purchases, most of which went to American or British oil companies active in the Middle East oil fields (Painter 1984, p. 375). The post-war petroleum order, as historians have termed it,

120  Handbook on oil and international relations linked the US government to major oil companies, consumers in Western Europe and Japan, and oil-producing states (Yergin 1991, pp. 391‒412). The American position, in other words, could be described as generally favorable. While domestic reserves had been depleted by the war, Anglo-American corporations possessed the means to deliver Middle East and Latin American oil to Western markets in large quantities. The cartelistic tendencies of the major companies and the weak position of producer states meant that this oil could be produced and moved at low cost (Cowhey 1985, pp. 1‒23). This facilitated a massive increase in the production and consumption of petroleum and petroleum products in the West. Between 1950 and 1972, oil rose from 29 percent of total energy consumption to 46 percent. In Western Europe and Japan, oil was 59.6 percent and 73 percent, respectively, of total energy consumption by 1972 (Painter 2014, pp.  189‒190; Schneider 1983, pp. 49‒75). Coal as a share of total energy consumption in Western Europe plummeted from 75 percent to 22 percent between the mid-1950s and 1972 (Graf 2018, p. 20). By comparison, the post-war energy situation of the Soviet Union—like its general economic position—could be described as precarious. Having sustained immense damage during the war, the Soviet Union was not in a position to increase domestic oil production, despite the existence of large untapped fields in the Ural-Volga region and in Siberia, due to a lack of capital and equipment (Painter 2010, pp. 489‒490). Like the United States and the United Kingdom, the Soviet Union had a strategic and economic interest in the oil of the Middle East. In March 1946, Stalin refused to withdraw Soviet troops from northern Iran, demanding the Iranian parliament grant a Soviet oil concession covering the country’s five northern provinces. Adroit diplomacy by the Iranian Prime Minister and pressure in the United Nations eventually forced Stalin to back down (Egorova 2017, pp. 79‒103; Westad 2007, pp. 60‒64). While Soviet influence inside the oil-producing Middle East grew during the 1950s and 1960s, it could not challenge the supremacy of Western oil companies. Retaining control over Middle Eastern oil was simultaneously a venture of private capital and a strategic endeavor, one that mixed public and private actors (Citino 2010, pp. 227‒251). To maintain the support of local governments, oil companies agreed to split profits along a “50:50” division. New concessions greatly increased the amount of money oil-producing states earned from the companies during the 1950s. Oil revenues were used to fund economic development programs, frequently drawing in expert assistance from Western companies and development firms. While the United States maintained a consistent interest in the major oil-producing regions, the United Kingdom remained the military hegemon of the Persian Gulf. The British relied on a network of bases, including two airfields in Iraq, installations in Cyprus and Aden, and treaty relationships with its client states Kuwait, Oman, Qatar, and the Trucial Arab states to maintain a regional influence that ensured the free flow of oil from the companies’ fields (Fain 2008; Ovendale 1996). Anglo-American power and cooperation with the oil companies was crucial in preserving the post-war petroleum order and Western energy security. In 1951, Mohammed Mosaddeq, the nationalist Prime Minister of Iran, nationalized the country’s British-owned oil industry. The United States attempted to mediate a diplomatic solution to the crisis, hoping to persuade Mosaddeq to accept terms which would allow private oil companies to maintain control of Iran’s industry. Negotiations failed in early 1953 and the Eisenhower administration opted to remove Mosaddeq by covert action. An alliance of British and American operatives, working with anti-Mosaddeq forces including Iran’s monarch, the Shah, successfully overthrew the

The geopolitics of oil  121 Mosaddeq government on August 19, 1953 (Byrne and Gasiorowski 2004; Brew 2019, pp. 38‒59). The new government of Iran received $45 million in US aid and carried out a series of policies designed to achieve American goals. The first was the suppression of Iran’s indigenous communist party, the Tudeh Party, which the United States believed acted as a Moscow proxy. The second was the acceptance of an oil agreement that allowed a consortium of Anglo-American oil companies to retake possession of the Iranian oil industry (Gasiorowski 1991, pp. 90‒91). While the Shah’s government accepted a 50:50 deal and stood to profit from the renewal of oil exports, the agreement reached in October 1954 confirmed Western control of Iranian production (Heiss 1994, pp. 511‒535). The geopolitics of oil in the early Cold War was thus premised on an imbalance of power that heavily favored the United States and the private oil companies. In 1954, arguably the high-water mark of the post-war petroleum order, the United States and its allies effectively controlled the entire non-Soviet global oil supply. This situation allowed the United States to supply itself and its allies with vast amounts of cheap petroleum, facilitating a rapid post-war economic recovery and a prolonged period of prosperity in the Western world, one that would last until the early 1970s. The Soviet Union, in contrast, failed to secure access to any significant oil reserves outside its own borders (with the exception of Romania).

1954‒80: THE ENERGY SHOCKS AND THE OPEC ENERGY ORDER The geopolitical oil balance favoring the United States slowly changed from 1954 to 1973. This was due to a series of economic and political factors, affected by geography, geology, the actions of non-state actors, and the shifting relations between oil-producing and oil-consuming states. The first factor was the surge in Soviet oil production in the 1950s. Investment in the rich deposits in the Volga-Ural region facilitated the United Socialist Soviet Republic’s (USSR’s) rise to become the second-largest oil producer by 1960. Between 1960 and 1970, Soviet production increased from 3 million bpd to 7.1 million bpd, with much of the oil exported to Soviet client states in Eastern Europe or sold to Western European consumers. Imported at low prices, Soviet oil began to crowd out the oil sold by the Western majors, contributing to a supply glut in the late 1950s and early 1960s (Painter 2017, p. 285). Another factor was rising resource nationalism in the Global South. While oil-producing states were discouraged from nationalizing in the aftermath of the Iran coup of 1953, pressure from resource nationalists in the producer states never fully abated (Dietrich 2017). The rise of the Arab nationalist government of Gamel Abdul Nasser in Egypt and the Suez nationalization crisis illustrated the continued potency of resource nationalism in the Global South. The Suez crisis also illustrated the danger such action posed to US control of oil resources: while Egypt was not a major oil producer, shutting down the Suez Canal threatened European access to Middle East oil, which now had to make the long journey around the Cape of Good Hope (Galpern 2009, pp. 178‒191). Actions by nationalists in Syria in 1957, and the fall of the pro-Western Hashemite monarchy in Iraq in 1958, indicated that the durability of the political order that ensured continued energy access for the United States and its allies was growing more fragile (Brew 2015, pp. 89‒109; Yaqub 2004).

122  Handbook on oil and international relations This fragility was further illustrated by the formation of the OPEC in 1960. The organization included the major oil-producing states of Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela, and would add Libya, Algeria, and Indonesia. Formed in response to a series of price cuts in the global oil price by the major companies, OPEC initially struggled to find a clear mandate. Pro-Western governments in the group led by Saudi Arabia were interested in securing a greater share of oil profits from the companies. States politically opposed to the United States, including Algeria and Iraq, pushed for more radical measures (Garavini 2018, pp. 116‒134). Iran emerged as a key US ally in the mid-1960s. As a result, it received favorable treatment from the companies, while the Shah used his oil revenues to purchase advanced weaponry from the United States. Iran’s relative geopolitical position increased in the wake of the British decision to exit the Persian Gulf in 1967. The Shah was made the new “guardian of the Gulf” in 1969 and outfitted with a virtually unlimited supply of US weaponry to assist him in protecting the flow of Gulf oil (Sargent 2015, pp. 141‒146; Alvandi 2014). Other states more hostile to the United States, such as the nationalist regime in Iraq, received less favorable treatment and saw their production and revenues stagnate for much of the 1960s (Saul 2007, pp. 746‒792). In 1969, geopolitical changes in the Global South coincided with alterations in the political economy in the West to usher in a revolution in global oil. First, a group of army officers led by Muammar Qaddafi overthrew the pro-US King of Libya. Qaddafi threatened to nationalize the country’s oil industry unless the oil companies offered better concession terms (Sampson 1975, pp.  225‒226). In 1971, the other members of OPEC followed suit, led by the Shah of Iran, who was hoping for an increase in both production and price. The companies were divided over how to deal with the challenge of OPEC, and received intermittent support from the US government. As a result, OPEC states successfully forced the companies to accept price increases between 1969 and 1973, while also committing them to eventual nationalization of their concessions (Garavini 2018, pp. 195‒209). The continued surge of oil demand in the West outran the companies’ ability to invest in new supply. In the United States, production peaked in 1971 and began to decline, signifying the shift in power to the oil-producing states of the Global South, which now accounted for the bulk of the oil consumed in Western Europe and Japan and were the major source of future supply for the United States (Sargent 2015, pp. 151‒155). Imports increased from 19 percent to 35 percent of total US consumption between 1971 and 1973 (Garavini 2018, p. 190). An energy report in August 1973 warned that dependence on imports would leave the US economy vulnerable to a sudden disruption (Qaimmaqami 2011, pp. 579‒580). This warning presaged the events of October 1973. When Arab states attacked the US ally Israel, Arab oil producers used the crisis to place an oil embargo on the United States. The producer states in OPEC seized the opportunity to unilaterally impose an increase in the price of oil from $3/barrel to nearly $13/barrel (Garavini 2018, pp.  217‒228; Skeet 1988). The sudden quadrupling of oil’s price had a profoundly shocking effect on the economies and politics of the West, compounding an energy crisis that had begun several years before (Stein 2010). It also accelerated a wave of nationalizations in the oil-producing states that had begun in Iraq and Algeria in 1972. By 1980, the companies had lost control of most concessions in the Middle East. The geopolitical shift of the first oil shock of 1973 indicated a period of dependence for the United States and its allies. Imports were estimated to exceed 50 percent of total US consumption by the 1980s. While considerable reserves had been discovered in Prudhoe Bay

The geopolitics of oil  123 in northern Alaska, it was assumed that the bulk of future imports would come from OPEC, specifically from Arab oil producers (Yergin 1991, pp.  551‒556). OPEC was suddenly in a position to exert real international influence, using the “oil weapon” deployed during the 1973 crisis to affect changes to the international balance of power. The mid-1970s saw increased speculation over whether the United States should use military power to recover control of Middle East oil (Ignotus 1975). Such ideas were impractical, for a variety of reasons. For one thing, a direct military intervention to seize foreign oil was a flagrant violation of international law. In the period of heightened regional tensions after the October War, such a move would have brought international condemnation. It was also unlikely that the oil fields could be taken without incurring heavy damage, rendering them unusable and negating the original strategic intent of the operation (CRS 1975). Rather than use military force, the United States spent the 1970s strengthening its ties to key oil producers. The leading OPEC states, Iran and Saudi Arabia, remained important US allies responsible for ensuring the security of Persian Gulf oil. Both states chose to invest the bulk of their new oil wealth in US investments, such as arms and financial products (McFarland 2019; Gray 2016, pp. 172‒197). Iran purchased $22 billion in US weapons between 1970 and 1979, while Saudi Arabia purchased $3.5 billion (Jones 2012, p. 212). While the United States and its allies attempted to pull themselves away from dependence on OPEC, in the near term these efforts were unsuccessful. In geopolitical terms, however, the oil revolution did not seriously affect US access to Middle East oil. Research has shown that the Arab oil embargo of 1973 was ineffective and the US experienced only a temporary disruption in supplies (Adelman 2002, pp. 169‒191). Of far greater significance was OPEC’s success in raising the price of oil, an action largely orchestrated by the Shah of Iran, an important US ally. While this punished US consumers and helped to depress the American economy, it served US strategic interests to see the Shah’s regime strengthened, as a more powerful Iran could ensure the security of the Gulf. In 1979, however, the Shah’s government in Iran collapsed. The Islamic Revolution triggered strikes in Iran’s major oil fields and sent the country’s oil production from 6 million bpd to nearly zero in 1980. Total OPEC production fell from 30 million bpd to 26 million bpd, causing the price to shoot up to $30/barrel by July 1980, producing a second oil shock (Schneider 1983, pp. 422‒456). The supply shock triggered a second price increase and altered the balance within OPEC. With Iran sliding towards an anti-Western strategic posture, the Soviet invasion of Afghanistan in December 1979, and the outbreak of the Iran‒Iraq War in September 1980, the United States embraced a full military commitment to defending its access to Persian Gulf oil, ending its policy of relying on proxies (Carter 1980). The Carter Doctrine announced in January 1980 formalized the US commitment to maintaining a permanent military presence in the Persian Gulf. The explicit purpose of this commitment was preventing any power from threatening the continued free flow of oil from the Gulf to the global market on which the United States and the rest of the industrialized world depended. In that sense, it represented both an important shift in the geopolitics of oil as well as a sign of continuity. The United States had retained a strategic interest in Middle East oil since the 1920s. The difference after 1980 lay in the US willingness to use direct military force against any actor that threatened access to Middle East oil, for either the US or its allies.

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1980‒PRESENT: THE POST-OPEC OIL ORDER AND THE GEOPOLITICS OF OIL IN THE ANTHROPOCENE In ideological terms, the rise of OPEC and the end of private corporate control of oil in the Global South had a profound impact on the American national psyche. Yet, in geopolitical terms, US energy security was not adversely affected in any inordinate capacity by the oil revolution of the 1970s. While the oil shocks of that decade were certainly dramatic, they have not been repeated in the subsequent decades and American energy security has remained the same; by some estimates, it has improved. This is for several reasons. The first is the durability of the US partnership with major oil producers in the Middle East, specifically Saudi Arabia. The ties between Riyadh and Washington, DC grew closer in the 1970s. While this did not govern all Saudi actions—the decision to rapidly increase production in 1985, tanking global prices and asserting Saudi leadership over OPEC, comes to mind—concern over the US‒Saudi alliance would continue to influence Saudi oil policy for the remainder of the twentieth century and beyond (McFarland 2019). The second reason is US military hegemony in the Middle East. During the 1980s, US military forces intervened in the Iran‒Iraq War, targeting the Iranian navy after Iran began attacking Iraqi oil tankers. The United States also reflagged tankers to secure them from attack. The most spectacular display of the new US role as guardian of the Gulf was Operation Desert Storm in 1991. While President George H.W. Bush and his advisors were careful not to characterize the campaign as a “war for oil,” the campaign was clearly inspired by the Carter Doctrine. Had Iraqi President Saddam Hussein retained control of Kuwait, it would have placed 20 percent of global oil reserves in Iraqi hands (Hurst 2009, pp.  83‒113). “An Iraq permitted to swallow Kuwait,” Bush said in September 1990, “would have the economic and military power … to intimidate and coerce its neighbors—neighbors who control the lion’s share of the world’s remaining oil reserves” (Bush 1990). It is admittedly difficult to gauge the full impact on the global oil market of the US military commitment to the Gulf. It is nevertheless true that American military might protected US access to Middle East oil in the latter decades of the twentieth century. After 2000, however, this military power appeared less necessary. This is due to the third important factor to have altered the geopolitics of oil since 1980: namely, the diversification of supply in the global oil market and the transformation in the global price mechanism. Non-OPEC oil surged in the aftermath of the second oil shock. The Soviet Union overtook the United States in the mid-1970s, and Soviet production surpassed 12 million bpd in 1980 (Painter 2017, p. 286). Russia remained an important oil and gas producer after 1991, and in the early twenty-first century emerged as a key supplier of fossil fuels to markets in Western Europe. Other non-OPEC sources such as Canada, China, Norway, Alaska, and the United Kingdom also came on line during the 1980s. While major exporters like Saudi Arabia could still influence prices by raising or lowering output, in general prices became much more fluid and volatile (McNally 2017). The concept of the OPEC “cartel” has become suspect as the group’s ability to influence the market has diminished (Colgan 2014, pp. 599‒632). Greater diversity in supply has made the market more resistant to sudden disruptions, such as the Libyan Civil War of 2011‒15 or the reimposition of US sanctions on Iran in 2018‒19. The exception has been the demand shock in early 2020, when the sudden onset of the novel coronavirus caused demand to collapse, triggering an immediate decline in prices (Brew 2020).

The geopolitics of oil  125 Yet while greater diversity in supply can help consumer states such as the United States, producer states are left at the mercy of an increasingly volatile market. The increase in oil’s price facilitated the rise of “petrostates” such as the member states of OPEC as well as Russia, which are largely dependent on the sale of oil to maintain economic growth and state solvency. While these states prosper when prices are high, they can succumb to severe instability when prices crash (Ross 2012). Notable crashes with major geopolitical repercussions include the price collapse of the mid-1980s, which was instrumental in the downfall of the Soviet Union (Painter 2017, pp. 283‒318). A period of prolonged shortage in the early 2000s raised fears of “peak oil” and permanent shortage (Yetiv 2004; Klare 2002).Yet this proved to be a passing phase, as higher prices drove investment in new technology and extraction methods, precipitating an increase in domestic US petroleum output after 2010 driven largely by hydraulic fracturing and horizontal drilling (Manning 2014). The early twenty-first century is thus characterized by an abundance of oil and gas, led by a resurgent United States. The geopolitical impact of the “shale revolution” has been a shift in the global oil market, a continued decline in the power of OPEC, and a gradual decline in US dependence on imported oil and gas (Blackwell and O’Sullivan 2014, pp. 102‒106). It has also produced an environment of depressed prices and growing geopolitical turmoil in a number of oil-producing states, including Libya, Iraq, Iran, Venezuela, and Nigeria, while exacerbating pressure on petrostates such as Saudi Arabia. For the United States, however, the geopolitics of oil has evolved in a way which serves US strategic and economic interests. Thanks to shale production, US imports from overseas began to decline after 2010 as domestic production increased. The threat of climate change has made a shift away from fossil fuels a priority in the twenty-first century. The dawn of the Anthropocene has come as a persistent supply glut encourages notions of “peak oil demand”: that is, the realization that lower prices and a shift away from petroleum consumption will make much of the world’s oil impossible to exploit. The geopolitical implications of these developments remain unclear, but a shift away from fossil fuels would improve American energy security and reduce the need to safeguard the flow of oil from geopolitically volatile regions such as the Persian Gulf (Johnston and Novik Sandberg 2018). Yet it would be premature to assume that the historical US commitment to the free flow of oil will change in any fundamental fashion. Political and strategic considerations continue to play a large role in influencing US approaches to energy security. The US invasion of Iraq in 2003, while not motivated primarily by concerns over accessing Iraqi oil, was clearly connected to the continued US commitment to maintaining military hegemony in the Persian Gulf (Klare 2007, pp.  31‒42). Oil remains a hugely important resource for the functioning of industrial society. Moreover, the oil of the Middle East is likely to loom large in the great power competition that many scholars believe will characterize the twenty-first century, particularly as China, a possible peer competitor to the United States, is dependent on imported oil from the Middle East (Toprani 2019c; Glaser 2013, pp. 112‒146). As it has in the past, the geopolitics of oil will change. But the geopolitical significance of petroleum is likely to remain a factor in international relations for the next century and beyond, for the United States as well as other aspiring great powers.

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REFERENCES Adelman, M.A. (1996), The Genie out of the Bottle: World Oil Situation Since 1970, Cambridge MA: MIT Press. Adelman, M.A. (2002), ‘World Oil Production and Prices 1947–2000’, Quarterly Review of Economics and Finance, 42 (2), 169–191. Alvandi, R. (2014), Nixon, Kissinger and the Shah: The United States and Iran in the Cold War, New York: Oxford University Press. Blackwell, R. and M. O’Sullivan (2014), ‘America’s Energy Edge: The Geopolitical Consequences of the Shale Revolution’, Foreign Affairs, 93 (2), 102–114. Brew, G. (2015), ‘“Our Most Dependable Allies”: Iraq, Saudi Arabia, and the Eisenhower Doctrine, 1956–1958’, Mediterranean Quarterly, 26 (4), 89–109. Brew, G. (2017), ‘In Search of “Equitability:” Sir John Cadman, Rezā Shah and the Cancellation of the D’Arcy Concession, 1928–33’, Iranian Studies, 50 (1), 115–148. Brew, G. (2019), ‘The Collapse Narrative: The United States, Mohammed Mossadegh, and the Coup Decision of 1953’, Texas National Security Review, 2 (4), 38–59. Brew, G. (2020), ‘Saudi Arabia’s Weaponization of Oil Abundance’, MERIP, accessed 5 December 2020 at https://​merip​.org/​2020/​03/​saudi​-arabias​-weaponization​-of​-oil​-abundance/​. Bush, H.W. (1990), ‘Address Before a Joint Session of Congress’, accessed 21 December 2021 at http://​ www​.presidency​.ucsb​.edu/​ws/​?pid​=​18820. Byrne, M. and M. Gasiorowski (eds) (2004), Mohammed Mosaddeq and the 1953 Coup in Iran, Syracuse, NY: Syracuse University Press. Carter, J. (1980), ‘State of the Union Address Before a Joint Session of Congress’, accessed 8 January 2021 at http://​www​.presidency​.ucsb​.edu/​ws/​?pid​=​33079. Citino, N. (2010), ‘International Oil Men, the Middle East and the Remaking of American Liberalism, 1945–1953’, Business History Review, 84 (2), 227–251. Colgan, J. (2013), Petro-Aggression: When Oil Causes War, New York: Cambridge University Press. Colgan, J. (2014), ‘The Emperor Has No Clothes: The Limits of OPEC in the Global Oil Market’, International Organization, 68 (3), 599–632. Congressional Research Service (CRS) (1975), ‘Oil Fields as Military Objectives: A Feasibility Study’, Committee Print Prepared for the House Committee on International Relations, accessed 7 February 2021 at https://​www​.mtholyoke​.edu/​acad/​intrel/​Petroleum/​fields​.htm. Cowhey, P. (1985), The Problems of Plenty: Energy Policy and International Politics, Berkeley, CA: University of California Press. Dietrich, C. (2017), Oil Revolution: Anticolonial Elites, Sovereign Rights and the Economic Culture of Decolonization, New York: Cambridge University Press. Egorova, N. (2017), ‘Stalin’s Oil Policy and the Iranian Crisis of 1945–1946’, in J. Perovic (ed.), Cold War Energy: A Transnational History of Soviet Oil and Gas, Cham: Palgrave Macmillan, pp. 79–103. Fain, T. (2008), American Ascendance and British Retreat in the Persian Gulf Region, New York: Palgrave Macmillan. Ferrier, R. (1982), The History of British Petroleum, Vol. I: The Developing Years, 1901–1932, Cambridge: Cambridge University Press. Galpern, S. (2009), Money, Oil, and Empire in the Middle East: Sterling and Postwar Imperialism, 1944–1971, Cambridge: Cambridge University Press. Garavini, G. (2019), The Rise and Fall of OPEC in the Twentieth Century, New York: Oxford University Press. Gasiorowski, M. (1991), US Foreign Policy and the Shah: Building a Client State in Iran, Ithaca, NY: Cornell University Press. Glaser, C. (2013), ‘How Oil Influences U.S. National Security’, International Security, 38 (2), 112–146. Goldman, M. (1980), The Enigma of Soviet Petroleum: Half-Empty or Half-Full, London: George Allen & Unwin. Graf, R. (2018), Oil and Sovereignty: Petro-Knowledge and Energy Policy in the United States and Western Europe in the 1970s, New York: Berghahn Books.

The geopolitics of oil  127 Gray, W. (2016), ‘Learning to “Recycle”: Petrodollars and the West, 1973–1975’, in E. Bini, G. Garavini, and F. Romero (eds), Oil Shock: The 1973 Crisis and Its Economic Legacy, New York: I.B. Tauris, pp. 172–197. Hayward, J. (1995), ‘Hitler’s Quest for Oil: The Impact of Economic Considerations on Military Strategy, 1941–42’, Journal of Strategic Studies, 18 (4), 94–135. Heiss, M. (1994), ‘The United States, Great Britain, and the Creation of the Iranian Oil Consortium, 1953–1954’, International History Review, 16 (3), 511–535. Hogan, M. (1974), ‘Informal Entente: Public Policy and Private Management in Anglo-Asian Petroleum Affairs, 1918–1924’, Business History Review, 28 (2), 187–205. Hurst, S. (2009), The United States and Iraq Since 1979: Hegemony, Oil, and War, Edinburgh: Edinburgh University Press. Ignotus, M. (1975), ‘Seizing Arab Oil’, Harper’s Magazine, accessed 17 February 2021 at https://​harpers​ .org/​archive/​1975/​03/​seizing​-arab​-oil/​. Jacoby, N. (1974), Multinational Oil: A Study in Industrial Dynamics, New York: Macmillan. Jaffe, A. (2020), ‘Geopolitics and the Oil Price Cycle—An Introduction’, Economics of Energy and Environmental Policy, 9 (2), 1–9. Johnston, R. and H. Novik Sandberg (2018), Decarbonization and Peak Oil Demand: The Role of Policy in the Transportation Sector, Washington, DC: Atlantic Council. Jones, G. (1977), ‘The British Government and the Oil Companies 1912–1924: The Search for an Oil Policy’, Historical Journal, 20 (3), 647–672. Jones, T. (2012), ‘America, Oil, and War in the Middle East’, Journal of American History, 99 (1), 208–218. Kennedy, P.M. (1987), The Rise and Fall of the Great Powers: Economic Change and Military Conflict, 1500 to 2000, New York: Random House. Kent, M. (1976), Oil and Empire: British Policy and Mesopotamian Oil, 1900–1920, London: Macmillan. Klare, M. (2002), Resource Wars: The New Landscape of Global Conflict, New York: Henry Holt. Klare, M. (2007), ‘Oil, Iraq, and American Foreign Policy: The Continuing Salience of the Carter Doctrine’, International Journal, 62 (1), 31–42. Manning, R. (2014), ‘The Shale Revolution and the New Geopolitics of Energy’, Atlantic Council, accessed 5 December 2021 at http://​www​.jstor​.com/​stable/​resrep03607​.4. McFarland, V. (2019), Oil Powers: A History of the U.S.–Saudi Relationship, New York: Columbia University Press. McNally, R. (2017), Crude Volatility: The History and the Future of Boom–Bust Oil Prices, New York: Columbia University Press. Meierding, E. (2018), The Oil Wars Myth: Petroleum and the Causes of International Conflict, Ithaca, NY: Cornell University Press. Mitchell, T. (2011), Carbon Democracy: Political Power in the Age of Oil, New York: Verso. Ovendale, R. (1996), Britain, the United States, and the Transfer of Power in the Middle East, Leicester: Leicester University Press. Painter, D. (1984), ‘Oil and the Marshall Plan’, Business History Review, 58 (3), 359–383. Painter, D. (1986), Oil and the American Century: The Political Economy of U.S. Foreign Oil Policy, 1941–1954, Baltimore, MD: Johns Hopkins University Press. Painter, D. (2010), ‘Oil, Resources, and the Cold War, 1945–1965’, in M. Leffler and O. Westad (eds), Cambridge History of the Cold War, Vol. 1, Cambridge: Cambridge University Press, pp. 486–507. Painter, D. (2014), ‘Oil and Geopolitics: The Oil Crises of the 1970s and the Cold War’, Historical Social Research, 39 (4), 186–208. Painter, D. (2017), ‘From Linkage to Economic Warfare: Energy, Soviet–American Relations, and the End of the Cold War’, in J. Perovic (ed.), Cold War Energy: A Transnational History of Soviet Oil and Gas, New York: Palgrave Macmillan, pp. 283–318. Philip, G. (1982), Oil and Politics in Latin America: Nationalist Movements and State Companies, Cambridge: Cambridge University Press. Philip, G. (1994), The Political Economy of International Oil, Edinburgh: Edinburgh University Press. Pobodnik, B. (2006), Global Energy Shifts: Fostering Sustainability in a Turbulent Age, Philadelphia, PA: Temple University Press.

128  Handbook on oil and international relations Qaimmaqami, L. (2011), Foreign Relations of the United States, 1969–1974, Vol. XXXVI, Washington, DC: Government Printing Office. Rabe, S. (1982), The Road to OPEC: United States Relations with Venezuela, 1919–1976, Austin, TX: University of Texas Press. Ross, M. (2012), The Oil Curse: How Petroleum Shapes the Development of Nations, Princeton, NJ: Princeton University Press. Sampson, A. (1975), The Seven Sisters: The Great Oil Companies and the World They Shaped, New York: Viking Press. Santiago, M. (2006), The Ecology of Oil: Environment, Labor, and the Mexican Revolution, 1900–1938, New York: Cambridge University Press. Sargent, D. (2015), A Superpower Transformed: The Remaking of American Foreign Relations in the 1970s, Oxford: Oxford University Press. Saul, S. (2007), ‘Masterly Inactivity as Brinksmanship: The Iraq Petroleum Company’s Route to Nationalization, 1958–1972’, International History Review, 29 (4), 746–792. Schneider, S. (1983), The Oil Price Revolution, Baltimore, MD: Johns Hopkins University Press. Shulman, P. (2015), Coal and Empire: The Birth of Energy Security in Industrial America, Baltimore, MD: Johns Hopkins University Press. Skeet, I. (1988), OPEC: Twenty-Five Years of Prices and Politics, New York: Cambridge University Press. Stein, J. (2010), The Pivotal Decade: How the United States Traded Factories for Finance in the Seventies, New Haven, CT: Yale University Press. Stivers, W. (1983), ‘A Note on the Red Line Agreement’, Diplomatic History, 7 (1), 23–34. Stoff, M. (1980), Oil, War, and American Security: The Search for a National Policy on Foreign Oil, 1941–1947, New Haven, CT: Yale University Press. Tooze, A. (2007), Wages of Destruction: The Making and Breaking of the Nazi Economy, New York: Viking Press. Toprani, A. (2019a), ‘Oil and the Future of U.S. Strategy in the Persian Gulf’, War on the Rocks, accessed 7 January 2021 at https://​warontherocks​.com/​2019/​05/​oil​-and​-the​-future​-of​-u​-s​-strategy​-in​ -the​-persian​-gulf/​. Toprani, A. (2019b), Oil and the Great Powers: Britain and Germany, 1914‒1945, New York: Oxford University Press. Toprani, A. (2019c), ‘A Primer on the Geopolitics of Oil’, War on the Rocks, accessed 19 Januray 2021 at https://​warontherocks​.com/​2019/​01/​a​-primer​-on​-the​-geopolitics​-of​-oil/​. Westad, O. (2007), The Global Cold War: Third World Interventions and the Making of Our Modern Times, Cambridge: Cambridge University Press. Yaqub, S. (2004), Containing Arab Nationalism: The Eisenhower Doctrine and the Middle East, Chapel Hill, NC: University of North Carolina Press. Yergin, D. (1991), The Prize: The Epic Quest for Oil, Money and Power, New York: Simon & Schuster. Yetiv, S. (2004), Crude Awakenings: Global Oil Security and American Foreign Policy, Ithaca, NY: Cornell University Press.

9. Russia: oil and revisionist power Richard Sakwa

Russia is neither a revisionist nor a status quo power, but a country torn between the two. It is revisionist to the extent that it refuses to accept American primacy or exceptionalism, but it is a status quo power to the degree that it remains committed to the institutions of the international system created in 1945, which endows it with the privileged status of permanent membership of the United Nations Security Council. This ambivalent status gives rise to a constant cycle of unstable compromises and a degree of unpredictability. However, there is a core of Russian strategy that is both consistent and enduring, and has operated since Russia re-emerged as an independent state in 1991. This is the view that Russia is a great power and that it should be recognised as such in international affairs. Russia’s claimed status rests on three pillars: military power, and above all nuclear parity with the United States; an abundance of raw materials, including the export-oriented energy sector; and Russia’s diplomatic traditions and weight, notably being a founding member of the post-1945 international system of sovereign states. This takes the specific form of the normative assertion of sovereign (conservative) internationalism as the bedrock of sustainable international relations, rather than what it believes to be the false universalism of the liberal international order. Over the years the relative weight of these three elements has ebbed and flowed, but their interaction remains constant (Baev 2008). The triad of guns, oil and diplomacy shapes the economy and conduct of foreign policy.

OIL, DEPENDENCY AND DIPLOMACY Energy exports were central to the maintenance of Soviet power during the Cold War. The oil industry was created on the shores of the Caspian in the nineteenth century, and by 1898 Russia had overtaken the United States (US) to become the world’s largest oil producer. War and revolution shattered the industry, and only in the late 1950s did the Soviet Union return as a serious oil exporter. New output in the Volga-Urals region was later buttressed by the vast reserves discovered in West Siberia, but exports entered an already saturated market. Depressed prices prompted the long-established exporters led by Saudi Arabia and Venezuela to create the Organization of the Petroleum Exporting Countries (OPEC) in September 1960 (Yergin 2020, p. 72). Energy exports compensated for the inadequacies of the command economy, and sustained Soviet power at home and abroad, while the developing pipeline network with Western Europe tied the two regions together. The fate of Russia and Saudi Arabia also now became linked. The US consistently opposed Western countries selling the Union of Soviet Socialist Republics (USSR) the necessary pumping and pipeline technologies. However, Italy and Germany considered economic ties not only potentially profitable, but also rational and appropriate, given the relative physical proximity between the West Siberian oilfields and the enormous Western European market. The first branch of the Druzhba (Friendship) oil 129

130  Handbook on oil and international relations pipeline running through Belarus was opened in 1964 and it has become one of the world’s longest and largest networks. The first gas pipeline, to Austria, opened in 1968 and forged the first link in what Gustafson (2020) calls ‘the bridge’, tying Russia and Europe into an enduring energy relationship. This was the counterpart of the classic West German strategy of ‘change through engagement’ (Wandel durch Annäherung), which led to the Ostpolitik from 1969 and culminated in the détente of the early 1970s. Very quickly the USSR developed a dangerous dependency on oil revenues, using them to avoid undertaking painful structural economic reform. Instead, the funds were squandered on huge grain imports, above all from the US; an unsustainable arms race; and various adventures in developing countries that ended in the disastrous invasion of Afghanistan in December 1979. Construction of the 3700 mile Yamal‒Europe gas pipeline provoked yet another crisis in US‒European relations. In response to the ‘gas-for-pipes’ deal in 1982, whereby Europe exchanged $15 billion worth of heavy machinery in return for gas, the Reagan administration imposed sanctions, just as the US tried to stop the construction of Nord Stream 2, in the end successfully. European energy security has always been a high priority for the US. In 1983, Ronald Reagan declared the Soviet Union an ‘evil empire’ and signalled that a period of rollback was on the cards. The US supplied the armed resistance in Afghanistan (the mujahideen) with increasingly sophisticated weapons. The fatal dependency on oil revenues was exposed when the oil price fell drastically, just at the time when Mikhail Gorbachev was launching the programme that he called perestroika (restructuring). It is still not clear whether the US coordinated with Saudi Arabia, but the latter opened the spigots, crippling Gorbachev’s reform efforts. The price of OPEC crude fell from $23.95 a barrel in December 1985 to $9.85 in July 1986, a fall of 58 per cent, forcing the Soviet Union to take out increasingly onerous loans from abroad. Oil prices continued to languish in the 1990s, falling to the trough of $12 a barrel in 1998, provoking Russia’s partial default that year. Thereafter prices steadily rose, to an average of $61 a barrel in 2006. Every dollar rise in the price of oil provided the exchequer with $1 billion in extra revenue. By 2006, Russia’s oil and gas industries accounted for 35 per cent of Russia’s exports in terms of value, but 55 per cent of export revenues because of the way that energy exports are taxed, 40 per cent of gross fixed investment and through taxes, 52 per cent of all revenues to the state treasury, up from 25 per cent in 2003. In June 2006 for the first time Russia extracted more oil than Saudi Arabia (The Independent 2006). Energy production at that time represented nearly 20 per cent of Russian gross domestic product (GDP), with increased energy rents accounting for between one-third and two-fifths of economic growth between 1993 and 2005 (estimates from a RAND study; reported by Wolf 2007). The substantial rise in real incomes fuelled a consumption boom that in turn generated economic growth (Miller 2018). President Putin used the windfall energy revenues to pay back creditors, and since then Russia has been pathologically averse to state debt dependency. Natural resources are both a curse and a blessing. Energy revenues enhance rent-seeking and corruption and weaken political accountability. Parliament in part lost the veto power it exercised over the budget, as the Kremlin-based administrative system used rent management for its projects, bypassing formal mechanisms (Gaddy and Ickes 2013). A ramified rent distribution system bought social peace, co-opted allies and undermined opponents. Mikhail Khodorkovsky, the head of the Yukos oil company, condemned the way that the ‘oil curse’ allowed the authorities to maintain social stability without modernisation (Skvortsova 2009). In fact, oil wealth is not necessarily a curse, and depending on ownership structure and the strength of institutions it can foster infrastructure and social development (Luong

Russia: oil and revisionist power  131 and Weinthal 2010). Prudent fiscal policies constrained the ‘Dutch disease’, the syndrome in which bountiful revenues from energy exports raise the value of the currency, rendering domestic goods uncompetitive in export markets while sucking in imports. Macroeconomic orthodoxy was pursued to the point of rigidity, and energy rents were to a degree sterilised. A ‘stabilisation fund’ was created on 1 January 2004 to collect export duties and the mineral extraction tax (MET) from the price of oil exceeding $27 a barrel (initially $20), and reached over $90 billion by the end of 2006, or 8.5 per cent of GDP. In 2008 the fund was split between two types of sovereign wealth funds: a Reserve Fund to manage gold and currency reserves; and a National Welfare Fund (NWF), devoted initially to covering pension obligations but later used for general welfare purposes. In the 2008‒09, 2014 and 2020 economic crises these funds helped to avert a repetition of the partial default of 1998. Russia maintained its foreign policy ambitions, including military intervention in Syria from September 2015. Despite the Covid-19 pandemic and accompanying fall in oil prices, Russia in 2020 was even able to increase its reserves. Oil once again came to the rescue, but the tax regime on the oil sector has been the subject of endless change. Russia’s oil export tax is calculated monthly, based on the average price for Urals, the main export blend. However, defying international best practice, no comprehensive tax regime has been devised and instead traditional means of taxation and ad hoc solutions predominate (Vatansever 2020). There is undoubtedly corruption in the system in which energy rents are used for political purposes, but the country is not systemically corrupt. If Russia was a kleptocracy (pace Dawisha 2011, 2014; Belton 2020), these funds would be in Swiss bank accounts rather than in the Russian treasury. However, while Russia averted the worst of the ‘Dutch disease’ and the rentier state syndrome, it was not able to avoid their political counterpart, what could be called the ‘Bonaparte syndrome’ (named after Napoleon III), where economic stabilisation encourages foreign policy ambitions and the assertion of sovereign autonomy in international affairs (Brookings 2006). State concerns and private companies controlled by the Kremlin ‘serve as important instruments of pressure in Russian foreign policy’ (Wiśniewska 1997, p.  39). In the 1990s, energy companies already acted as instruments of the state (Khripunov and Matthews 1996; Duncan 2007, p. 9). Between 1998 and 2000, Transneft, the state-owned oil pipeline company, cut off supplies nine times to prevent the Lithuanian government selling the Mazeikiu refinery, the single largest industrial plant in the Baltic republics, to the American oil company Williams. The attempt failed, but in 2001 Williams resold it to Yukos. The refinery then reverted to Lithuania following Yukos’s demise, and it was then sold to the Polish company PKN Orlen (Duncan 2007, p. 14). Peter Rutland (1999, p. 167) noted that ‘Gazprom has repeatedly pressed the ex-Soviet republics to pay off their gas debts with equity in energy installations’, and he notes the ‘annual ritual’ of conflict over transit and energy charges with Belarus and Ukraine, ‘breaking out in January, when the new year’s tariff agreements can no longer be delayed’.

AN ENERGY SUPERPOWER The commodities boom of the 2000s, in large part driven by China’s insatiable appetite for raw materials, saw oil prices rise and fostered illusions that Russia would become an ‘energy superpower’ (Rutland 2008). It was never quite clear what the term meant, but it certainly entailed the mobilisation of the oil leg of the power triad to sustain a more assertive Russian

132  Handbook on oil and international relations presence in international affairs. In his notorious Munich Security Conference speech in February 2007, Putin (2007) objected to the behaviour of the US-led Atlantic power system; but it was only from 2012 that Russia fundamentally rejected the universalist claims of the liberal international order, the name adopted by the Atlantic power system after the end of the Cold War and the collapse of the Soviet Union (Ikenberry 2011). As far as Moscow was concerned, the normative claims of the liberal international order were only the velvet glove manifestation of the iron fist of American hegemony (Porter 2020). Understandably, Russia and its increasingly close Chinese partner stressed the autonomy of international governance institutions, insisting that they were not synonymous with the universal claims of the liberal international order. This, in essence, is the fundamental principle of neo-revisionism practised after Putin returned to the Kremlin in 2012, following Dmitry Medvedev’s four-year presidency. This meant a rejection of the practices of US-led international order, but not of the international system in which it operates (Sakwa 2019). Russia remains a conservative status quo power intent on maintaining the post-1945 international system, which grants it the supreme privilege of P5 membership (Russia is one of the five permanent members of the United Nations Security Council), as well as providing a benign framework for the great power triad to work. Russia’s policy of conservative, or sovereign, internationalism is a model of world order favoured by China, India and many other states wary of the hegemonic implications of the liberal international order. Putin never hid his view that energy is one of Russia’s major resources for domestic development and foreign policy ambitions. His PhD (kandidatskaya) research in the 1990s made this explicit (Balzer 2005, 2006). Putin (1999 [2000]) argued that Russia’s energy sector represented ‘the main reserve for converting Russia into a leading economic power’. In a speech to Russia’s Security Council in late 2005, Putin reaffirmed his view that energy is ‘the most important motive force of world economic progress’ and called on the country to assume global leadership on energy issues (Orlov 2006). This unleashed a flood of articles about Russia as an ‘energy superpower’, although Putin himself never used the term. Konstantin Simonov, the head of the National Energy Security Foundation in Moscow and author of a major work on the subject, argued that ‘the largest country in the world in territorial terms cannot rest at the periphery of world politics (Simonov 2006, p. 5). Russia’s energy resources were to be mobilised to sustain Russia’s economic development while enhancing its diplomatic status. This involved the expropriation of Yukos. Following the Soviet collapse, the gas industry remained largely intact and the old ministry became the state-owned Gazprom, retaining its production and distribution dominance. By contrast, the oil industry was broken up and largely privatised, creating a powerful class of ‘oligarchs’ (Goldman 2008). In the 1990s most of the oil-producing fields fell into private hands, creating major oil corporations such as Yukos, Lukoil and Sibneft, as well as the low-profile Surgutneftegas. In 1998 there had even been talk of selling Rosneft, one of the last companies in state hands. Khodorkovsky was the most politically ambitious of the oligarchs, leading the attempt to convert oil wealth into political power. Above all, he sought to enhance the autonomy of an independent bourgeoisie to balance the power of the administrative regime and thus to create space for democratic freedoms. Khodorkovsky funded a range of political parties and movements, while advancing an energy strategy of his own (notably, a private oil pipeline to China). The Kremlin fought back and he was arrested in October 2003 (Sakwa 2014). Yukos was dismembered, and after a political trial Khodorkovsky spent ten years in jail (Sakwa 2016). Rosneft was the great beneficiary and became the core of reconstituted state activism in the energy sector. Under the leader-

Russia: oil and revisionist power  133 ship of Igor Sechin, it absorbed most of Yukos’s assets and went on to become the ‘national champion’ in the sector. The ruthless model of political economy that the company practised at home reflected a particular vision of international politics as well, in which economic power was used to advance purported state interests. The heavy-handed manner in which Russia played its ‘energy card’ alienated more than it attracted. The Yukos affair undermined Russia’s claims to be a reliable partner, and there are numerous instances of the ‘energy weapon’ being used (Larsson 2006). In the wake of the Yukos affair, and the gas cut-off to Ukraine on 1 January 2006, to Belarus on 1 January 2007 and again to Ukraine in the first weeks of 2009, Russia’s reliability as an energy supplier was irreparably damaged. At home, however, such muscular energy diplomacy was perceived as the repudiation of Russia becoming a ‘raw materials appendage’ of the West. As an autonomous subject in international economic life, limits were placed on the participation of foreign companies in the Russian economy. Some of the production-sharing agreements (PSAs) struck in the 1990s, notably the various oil and gas projects in Sakhalin, were revised. Russia now tried to shape the rules and norms governing energy and other markets (Averre 2007, p. 176). At the EU‒Russia summit in Sochi on 25 May 2006, Putin (2006) insisted that Russia would not unilaterally open up its energy transportation system, which he called ‘the holy of holies’, as required by the Transport Protocol of the Energy Charter Treaty (which Russia signed but never ratified). Between 2000 and 2012, Russia’s oil exports increased eightfold and revenues rose from $36 billion to $284 billion a year (Yergin 2020, p. 77). With energy revenues pouring in and enormous strategic reserves of oil and gas, ‘Russia’s predominant position … strengthened Russia’s hand in playing the geopolitical game of hydrocarbons’ (Hiro 2006, p. 245). Defence Minister Sergei Ivanov (2006) referred to Russia as an ‘energy superpower’ and suggested the instrumental use of energy resources to achieve geopolitical ends. This prompted a range of hostile reactions. Margarita Balmaceda (2008, p. 5) argued that Russia used energy as a ‘foreign policy tool’ in relations with former Soviet states, exploiting energy dependency to impede ‘the development of broader relationships with Western institutions’. Zeyno Baran (2007, p. 132) highlighted that ‘Under the leadership of Putin, the Kremlin has pursued a strategy whereby Europe’s substantial dependence on Russian energy is levered to obtain economic and political gains’. The former Prime Minister and now Putin’s opponent, Mikhail Kasyanov (2006), condemned ‘petro-dollar sovereignty’ and instead called for an ‘empire of freedom’. The Washington Post (2006) railed against Russia acting as an ‘energy bully’. It should be noted, however, that Russia is locked into mutual interdependency as a supplier to its markets, and is itself a transit country, notably regarding the Caspian Pipeline Consortium (CPC), transporting Kazakhstan oil to the Black Sea. At the same time, even before the Putinite consolidation, the Atlantic powers encouraged the construction of oil pipelines bypassing Russia, including the 1786 km Baku‒Tbilisi‒Ceyhan link opened in 2006. Simonov (2007) argued that we are entering an era of ‘global energy wars’, which will not necessarily take military form but will shape the international politics of the future. The whole notion of an ‘energy superpower’ is built on sand, and is little more than a rhetorical device for its advocates and a useful term of abuse for its critics. For Vladimir Milov (2006a, p. 7), a former deputy energy minister before he moved into opposition, the idea encourages stagnation and the loss of Russian prestige. He notes in particular that the ratio of population to energy resources was far lower in Russia than in most other energy exporters, hence ‘our ability to convert national hydrocarbon potential into national prosperity is

134  Handbook on oil and international relations limited’ (Milov 2006b, p. 6). This is not to say that energy is not a crucial factor in Russia’s rise as a great power and its greater self-confidence in international affairs. As Rutland (2008, p. 206) notes, the idea is built on the contradictory logic of a ‘superpower’, whose dynamic is very different from that of the ‘energy’ market. It is extremely difficult to convert energy into political influence, and attempts to do so can easily backfire. As the Soviet Union discovered, subsidised energy for its Soviet bloc allies won neither loyalty nor respect. Similar arrangements work little better in relations with Belarus. The country sustains its neo-Soviet economy and authoritarian political system through processing subsidised Russian oil and then selling value-added finished petroleum products to Western markets. Used as a stick, energy is a two-edged sword, and is a rather inefficient way of trying to achieve hard power goals with soft power methods. It can also create what Andrew Monaghan (2006) has called the ‘energy security dilemma’, where the insecurities felt by both suppliers and markets (in this case Russia and the EU) provoke anticipatory actions which precisely provoke the outcome that the preparations are intended to avoid.

THE GEOPOLITICS OF THE TRIAD ‘Sovereign democracy’ is the term used to describe Russia’s managed democracy. High energy prices and expanding output provided the material basis for Russia’s ‘sovereignty’. Andrei Kokoshin (2006, p. 172), head of the Duma committee with relations with former Soviet republics, stressed that ‘The United States has to deal with an absolutely different Russia today – a Russia that has restored its real sovereignty in many areas and is pursuing a course on the world arena that meets mainly its own national interests.’ ‘Real sovereignty’, in his view, was ‘the capacity of a state in reality (and not merely in declaratory fashion) to conduct independently its internal, external and defence policies, to conclude and tear up agreements, enter into strategic partnerships or not’, and Russia was one of the handful of countries in this category, along with India and China. Historically, Russian economic performance closely tracks the oil price, and the value of the rouble has faithfully followed the vicissitudes of the oil price. In the late 1990s, with oil trading at below $10 a barrel, the state effectively ran out of money, precipitating the August 1998 partial default. Thereafter the steady climb in oil prices was tracked by a 7 per cent annual growth in GDP up to the 2008 crisis. The destruction of the Yukos oil company allowed a significant change in the tax regime (Sixsmith 2010). The state extracted a far greater share of energy rents, and dictated the terms on which changes in investment incentives and extraction taxes were tailored to specific geological conditions and the age of particular fields. Russia’s oil sector tax regime is considered regressive, with the effective tax burden rising in line with oil price increases, with companies gaining a little extra when the price is above $30 a barrel, but very sensitive to prices below that (Trickett 2020). The country soon came out of the 2009 recession, but it never recovered the spectacular growth rate of the early part of the century. Oil is just one sector in which a new growth model is required. Above all, the diversification of the economy away from a reliance on oil rents is a priority. The lesson was driven home when oil prices plunged from late 2014, forcing Russia once again into recession. Dependence on oil represents a fundamental point of vulnerability, as it had done in the late Soviet period. This is why the government pursued a diversification strategy, applied with added vigour following the rupture of relations with the West provoked by the Ukraine crisis in

Russia: oil and revisionist power  135 2014. In 2014 the break-even point for the budget to balance had been over $100, but by 2020 this had fallen to $42 a barrel. Russia has long operated a countercyclical policy of building up reserves when the going is good, to limit borrowing in tough times. The policy worked well in the 2008‒09 global financial crisis, and again after the oil price plunge in late 2014. The stabilisation of oil prices from 2016 was accompanied by attempts to decouple the economy from the oil price. This includes the ‘budget rule’ that diverts all revenues from oil trading at the break-even point (currently $42 in 2020) to the NWF and other reserves. However, the larger Russian economy remains skewed towards energy producers. In 2020, seven of the top ten Russian companies on the Forbes Global 2000 list were oil and gas producers, while the other two were banks (Sberbank and VTB Bank), along with Norilsk Nickel (Rapoza 2020). In his speech to the Federation Council on 23 September 2020, Putin (2020a) stressed just how far Russia had gone into diversifying its economy. He noted: Our economy and our budget do not depend critically on the ups and downs of oil prices anymore … In 2011, hydrocarbon-related revenues amounted to half of all budget income, whereas in 2021, their share will drop to one-third … This is the first time in the history of modern Russia that we have achieved such budget system stability.

He reiterated the geopolitical ramifications in his annual press conference on 17 December 2020, when he argued that Russia was weaning itself off oil revenues and, ‘while we’re not completely there, we are nonetheless starting to get off the so-called oil and gas needle … If someone still wants to consider us a gas station [as asserted earlier by John McCain], then this has no real basis’ (Putin 2020b). Oil and gas revenues had fallen to 30 per cent of GDP, but they still accounted for 60 per cent of total exports. This is a lower proportion than in most of the world’s other major oil exporters, but it is still relatively high (Slav 2020). The centrality of oil in the triad of Russian power was falling, but the dependency was still high, and was tested when President Donald J. Trump’s mercantilist nationalism between 2016 and 2020 challenged both the liberal international order and Russia’s conservative internationalism. Some elements of Trump’s foreign policy conduct were welcomed by Moscow, notably his emphasis on personalised diplomacy and great power interactions, as well as his critique of the Atlantic power system. However, his contempt for the multilateralism that is at the heart of the post-1945 international system worried Moscow, while his rejection of old-style globalisation provoked an intense trade war with China. Trump was contemptuous of both the liberal ‘rules-based’ order and of international law. He also rejected the environmental and other concerns that imposed restrictive regulations in the Barack Obama years. Instead, Trump pursued a policy of ‘oil unchained’, based on highly sophisticated but expensive and environmentally damaging fracking technologies to access ‘tight’ oil reserves locked in shale formations, reducing dependency on imports and providing a surplus for export. In response, in 2016 OPEC and Russia (OPEC+) agreed production cuts that succeeded in stabilising oil prices. The deal was followed in 2017 by the first ever visit to Moscow by a Saudi king, followed in October 2019 by Putin’s first trip to Saudi Arabia since 2007. However, production restraints allowed the ‘free-riding’ US to become the world’s top oil producer by 2019, with surpluses available for export into markets traditionally dominated by competitors. This is why Russia at the OPEC+ meeting in Vienna in March 2020 rejected Saudi Arabia’s proposal to deepen the earlier production cuts by 1.5 million barrels a day (mbpd), on the grounds that the gap in the market would be filled by production increases by US oil companies (Prince and Eckel 2020).

136  Handbook on oil and international relations The idea was that lower prices would knock US producers, which had higher production costs than Moscow and Riyadh. However, this act of geo-economic brinkmanship soon had real consequences. With the deal in tatters, Saudi Arabia opened the spigots. The result was the largest one-day fall in oil prices in three decades, which was then accelerated by the almost complete collapse in demand and the accompanying exhaustion of storage facilities provoked by the pandemic. Planes stopped flying, traffic disappeared from highways and factories were shuttered. In the end, on 12 April Russia was forced to accept a deal that Trump helped to shape (leading to talk of the creation of OPEC++). Russia agreed to cuts of 1.8 mbpd from 10.3 mbpd, far more than the 300 000 cut under the original deal. Output was capped at a level not seen since 2003. Trump boasted that he had brokered a deal that would ‘save thousands’ of American jobs (Aris 2020). Russia had rejected the earlier deal, but it was now forced to accept deeper cuts (Prince 2020). The experience once again demonstrated that, ‘For the US, oil is a sectoral interest; for Russia (and Saudi Arabia), it is an existential one’ (Gould-Davis 2020). By then, Russia once again joined the countries against which the US applies sanctions, with a return to the Cold War pressure against Russo-European energy relations. In turn, Russia reasserted its influence in the Middle East, where the US was long the dominant power. Trump’s attempts to peel Russia away from alignment with China soon came to naught, and the two non-Western countries went on to solidify their relationship through a deepening energy partnership. The 2800-mile East Siberia‒Pacific Ocean (ESPO) pipeline, terminating at the Kozmino port and oil terminal on the Pacific coast, includes a spur commissioned in 2011 from Skovorodino to the Chinese oil distribution centre in Daqing. Construction was largely funded by $80 billion in prepayments for oil to be delivered by Rosneft over 25 years, creating yet another level of interdependence. In 2018, China overtook the European Union (EU) in oil demand, consuming 14 mbpd, while imports exceeded 10 mbpd. The proportion of Russian oil exports to China rose from just 5 per cent in 2005 to over 30 per cent in 2020, and Russia has overtaken Saudi Arabia as China’s top supplier (Yergin 2020, p. 118). The energy partnership deepened to include the Power of Siberia gas pipeline, inaugurated in December 2019, and became one of the fundamental legs of the triad – energy, arms and diplomacy – that underpinned the Russo-Chinese alignment.

THE FUTURE OF OIL AND THE TRIAD Russia produces about 10 per cent of global energy, a share that has remained remarkably stable over the last two decades (Kurdin 2020, p. 146). It is one of the world’s three largest energy producers and exporters, a position that it intended to maintain through expansion in production, while ensuring that domestic consumption remained sustainable. Oil revenues were an essential part of the Kremlin’s armoury to maintain its sovereign autonomy in international affairs. The plunge in oil prices and the demand shock caused by Covid-19 demonstrated that Russia was far less resilient in the face of crisis than it believed. Diplomacy and arms could in part compensate, but the vulnerabilities of the oil leg of the triad only reinforced Russia’s dependency. In the neo-revisionist era, Russia was always bracing itself for a new wave of sanctions, hence the imperative of maintaining significant reserves. The pandemic and environmental crises did not foster a greater spirit of cooperation to address common challenges, and instead the energy sector remains part of the geopolitical struggle between the US and Russia. Most joint energy ventures have been terminated, and

Russia: oil and revisionist power  137 instead there are various struggles over access to energy technology (the transfer of which has been the subject of various sanctions for over half a century), over the gas market (notably Nord Stream 2), over access and exploitation of Arctic reserves and over LNG development (Mitrova 2020). The struggle over oil resources was one of the proximate causes of the US‒ Russia conflict in Syria (De Rosa 2020). Despite this, elements of cooperation remain, and Russian crude filled the gap left by the forced withdrawal of the heavy Venezuelan supplies needed to keep US refineries working, when mixed with the light oils extracted by US producers (Reuters 2020). The triad is assuming new configurations. One aspect is the global role of Rosneft as an instrument of Russia’s global ambitions. In March 2013, Rosneft bought TNK-BP in a part exchange, and BP owned 19.75 per cent of Rosneft’s shares, rendering it a major stakeholder in the company’s fate until it sold at a heavy discount following the start of the Ukraine war in 2022. The internationalisation strategy since then has stalled, except for deepening links with China. Ambitious plans to exploit Arctic resources with Exxon-Mobil, however, had to be shelved because of the onset of the Second Cold War in 2014. Nevertheless, Rosneft continued to develop the giant Vostok Oil project in the Arctic, planned to deliver up to 30 million tonnes of oil via the Northern Sea Route by 2024, and up to 100 million tonnes a year when the project is completed. Despite sanctions, Russia accessed the required production technologies, an increasing proportion of which came from China. Rosneft also ramped up its operations in Venezuela, even though after the death of President Hugo Chávez his successor, Nicolás Maduro, was increasingly embattled as the US ramped up sanctions. The country’s economic mismanagement led to a catastrophic fall in the standard of living and mass emigration. In March 2020, Rosneft transferred its assets to another Russian state corporation, to avert the danger of further US sanctions because of its association with the Maduro regime. Venezuela racked up billions of dollars of debt to Russia, most of which would probably never be repaid, although China also entered into the Venezuelan market and was owed at least seven times more than Russia. Rosneft was building on historical ties to the country, but its increased engagement after 2014 was associated with attempts to enhance Russia’s geopolitical role as part of the neo-revisionist strategy. By 2020, that strategy looked increasingly contradictory. The demand loss provoked by the pandemic amid an intensifying climate crisis once again raised the question of ‘peak oil’. This refers not to the finiteness of supply – assuming that there is no ‘peak technology’, the boundaries of exploitation are potentially almost unlimited – but of demand. Shell and BP warned that oil had probably reached its ‘high point’ (Ambrose 2020a, p. 14; Ambrose 2020b, p. 39), a view based on several considerations. First, the enormous economic costs of the pandemic prompted various plans for ‘green’ new deals, notably in the US and the EU. President Joseph Biden promised to invest over $2 trillion to clean up the US energy market, and investment in renewable energy was to act as the locomotive of economic recovery. This could well spell the end of US fracking, and thus undermine America’s position as a major oil exporter (Ambrose 2020c, p. 37). Other countries also pledged to reduce carbon emissions, with China promising to become carbon-neutral by 2060. Russia cannot stand apart from the decarbonisation agenda, and the EU’s Green Deal will certainly encourage Russia to ‘clean up its act’ (Paramonova 2020). Second, there are lifestyle shifts away from commuting towards home working, reducing demand for transport, accompanied by an accelerating shift towards electric cars. Third, power generation increasingly focuses on renewable energy sources, above all wind and solar power, accompanied by a renewed interest in nuclear power as the provider of a guaranteed clean base load.

138  Handbook on oil and international relations Russia recognises that the days of peak oil consumption are probably over, and global demand for Russian oil will probably fall. This was accepted by Alexander Novak, the former energy minister who was now a deputy prime minister, when he argued that in response to the global climate agenda, Russia would have to diversify its energy exports by focusing on added value processed hydrocarbons as well as on new energy, accompanied by renewed focus on developing the domestic market (IMEMO 2020). The latest iteration of Russia’s Energy Strategy to 2023 (dated June 2020) stressed the fundamental point that ‘energy development and national security are inextricably linked’, and thus focused on Russia’s ‘energy security’ (Government of the Russian Federation 2020, p. 4). The document anticipated a decline in supply on oil and gas markets, and therefore stressed that rising prices and the conservation of fossil fuels would be the foundation of the global energy market. The document did not consider the shift to renewable energy as an opportunity for Russia to decarbonise, and instead the transition was viewed as a threat to Russia’s energy sector. The general tone was that Russia should continue to enjoy the blessing of abundant oil reserves, in fiscal and security terms, while less-endowed countries were forced to move towards renewable resources. However, such a sanguine view was challenged by the increasing urgency of the environmental crisis, and larger shifts in the energy market. The issue is much discussed in the Russian media, and is part of the debates feeding into its energy and environmental strategies (Saari and Secrieru 2020, pp.  17‒19). However, for the next decade at least, oil and gas will remain Russia’s primary exports (Mitrova and Yermakov 2019, p. 15), while Novak (2020) predicted that growing energy markets in the Global South meant that oil would continue to play a large part in the global energy balance until at least 2050. However, the oil leg of the triad will probably be challenged rather sooner than Moscow anticipates.

CONCLUSION Oil is both a curse and a blessing. The political problem of dependency remains, and that is why one of Russia’s leading liberals, Anatoly Chubais, urged the country to use the opportunity created by the pandemic to reduce its reliance on oil (Tickle 2020). Nevertheless, oil allowed Russia to reassert its position in global affairs and remains a fundamental pillar of the triad of Russian power (along with the military and diplomacy). However, it also creates dangerous dependencies that foster exaggerated ambitions and dangerous illusions, such as the idea of Russia becoming an ‘energy superpower’. It also feeds an energy rent-driven administrative regime, and nourishes what many perceive to be excessive foreign policy ambitions. However, Russia has managed its oil revenues with relative prudence, and oil rents have underpinned macroeconomic stability at home while allowing Russia’s voice to be heard in international affairs, providing a neo-revisionist counterbalance to the hegemony of the other leading powers. Dependency on oil has been reduced, and Russia remains a full-service economy. Nevertheless, neo-revisionism abroad is accompanied by neo-democracy at home. When Russia has a full-spectrum polity to match the economy, then we will be able to argue that Russia’s post-communist modernisation is complete. The triadic foundations of Russian power will give way to a more complex pluralism.

Russia: oil and revisionist power  139

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Russia: oil and revisionist power  141 Rapoza, K. (2020) ‘Forbes Global 2000 Shows Nothing Can Stop Russia’s Oil Beasts’, Forbes, 13 May, accessed on 20 September 2021 at https://​www​.forbes​.com/​sites/​kenrapoza/​2020/​05/​13/​forbes​-global​ -2000​-shows​-nothing​-can​-stop​-russias​-oil​-beasts/​?sh​=​3caa96103c2b. Reuters (2020), ‘Russia Keeps US Fuel Exports High as Washington Seeks to Replace Venezuelan Barrels’, 13 July, accessed on 20 September 2021 at https://​money​.usnews​.com/​investing/​news/​ articles/​2020​-07​-13/​russia​-keeps​-us​-fuel​-oil​-exports​-high​-as​-washington​-seeks​-to​-replace​ -venezuelan​-barrels. Rutland, P. (1999), ‘Oil, Politics and Foreign Policy’, in David Lane (ed.), The Political Economy of Russian Oil, Lanham, MD: Rowman & Littlefield, pp. 163‒188. Rutland, P. (2008), ‘Russia as an Energy Superpower’, New Political Economy, 13 (2), 203‒210. Saari, S. and S. Secrieru (2020), ‘Global Trends in the Russian Context’, in S. Saari and S. Secrieru (eds), Russian Futures 2030: The Shape of Things to Come, Chaillot Paper No. 159, pp. 1‒25. Sakwa, R. (2014), Putin and the Oligarch: The Khodorkovsky‒Yukos Affair, London: I.B. Tauris; New York: Palgrave Macmillan. Sakwa, R. (2016), ‘The Trials of Khodorkovsky in Russia’, in J. Meierhenrich and D.O. Pendas (eds), Political Trials in Theory and History, Cambridge: Cambridge University Press, pp. 369‒393. Sakwa, R. (2019), Russia against the Rest: The Post-Cold War Crisis of World Order, Cambridge: Cambridge University Press. Simonov, K.V. (2006), Energeticheskaya sverkhderzhava, Moscow: Algoritm. Simonov, K.V. (2007), Global’naya energiticheskaya voina: Tainy sovremennoi politiki, Moscow: Algoritm. Sixsmith, M. (2010), Putin’s Oil: The Yukos Affair and the Struggle for Russia, London and New York: Continuum. Skvortsova, E. (2009), ‘Eksklyuzivnoe interv’yu. Mikhail Khodorkovskii: Rossiya dostoina svobody, i sud’by strany reshat’ nam’, Sobesednik, 50, 29 December. Slav, I. (2020), ‘Putin: Russia Reduces its Dependence on Oil’, Oilprice.com, 17 December, accessed on 20 September 2021 at https://​oilprice​.com/​Energy/​Crude​-Oil/​Putin​-Russia​-Reduces​-Its​-Dependence​ -On​-Oil​.html. Tickle, J. (2020), ‘“If You’re Riding a Dead Horse, the Best Strategy is to Dismount”: Veteran Kremlin Insider Chubais Says’, RT.com, 20 May, accessed on 20 September 2021 at https://​www​.rt​.com/​ russia/​489196​-business​-chubais​-oil​-finished/​. Trickett, N. (2020), ‘The Sagging Prospects for Russian Oil’, Riddle, 19 November, accessed on 20 September 2021 at https://​www​.ridl​.io/​en/​the​-sagging​-prospects​-for​-russian​-oil/​. Vatansever, A. (2020), ‘Taxing the Golden Goose: Reforming Taxation of the Oil Sector in Putin’s Russia’, Europe-Asia Studies, 72 (10), 1703‒1727. Washington Post (2006), editorial, 23 August. Wiśniewska, I. (1997), The Invisible Hand … of the Kremlin: Capitalism ‘á la Russe’, Warsaw: Centre for Eastern Studies, Policy Briefs, 39‒72. Wolf, C. (2007), ‘A Mighty Country’s Progress and Regress’, accessed on 20 September 2021 at http://​ www​.rand​.org/​commentary/​010407PS​.html. Yergin, D. (2020), The New Map: Energy, Climate, and the Clash of Nations, London: Allen Lane.

10. Middle East: oil and political order Raymond Hinnebusch

The topic of this chapter is how the interaction of globalization and Middle Eastern oil has shaped regional and global order. The global hegemony of the United States (US) and of its finance capital hinged on its harnessing of Middle East and North Africa (MENA) oil. In turn, globalization and oil together shaped the MENA regional system, leaving it vulnerable to US-driven neoliberalization, driving lopsided forms of economic modernization and authoritarian governance in weak states, and making MENA highly vulnerable to resource wars.

MIDDLE EAST OIL, US HEGEMONY AND GLOBALIZATION OF FINANCE CAPITAL The Dynamics of Globalization, Finance Capital and Military Intervention Transnational finance capital was dominant in the late nineteenth century first wave of globalization under United Kingdom (UK) hegemony. An ‘interregnum’ intervened from roughly 1930 to 1980, in which finance capital was constrained by Keynesian ‘embedded liberalism’ and a balance of power between big government, big business and big labour, while, in parallel, the US hegemon was checked by the rival Soviet superpower. A second wave of globalization under American hegemony was well under way by the 1980s, as Keynesianism was superseded by neoliberalism and the globalization of Western finance capital, tilting the balance against labour and in favour of capital. This was engineered by what Harvey (2005) called a ‘Wall Street‒US Treasury‒IMF [International Monetary Fund] complex’ as the US sought to make up for its loss of productive ascendancy under rising competition from Europe and Asia (Arrighi and Silver 2001) by establishing the global supremacy of its finance capital over foreign productive capital (Gill 2003, pp.  41‒65) and of the core over the periphery. While the US hegemon thus put the interests of its own capitalists first, it also sustained a transnational capitalist order from which capitalist interests in other core states benefited. In the periphery, globalization advanced (Robinson 1984) through imposition of free trade agreements and structural adjustment to open up markets to mobile finance capital and force late developers toward a single neoliberal model that benefits finance capital (Gowan 1999). These processes created a global society of ‘semi-sovereign’ states (Clark 2001), that in the periphery often acted as ‘transmission belts’ (Cox 1996) for the enforcement of capitalist discipline on periphery peoples. While globalization is based more on structural (market, ideological) power than physical control of territory, it still needs a hegemonic power that can lead the core and discipline the periphery. As Petras and Veltmeyer (2005) insist, global finance capital and global military intervention are inextricably linked because globalization inevitably generates resistance from its victims that provokes intervention: there has been an exceptional concentration of both resistance and intervention in MENA since the 1980s. The two states historically in the forefront of interventionism in MENA and which maintain militaries with 142

Middle East: oil and political order  143 global reach in the periphery (aircraft carriers, counter-insurgency forces), the US and the UK, host the main centres of finance capital and are historically the two largest global investors. Constrained for a period (1945‒90) by Soviet countervailing power, the Soviet Union’s 1990 collapse opened the door to the resumption of core military intervention in the periphery. Oil as Source of Global Power What was the role of Middle East oil in the construction of a global order dominated by Anglo-American finance capital? Oil was perhaps the first globalized business, and the core hegemons – UK and US ‒ long controlled MENA oil; with its concentration of strategic hydrocarbons controlled by Western oil companies, MENA was pivotal to both the rise of American hegemony (Bromley 1991) and of globalization (Alnasrawi 1991; Spiro 1999). The large investments required for oil extraction made the industry susceptible to oligopoly; thus the pre-Organization of the Petroleum Exporting Countries (OPEC) cartel formed by the Anglo-American dominated ‘Seven Sisters’ oil companies to fix prices generated huge super-profits for US companies, which funded the most powerful American political forces (grouped in the Republican Party). US oil companies wrested an increased share of Middle East oil resources, from 10 per cent in 1940 to 60 per cent in 1967, at the expense of the UK, whose share declined from 72 per cent to 30 per cent. The oil companies also repressed the price of oil, thereby encouraging the shift from coal to oil that made Europe and Japan dependent on the cheap oil they provided and, in parallel, made the latter dependent for energy security on US hegemony over the oil fields, while the US itself retained relative energy independence. This oil hegemony would become a key instrument of US global hegemony. Oil gives potential power to whoever controls it because it is a strategic commodity no state can do without. It is the pivotal strategic commodity crucial to military power and to the main industries – autos, aircraft, fertilizers, petrochemicals – of the energy-intensive world capitalist economy. Oil security was subject to joint strategic planning by the US government and the big oil companies. Because oil resources were concentrated in the Middle East, whose share of total proven oil resources fluctuated between almost two-thirds and nearly half, every US Cold War national security doctrine – Truman, Eisenhower, Nixon, Carter – responded to perceived threats from the Soviet Union or local nationalism to Middle East oil, and each incrementally increased the US presence in MENA via treaties and bases, reliance on proxies such as the Shah’s Iran, and with his fall, the creation of the Rapid Deployment Force (later USCENTCOM), allowing direct intervention (Alnasrawi 1991, pp. 69‒85; Bina 1993; Bromley 1991; Harvey 2005, pp. 1‒25, 215‒219; Kubursi and Mansur 1993). OPEC and the Struggle over Oil Rents A key episode in the interaction of oil, US hegemony and globalization was the struggle over control of oil rent between the core and OPEC in the 1970s. Starting as an apparent challenge to Anglo-American control of MENA oil, it ended up, paradoxically, reinforcing US dominance over MENA oil. Pre-OPEC, the Seven Sisters cartel, cooperatively exploiting their monopoly positions inside the producer states, captured much of the economic rent at the expense of the latter, with prices held quite low for decades. OPEC was founded in the 1960s to get some counter-leverage over the companies, but only in the 1970s was this realized when increasing demand for oil shifted market conditions in favour of the producer states. With the formation

144  Handbook on oil and international relations of OPEC, Middle East oil producers controlled such a large proportion of world oil resources (78 per cent of proven reserves and 41 per cent of output in the 1990s) that OPEC states had the potential to limit world oil supply, hence increase prices, if their members cooperated. However, it took a war to precipitate matters: the 1973 Arab‒Israeli War led to an oil embargo on the sale of oil to the US by the Arab oil producers, leading to a drop in supply of 15 per cent, which quadrupled prices overnight (from $10 to $40 per barrel). This was possible because the US, having reached its full oil production capacity, could not make up for shortfalls in supply from the embargo. Even when the embargo ended, prices did not return to the old level, since OPEC had the solidarity to keep them up and the oil market was still tight. In parallel, state after state nationalized the oil industries on their territories, wiping out the Western ownership of the Seven Sisters and creating ‘national oil companies’ under direct government control. Then, the 1979‒80 Iranian revolution and Iran‒Iraq War again reduced supply, creating another price boom ($76/barrel in 1980). Because of the exceptional global dependence on oil for energy, OPEC was able to engineer rising prices that forced a big transfer of wealth to the Middle East that the West had no choice but to accept. Prematurely, some perceived the potential in natural resource distributions concentrated in the Global South to replace the historic economic dependency of the periphery on the core with a more interdependent relationship. High oil prices, however, were not sustained. A rational OPEC strategy was to capture rent through limiting supply, thus raising prices. Success depended on OPEC cooperation ‒ notably, observance by each member state of its production quota ‒ but this cooperation fluctuated. It was easier when high prices kept revenues up; but if prices fell, maintaining revenue meant that producers were tempted to increase output: members would cheat on their quotas or even compete among themselves for market share by increasing output, thus further undermining prices. Also working against cooperation were the built-in divergences of interests between the high-population, revenue-starved states (for example, Iran, Algeria, Iraq) that wanted high prices, and the low-population ones (Kuwait, United Arab Emirates) that wanted moderate prices since they had big foreign investments in the West (which gained from low oil prices). Aggravating the problem was that OPEC producer states had conflicting political interests, and some even constituted military threats to each other. Such political conflicts destroyed OPEC’s 1970s solidarity: first revolutionary Iran and later Saddamist Iraq threatened the Gulf monarchies, which became dependent on protection by external consumer powers (the US), which, in turn, required that they moderate prices. Moreover, Saudi Arabia and Kuwait practised economic warfare by overproducing, driving down prices and the revenues needed by Iran and Iraq for their military efforts in the two Gulf Wars. Pivotal to price stability was the role of Saudi Arabia as ‘swing producer’: the one oil producer with enormous oil and revenue reserves and therefore in a position to rapidly increase (or restrain) its production, it was historically most able to influence other OPEC members and affect prices. The Saudis’ long-term policy was to support prices in a weak oil market and moderate them in a strong one, but this strategy, rational from the point of view of the OPEC collective interest, was often compromised by Saudi regime interests. In the mid-1970s, as part of a deal with Washington in which the Americans guaranteed Saudi security against its more powerful Gulf neighbours, the Saudis agreed to keep oil prices ‘moderate’. After 1980, when oil demand fell, Riyadh sought to keep its market share and also punish Iran, so it increased production, precipitating the 1986 oil bust. In the oil bust of 2014‒15, rivalry with Iran again

Middle East: oil and political order  145 contributed to deterring the Saudis from supporting prices. Thus, the interstate political conflicts fractured OPEC unity to the advantage of the US hegemon. For this and other reasons and, in spite of OPEC’s theoretical leverage over the price of oil, prices have continued to go through the boom‒bust cycles typical of primary products. After the 1970‒86 period of price boom, there was an oil bust as recession, conservation and new discoveries (North Sea) reduced demand for OPEC oil, exacerbated by producer competition for market share. Another boom started in the 1990s with the Iraqi invasion of Kuwait; and in 1997‒98 there was another bust as the East Asian crisis reduced demand (prices falling to $12/ barrel); only in 1999 did OPEC cooperation stabilize prices at $22‒$28. In the 2000s another boom was sparked by the 2003 US invasion of Iraq, plus growing Asian demand; this time it lasted a decade and a half, but inevitably a bust followed for the usual reasons: high prices had made shale oil extraction economical in the US. Thus, OPEC’s ability to control oil prices to the benefit of the regional MENA economy proved quite uneven (Alnasrawi 1991; Noreng 2005; Parra 2003). How OPEC Helped to Empower American Hegemony, Wall Street and Neoliberal Globalization Ironically, therefore, it was not the MENA region but American hegemony and financial capital that proved to be the main enduring beneficiary of the oil price explosion. The oil price boom led to the stagflation of the 1970s in the European core, preparing the way for the assault on the Keynesian welfare state by Reaganomics/Thatcherism and making the neoliberal alternative to Keysianism credible, while also the oil monarchies’ recycling of petrodollars to US banks and government bonds gave an enormous boost to the globalization of US finance capital (Alnasrawi 1991, pp. 93‒98; Spiro 1999; Terzian 1985). The US actually encouraged the 1970s oil price rises that hurt its more oil-importing dependent European and Japanese competitors, blunting their challenge to US hegemony.1 Washington rejected European proposals to recycle the vast amounts of petrodollars being earned by the oil-producing states through the IMF, and pressured its Saudi and Iranian clients to keep selling oil exclusively in dollars (despite its rapid fall in value) and to invest their earnings in US treasury bills, banks, property and massive arms purchases; for example, in the 1970s the Saudis acquired $35 billion in US treasury bonds. In addition the Saudis sold oil at a discount to the US. As part of a major ‘petrodollars for security’ deal between Washington and Riyadh, a joint US‒Saudi commission was established to manage the recycling of petrodollars; as a result, while the US paid out $1.7 billion for Saudi oil in 1974, $8.5 billion flowed from Saudi Arabia to the US. As such, the US (along with the Arab oil producers) was a main beneficiary of high oil prices, while the rest of the world paid the cost (Bronson 2005). Also as a result, Saudi Arabia and the smaller Gulf emirates became conduits for massive transfers of petrodollars to the US Treasury and Wall Street;2 this, combined with US insistence on the deregulation of global capital markets, was a watershed in unleashing the finance capitalism that drove globalization. As part of its deal with Washington, Saudi Arabia also undertook, as the ‘swing producer’ in OPEC, to moderate oil prices to the benefit of the West: pivotal to promoting the perceived indispensability of US hegemony for world energy security. The oil boom crisis in the core allowed the US to scuttle the Bretton Woods monetary system based on fixed exchange rates, and construct an alternative dollar-centred monetary regime with unstable floating exchange rates. This gave the US seigneurage privileges,

146  Handbook on oil and international relations allowing it to print and thereby manipulate the value of the dollar, amounting to a virtual tax on other states, and to evade the balance of payments constraints other states faced. Paying for dollar-denominated oil also required other states to earn dollars by exporting to the US; exchange rate instability also forced other states to build up dollar reserves to protect their own currencies. As a result, productive capital, mostly Asian, began piling up dollar surpluses in US banks and government bonds. These mechanisms funded rampant US consumerism, militarization and imperial overreach, and allowed US corporations to buy up assets globally. The US economy became dependent on these huge inflows of finance from around the world, giving Washington an interest in the persistence of monetary instability which encouraged capital flight in the Global South to supposedly safe American investments or bank deposits (Gowan 1999; Hudson 2003). The US was also able to use access to its market as a political weapon against other states, notably to enforce extra-territorial sanctions; indeed, once military intervention became (after the Iraq War) more costly, Washington increasingly exploited the sanctions weapon, abusing the world financial system for its own parochial objectives. At the same time, US policy encouraged the lending of the OPEC surplus by US banks to oil importers in the periphery. Owing to the high interest rates engineered by Reagan and Thatcher, poorer oil-consuming states fell into debt, which was then used by the US‒IMF to impose structural adjustment on them, requiring domestic deflation and currency devaluation, and prioritizing debt repayment over domestic needs, thus forcing the populations of debtor states to bear the costs of reckless lending by US banks; this also engineered a massive wealth transfer from the Global South to the North. But the US‒IMF combinazione went further in seeking to reshape LDC economies in a single neoliberal mould: the forced opening of their markets to foreign competition undercut national capitalism in the South, led to considerable de-industrialization and, together with the privatization of state-owned utilities and manufacturers, and the forced opening of LDCs to foreign finance capital, facilitated takeovers by core-based foreign investors and their local crony capitalist collaborators. Structural adjustment forced cuts in welfare and employment, paralleled by tax cuts for investors, massively increasing social inequality. Additionally, a switch to export strategies to repay debt required driving down wages and taxes to make states’ products competitive on global markets, thereby also providing cheap goods for Western consumers (Gill 2003, pp. 143‒152; Gowan 1999, pp. 95‒100; Harvey 2005, pp. 137‒182).

HOW GLOBALIZATION REMADE A NEOLIBERALIZED MIDDLE EAST The First Wave of Globalization The Middle East states system was created at the time of the first wave of globalization, which paralleled classic nineteenth-century imperialism, culminating in the post-World War I imposition of a supposedly Westphalian states system in MENA. Crucially, the flawed and arbitrary way the states system was imposed – state boundaries often incongruent with identity, fragmentation of pre-existing identity communities, giving rise to ‘pan’ ideologies (Pan-Arabism, Pan-Islam), the fostering of settler states (Israel, French Algeria) and the denial of statehood to indigenous felt nations (Palestinians, Kurds) – all built irredentism into the fabric of the regional order. This made it particularly conflict-prone and fuelled the rise of revisionist

Middle East: oil and political order  147 movements and states seeking to change the system. At the same time, the region acquired formal independence and a measure of real sovereignty, in the mid-twentieth-century period of decolonization and bipolarity that enabled a period of statist development in the roughly three-decade interregnum (1950‒80) between the first and second waves of globalization. Oil was pivotal in shaping the architecture of the regional order. Oil funded a degree of indigenous state-building: it enabled degrees of material co-optation to stabilize fragile, even otherwise non-viable states. It also secured Western protection without which some states might otherwise have collapsed. The oil city-states in the Gulf would certainly have been absorbed by stronger powers – an expanding Saudi state, Iraq or Iran – without Western protection motivated by oil interests (Luciani 2019, pp. 113‒114). Oil also provided resources for revisionist regimes – even ‘war states’ (for example, Iraq) – ambitious to become regional oil hegemons. The resultant contest to control regional oil made the region a magnet for US intervention that massively destabilized its fragile architecture. The Failure of Oil Arabism as a Basis of Regional Development and Security MENA’s exceptional oil resources might have provided the basis of both security and development. At the time of the 1970s oil price boom it was thought oil might provide collective Arab power that would force the US/West to accommodate Arab interests in the Arab‒Israeli conflict, and drive the regional economic integration needed to promote economic development and political solidarity. Yet, oil proved more of a curse than a blessing, and understanding why exposes the hidden intersection of globalization, hegemony and oil. In 1973, the Arab oil-producing states, led by Saudi Arabia, had briefly sought to use the ‘oil weapon’ – an embargo on oil sales to the US – in order to force it to broker an ‘equitable’ resolution of the Arab‒Israeli conflict. This provoked speculation that possession of major oil resources might translate directly into power in world politics. However, even in the brief decade of the first oil boom, oil did not translate into such power: the embargo did not force the US to pressure Israel into evacuating the Arab territories it had occupied in 1967, and America’s pro-Israeli policies actually hardened in the Reagan period. Oil power failed because the recycling of petrodollars earned by the oil states to the West – deposited in Western banks, US government bonds or spent on massive Western arms purchases – linked the interests of the monarchic oil producers to the West. Most importantly, Saudi Arabia, being dependent on the US for security and with its elites’ economic interests invested in the US relation, was in no position to extract a change in US policy, and it rapidly abandoned the ‘oil weapon’. Despite an explosion of US arms and aid to Israel which kept it so strong that it needed to make few concessions to the Arabs in the peace process, Saudi Arabia continued to pump large amounts of oil to keep the price down at American behest. The brief moment of potential Arab oil power was lost, for the price boom was followed by a bust that was very damaging to MENA economies, and produced a new round of debt and submission by states such as Egypt to the Western-dominated IMF (Aarts 1994; Alnasrawi 1991, pp.  93‒152; Kubursi and Mansur 1993). Oil-fuelled economic integration had also seemed, during the 1970s, to be a potential force of cohesion among the Arab states, generating an economic undergirding for a political concert of Arab states. Inter-Arab economic ties proliferated from the post-war explosion in Arab oil wealth. The Arab oil states transferred about 15 per cent of their capital surpluses to the non-oil Arab states (in the form of development or defence aid). The oil-poor states started

148  Handbook on oil and international relations opening their economies to external Arab investment and inter-Arab free trade agreements were signed. A massive labour migration from poor to oil-rich states took place, with worker remittances flowing back to stimulate home state economies. Pan-Arab joint ventures were proposed, the most successful of which was the joint Egyptian‒Saudi Arab Military Industrial Organization meant to reduce dependence on foreign arms purchases (Kerr and Yassin 1982). In practice, however, oil did not fuel a new Arab order. Inter-Arab trade remained at less than 10 per cent of total Arab trade, partly due to the similarity of their products (that is, producers of either oil or competing agricultural/light industrial goods). Pan-Arab investment and joint ventures remained limited, partly because of the prevalence of import substitute industrialization (economies that were non-competitive and not export-oriented), and partly because most Arab capital surpluses were recycled to the West: only 3 per cent of oil revenues were invested in the region, meeting only one-third of regional capital needs. Inter-Arab capital transfers declined after the oil bubble burst around 1986. By the 1990s, 98 per cent of private Arab foreign investment was outside the region. Arab migrant workers acquired no rights in the oil wealthy states of the Gulf, and had to leave their host countries when the oil boom demand dropped. Oil linked the interests of the oil producers to the world economy rather than the Arab world. It accentuated the income gap between oil and non-oil countries, sharply differentiating their interests (Alnasrawi 1991; Kubursi and Mansur 1993). Oil also propelled a shift of power and influence in the Arab world from the core Arab republics (Egypt, Syria), which had prioritized national independence, to the periphery Gulf monarchies (which had never experienced a struggle for independence and were invested in dependence). And, in what Heikal (1975, pp. 261‒262) called the eclipse of thawra (revolution) by tharwa (resources), the oil monarchies deployed their massive rent surpluses to buy influence in the formerly radical Arab republics, a key factor in their deradicalization and opening to the West, as best exemplified in Sadat’s Egypt. The Second Wave of Globalization Engulfs MENA The Middle East’s states – or specifically, its monarchic oil producers – having helped to generate a neoliberal world and having missed the chance to use oil to empower the region, left the region vulnerable to reshaping by the neoliberal world order. MENA was, according to Halliday (2002), re-incorporated as a periphery of the core, albeit with the Gulf’s oil monarchies’ privileged clients presiding over and taking their cut of capital circuits linking them to the core. ‘Peripheralization’ of the MENA economies was manifest in the failure of state-led import substitute industrialisation (ISI). This was partly a result of the imperially imposed fragmentation of the regional market and the recycling to the West of the vast capital surpluses that might have been invested in regional industry. Rather, MENA suffered the world’s highest capital flight as a percentage of gross national product (GNP) ‒ 100 per cent ‒ with $150‒200 billion in foreign banks or financial markets in the 1990s (Guerrieri 1997; Padoan 1997); 90 per cent of Arab investment from the 1970s oil boom was recycled to the West (Alnasrawi 1991, p. 163), with 40 per cent spent on Western arms deals even as capital-poor MENA countries went into debt to Western lenders. By the 1980s, the populist republics, suffering economic stagnation, moved to open their economies to private and foreign capital, and especially the new oil capital in the Gulf; economic liberalization was accompanied by import booms that, followed by the oil price bust of 1986, ended in debt and stagnant growth. Declining state

Middle East: oil and political order  149 investment in public industry led to privatization, providing good pickings for speculative foreign capital and domestic crony capitalists (Abdul Khalek 2001). International finance promoted tertiary, speculative investment, with industry declining as a proportion of GNP and of investment in the region. This produced few skilled jobs, even as social safety nets were cut away, a lethal combination that prepared the way for the 2010 uprisings (Heydarian 2014). By the 2000s, however, Gulf finance capital played its own powerful role as an agent, not just a passive beneficiary of the deepening of neoliberalization. The opening up of the non-oil countries to Gulf investment and the accumulation of surplus capital in Gulf hands, particularly enhanced as a result of the 2004‒14 oil boom, gave unprecedented regional depth to the financialization of MENA economies in what could be seen as a second wave of oil-driven economic integration. While the first wave had taken the form of transfers of rents in the form of aid to non-oil Arab states, or wages to migrant workers in the oil states, the new wave took the form of semi-private investments of Gulf capital in non-oil Arab economies, buying up assets and achieving commanding positions in many market sectors. The rise of business conglomerates linking Gulf royals, traders and the nouveau riche propelled investment across the region in agribusiness, real estate, construction, telecoms and banking. This appeared to empower the private sector against the state, as the public sector share of gross domestic product (GDP) was everywhere in decline; yet, the Gulf investment, linking rulers as private investors with non-royal associates, was essentially crony capitalism, while in the non-oil states Gulf investment was typically in partnerships with local investors, driving a process of ‘Khaleejization’ (Gulfization) of crony capitalism. Gulf investments further deepened the neoliberalization of public policy and consequently of class inequalities. Thus, for example, in the housing sector the public investment in affordable housing and rent controls typical of the populist era gave way to the privatization of housing, with investment concentrated in gated communities for the rich, while the middle classes were squeezed out of formal housing markets and the masses confined to informal settlements. Agribusiness re-oriented agriculture to export (including to the Gulf itself), making populations vulnerable to rising prices of (often imported) food on the home market of non-oil states that squeezed the budgets of lower-income people. As such, in the 2000s the Gulf Cooperation Council (GCC) became a key collective transmission belt mediating between global finance capital and the region. The resulting sharpened inequalities would help to precipitate the Arab uprisings after 2010; in reaction to this, Gulf states deployed their financial clout to stabilize post-uprising regimes, notably al-Sisi’s Egypt, that would sustain neoliberalism in the face of popular opposition. The emergent dependence of regimes in what had been the more developed core of the Arab world, on what had been the less-developed tribal periphery, manifested the hyper-power of finance capital to drive a complete reorganization of MENA’s political economy (Hanieh 2018).

OIL AND THE FORMATION OF REGIONAL STATES Regime Stability, State Weakness Hydrocarbons have shaped distinctive trajectories of state formation in MENA, but their impact has varied by case; conversely, differing experiences of state formation have shaped the uses to which oil revenues have been put. Nevertheless one relative constant has been the tendency to strengthen regimes while, paradoxically, weakening states. As regards regimes, it

150  Handbook on oil and international relations is no accident that the 1970s oil boom separates a period of widespread instability (1940‒70) in the Arab world from one of regime consolidation and durability, with no regime overthrown between 1970 and 2010. The region’s exceptional hydrocarbon rent windfall constituted an enormous patronage resource, especially in oil producers with small citizen populations, but non-oil states also received a share of the rent (becoming indirect partial rentier states). Regimes’ monopoly of hydrocarbon rents allowed the incorporation of constituents and, in fuelling clientalism (in which individuals and groups competed for patronage), fostered divide and rule, and deterred class formation and mobilization against rulers. Rent also funded the expansion of the security apparatus, often made up of tribesmen, minorities or foreign mercenaries who felt less compunction at using violence against populations. In the monarchies rent allowed a build-up of air forces, which, piloted by royal princes or loyal minorities, alleviated the need for the mass conscription or middle-class recruitment to the officer corps that could fill land armies with disloyal elements (Beblawi and Luciani 1987; Herb 2005; Lotz 2008; Richter 2020, p. 233; Ross 2001). To be sure, oil in itself is no guarantor of regime stability, and is so only in conjunction with other factors: notably in the Arab Gulf monarchies, the historic dominance of tribalism as the constituency of ruling families and the persistence of monarchic legitimacy (Richter 2020, pp. 232‒233). This point is also made by the main exception to the rule that oil consolidated regimes: namely Iran, where rapid Westcentric oil-funded modernization actually destabilized the Shah’s rule. Massive urbanization and social mobilization of Iran’s very large population, with high expectations encouraged by the oil wealth boom but which exceeded the regime’s oil-endowed co-optative capacity, destabilized the regime. However, Iran was also a special case because of a legitimacy deficit which the Shah could never overcome, that was linked directly to Iran’s oil: the belief that he was a puppet of the US, after he was restored to power by the Central Intelligence Agency (CIA) after Prime Minister Muhammad Mossadeq’s overthrow for having nationalized Iran’s oil (Cottam 1979). If rent usually strengthens regimes, it may keep states weak, since states that need not extract taxes from populations need not develop the bureaucratic sinews to penetrate society (Mahdavy, quoted in Richter 2020, p. 228; see also Chaudhry 1997; Karl 1997). Instead of relying on robust citizen armies, rentier regimes often ‘buy’ security from foreign patrons or mercenaries. Rent reinforces clientalism as the dominant political practice at the expense of broader association, debilitating parties and institutions. And rent-dependent modernization does not create the national economies that are the true foundation of states’ political and military strength. Sources of Intra-State Conflict Irrespective of the strong regime, weak state syndrome, the ‘resource curse’ hypothesis claims that abundance in natural resources can encourage internal conflict, even separatism or civil war, that may debilitate both regime and state (Klare 2001; Ross 2001). In high-population states where the state is dispenser of economic benefits yet there is not enough revenue per capita to buy off citizens, the regime can become a target of discontent by those unhappy with their share (Karl 1997). Thus, in Algeria the shrinking of rental income was one ingredient of civil war, and in Iran a similar scenario drove the Shah’s overthrow. Moreover, where revolt against the regime weakens the state, non-state or regional elites may contest central government control of resources; the conflict between Iraq’s central government and the Kurds over

Middle East: oil and political order  151 control of Kirkuk became particularly virulent after the central government was gravely weakened by the US invasion. And where the state breaks down and civil war erupts, the struggle for control of oil resources will both incentivize and provide the means to prolong fighting, as in Libya after the Western intervention helped to destroy the Qaddafi regime. Deterring Democratization Rent, it is widely argued, also deters the democratization and institution-building that might strengthen states. Rents give regimes autonomy of society, much reducing their dependence on populations for taxes and conscription. Material benefits substitute for political participation: rather than taxing society, a dynamic that elsewhere led to demands for representation, the state instead distributes benefits to society, diluting the urgency of calls for representation. Business, dependent on state contracts and insider connections, is in no position to push for the rule of law or democratization, and indeed may see authoritarian government as essential to discipline labour. Regimes can selectively extend and withdraw oil-funded material benefits and political rights as part of a divide and rule strategy that sets elements of society against each other, enabling the ruler to stand above and broker such conflicts (Gengler 2016). Of course, this is not incompatible with limited democratization, as seen in oil states such as Kuwait, where a very limited franchise translates into elected parliaments representative of a privileged citizenry consisting of a fraction of the population. Such parliaments do have some powers to check the government, but they risk dissolution by the ruler if they push too far, as has often happened. Moreover, the electorate ‒ citizens entitled to generous rent-funded material benefits – have an interest in defending such a hybrid regime against the demands of the unentitled for a share of the largesse: the migrant labourers who constitute the majority of the population and do most of the work, but who are readily expelled if they make political demands (Ross 2004). Such democratization is therefore of a quite limited and exclusionary variety.

OIL AND LOPSIDED MODERNIZATION Does oil promote or deter economic development? Oil provides the capital that can potentially be used to import technology, diversify economies and reduce dependence on rent in the long term. Yet in many ways it promotes what dependency theorists called ‘the development of underdevelopment’. Thus, in MENA the oil industry tends to remain an export enclave, with limited backward and forward linkages to stimulate other businesses; investment in petrochemicals downstream is economically rational, but such industries generate few skilled jobs and many are staffed by expatriates, and modern infrastructure is imported, not built by skilled indigenous workforces. Oil also discouraged private investment in productive sectors owing to import explosions and an overdevelopment of tertiary sectors due to high government spending. Access to rent dilutes the necessity to invest in productive activities and maximize efficiency, and encourages distribution and overconsumption (Apergis and Payne 2014; Richter 2020, p. 229). In principle, oil resources enable investment in human capital, for example, through mass education of citizens which has taken place in the Gulf monarchies. Yet the massive import of external labour (to do the manual work under a licensing system requiring a citizen as guarantor, in return for a percentage of workers’ wages), and the privileged access

152  Handbook on oil and international relations of nationals to sinecures in the government and generous welfare entitlements, tended to ruin the development ‘ethic’ (to work, postpone consumption/save, invest). Excessive state intervention and rent-seeking activities are encouraged, which can undermine property rights and discourage long-term investment. Unearned wealth combined with a lack of accountability leads to profligate corruption and waste of revenues; for example, on arms and white elephants. Mineral export-based development leads to periods of rapid price booms followed by bust and, often, debt. There is also the longer-term risk that once the minerals are exhausted, the economy returns to underdevelopment. Globalized City-States One outcome of such development is the petro city-states of the Gulf, a particular artefact of imperial boundary-drawing: small-population states created around oil wells and cut off from their natural hinterland by the British. As Ismael (1993) showed in the case of Kuwait, limited absorptive capacity led to recycling petrodollars rather than investing in the regional economy. Under contemporary globalization, these mini-states have created niche economies around offshore banking, as transit depots (between East and West) and as tourism centres. Investment in the Western economy (banks, property, stocks) via sovereign wealth funds ensures flows of rent when hydrocarbon exports or prices decline, but these flows are not immune to finance capital’s manipulations: thus, the speculator-generated 1991 depression in East Asia drove down the price of oil on global markets (Gowan 1999, pp. 103‒125), and the sovereign wealth funds suffered huge losses from the 2008 financial crisis. These states, particularly Dubai, are the very icons of globalized city-states. Dubai is the third-largest global re-exporter, a transit hub and a consumer playground, with the highest level of per capita waste in the world, super-consumption of imported brands, a culture of shopping malls and fast cars. These super-wealthy city-state enclaves are detached from the poverty of the region, but linked to other global cities by the internet, global media, local campuses of American universities and a switch in local universities from Arabic to English (Fox et al. 2006). In their concentrated rentierism and with the low role of production they exaggerate the distortions of financial globalization, with little transfer of productive skills to citizens, and reliance on high-paid Western expatriate experts together with the exploitation of low-paid Asian labour forces lacking rights. However, in parallel to this was the counter-tendency of the Gulf elites – royal families and their merchant partners – to become owner-managers of capital, investing via huge conglomerates across the region, or via sovereign wealth funds, on a global scale, combined with the possibility, even in a rentier context, for some enterprises to be run on profitable lines (Hertog 2010). Thus, there was a certain tendency to turn the petro city-states from mere islands of consumption to nodes of capital accumulation – even enterprise – increasingly integrated into both the wider regional and the global financial circuits (Davidson 2013; Hanieh 2018; Luciani 2019, p. 127).

OIL AND REGIONAL CONFLICT Rather than becoming the basis of a new regional security order, oil exacerbated regional insecurity in MENA. Globally, petrostates are associated with high military spending and more

Middle East: oil and political order  153 militarized interstate disputes (Strüver and Wegenast 2018). That MENA is the most militarized and conflictual global region is certainly partly a function of oil. Indeed, oil and regional conflict are linked in a chain of conflict events whose origins go back to the CIA’s overthrow of Iranian Prime Minister Muhammad Mossadeq because of his nationalization of Iranian oil; this, in turn, was a major factor precipitating Iran’s 1979 revolution that initiated Tehran’s attempted export of Islamic revolution to its neighbours. In this sense, oil was a precipitating factor in the chain of events leading to the Iran‒Iraq War and, in turn, the two Iraq Wars for which the former prepared the way. To be sure, hydrocarbons in themselves do not explain war-proneness. The motives for belligerence are rooted in the irredentism built into the region at its founding, but hydrocarbons have fuelled arms races, destabilizing the regional power balance, and have given ambitious states the means for assertive foreign policies. Oil has made regional states targets of external predators and has been an issue in conflicts (for example, between Iraq and Kuwait in 1990). Nor does possession of oil necessarily translate into belligerence; whether it does depends on states’ size and other power assets, and whether their regimes are constituted as revisionist or status quo: thus, the small Gulf monarchies are status quo-oriented and vulnerable to the gross imbalance of power with large neighbours such as Islamic Iran and Ba’thist Iraq that put oil in the service of revisionism. Iraq as a War State? Iraq, Malik Mufti (1996) claimed, was created as a ‘war state’: it has been involved in four wars: with Iran, Kuwait, and twice with the US. It exemplifies the previous observations about how oil can be an issue provoking conflict and can provide the means to pursue revisionist policies, but by itself does not explain the origins of a state’s war-proneness. War-proneness was embedded into Iraq’s state formation. The stabilization of the identity-fragmented Iraqi state under the Ba’th party resulted from a combination of Saddam Hussein’s hard authoritarianism, its legitimization by Arab nationalist ideology (whose credibility depended on being seen to defend Pan-Arab interests) and the oil boom revenues funnelled into modernization, bureaucratic expansion and a big army, giving Iraq the capacity to follow a revisionist foreign policy. The case of Iraq’s invasion of Kuwait exemplifies the complex interaction of oil with revisionist grievances and regime vulnerabilities that produced war. Iraq always had pretensions to be the Prussia (unifier) of the Arab world, and Saddam Hussein was ambitious for it to replace Egypt as the latter withdrew from Arab leadership after 1980. To counter what he declared was the shift in the balance of power against the Arabs, from the late 1980s decline of the Soviet Union and the tide of Soviet Jewish emigration to Israel, Saddam Hussein proposed reviving the oil weapon to force a change in US pro-Israel policy; he also warned that he would use non-conventional weapons against Israel if it attacked any Arab country, winning wide acclaim in the Arab street. Under his proposed new Pan-Arab order, Arab states would expel foreign bases, and the rich states had to share oil wealth with the poorer. This was a threat to the US and all pro-US Arab regimes (Egypt, Saudi Arabia, the Gulf emirates), and they rebuffed Saddam Hussein: the invasion of Kuwait in 1990 was in part an attempt to impose his will. Kuwait was the target because Iraq had never wholly accepted the legitimacy of its creation by Britain or of its borders that, as Iraq saw it, denied it secure access to the Gulf for its oil

154  Handbook on oil and international relations exports. At the same time, Iraq came out of the Iran‒Iraq War dissatisfied. It had paid a high cost and seemed to win, but got no commensurate rewards. Rather, the war had bankrupted it, while the Gulf monarchies were calling for repayment of Iraq’s debts owed to them but incurred, Saddam Hussein declared, to help defend them from Islamic Iran. At the same time, Kuwait was overpumping oil, driving down its price when Iraq desperately needed income; what Saddam Hussein called economic warfare. He calculated that the invasion of Kuwait would solve his economic problem and increase his domestic nationalist legitimacy, and that, by dominating Kuwait’s oil, he could impose his leadership and Arab nationalist ideology on the Arab world. Oil alone did not explain this war, but it raised the stakes, inflated (Saddam Hussein’s) ambitions and provided the means to finance war.

OIL WARS AND US HEGEMONY Oil made MENA a magnet for US intervention, because it was the location both of the oil needed for US hegemony, and of resistance to this hegemony which kept the oil relation with the West politicized and continually challenged. On the face of it, the relation between oil producers and consumers is a win‒win one that might easily be left to market relations and peaceful bargaining. What made Western, and particularly US, military intervention necessary was the ever-exacerbated animosity created in Middle Eastern nationalist regimes and movements: less by the fading residues of imperialism, than by the actually ongoing and intensifying support for Israel and its attempt to incorporate the occupied Palestinian territories at the expense of Palestinian national rights. Oil and Israel had become inextricably linked. This was exemplified in the Iraq Wars. The origin of the 1990 war was a bid by Iraq to become a regional oil counter-hegemon, which it openly justified by its assumption of Arab nationalist leadership, notably in the struggle with Israel. Alarming as this was in Washington’s eyes, what made it particularly dangerous was the fact that if Iraq, after its 1990 invasion of Kuwait, were to retain the Kuwaiti oil fields it had seized, and if its armies remained in Kuwait where it could intimidate Saudi Arabia, Baghdad could nullify Saudi Arabia’s role as pro-Western swing producer of oil and give Saddam Hussein hegemony over 40 per cent of world oil reserves at a time when American known oil reserves had shrunk from 34 to 7 per cent of the global total. Iraq would still have to sell its oil and its dire need for revenue dictated that it would, in the short term, pump oil at levels likely to keep prices moderate. But unlike Saudi Arabia which, by virtue of its security dependence on the US and investments in the Western economy could be depended upon to indefinitely moderate prices and also recycle the proceeds through Western banks and the purchase of Western arms, Iraq was not similarly dependent and, on the contrary, was threatening to make its oil policy conditional on a favourable Western policy in the Arab‒ Israeli conflict. Were Iraq able to dictate the terms on which the West received oil, it would trap US politicians between the demands of the Israeli lobby and US consumers’ appetite for cheap gasoline (Gowan 1999, pp. 158‒160; Hinnebusch 2010). While this threat, from Washington’s point of view, had to be countered, the invasion was also an opportunity for the US to establish direct hegemony over the region and its oil that, from the time of OPEC and the nationalization of Western oil companies, had had to be exercised indirectly, through client states such as Saudi Arabia. Because the invasion coincided with the Soviet Union’s withdrawal from global competition with the US, the risk of a super-

Middle East: oil and political order  155 power confrontation that would hitherto have restrained US intervention was removed. A war on Iraq would consolidate the US’s emerging status as the post-Cold War global hegemon. War presented a chance to destroy Iraq as a regional power, it being a prime example of what the Pentagon had identified as the main remaining post-Cold War opposition to US hegemony: Third World nationalist regimes. A cheap military victory through the unrestrained use of America’s high-tech military power would warn other would-be challengers, banish the Vietnam syndrome that had constrained US involvement in conflicts abroad and justify a new post-Cold War mission for the US military‒industrial complex. The US had long sought extensive military bases in the Gulf but had been rebuffed by regimes reluctant to violate the norms of Arab nationalism; Saddam Hussein’s threat was used to sweep aside their qualms. Finally, war was an opportunity to demonstrate the dependence of the US’s economic competitors on its hegemonic role in securing oil supplies, and to ensure that Gulf petrodollars would continue to be primarily recycled through US institutions and serve US competitiveness. A key aspect of this was that the Gulf states had started to diversify their arms purchases toward Europe because of Washington’s pro-Israeli policies; this was reversed after the war. So successful was the US demonstration of its ‘indispensability’ to the energy and physical security of its economic competitors (Germany, Japan) and its regional clients (Saudi Arabia, Kuwait) that it was able to bring them to fund the war (Aarts 1994; Hinnebusch 2010; Klare 1996; Kubursi and Mansur 1993). The blow to Arab nationalism by the US defeat of Iraq, combined with the subsequent collapse of the Soviet Union, leaving the remaining radical Arab republics without protection and patronage, seemed to overcome the last obstacles to unchallenged US hegemony in the region ‒ had the US not squandered the opportunity. The 2003 war on Iraq was another pivotal moment in the struggle for world hegemony. Control of Middle East oil was becoming ever more crucial to the US’s hegemony, as its own reserves declined and its oil dependence was predicted by the Cheney report (United States Government 2001) to reach 70 per cent by 2025. In parallel, 9/11 had produced a perceived need to deliver a ‘shock and awe’ blow to regional resistance to this hegemony. In parallel, as the reliability of Saudi Arabia as a US surrogate to control the region’s oil was coming into doubt (notably from the involvement of Saudi citizens in 9/11), Iraq, possessing the next-largest oil reserves, was recognized as a potential alternative swing producer. Saddam Hussein was seeking to escape US military containment by handing out oil concessions to French, Russian and Chinese companies, while excluding British and American ones (Aarts 2005, p. 427). The 2003 Iraq War was thus a way of both smashing lingering resistance to American hegemony while consolidating the US’s grip over the Middle East oil supplies needed by its economic competitors, and providing a hedge against a hegemonic power shift to China (Harvey 2005, pp. 1‒25, 62‒86; Hinnebusch 2007; Khalidi 2004). The expectation was that the war and reconstruction would be paid for by Iraq’s oil resources; indeed, as Hartnett and Stengrim (2006, pp. 221‒266) observed, Iraq under US occupation was the epitome of crony capitalism, with non-competitive contracts awarded to contractors close to the Bush administration who were exempt from legal accountability to Iraq (p. 218), their payments guaranteed by a trusteeship over Iraq’s oil (p. 257), mortgaging its future (p. 261). To be sure, the war was not solely about oil: it was also driven by the ambitions of the neo-conservatives around Bush to smash a potential threat to Israel. The Zionist lobby had not only relentlessly advocated a US attack on Iraq, but had also promoted the perception that the Saudis were a source of terrorist funding, even advocating seizing Saudi assets and oil fields

156  Handbook on oil and international relations (Aarts 2005; Bronson 2005). Thus, the occupation of Iraq exposed the intimate interaction between MENA oil, finance capital, US hegemony and Zionism. Much changed on the MENA oil scene after the 2003 Iraq War, indicative of major transformations in the global economy. Parallel with China’s global rise, Beijing replaced the US as the main customer for Middle East oil, the main trading partner for the region, and its single biggest foreign investor (amounting to 31 per cent of all investments in MENA in 2016). In the US, the fears regarding a peaking of oil production salient in 2003 were eclipsed by shale oil production that made the US self-sufficient in oil, greatly reducing its MENA imports (Dannreuther 2019, p. 406). The US still clung to its role of world oil hegemon, but this became more of a negative matter of trying to deny its rivals, above all China, and even allies such as Japan, unhindered access to oil, even though Washington did not need the oil itself. Thus, the US tried to pressure its Gulf allies to choose between their American and Chinese ties, and it continued to abuse the world financial system and use access to its own huge market to enforce extra-territorial sanctions to keep Iranian oil off the market (again showing the intimate interaction of financial globalization and the oil order). The positive basis upon which the US claimed oil hegemony ‒ its supposed guarantee of access to Gulf energy supplies ‒ was of declining credibility, since its regime change in Iraq had destabilized the whole region, and its overturn of the Iran nuclear deal and maximum-pressure campaign against Iran was seen by many world powers as a main threat to regional stability, and hence oil supplies. On the other hand, Washington’s failure to respond to Iranian proxy attacks on a Saudi oil field in 2019 showed that it was unwilling to pay the costs of policing the area now that the US’s own oil dependency on it had shrunk. China, for its part, refrained from directly confronting the US, attempting instead to reduce its vulnerability to US pressures, and particularly the threat that the US could intercept its oil supplies en route through the Indian Ocean and the Strait of Malacca; toward this end, Beijing negotiated a string of port facilities along this route and tried to bypass it through pipeline and infrastructure projects to (and through) central Asia to the Gulf.

CONCLUSION The combination of oil and globalization shaped the interaction of MENA and the US-dominated neoliberal world order. MENA oil helped to empower US hegemony and financial globalization, which in turn then re-incorporated MENA as a periphery of the globalized economy, after the potential to use oil to boost regional autonomy was short-circuited by the Washington‒Saudi connection. Oil rents drove lopsided modernization, and consolidated regimes ruling over weak states, making MENA vulnerable to continuing global penetration. Rents empowered both globalized city-states (Kuwait) and revisionist war states (Iraq), which further fragmented and militarized the region and made it a magnet for US resource wars. Globalization and oil benefited US hegemony and the Gulf’s monarchic rulers, but fragmented and debilitated the MENA order.

Middle East: oil and political order  157

NOTES 1.

According to the US ambassador in Saudi Arabia, this was done deliberately to attack the economies of US rivals (Terzian 1985). 2. According to UK government documents, the US threatened military action if they did not recycle petrodollars (Harvey 2005, p. 219).

REFERENCES Aarts, P. (1994), ‘The New Oil Order: Built on Sand?’, Arab Studies Quarterly, 16 (2), 1‒12. Aarts, P. (2005), ‘Events vs. Strategy: The Role of Energy and Security in the US–Saudi Relationship’, in P. Aarts and G. Nonneman (eds), Saudi Arabia in the Balance, London: Hurst, pp. 399–432. Abdul Khalek, G. (2001), Stabilization and Adjustment in Egypt, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing. Alnasrawi, A. (1991), Arab Nationalism, Oil and the Political Economy of Dependency, New York and London: Greenwood Press. Apergis, N. and J.E. Payne (2014), ‘The Oil Curse, Institutional Quality and Growth in MENA Countries’, Energy Economics, 46 (C), 1–9. Arrighi, G. and B. Silver (2001), ‘Capitalism and World (Dis)order’, in M. Cox, T. Dunne and K. Booth (eds), Empires, Systems and States: Great Transformations in International Politics, Cambridge: Cambridge University Press, pp. 257–279. Beblawi, H. and G. Luciani (eds) (1987), The Rentier State, Beckenham: Croom-Helm. Bina, C. (1993), ‘The Rhetoric of Oil and the Dilemma of War and American Hegemony’, Arab Studies Quarterly, 15 (3), 1–20. Bromley, S. (1991), American Hegemony and World Oil: The Industry, the State System and the World Economy, Cambridge: Polity Press. Bronson, R. (2005), ‘Understanding US–Saudi Relations’, in P. Aarts and G. Nonneman (eds), Saudi Arabia in the Balance, London: Hurst, pp. 372–398. Chaudhry, K.A. (1997), The Price of Wealth: Economics and Institutions in the Middle East, Princeton, NJ: Cornell University Press. Clark, I. (2001), ‘Another Double Movement; The Great Transformation after the Cold War’, in M. Cox, T. Dunne and K. Booth (eds), Empires, Systems and States: Great Transformations in International Politics, Cambridge: Cambridge University Press, pp. 237–255. Cottam, R. (1979), Nationalism in Iran, Pittsburgh, PA: University of Pittsburgh Press. Cox, R. (1996), ‘Social Forces, State and World Orders’, in Richard Cox and Timothy Sinclair, Approaches to World Order, Cambridge: Cambridge University Press, pp. 85–123. Dannreuther, R. (2019), ‘Russia, China and the Middle East’, in L. Fawcett (ed.), International Relations of the Middle East, Oxford: Oxford University Press, pp. 394–414. Davidson, C. (2013), After the Sheikhs, New York: Oxford University Press. Fox, J., N. Mourtada-Sabbah and M. al-Mutawa (2006), Globalization and the Gulf, London and New York: Routledge. Gengler, J. (2016), Group Conflict and Political Mobilization in Bahrain and the Arab Gulf: Rethinking the Rentier State, Bloomington, IN: Indiana University Press. Gill, S. (2003), Power and Resistance in the New World Order, London and New York: Palgrave Macmillan. Gowan, P. (1999), The Global Gamble: Washington’s Faustian Bid for World Dominance, London: Verso. Guerrieri, P. (1997), ‘Globalism and Regionalism in the World Economy and the Middle East’, in L. Guazzone (ed.), The Middle East in Global Change, London: Palgrave Macmillan, pp. 153–173.

158  Handbook on oil and international relations Halliday, F. (2002), ‘The Middle East and the Politics of Differential Integration’, in T. Dodge and R. Higgott (eds), Globalization and the Middle East: Islam, Economy, Society and Politics, London: Royal Institute of International Affairs, pp. 42–45. Hanieh, A. (2018), Money, Markets and Monarchies: The Gulf Cooperation Council and the Political Economy of the Contemporary Middle East, Cambridge: Cambridge University Press. Hartnett, S. and L. Stengrim (2006), Globalization and Empire: The US Invasion of Iraq, Free Markets and the Twilight of Democracy, Birmingham, AL: University of Alabama Press. Harvey, D. (2005), The New Imperialism, Oxford: Oxford University Press. Heikal, M.H. (1975), The Road to Ramadan, New York: Reader’s Digest Press. Herb, M. (2005), ‘No Representation without Taxation: Rents, Development, and Democracy’, Comparative Politics, 37 (3), 297–316. Hertog, S. (2010), Princes, Brokers and Bureaucrats: Oil and the State in Saudi Arabia, Ithaca, NY: Cornell University Press. Heydarian, R.J. (2014), How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings, London: Zed. Hinnebusch, R. (2007), ‘The US Invasion of Iraq: Explanations and Implications’, Critique: Critical Middle Eastern Studies, 16 (3), 209–228. Hinnebusch, R. (2010), ‘The Middle East in the World Hierarchy: Imperialism and Resistance’, Journal of International Relations and Development, 14, 213–246. Hudson, M. (2003), Super Imperialism: The Origins and Fundamentals of US World Dominance, London: Pluto Press. Ismael, J. (1993), Kuwait: Dependency and Class in a Rentier State, Gainsville, FL: University Press of Florida. Karl, T.L. (1997), The Paradox of Plenty: Oil Booms and Petrol States, Oakland, CA: University of California Press. Kerr, M. and S. Yassin (eds) (1982), Rich and Poor in the Middle East: Egypt and the New Arab Order, Cairo: American University in Cairo Press. Khalidi, R. (2004), Resurrecting Empire: Western Footprints and America’s Perilous Path in the Middle East, London: I.B. Tauris. Klare, M.T. (1996), ‘The Pentagon’s New Paradigm’, in M. Sifry and C. Cerf (eds), The Gulf War Reader, New York: Times Books, pp. 466–479. Klare, M.T. (2001), Resource Wars: The New Landscape of Global Conflict, New York: Metropolitan Books. Kubursi, A. and S. Mansur (1993), ‘Oil and the Gulf War: An American Century or a “New World Order”?’, Arab Studies Quarterly, 15 (4), 1–18. Lotz, C. (2008), ‘Rentierism and Repression’, Journal of Politics and International Relations, 3 (Spring), 106–118. Luciani, G. (2019), ‘Oil and Political Economy in the International Relations of the Middle East’, in L. Fawcett (ed.), International Relations of the Middle East, Oxford: Oxford University Press, pp. 107–131. Mufti, M. (1996), Sovereign Creations: Pan-Arabism and Political Order in Syria and Iraq, Ithaca, NY: Cornell University Press. Noreng, O. (2005), Crude Power: Politics and the Oil Market, London: I.B. Tauris. Padoan, P. (1997), ‘The Political Economy of Regional Integration in the Middle East’, in L. Guazzone (ed.), The Middle East in Global Change, London: Palgrave Macmillan, pp. 174–200. Parra, F. (2003), Oil Politics: A Modern History of Petroleum, London: I.B. Tauris. Petras, J. and H. Veltmeyer (2005), Empire with Imperialism: The Globalizing Dynamics of Neo-Liberal Capitalism, London: Zed Books.

Middle East: oil and political order  159 Richter, T. (2020), ‘Oil and the Rentier State in the Middle East’, in R. Hinnebusch and J. Gani (eds), Routledge Handbook of the Middle East and North African States and States System, London: Routledge, pp. 225–237. Robinson, R. (1984), ‘Imperial Theory and the Question of Imperialism after Empire’, in R.F. Holland and G. Rizvi (eds), Perspectives on Imperialism and Decolonization, London: Frank Cass, pp. 42–54. Ross, M.L (2001), ‘Does Oil Hinder Democracy?’, World Politics, 3 (3), 325–361. Ross, M.L. (2004), ‘What Do We Know about Natural Resources and Civil War?’, Journal of Peace Research, 41 (3), 253–273. Spiro, D.E. (1999), The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, Ithaca, NY: Cornell University Press. Strüver, G. and T. Wegenast (2018), ‘The Hard Power of Natural Resources: Oil and the Outbreak of Militarized Interstate Disputes’, Foreign Policy Analysis, 14 (1), 86–106. Terzian, P. (1985), OPEC: The Inside Story, London: Zed Books. United States Government (2001), National Energy Policy: Report of the National Policy Development Group, Washington, DC.

11. Latin America: oil, populism and revolution David Mares

For many analysts, public intellectuals and lay people, oil, populism and revolution are inextricably linked. From a ‘resource curse’ perspective, it might seem linear: oil stimulates populism, which leads to revolution, with the latter emerging because of either the success or the failure of policies adopted by populists swayed by the siren call of oil (Friedman 2009; Karl 1997; Ross 2012). Alternatively, oil revenues could be argued to provide the largesse that political leaders could use to promote national development with low taxes and stave off both populists and revolution (Humphreys et al. 2007; Menaldo 2015; Shaffer and Ziyadov 2012). Empirical reality, however, belies claims about oil as a fundamental cause of either populism or revolution. The relationship among the three is complex and not well understood; this is true around the world, but in this chapter I focus on Latin America, which has more than 100 years’ experience with oil as a valuable commodity. The region is also well known for its proliferation of populist leaders and revolutions over its two centuries since political independence. This experience gives significant variation on the three variables of interest: oil, populism and revolution. The three variables of interest could be combined in a variety of ways. There could be oil and populism, but no revolution. Alternatively, there could be oil and revolution, but no populism. And there could be populism and revolution, but no oil or gas. Since the topic of the chapter is the relationship among the three, the analysis will focus on only those cases in which all three variables were present. The editors of this book also expressed interest in how the US might have related to these revolutions involving oil and populism, and I address that issue after establishing the dynamics of the main relationship examined here. The chapter proceeds in four main sections. It first deals with defining key terms. The next section derives hypotheses about causal relationships among oil, populism and revolution which appear promising. Latin American countries, with 200 years of independence, well-endowed and diverse geographies, and as recipients of migration from across the globe, have societies, economies and politics with many dimensions that interact in a variety of ways. The section illustrates the challenges for thinking analytically about how oil, populism and revolution relate to each other in such a diverse and complex context. The third main section examines the US response to revolution in Latin America. The US and Latin America share a long history pre-dating the discovery of hydrocarbons, and in which a web of social, economic, political and security issues create a dense and complex relationship. I demonstrate that the US response to revolution in the region varies along a continuum from total opposition to accommodation, and is determined by the characteristics of the specific revolution. The final section examines the empirical record of these relationships in Latin America in the 20th and 21st centuries. The complexity of the relationship among the three concepts is borne out and discussed in the Conclusion.

160

Latin America: oil, populism and revolution  161

DEFINING KEY TERMS The relationship between oil, populism and revolution, as well as the causal mechanisms among them, will reflect the definitions utilized to identify them. Definitions thus identify the nature of phenomenon, and the characteristics of that nature are used to guide the derivation of arguments about its relationship to other concepts or phenomenon. Oil and Natural Gas These hydrocarbons can be simply identified by their properties as sources of energy stored in chemical bonds, but such a definition would not help to contemplate their relationships to populism or revolution. It is their materiality that draws attention. The energy contained in their molecules gives them significant advantages over other energy sources for fuelling transport and industrialization, although that energy comes with associated costs. Still, that energy makes them objects of social, economic and political interest and competition. Their geological characteristics make discovery and production expensive, requiring significant initial outlays of capital, especially today with non-conventional oil and gas: deep water, extra heavy crude, shale. Production (supply) of these hydrocarbons does not respond quickly to price movements because of fixed costs, skill sets required to exploit them, well characteristics and socio-political factors (demand for wealth, services and corruption stimulated by oil and gas markets). Demand is inelastic to price in the short term but can be significantly affected in the medium and long term by technological change or consumer choice that makes consumption of these hydrocarbons more efficient or less desirable. These supply and demand factors create boom and bust periods that can have deep and profound impacts on society, the economy and the political systems within which oil and natural gas are produced and consumed. The relevant oil and gas markets for this study are external (global or regional) and this characteristic taps into the nationalist characteristics of populism and revolution. The oil and gas markets are different: after the end of the Red Line arrangements which divided up the market among companies, the oil market became global, while in natural gas the market until recently was established through long-term bilateral contracts. But what matters for this discussion is that the consumer of that gas is located in a different country, beyond the control of societies and governments in which production is located. The specificity of the impacts of oil and gas on countries, however, are not determined simply by the materiality of oil and gas, but by the interplay of that materiality and domestic social, economic and political dynamics. The Latin American nations for which oil and natural gas have played important social, economic and political roles are limited in number, as is the period in which they were important. In Venezuela oil has been the dominant economic and political factor since the 1920s. But other Latin American countries with important hydrocarbon production have had more diversified economies and societies, therefore their politics have been more complex. Even when Mexico was the number one exporter of oil in the world (second decade of the 20th century) it had major mining and agricultural sectors. Today oil accounts for only about a third of Ecuador’s export receipts and a fifth of Mexico’s, while natural gas represents just under 30 per cent of Bolivian export value. Starting in the mid-19th to early 20th century, depending on the country, the eight Latin American oil and gas producers sought to recover control over subsoil resources and establish a state role in determining how those resources were to be used. The timing, process and

162  Handbook on oil and international relations Table 11.1 Country

Latin American oil and gas producers: nationalizations, monopolies and national oil companies Upstream

Monopoly

Nationalization

National

Monopoly

Private

nationalization

upstream

reversed

hydrocarbon

for NOC

shares in NOC

1922 and

Never for

YPF privatized

re-established in

either YPF or 1993;

2012 YPF;

ENARSA

company (NOC) Argentina

1907, 1924‒27,

Never

1993

1935, 1936, 2012

renationalized 2012 with 49% shares

ENARSA 2004

private; ENARSA 35% Bolivia

1937, 1969, 2006

Never

1955, 1996

1936 and

Never

1936 permitted

re-established in

but no takers;

2006 YPFB

1999, 51%; renationalized with no private shares in 2006

Brazil

1953, 1964, 2010

Yes

1964, 1975, 2016

1953 Petrobras

1953‒75

1999‒present; fluctuates, currently 36%

Colombia

1948, 1974, 1979

Never

2003

1948 Ecopetrol

Never

2007 to present, 10.1%; 20% authorized

Ecuador

1972, 2010

2010‒18

1982

1972 CEPE,

Mexico

1938

1958

2013

1935 Petromex,

2010‒18

Never

1958‒2008

Petromex 50%

1989 Petroecuador 1938 PEMEX

permitted but no takers

Peru

1969

Never

1991

1946 EPF,

Never

1969 PetroPeru

20% authorized but none offered to date

Venezuela

1975, 2006

1975‒93

1993

1960 CVP,

1975‒93

Never

1975 PDVSA

scope of nationalization varied widely, often contrary to much of the literature concerning these events. Although the literature recognizes that initially ‘nationalization’ meant monopoly control, and today it spans the spectrum from monopoly to majority control, there is no explanation for where on that continuum a government would seek to place the country. For example, on the radical left, Evo Morales in Bolivia nationalized natural gas upstream via majority state ownership of projects, while Hugo Chávez permitted 100 per cent private ownership of Venezuelan upstream projects. Table 11.1 provides a historical summary of variations in nationalizations and national oil company (NOC) characteristics among the eight major producers. Populism Populism is a form of politics that is anti-systemic, perceives an existential confrontation between ‘the people’ and the ‘elite’ or the ‘powerful’ (Manichean perceptions) and establishes

Latin America: oil, populism and revolution  163 a direct, unmediated assertion of the sovereignty of ‘the people’ (these are defined by the populist leadership and their followers, but may not overlap perfectly). The dominant debate in political science regarding populism turns on whether it is an ideational or a strategic phenomenon (Kaltwasser et al. 2017). My own scholarly work emphasizes strategic approaches, and I consequently define populism as a political strategy. Can there be populist parties without a supreme leader who dominates the party, or at least oversees the political system? Some scholars equate a populist leader’s use of a political party to amplify their message or mobilize support as evidence that parties can be populist. Yet these parties were created by the populist leaders and fail to compete effectively without a populist leader: Peru’s APRA (Alianza Popular Revolucionaria Americana) depended on its founder Victor Raúl Haya de la Torre and his successor Alan Garcia to be major forces; and Peronism in Argentina has been the vehicle for a succession of populist leaders since Juan Perón’s death. The Mexican party which held office for 70 years, PNR-PMR-PRI (Partido Nacional Revolucionario-Partido de la Revolución Mexicana, Partido Revolucionario Institucional), is often described as a populist party and it has had a few populist leaders (Casullo and Freidenberg 2017). But references to Lázaro Cárdenas are not sufficient to establish the party’s populist bonafides, since it was created before he became president; he was never anti-systemic, and he oversaw the transition away from a focus on populist programmes undertaken from 1940 until at least 1958. Carlos de la Torre is never explicit about how parties fit in the definition, and he off-handedly refers to ‘populist presidents’ in the Mexican party without identifying anyone, and throughout the work he refers to individuals when describing all other ostensibly populist parties, even when referring to Peronism in Argentina (De la Torre 2017). Neither Roberts nor Weyland, two other theorists of Latin American populism, consider the Mexican party ‘populist’; consequently, I follow the standard of putting individual leaders at the centre of the definition. These leaders are personalistic, seeking to exercise government power based on direct, unmediated and uninstitutionalized support from large numbers of citizens. That link is not based on ideology, which would limit a leader’s ability to be pragmatic and opportunistic, but on a personal link between leader and follower. Charisma helps, but is not necessary. What is key is the identification and articulation by the leader of the ‘enemies’ of the ‘true’ and ‘patriotic’ citizens of a nation. The strategy requires that the leader convince citizens to give him or her the right to interpret their will, and thus to justify the concentration of power, decrease limits on authority and orchestrate national referenda to demonstrate and consolidate his power (Weyland 2017, pp. 50, 53‒54). Populists who become presidents/prime ministers in their own non-revolutionary environment can be constrained by the functioning of existing social and political institutions (for example, Trump in the United States). Once the populist leader has institutionalized their revolution, they can become constrained by its institutions (for example, Correa in Ecuador, Morales’s separation from the presidency in Bolivia in 2019). Although there is a tendency to label as ‘populist’ any leader who is charismatic and appeals to the poor, this is misleading for social science analysis. According to the dominant definitions reviewed, if these leaders lack anti-system programmes and do not seek to perpetuate themselves in power, they are not populists. Lázaro Cárdenas in Mexico (1934‒40) was opposed to the political party structure created by former President Plutarco Elías Calles in 1929, but Cárdenas opened it up and institutionalized it by integrating workers and peasants into the party via corporatist structures. Cárdenas also never sought to overturn the Constitutional

164  Handbook on oil and international relations Table 11.2

Populist leaders in Latin America since 1900

Country

Leader

Years of leadership

Argentina

Juan Domingo Perón

1946‒55, 1973‒74, but major influence 1943‒74

 

Carlos Saúl Menem

1989‒99

 

Néstor Kirchner

2003‒07

 

Cristina Fernández de Kirchner

2007‒15

Bolivia

Evo Morales

2006‒19

Brazil

Getúlio Vargas

1930‒45, 1951‒54

Colombia

Jorge Eliécer Gaitán

1930s‒1948 but never held presidency and was assassinated

Ecuador

José María Velasco Ibarra

1934–35, 1944–47, 1952–56, 1960–61, 1968–72

 

Abdalá Bucaram

1996–97

 

Rafael Correa

2007–17

Mexico

Andrés Manuel López Obrador

2018‒present

Peru

Victor Raúl Haya de la Torre

Founded and dominated the APRA political party, but was

 

Alán García

1985–90, 2006–11

 

Alberto Fujimori

1990‒2000

Venezuela

Hugo Chávez Frias

1998‒2013

never permitted to win presidential office

provision prohibiting re-election or to rule behind the scenes after completing his term as Calles did (De la Torre 2017, pp. 196, 209). Likewise, Brazilian Fernando Collor de Mello (1990‒92) is labelled populist because he ran as a political outsider and denounced the state bureaucracy (De la Torre 2017, p. 198). But Collor did not hold referenda when opposed by Congress, attempt to organize mass demonstrations in his support when impeached, nor articulate any programme in which his perpetual leadership of government was communicated to be the only way in which ‘true Brazilians’ could save their country. Populism can be left- or right-wing oriented (Gandesha 2018). Right-wing politicians can favour either letting markets work (right-wing neoliberals) or having government heavily guide economic relationships (state capitalism, fascism). But right-wing populism is likely to fall into the latter category because of its link to citizens who feel exploited by elites. Capitalist elites are an especially attractive target for both left- and right-wing populists because their accumulation of wealth is questioned by the populist partisans, and because capitalist elites prefer less state interference in the economy than populists propose. Hawkins argues that populist attitudes are not strongly correlated with policy crises or corruption. In addition, neither the intensity of such attitudes nor the breadth of demands for change in the name of the people are the same (Hawkins et al. 2017, pp. 278‒279). Thus, to understand the implications of populism it is necessary to set that political strategy in a specific context; in this case that would be the existence of oil and gas and the development of a pre-revolutionary situation. In accordance with the definition of populism utilized in this chapter and the caveats above, the list of Latin American populist rulers can be enumerated in Table 11.2. Comparing Table 11.2 with Table 11.1, we can immediately see that all of the region’s populist leaders have been from countries in which oil and gas were prominent issues at some point. This correlation provides a basis for considering whether oil, populism and revolution interact in some causal fashion. But before answering that question it is imperative to examine the revolution variable and to develop some hypotheses about the relationships which can then be tested.

Latin America: oil, populism and revolution  165 Table 11.3

Revolutions in Latin America 1900‒2020

Country

Years

Notes re oil and gas

Argentina

1943–55

Opening up the oil and gas sector topic of discussion

Bolivia

1952–64

Oil nationalized with monopoly 1937; sector reopened 1955

 

2006

Gas nationalized 2006; no monopoly

Brazil

1964

Minor oil deposits

Cuba

1959

No oil or gas deposits

Chile

1970–73

No oil or gas deposits

 

1973–89

No oil or gas deposits

Ecuador

2007–17

Oil nationalized with monopoly 2010–18

El Salvador

1948

No oil or gas deposits

Guatemala

1944–54

Minor oil deposits

Mexico

1910–40

Oil workers’ strikes, Cárdenas nationalization 1938; monopoly legislated 1958

Nicaragua

1979–90

No oil or gas deposits

Peru

1968–75

Oil contracts selectively nationalized; no monopoly

Venezuela

2003‒present

Oil nationalized 2007; no monopoly

Sources:  Based on Becker (2017), Cumberland (1962) and Blasier (1985).

Revolution The term ‘revolution’ is ubiquitous in Latin America, spanning the 19th century wars of independence to the mere overthrow of a dictator and his replacement by another. For analytical purposes we should reserve the word for events of significant change. For the purposes of the analysis here, a definition is needed of what ‘revolution’ means and an examination of factors necessary for a revolution to succeed. Skocpol (1979) puts social and political structures at the centre of her definition, with significant economic change following the overthrow and considerable restructuring of the first two. Revolutions occur in a context that delegitimizes the old social, economic and political order. For Skocpol the international context is a fundamental cause of social revolution because it undermines the pre-revolutionary social and political regime. Since the oil market is an international one and the natural gas market a bilateral one, we could hypothesize that those markets could be important contributors to revolution in these cases, though not necessarily a driver in how a revolution addresses the pressures and opportunities from the international oil market. That delegitimizing domestic and international context is the driver not only for revolution, but also for populism, again suggests the plausibility that the two might be causally related, not just correlated. But we cannot jump to the conclusion that they are. If the populist leader concentrates power, articulates an anti-system programme, but accumulates wealth in the existing social, economic and political order, then they are not a revolutionary. Following Skocpol’s definition of revolution, Table 11.3 presents the 14 revolutions in Latin America from 1900 to 2020. Five of the revolutions occurred in countries with no oil or gas deposits (Cuba, two in Chile, El Salvador and Nicaragua) and two in countries with minor hydrocarbon deposits identified (Guatemala and Brazil). Clearly, Latin American revolutions do not depend on oil or gas, but in seven revolutions oil and gas deposits had at least a significant presence. Of the seven revolutions in Latin America where oil or gas deposits were topics of discussion, four combined the three variables of interest: populism, revolution and oil. In the oil and

166  Handbook on oil and international relations Table 11.4

Populism, oil and revolution

Country

Populism

Oil

Revolution

Argentina

yes

yes

1943‒55

Bolivia

yes

yes

2006‒19

Colombia

yes

yes

no

Ecuador

yes

yes

2007‒17

Venezuela

yes

yes

2003‒present (2022)

gas group in Table 11.1, however, there were two revolutions that did not happen. Colombia in the 1940s was preparing for the termination of its largest oil contract with an international oil company (IOC) and debating the characteristics that an NOC would be endowed with to take over the fields. Gaitán was the populist leader on the left, promoting significant social and economic change, and at least calling for significant political reform. His assassination in 1948 triggered a decade-long civil war (La Violencia) that ended with a reformed democracy rather than a revolution. Because the expectation is that a populist leader in an oil and gas country will opt for revolution, Colombia is included in the case studies despite the lack of a revolution. Four of the seven revolutions combined the three variables of interest: populism, revolution and oil (Argentina 1943, Bolivia 2006, Ecuador 2007 and Venezuela 2003). The case studies thus include five cases (Table 11.4).

SETTING UP CAUSAL RELATIONSHIPS The materiality of oil and gas can contribute to the delegitimation of domestic social, economic and political structures, directly or indirectly. A direct mechanism is one in which these hydrocarbons are considered to produce unacceptable social, economic or political results. The advocates of a ‘green revolution’ or the defenders of ‘indigenous culture’ are propelled by the direct implications of hydrocarbon exploitation. Most of the negative impact, however, is mediated by factors ostensibly under the control of some anti-national agents. This could be the international oil market when it is perceived to be ‘controlled’ by oil-consuming countries or IOCs. Alternatively, it could be domestic elites who utilize the wealth generated by the nation’s patrimony inappropriately (in all Latin American countries, subsoil resources belong to the nation). Both mechanisms can feed into the national discourse of exploitation proposed by populists and revolutionaries. Latin America has not yet had revolutions based on environmental or cultural issues, so the focus in this section will be on the hydrocarbon markets and the distribution of the wealth generated by those markets, as perceived by the national populations. For these five revolutionary situations the major social, economic and political upheavals to which debates around oil may have contributed will be analysed. Focusing on oil and gas as causal factors, three hypotheses follow from this discussion of oil, populism and revolution: These hydrocarbons create or significantly contribute to delegitimizing conditions that promote pre-revolutionary conditions of delegitimacy.

Latin America: oil, populism and revolution  167 These hydrocarbons create or significantly contribute to delegitimizing conditions that facilitate the rise of a populist leader who then articulates a revolutionary programme which results in revolution unless blocked by other factors. A populist leads the country into a revolution and these hydrocarbons significantly contribute to the success or failure of the revolution. By ‘significantly contribute’ I mean that other factors create pre-populist or pre-revolutionary conditions, and oil or gas combines with them to push the pre-populist or pre-revolutionary conditions past the key threshold. In the Latin American context, one of the obvious other factors that may intervene in the causal relationship is the United States’ (US’s) response to a revolutionary context. A fourth hypothesis can thus be considered: The US is a factor in the development/non-development of either a populist leader or a revolution. Oil policy could be a dependent variable, determined by revolution and populism. But oil policy under populism and revolution is too varied, given the few relevant cases. Chávez nationalized oil projects by requiring 60 per cent state ownership of projects and its NOC as operator, but permitted up to 100 per cent private ownership of gas fields. Morales nationalized Bolivian gas projects by requiring majority state ownership, but permitted foreign operators. Correa forced all oil contracts with foreigners to become merely service contracts with no ownership of the projects. Perón, on the other hand, attempted to re-open Argentina’s oil sector to foreign investment.

US RESPONSES TO LATIN AMERICAN REVOLUTIONS Evaluating the fourth hypothesis requires a digression from the focus on oil, populism and revolution to consider US interventionist behaviour. The relationship of the US to revolutions in Latin America is complex because Latin American revolutions vary in their specific characteristics. The US has not promoted revolutions of any type in the region, perhaps demonstrating its fear that once under way, revolutions are not easily controlled, especially by foreigners. Yet revolutions, because they generate significant change domestically, will inevitably affect US interests in the region, no matter how those interests are defined. Consequently, the US will inevitably respond to the fact of revolution. This section argues that US responses will be fundamentally affected by the characteristics of the specific revolution. In Latin America revolutions to date can be distinguished into four categories: democratic, nationalist, semi-fascist and communist. In democratic revolutions, people and their leaders seek inclusionary political forms of government, with a free press to inform the public, and regular and openly competitive elections to provide accountability to the citizenry. Latin American democratic revolutions have always included demands for social equality and economic inclusion, understanding that a democratic form of government is unlikely to endure, and certainly would not represent the interests of the citizens without social and some degree of economic inclusion. All of Latin America’s democratic revolutions have accepted capitalism in some form, and by definition are not defined

168  Handbook on oil and international relations by the political ideologies of any particular group that accepts democracy and capitalism. Competition for political office leads to electoral victories from the right, through the centre and into the left of the political spectrum. These characteristics of pro-democracy and pro-capitalism provide the basis for cooperation between the revolution and the US government. The US ideologically favours clean and periodic elections, a relatively free press, government accountability to its citizens and social inclusion. Out of both ideological and material interests the US favours capitalism. The US has also accepted various forms of social democracy and regulated capitalist economies among its allies, so there is no inherent conflict of interest on these grounds. Yet the US government distrusts democratic revolutions in Latin America, thereby creating the basis for conflict. The region suffers from a cult of the caudillo, a leader who may or may not be charismatic or populist, but seeks to concentrate power in himself. With power concentrated, the caudillo can shift policy quickly, decreasing the credibility of any agreements reached with his government. In addition, the caudillo may even use that power to undermine or overthrow a democracy. But US distrust of democracy in Latin America is also affected by the frustration of societies in the region with the corruption and unresponsiveness of many democratic governments. So democracy might be overthrown by the people themselves. If in this context a democratic government brought communist parties or individuals into government, the US worries about both the commitment to capitalism and whether the democracy could be ‘hijacked’ onto a path of communist revolution. Examples of democratic revolutions are Costa Rica in 1948, the Dominican Republic in 1963 and Chile in 1970. The US came to terms with Costa Rica, but intervened militarily in the Dominican Republic, and promoted first a parliamentary tactic to block the Chilean revolution and then a military intervention expected simply to bring the Christian Democrats back into power. A second type of revolution in Latin America is nationalist. The driving factor in the revolution is a sense of nationalism among the leadership and its society, one which justifies authoritarian rule for the moment. The revolutionary government may hold elections, but these may not be regular, nor open and competitive. The revolutionaries define nationalism for the voters through organizations controlled from above, and which benefit from government support. Revolutionary nationalists want to harness the benefits of capitalism for the nation; they are not Marxists who believe in an international struggle and focus on the benefits for a single class. This provides a basis for cooperation with the US, since nationalists will be opposed to communist power even if they permit the occasional communist to join a National Front government in a time of crisis. Nationalist revolutionaries will provide incentives for foreign investors to invest in the national economy even if they nationalize some sectors or firms and increase regulations on the economy. Protected national markets will produce profits for private investors, decreasing their desire to ask their home governments to sanction the nationalist revolutionaries. Since nationalist revolutionaries are not inherently democratic, they will impose non-democratic controls on their opposition. These characteristics provide the basis for the US government to be more willing to cooperate ‒ and across a broader spectrum of issues ‒ with the nationalist revolutionaries, than to seek their overthrow. Relations between the US government and nationalist revolutions, however, are not harmonious. Conflict lurks around the prioritization of short-term focused national interests on both sides. The tendency of nationalist revolutions to bring in left-wing radicals in moments of crises worries the US, at least until the nationalists end the National Front coalitions. In

Latin America: oil, populism and revolution  169 addition, the separation of powers in the structure of the US government among the executive, legislative and judiciary branches provides individuals, firms and non-governmental organizations (NGOs) who have particular disagreements with the nationalist revolutionary governments with the ability to influence US policy towards them. Thus, firms nationalized by the Peruvian revolutionary government in 1968 could obstruct US government efforts to accommodate that government, as did human rights NGOs with respect to the left-leaning nationalist revolutionary governments of both Ecuador and Peru in the early 1970s. Examples of nationalist revolutions include the Mexican Revolution from 1910 to 1940, when it entered its consolidation phase and was no longer revolutionary; Guatemala from 1944 to 1954, when it was overthrown after the army split; Bolivia where the revolutionary process began in 1936–40, 1943–46 and resumed in full force from 1952 to 1964, when a military coup terminated it; and Peru from 1968 to 1975, when the military forced out its radical officers and began a transition to democracy. It is interesting to note that in three of these four examples the US government accommodated revolutions that nationalized US oil companies (Bolivia in 1937, Mexico in 1938 and Peru in 1968). Semi-fascist revolutions represent a third type in Latin America. Fascism is a corporatist political system designed to regulate industrial capitalism according priority to the state, in which the individual gains full consciousness of themselves through the nation; and with a moral vision – the ‘state had the pedagogical obligation of training human beings to selfless virtue’ (Gregor 2006, p.  141) (as leaders defined it) ‒ and concerned with national revival (Griffin 2003). The semi-fascist revolutions in Latin America were led by the right-wing national security states of the 1960s‒1980s (Mares 2007), and this is what distinguishes them from fascism. These professional military organizations in Argentina (1976–82), Bolivia (1971–78), Brazil (1967–85), Chile (1973–89) and Uruguay (1973–85) rejected ‘politics’ and did not seek to create political parties to guide the revolution. Their goal was to purge society and politics of anyone who did not prioritize national security as the military’s geopolitical interpretations defined it, and to restructure the economy to minimize not only state-owned enterprises but also state regulation of the private sector. Since these semi-fascist revolutions occurred during the Cold War, the basis for cooperation between them and the US government was their mutual anti-communism, distrust of democracy and support of foreign direct investment. This did not mean that relations lacked points of conflict. The US initially encouraged these militaries to overthrow a government that the US government perceived to be on a path facilitating communist takeovers, but it did not expect the result to be a semi-fascist revolution. A geopolitical understanding of world politics made these Latin American militaries wary of US interests in the region. These nationalist militaries worried that their interests in national development via technologies that had both civilian and military applications, and in controlling access to natural resources, might be subordinated to US priorities in its struggle against international communism. In addition, traditional Brazilian and Argentine perspectives on their ‘rightful’ place as leaders in South America made them suspicious of the US as well as of each other. US domestic politics also created points of tension over human rights during the Carter administration and with Congress since it was controlled by the Democratic Party in this period. Finally, US President Ronald Reagan distanced himself from these revolutions after the Argentine military went to war with US ally the United Kingdom over the Malvinas/Falklands Islands in 1982. From the Reagan administration’s perspective, the war put the North Atlantic Treaty Organization (NATO) at

170  Handbook on oil and international relations Table 11.5

US response to revolution in Latin America

 

Type of revolution

 

Democratic

Nationalist

Semi-fascist

Communist/left openly

US response

Distrust

Broad cooperation

Focused cooperation

Examples

Costa Rica 1948

Mexico 1910

Brazil 1967

Unmitigated conflict Cuba 1959

Dominican Republic 1963

Guatemala 1944

Bolivia 1971

Venezuela 2003

Chile 1970

Bolivia 1943, 1952

Chile 1973

Bolivia 2006

Peru 1968

Uruguay 1973

Ecuador 2007

anti-US

Argentina 1976

risk for the sake of meaningless Argentine advantages from potentially gaining sovereignty of insignificant islands in the farthest reaches of the South Atlantic Ocean. The fourth type of revolution in Latin America is communist. There has only been one successful communist revolution in the region, Cuba, which began modestly in 1956 and achieved victory in 1959. Ironically, the revolution did not achieve power through a nationwide armed rebellion by workers and communists (Batista simply chose to flee the capital city while the guerrillas were still fighting in the mountains). But it was Fidel Castro’s armed group that was prepared to seize power and ruthlessly implement its vision of communist revolution. US opposition to the Cuban communist revolution was implacable and fairly clear from the outset. But that opposition should not be understood simply on the basis of anti-communism. The US has accommodated communist governments before and after the Cuban Revolution: it provided security guarantees to communist Yugoslavia after World War II; it opened up relations with the communist China of Mao Tse Tung in the 1970s; and it would even establish good relations with communist Vietnam in 1995 despite the long Vietnam War (roughly 1955–75) between them. The key to understanding the animosity towards the Cuban Revolution is that it happened in the Western Hemisphere, viewed by the US through the lens of the Monroe Doctrine which unilaterally declared it of fundamental security interest. It is the Monroe Doctrine perspective, rather than anti-communism, that better explains US intervention in Latin America, including against suspected communist incursion in Guatemala in 1954 and the Dominican Republic in 1965. There has been very little basis for cooperation between the US and Cuba. They cooperate on hurricane and drug issues, as well as occasionally around migration. Cuba actively promoted revolutions in Latin America and Africa until the late 1980s when the Soviet Union could no longer provide financial and logistical support for those efforts, and this added fuel to US government opposition to the Cuban Revolution. Table 11.5 summarizes the US response to revolution in Latin America.

THE EMPIRICAL RECORD IN LATIN AMERICA I now turn to the five relevant cases for examining the three hypotheses regarding the impact of oil and gas on populism and revolution: Argentina 1943, Colombia 1940s, Venezuela 2003, Bolivia 2006 and Ecuador 2007.

Latin America: oil, populism and revolution  171 Argentina 1943 Colonel Juan Perón rose to power in Argentina through his labour reforms as head of the Labor Department (subsequently Labor Secretariat) in the military government. Thereafter, and with the US government opposing him, he won election to the presidency. Beginning in 1943, and until his overthrow by the military in 1955, Peron and his wife Eva carried out a social revolution, stimulated an economic transformation with import substitution industrialization and transformed politics such that even multiple military coups against any hint of a return to power by Peron failed to destroy his movement. He created the Justicialista party, but it moved left or right depending on Perón’s views on particular issues (Alexander 2018). Following his death in 1975 and the return of democracy in the 1980s, the Peronist party has been dominated by different populist leaders (Ostiguy and Schneider 2018). State versus private control of oil projects had been a policy issue in Argentina since the beginning of the 20th century (Philip 1982, pp.  402‒409; Solberg 1982; Szusterman 1993, pp.  44‒46). In the 1940s the government and private companies were in a stalemate. The government created an NOC in the 1920s and the 1935 Oil Law required a 50:50 split for new concessions in federal territories, with provinces following suit in 1936. The government would not nationalize existing private holdings and as these fields depleted the IOCs were stymied since they refused to accept the 50:50 split. But the oil stalemate was not an issue that mobilized strong national positions, so it contributed neither to populism nor to the Peronist revolution. The US government opposed Perón, but largely because he was a nationalist seeking to maximize Argentina’s space to manoeuvre, first by not denouncing fascism and Nazism, then by articulating a ‘Third Way’ between the US and the Union of Soviet Socialist Republics (USSR), not because of his position on oil (Dorn 2002). In fact, just before he was overthrown by the Argentine military, Perón had signed a new contract with Standard Oil of New Jersey. Colombia 1940s Gaitán was a leader of the Liberal Party’s more labour and peasant radical elements, being a labour lawyer and having served as Minister of Labor. At one point he flirted with creating a separate political party, but returned to the Liberal Party to have more impact. His ideas were radical in the Colombian context, but they were more social democratic than communist and were the logical extension of reforms carried out in Liberal Alfonso López Pumarejo’s first term of office, 1934–38, and known as the Revolución en Marcha. There were multiple issues that threatened the legitimacy of the Colombian social and political structures, including the need for agrarian reform, labour reforms in rural and urban workplaces, the use of force by the state against peasants and workers, a concern that the two-party system of Liberal and Conservative only served the elite, and the oil sector. The oil workers’ union engaged in strikes and the oil contracts signed with IOCs by previous governments were contentious topics even among the elite. But the oil workers’ union was not a major force, and the political elites coalesced around creating a national oil company and exerting more state control in the sector (Bucheli 2006; De la Pareja 1989, pp. 30‒42; Mutis 2014, pp. 149‒151, 161‒171). As a result, oil did not rise to become a defining issue in Colombia. Gaitán ran for the presidency in 1946, but the Liberal Party split and the Conservative candidate won the three-way race. There were no credible allegations of fraud, and after he

172  Handbook on oil and international relations became leader of the party in 1947 the expectation was that Gaitán would win the 1950 election. The radical left was not institutionalized in the Liberal Party and was unable to survive Gaitán’s assassination (Dix 1978; Green 2000). Scholars generally explain Gaitán’s killing without reference to the US, and Green’s article shows that neither State Department officials in Colombia nor the US Federal Bureau of Investigation (FBI) perceived of Gaitán as a communist or falling under their influence. Nor did the US government oppose the creation of an NOC, or insist that the expired oil contracts needed to be renewed. The decade-long Violencia was a civil war among partisans of the two political parties, with vigilante groups springing up in the countryside, rather than a failed democratic revolution (Palacios 2016). Venezuela 2003 The oil market collapsed in the 1980s and the two main political parties, AD and COPEI, were unable to reverse the economic crisis, halt the deterioration in social conditions and end the perceived corruption of the elite. This combination delegitimized Venezuela’s political system that had returned the country to democracy in 1958. There were two failed military coups in 1992 (one led by Colonel Chávez), President Pérez of AD had been impeached in 1993 and former president Caldera of COPEI bolted from his party to win the presidency with a new party in 1994. But the country continued to slip into pre-revolutionary conditions as the oil markets remained low and unstable, the government provided incentives to investors while the social situation continued to deteriorate, and the private and public oil companies prospered (Coppedge 1997; Corrales 2002; Monaldi and Penfold 2006). Chávez achieved a surprising victory in the 1998 presidential elections, coming from behind to win. Venezuelans believed their country was wealthy because it had oil, and looked for an individual to rid the country of the corrupt ‘oligarchy’ and govern for the sake of the people. Chávez’s first years in office brought some important but not radical changes: Venezuelans had been discussing the need for a new constitution since the early 1990s. A new gas law opened the sector to private investment, and while the new oil law created conditions for a larger government share of the oil wealth, the Oil Minister declared that it was not retroactive. With the oil market still low, the government moved slowly on its social programmes (Mares forthcoming). The make-or-break years for Chávez’s Bolivarian Revolution, 2002–03, occurred before the oil market recovery began, then took off in the commodity boom of 2004–13. The political opposition tried to use the oil sector to starve the government of funds and convince the people that Chávez was destroying their wealth. But the massive strikes during those years backfired, making it easier for the government to control the sector, capture the enormous rents brought by the subsequent boom and distribute the largesse in unsustainable social programmes and corruption. All oil projects passed into at least 60 per cent state control by 2007, though major gas fields remained under private contracts of up to 100 per cent. Oil rents and Chinese loans financed the Bolivarian Revolution and consolidated Chávez’s populism (Mares forthcoming). Chávez died just before the oil market collapsed once again in 2014 and Venezuelan oil production began a steep decline caused by inadequate funding and corruption. The Bolivarian Revolution followed suit, degenerating into an ever-increasing authoritarian and corrupt government led by the populist but non-charismatic Nicolás Maduro. Maduro has pursued not only the centre-right opposition, but also many top officials from the Chávez administration, including Oil Minister Rafaél Ramírez; he also installed a constitutional convention to replace

Latin America: oil, populism and revolution  173 the Chávez constitution. Ironically, oil is once again a driving factor contributing to the recreation of a pre-revolutionary situation in Venezuela. The US government played no role in the Venezuelan pre-revolutionary period leading up to Chávez’s election in 1998. It played a minor role hosting and promoting opposition leaders publically criticizing the Chávez government. But it did not finance coup efforts, undertake an invasion or impose major sanctions on the government or the economy until after the revolution had collapsed economically and politically (2017). The US government is involved in promoting the overthrow of the Maduro government, but this has little to do with revolution or oil. Venezuelan oil will inevitably flow into the international market once a legitimate government of the left, centre or right assumes control, though most likely at reduced levels given its relatively high costs and the fact that a world already embarking on an energy transition is less interested in heavy and extra-heavy oil, which characterizes Venezuela’s major reserves (Monaldi et al. 2021; Stott 2020). Bolivia 2006 Bolivia entered a pre-revolutionary situation in the late 1990s, but initially not from issues associated with its gas. From his leadership of the Seis Federaciones del Trópico de Cochabamba, Morales led opposition to the neoliberal reforms in the 1990s and was in an advantageous position within the opposition when first the Water Wars against privatization (1999) and then the Gas Wars against exports to Chile and the US (2003) erupted. Morales was elected to the presidency in 2006, and as the first Indigenous President of Bolivia he led a social, political and economic revolution in Bolivia that was successful even in the eyes of the World Bank. The path skirted civil war and Morales, like all populists, made compromises along the way. Gas exports to Argentina and Brazil financed the revolution, but one must also recognize the prudence with which the Morales government administered that wealth and worked out an understanding with the oligarchy of Santa Cruz (Mares et al. 2008: Postero 2017). The US government opposed Morales from the beginning, not only because he was a left-wing populist but also because he was the president of the national coca growers union. Morales rejected the US conception of a drug war and was successful in getting United Nations recognition of legitimate uses for coca. There are controversial allegations of US covert support for violent opposition to the Morales government, but the US certainly publicly supported the opposition and denounced the Morales government; US irritation increased when Bolivia rejected sanctions against the Maduro government in Venezuela. Morales expelled the US Agency for International Development (USAID), the Drug Enforcement Agency (DEA) and the US Ambassador. Whatever actions the US took to delegitimize the Morales government, they all failed, and the Bolivian revolution succeeded (Molina 2011). There was a break in political stability in 2019. Morales attempted to lift the limits placed by his own constitution on a third re-election, but lost the referendum in 2016. In 2017, the Bolivian constitutional court, whose judges were appointed by the Morales government, accepted the argument that term limits were a violation of human rights under the American Convention of Human Rights, to which Bolivia was a signatory. Elections were held in October 2019, the vote counting process experienced an unexplained 20-hour delay and official results gave Morales a lead of 10.57 per cent, surpassing the 10 per cent requirement to avoid a second round. Demonstrations for and against the vote tally erupted, turning violent. The government asked the Organization of American States (OAS) to audit the results; its report suggested

174  Handbook on oil and international relations irregularities and the protests intensified. Morales resigned and accepted Mexico’s offer of asylum. An extreme right-wing politician, Jeanine Áñez, became Interim President, after MAS officials in the order of succession all resigned. Her government intended to reverse the revolution, but failed when the MAS candidate overwhelmingly won the 2020 presidential election and the party achieved control of both legislative chambers (International Crisis Group 2020; Rochabrun and Ramos 2020). The Bolivian case under Morales gives the most favourable outcome in the relationship among gas, populism and revolution. Not only does the revolution seem to have been successful, but if the new government of Luis Arce keeps to its initial declaration that Morales will not be in the government (Rochabrun and Ramos 2020), the MAS party could be undermining populism and consolidating a democratic revolution. Ecuador 2007 The collapse of the oil market in the 1980s shortly after the transition to democracy in 1979, political ineptitude among the elite and corruption, fomented political instability. Indigenous peoples mobilized into an active and autonomous confederation (CONAIE, Confederación de Nacionalidades Indígenas del Ecuador) and engaged in civic actions to promote their cause. The period 1997 to 2005 witnessed three elected presidents fall after large demonstrations in the streets and a failed coup d’état in 2000 (International Crisis Group 2007). Correa led a peaceful revolution in Ecuador from 2007 to 2017, financed by oil revenues, Chinese loans and investments, and significantly renegotiating the value of foreign debt by threatening to default on billions of dollars of bonds. His dependence on these sources of funding led him to promote oil exploration and increased mining, despite pledges to protect the environment. The Indigenous organizations withdrew their support of Correa and moved into active opposition (Escribano 2013; Valladaresa and Boelensa 2019). Correa kept the US dollar as the currency of Ecuador even as he joined the Chávez-inspired Bolivarian Alliance for the Americas (ALBA) and terminated an agreement that provided the US with access to an air force base used in the drug war. Relations with the US were strained, especially after Correa granted Julian Assange asylum in Ecuador’s London embassy to avoid extradition to the US in connection with the Wikileaks scandal. But the US did not sanction Ecuador or attempt to subvert his government; it was Correa who unilaterally ended Ecuador’s participation in a preferential trade agreement with the US (GlobalSecurity.org 2021). Constitutional limits terminated Correa’s leadership in 2017, and his hand-picked successor, Lenin Moreno, won the presidency. But Moreno faced an international debt once again exceeding the country’s ability to pay and continued low oil prices. Moreno had neither the charisma nor the populist aspirations of Correa, and opted to deal with the economic crisis within the context of democratic institutional constraints rather than attempt to salvage Correa’s legacy. Correa came out against the government’s programme, including its pursuit of corruption. Moreno’s Vice President was convicted for corruption under the Correa administration, and in 2020 Correa himself was convicted in absentia (he lives in Belgium with his Belgian wife) of corruption and sentenced to eight years in prison as well as loss of political rights. The effort to reconstitute Correa’s revolution after Moreno failed when the right-wing candidate achieved a significant victory in the 2021 presidential elections. Correa’s revolution ended, though not as spectacularly as that of Chávez (Congressional Research Service 2021; Tegel 2020).

Latin America: oil, populism and revolution  175

CONCLUSION: THE COMPLEXITY OF OIL IN NATIONAL POLITICS The discussion around major issues tends to begin with a search for easy answers. As scholars, we are aware that social phenomena are complex, but to make them understandable we need to reduce that complexity without losing understanding. This chapter demonstrates that in Latin America the materiality of oil and gas is not unidirectional, inherently promoting populism and creating pre-revolutionary situations. Oil and gas wealth is a phenomenon; its relationships to populism and revolution depend on the domestic social, economic and political dynamics of a country at a specific moment in time. I can now sum up the evidence and evaluate the hypotheses. The first hypothesis, that hydrocarbons would significantly contribute to pre-revolutionary situations, is fully supported only in Venezuela. In Ecuador and Bolivia, other factors were just as important as hydrocarbons, if not more so, in delegitimizing the economic, social and political structures. In Ecuador, these were corruption and indigenous empowerment, while in Bolivia significant conflicts over water and coca, as well as indigenous empowerment, occurred before conflicts over natural gas. Oil and gas became an additional issue undermining the existing order in Ecuador and Bolivia, respectively. Correa may have needed the oil issue to overcome the defection of the Indigenous movement from his political agenda, but Morales would have most likely been able to pursue his revolutionary agenda based on Indigenous empowerment and grievances alone; however, more research is needed for a definitive answer. In Argentina, oil was a minor issue and despite the materiality of oil in the Colombia of the 1930s and 1940s, it did not become a significant contributor to the pre-revolutionary situation facing the country in the late 1940s. We can conclude that the importance of oil and gas to significantly contributing to pre-revolutionary situations depends on local histories and conditions. The second hypothesis, concerning the contribution of hydrocarbons to the rise of populist leaders who promote revolution, is only fully supported in the case of Hugo Chávez. In Bolivia, Morales rose to national attention and leadership largely on the basis of his position as head of the Seis Federaciones del Trópico de Cochabamba and his ethnicity; he used those strengths to take control of the nationalist narratives around natural gas. Correa rose to power through his success as Minister of the Economy and Finance in opposing the International Monetary Fund (IMF) and neoliberalism; the distribution of oil revenues under austerity was only part of his criticism of the corrupt political system. Perón rose to power on the basis of his support for labour, not due to his vision for oil in Argentina. Gaitán gained significant political standing without addressing the oil issue, but unlike the other populist leaders examined, did not articulate a revolutionary programme before his assassination. Once again, the hypothesis is contingent on factors beyond hydrocarbons themselves. The third hypothesis expects that once a populist leader embarks on revolution, hydrocarbons will significantly contribute to the success or failure of the revolution. Hydrocarbon revenues, or the expectation of future hydrocarbon revenues, were clearly a factor in the initial success of the Bolivarian Revolution. Chávez not only received historic windfalls in export revenues, but Venezuela was also able to borrow and attract investment based on the expectation of continued wealth. Correa enjoyed similar benefits. And both the Venezuelan and the Ecuadorian revolutions crumbled when hydrocarbon revenues collapsed. However, once we consider Morales and Bolivia, we can see that hydrocarbon wealth itself is not the explanation for the success and failure. Morales’s decisions to limit export growth and avoid

176  Handbook on oil and international relations significant international debt meant that the MAS revolution did not collapse at the end of the commodity boom. Hydrocarbons can help revolutionaries to prolong poor policy choices (for example, Venezuela and Ecuador), or help them to make compromises to further the life of the revolution (Bolivia). Revolutionary populist leaders are not prisoners to commodity wealth; their decisions regarding how to pursue the revolution matter. The final hypothesis focused on the external obstacles to populism and revolution, in particular the role of the US. The cases examined here strongly demonstrate that the US did not have the ability to stop the rise of a revolutionary populist in hydrocarbon-producing countries. Nor did US efforts to subvert revolution in hydrocarbon-producing countries of Latin America significantly impact upon those revolutions. In Argentina, US intervention was limited to public criticism of Perón, which heightened his populist appeal. Perón’s revolution was, and continues to be, unstoppable by the US. Colombia’s avoidance of revolution in 1948 owed nothing to the US. Until 2014 and the end of the commodity boom, US actions against Venezuela, Ecuador and Bolivia could not contain their revolutions or significantly alter their characteristics. The economic distortions and international debt (and, in the case of Venezuela, growing authoritarianism) that brought down Chávez’s and Correa’s revolutions owe little to US intervention. And despite US antipathy to MAS (as well as quick recognition of Anez’s government in 2019), the US has been unable to derail Morales’s revolution in Bolivia. In conclusion, the analysis in this chapter confirms that oil and gas can generate tensions and be a source of significant wealth. But how the issues that develop from these facts play out in terms of populism, revolution and foreign intervention is neither pre-ordained nor a ‘curse’. Rather, the results depend overwhelmingly on the domestic context and the choices made by leaders themselves.

REFERENCES Alexander, R.J. (2018), Juan Domingo Perón: A History, New York: Routledge. Becker, M. (2017), Twentieth-Century Latin American Revolutions, Lanham, MD: Rowman & Littlefield. Blasier, C. (1985), The Hovering Giant: U.S. Responses to Revolutionary Change in Latin America, 1910–1985, Pittsburgh, PA: University of Pittsburgh Press. Bucheli, M. (2006), ‘Multinational Oil Companies in Colombia and Mexico: Corporate Strategy, Nationalism, and Local Politics, 1900–1951’, Paper presented at the International Economic History Conference, Helsinki. Casullo, M.E. and F. Freidenberg (2017), ‘Populist and Programmatic Parties in Latin American Party Systems’, in C. Heinisch, O. Holtz-Bacha and M. Mazzoleni (eds), Political Populism: A Handbook, Baden Baden: Nomos, pp. 275–292. Congressional Research Service (2021), ‘Ecuador: An Overview Updated’, 5 January, accessed 11 April 2021 at https://​fas​.org/​sgp/​crs/​row/​IF11218​.pdf. Coppedge, M. (1997), Strong Parties and Lame Ducks: Presidential Partyarchy and Factionalism in Venezuela, Stanford, CA: Stanford University Press. Corrales, J. (2002), Presidents Without Parties: The Politics of Economic Reform in Argentina and Venezuela in the 1990s, University Park, PA: Penn State University Press. Cumberland, C.C. (1962), ‘Twentieth-Century Revolutions in Latin America’, Centennial Review, 6 (3), 279–296. De la Pareja, R. (1989), Energy Politics in Colombia, Boulder, CO: Westview. De la Torre, C. (2017), ‘Populism in Latin America’, in C.R. Kaltwasser, P. Taggart, P.O. Espejo and P. Ostiguy (eds), The Oxford Handbook of Populism, Oxford: Oxford University Press, pp. 195–213.

Latin America: oil, populism and revolution  177 Dix, R.H. (1978), ‘The Varieties of Populism: The Case of Colombia’, Western Political Quarterly, 31 (3), 334–351. Dorn, G.J. (2002), ‘Perón’s Gambit: The United States and the Argentine Challenge to the Inter-American Order, 1946–1948’, Diplomatic History, 26 (1), 1–20. Escribano, G. (2013), ‘Ecuador’s Energy Policy Mix: Development Versus Conservation and Nationalism with Chinese Loans’, Energy Policy, 57 (June), 152–159. Friedman, T. (2009), ‘The First Law of Petropolitics’, Foreign Policy, October 16, accessed 20 September 2021 at https://​foreignpolicy​.com/​2009/​10/​16/​the​-first​-law​-of​-petropolitics. Gandesha, S. (2018), ‘Understanding Right and Left Populism’, in J. Morelock (ed.), Critical Theory and Authoritarian Populism, London: University of Westminster Press, pp. 49–70. www​ GlobalSecurity.org (2021), ‘US Relations with Correa’, accessed 11 April 2021 at https://​ .globalsecurity​.org/​military/​world/​ecuador/​forrel​-us​-correa​.htm. Green, W.J. (2000), ‘Sibling Rivalry on the Left and Labor Struggles in Colombia during the 1940s’, Latin American Research Review, 35 (1), 85–117. Gregor, A.J. (2006), Mussolini’s Intellectuals: Fascist Social and Political Thought, Princeton, NJ: Princeton University Press. Griffin, R. (2003), ‘The Palingenetic Core of Fascist Ideology’, in A. Campi (ed.), Che cos’é il fascismo? Interpretazioni e prospective di richerche, Rome: Ideazione editrice, pp. 97–122 Hawkins, H., M. Read and T. Pauwels (2017), ‘Populism and Its Causes’, in C.R. Kaltwasser, P. Taggart, P.O. Espejo and P. Ostiguy (eds), The Oxford Handbook of Populism, Oxford: Oxford University Press, pp. 267–286. Humphreys, M., J.D. Sachs and J.E. Stiglitz (eds) (2007), Escaping the Resource Curse, New York: Columbia University Press. International Crisis Group (2007), ‘Ecuador: Overcoming Instability?’, Latin America Report, 22, 7 August. International Crisis Group (2020), ‘Bolivia Plans for an Uncertain Election’, 29 January, accessed 20 September 2021 at https://​www​.crisisgroup​.org/​latin​-america​-caribbean/​andes/​bolivia/​bolivia​-plans​ -uncertain​-election. Kaltwasser, C.R., P. Taggart, P.O. Espejo and P. Ostiguy (2017), ‘Populism: An Overview of the Concept and the State of the Art’, in C.R. Kaltwasser, P. Taggart, P.O. Espejo and P. Ostiguy (eds), The Oxford Handbook of Populism, Oxford: Oxford University Press, pp. 1–24. Karl, T.L. (1997), The Paradox of Plenty: Oil Booms and Petro-States, Berkeley, CA: University of California Press. Mares, D.R. (2007), ‘The National Security State’, in T.H. Holloway (ed.), Blackwell Companion to Latin American History, Hoboken, NJ: Wiley-Blackwell, pp. 386–405. Mares, D.R. (forthcoming), Resource Nationalism and the Political Economy of Energy Policy: Venezuela in Context, New York: Columbia University Press. Mares, D.R., P.R. Hartley and K.B. Medlock III (2008), ‘Energy Security in a Context Of Hyper-Social Mobilization: Insights From Bolivia’, Working Paper, James A. Baker III Institute for Public Policy, Rice University. Menaldo, V. (2015), ‘Review: The New Political Economy of Natural Resources in Latin America’, Latin American Politics and Society, 57 (1), 163–173. Molina, G.G. (2011), ‘U.S.–Bolivian Relations: Behind the Impasse’, in A.F. Lowenthal, T.J. Piccone and L. Whitehead (eds), Shifting the Balance: Obama and the Americas, Washington DC: Brookings Institution Press, pp. 86–98. Monaldi, F., I. Hernández and J. La Rosa Reyes (2021), ‘The Collapse of the Venezuelan Oil Industry: The Role of Above-Ground Risks Limiting FDI’, Resources Policy, 72 (August). https://​doi​.org/​10​ .1016/​j​.resourpol​.2021​.102116. Monaldi, F. and M. Penfold (2006), ‘Institutional Collapse: The Rise and Decline of Democratic Governance in Venezuela’, in R. Hausmann and F.R. Rodríguez (eds), Venezuela Before Chávez: Anatomy of an Economic Collapse, University Park, PA: Penn State University Press, pp. 285–320. Mutis, A.P. (2014), La economía petrolera en un mercado politizado y global: México y Colombia, Mexico City: FLACSO-México. Ostiguy, P. and A. Schneider (2018), ‘The Politics of Incorporation: Party Systems, Political Leaders, and the State in Argentina and Brazil’, in E. Silva and F.M. Rossi (eds), Reshaping the Political

178  Handbook on oil and international relations Arena in Latin America: From Resisting Neoliberalism to the Second Incorporation, Pittsburgh, PA: University of Pittsburgh Press, pp. 275–308. Palacios, M. (2016), ‘Poder, Democracia y Violencia Pública en Colombia: La Historia’, in H. Garza, I. Bizberg and M. Serrano (eds), Pensar la historia, pensar la política … a manera de Lorenzo Meyer, Mexico City: Colegio de Mexico, pp. 335–370. Philip, G. (1982), Oil and Politics in Latin America: Nationalist Movements and State Companies, Cambridge: Cambridge University Press. Postero, N. (2017), The Indigenous State: Race, Politics, and Performance in Plurinational Bolivia, Berkeley, CA: University of California Press. Rochabrun, M. and D. Ramos (2020), ‘Luis Arce: Bolivia’s New President Credited for Its Socialist Growth “Miracle”’, Reuters, 22 October. Ross, M.L. (2012), The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, Princeton, NJ: Princeton University Press. Shaffer, B. and T. Ziyadov (eds) (2012), Beyond the Resource Curse, Philadelphia, PA: University of Pennsylvania Press. Skocpol, T. (1979), States and Social Revolutions: A Comparative Analysis of France, Russia, and China, Cambridge: Cambridge University Press. Solberg, C.E. (1982), ‘Entrepreneurship in Public Enterprise: General Enrique Mosconi and the Argentine Petroleum Industry’, Business History Review, 56 (3), 380–399. Stott, M. (2020), ‘Venezuelan Oil Could Become World’s Biggest Stranded Asset, Say Experts’, Bloomberg, 18 November. Szusterman, C. (1993), Frondizi and the Politics of Developmentalism in Argentina, 1955–62, Pittsburgh, PA: University of Pittsburgh Press. Tegel, S. (2020), ‘Ecuador Shows How Hard It Is to Recover From a Populist Autocrat’s Rule’, World www​ .worldpoliticsreview​ .com/​ Politics Review, 25 February, accessed 11 April 2021 at https://​ articles/​28557/​in​-ecuador​-protests​-left​-a​-lasting​-mark​-on​-moreno​-and​-the​-country​-s​-future. Valladaresa, C. and R. Boelensa (2019), ‘Mining for Mother Earth: Governmentalities, Sacred Waters and Nature’s Rights in Ecuador’, Geoforum, 100, 68–79. Weyland, K. (2017), ‘Populism: A Political-Strategic Approach’, in C.R. Kaltwasser, P. Taggart, P.O. Espejo and P. Ostiguy (eds), The Oxford Handbook of Populism, Oxford: Oxford University Press, pp. 48–73.

12. Africa: oil, colonialism and development Nelson Oppong and Kwabena Oteng Acheampong

INTRODUCTION Modern forms of colonial conquests in Africa from the late 19th century were propelled by a long-standing worldview in the European imaginaries of global development that upheld the region as the new ‘El Dorado’ or the ‘Second India’, with an expanse of natural resources that could be tapped for the industrial expansion of select countries of Europe. This largely materialist logic of the colonial project took centre stage at the Berlin Conference where 14 European countries, under the auspices of Chancellor Otto von Bismarck, convened over three months between 1884 and 1885, to mark out spheres of control that would enable them to cash in on the ‘marvellous exuberance of tropical and subtropical wealth’ that Africa presented (Tilley 2011, p. 57). In the ensuing decades, the sprawling landscape of mining townships of the Copperbelt of the Southern and Central parts of the continent, the West African goldfields, in addition to the sub-region’s countless tracts of smallholder cocoa farms, and the geostrategic importance of the Nile waterway running from the East to the North (see Langer 1935; Robinson et al. 1961, contra Gjersø 2015) came to epitomise the success of the colonial powers in extracting mineral resources and exporting tropical crops from Africa to Europe. Despite some attempt to replicate the success of mineral and crop development in the search for oil, mostly through state-backed commercial intermediaries and other business ventures, such as the erstwhile Anglo-Persian Oil Company (now BP), commercial oil discoveries were recorded only at the twilight of the colonial period in Africa. Historians and social scientists who have observed this rather patchy impulse of colonial governments for exploration and the prospective oilwells that mostly turned out dry, until the 1950s and 1960s, have often cast oil as the tabula rasa of the geostrategic processes that culminated into Europe’s ‘scramble for Africa’. Also, while the origins of Africa’s mixed record of oil-led transformation continue to attract attention from disciplines ranging from geography to international relations, there is surprisingly less enthusiasm in their linkages with the colonial experience. This chapter offers an account of how the colonial encounter shaped the trajectory of oil and development in Africa. The overriding observations posit that while the colonial period did not yield many accomplishments by way of oil production, the extractive logic and the institutional norms of the era continue to shape the materiality of oil across the region. To unpack this observation further, the next section explores the different dimensions of resource appropriation that came to characterise the colonial gaze in Africa. This is followed by a discussion of the commercial and strategic engagements that encompassed the industrial structure of oil during the colonial period. The chapter then offers a reflection of the ways in which these complex commercial and institutional structures shaped oil development after the colonial period.

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OIL AND THE COLONIAL GAZE According to a popular view in the social sciences, there is an inverse relationship between natural resources and optimum development outcomes in resource-rich countries (Sachs and Warner 2001; Ross 2004; Rosser 2006). In Africa, analysts who uphold this viewpoint, also known as the ‘resource curse’ thesis, often cast the failures of oil-led development as part of a broader incentive-ridden dynamic that obviates the competitive instincts of market norms, civic virtues, democratic accountability and good governance (Yates 1996; Ferguson 2006; De Oliveira 2007; Oppong 2020a). While the underlying prognoses of this rather sweeping account of oil-led development continue to attract intense scrutiny (Watts 2004; Heilbrunn 2014; Ovadia 2015; Oppong 2020b), they intersect strongly with the logics of extraction that came to dominate the colonial encounter in Africa. ‘Colonialism’ is commonly used to refer to the establishment of formal political authority by the more advanced countries over the areas of Asia, Australasia, Africa and Latin America (Scott 2014). Academics and social commentators who are interested in the motives, mechanisms and consequences of colonialism have been sharply divided between those who have tied colonialism with the accelerated transitions of colonies to the instruments and principles of modernity (Ferguson 2012; Gilley 2018), and others who fault it as the basis of economic backwardness and sociopolitical disintegration of most colonised societies (Amin 1989; Taiwo 2010; Acemoglu and Robinson 2017). While this contentious debate points to the complexity of the colonial project, it has underscored the parallel, and largely contradictory, processes that came to define its fundamental logic as a process of social engineering and a tool for wealth accumulation. The inception of what Crawford Young (1994, p. 14) described as the ‘territorial grid of colonialism’ in Africa, which occurred between 1870 and 1914, was underpinned by the ultimate desire to fashion the continent as a strategic outpost for European accumulation. During a tour of East Africa in 1907, for instance, Winston Churchill famously described Africa as Europe’s future breadbasket and stated that it would soon ‘play a most important part in the economic development of the whole world’ (Tilley 2011, pp.  124‒125). African colonial outposts were therefore to provide resources for the benefit of the colonial powers and provide new consumer markets that would enable the expansion of their industries (Amin 1989; Tilley 2011). In many parts of Africa, colonialism was the culmination of a long history of encounters that dated from voyages to the African coastlines of the Atlantic Ocean in the 14th century, through centuries of oceanic trade, to the transatlantic slave trade (Thornton 1998). As recounted here by John Thornton in the case of West Africa, these encounters were on a largely materialist basis, as European navigators sought to capture the allure of the continent’s mineral wealth: of all the economic possibilities that might provide motives for Atlantic navigation, however, the prospect of a short route to the West African goldfields seems the most likely. The Indies, after all, were far away in anyone’s conception of world geography, whereas West Africa, known to be wealthy in gold, was much closer and clearly accessible by a sea route. West Africa had been a source of gold for Mediterranean countries for centuries, perhaps since Byzantine times. Moslem writers since the ninth century were aware of the gold-producing areas, and a steady stream of Arabic language descriptions of West Africa resulted … These were joined by Christian accounts, especially those generated by the Catalan and Italian merchant communities of North Africa, who had been dealing in the gold (called the ‘gold of Palolus’ in these sources) since the twelfth century. (Thornton 1998, p. 26)

Africa: oil, colonialism and development  181 The end of the slave trade and the increasing demand by European companies for raw minerals, including palm oil, rubber, fats and cocoa at the turn of the 19th century, led to calls for European governments to adopt a more interventionist approach to secure supplies and markets. As demonstrated by activities of the British Company of Merchants1 in West Africa, imperial power had been, hitherto, confined to the promotion of trade and protection of national firms either through convivial coexistence with some local players or through armed protection of trade routes and forts, and the assistance of domestic collaborators (Agbosu 1980, p. 64). As a nascent indigenous capitalism mounted an increased competition over the commodity trade (Agbosu 1980; Akyeampong 2014; Olukoju 2014), a more intrusive form of colonialism became necessary to maintain the rules of exchange in favour of European firms. In some instances, namely the British South Africa Company (Rhodesia) and the Anglo-Belgian Indian Rubber Company (Congo), colonial intervention involved concessionary undertakings that delegated sovereignty to chartered companies to organise domination, including maintaining an army, and to extract rents for the colonial governments (Young 1994; Rönnbäck and Broberg 2019). The ensuing decades of colonialism witnessed the unveiling of a complex apparatus of hegemonic control. While a reasonable measure of variation persisted across different colonies, this apparatus of colonial hegemony entailed arbitrary imposition of taxation, an acculturation drive aimed at bringing ‘civilisation’ via intermediaries such as Christian missions and educators, as well as support for European enterprises through a mix of incentives that ranged from labour conscription, especially for mines and plantations, to the creation and maintenance of market niches and monopoly protection for colonial trading companies (Young 1994; Omeje 2008). An established body of scholarship continues to explore the workings and spin-offs of this rather complex alliance between the state, missionaries and corporations, with varying interpretations that cannot be captured within the scope of this chapter (Collins 1970; Amin 1989; Young 1994; Acemoglu and Robinson 2017). However, they each underscore that fact that, as a project of resource appropriation, colonial development reflected a complex and often contradictory construction of Africa as a terrain mired in primitivity and potential. In 1948, a senior British politician more pointedly captured this interplay between the primitive construct and extractivist logics as a rationale for sustaining the colonial enterprise: Up to a year or two ago the policy was ‘Africa for the Africans’ ... Now the opposite is being pursued. In order to increase the world’s production of raw materials, the word has gone out, ‘Full speed ahead,’ which means that the natives gradually must continue to come less and less under the rule of the chief and more and more to be part of an active European organisation … This is probably best for the African in the long run, but the Government must say so quite frankly and not wrap it up in pious hopes about Africans taking over the management or becoming the owners of great enterprises. (Col. Ponsonby, MP, Chairman of the Joint East Africa Board in 1948, cited by Low 1991, p. 172)

Throughout the colonial period, this deployment of the primitive construct and breakthroughs in resource extraction are what enabled colonialism to be justified as the tool of modernity, while denying its subjects modern principles of consent, citizenship, inclusivity and economic participation (Taiwo 2010). The story of oil during Africa’s colonial decades can be summed up as part of this wider gaze of using instruments of European knowledge, ideas and tools to overcome Africa’s primitivity, while appropriating its potential.

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APPROPRIATION: IMPERIAL LOGICS OF OIL EXTRACTION IN AFRICA Discernible dynamics of oil imperialism can be gleaned from the 19th century, especially with the intense competition among major oil companies such as Standard Oil (United States), Royal Dutch (Netherlands), Shell (United Kingdom) and the Nobel Brothers Petroleum Company (Russia) to build and maintain new markets and crucial transport routes across the Americas, Asia, Africa and the Caucasus (McKay 1984). However, the turn of the 20th century brought together a scintillating cocktail of events that pushed oil to the forefront of global geopolitics and, to a large extent, patterns of colonial appropriation in Africa. The early 20th century witnessed multiple advances in technological innovations, such as the internal combustion engine which drove the production of quadracycle cars in Western Europe and North America, and electric-powered light (Maugeri 2006), which inspired an expansion in the mass consumption of oil and a deceleration in the world’s reliance on coal. Accompanying these advances were notable geological inroads in production and refining that expanded everyday use of oil by-products ranging from lubricant for industrial machinery, to wax for pharmaceuticals, candles, medicines, solvents and fuel for stoves (Maugeri 2006). This mounting use and demand for oil overstretched existing reserves that were predominantly based in North America and Western European countries. The ensuing competition for oil and the activities of petroleum lobby groups, such as the International Petroleum Congresses which were held between 1900 and 1910, spurred an expansion in states’ diplomatic support for oil companies and support for exploration activities in different countries and outside territories that were within their control. Mass consumption of oil in the early 20th century, and the associated interest of European and North American states, took on a more dramatic turn with the First World War (1914‒18). Prior to the war and at the instigation of Winston Churchill, who was appointed First Lord of the Admiralty in 1911, the United Kingdom adopted a Navy Plan that included acquisitions of a substantial number of oil-fired ships which, in contrast to its coal-powered fleet of the same size, offered a much greater speed and less refuelling, and in addition the oil was lighter to transport (Engdahl 2004). Churchill also tapped into the growing global impulse for oil consumption by convincing the British government to acquire majority share ownership of Anglo-Persian Oil, under terms that were controversially held secret. While scholars such as Timothy Mitchell argue that this expansion in the Royal Navy helped to drive Europe into the war (Mitchell 2011, p. 60), events during the war such as the capture of the Baku Fields in Russia by the Allied Forces – the United Kingdom, France, Russia, Italy, Romania, Japan and the United States – led by the United Kingdom, and the German invasion and occupation of Eastern Europe, in part to gain access to Romanian oil pipelines, underscored the strategic importance of oil in the war (Venn 1986). Indeed, it was the unhindered submarine attacks by German forces that saw the destruction of oil tankers owned by American companies, such as Standard Oil, that pushed the United States to declare war against Germany, despite its avowed foreign policy of non-intervention and neutrality. As the Allied nations powered victory on what Lord Curson famously characterised as the ‘wave of oil’ (cited in Delaisi 1920), colonies around the world were quickly enfolded into the evolving global mechanisms of oil appropriation that were firmed up after the First World War. Evidenced by the visible involvement of companies such as Royal Dutch in the Treaty of Versailles in 1919, which ended the First World War, and the Anglo-French Oil agreement two years later (Delaisi 1920), this new-

Africa: oil, colonialism and development  183 found global structure was founded on the security of access by Western powers to the flow of oil, and was characterised by multiple entanglements between commercial and state interests. In the immediate aftermath of the First World War, the United Kingdom launched a major exploration drive to build on its colonial reserves that, hitherto, had relied heavily on imports from Burma and Trinidad. Notably, the Board of Trade quickly evolved from its pre-war lull,2 and was reorganised into the Department of Public Services and Administration and the Department of Commerce and Industry, along with departments for home industries and regulation. The Board also initiated discussion around a long-term national oil policy, which, as demonstrated by the formation of the Petroleum Imperial Policy Committee, led to a number of intergovernmental actions around different strategies of extraction in the colonies. These strategies revolved around the maintenance of rigid legislative control of limited supplies, pre-emptive ownership of new oil-bearing territory within the British colonies and the building up of supplies at strategic locations such as the Singapore naval base (Venn 1986, p. 44). As part of this strategy, several ordinances modelled after similar laws adopted earlier in Trinidad and Tobago, and other home laws such as the Defence of the Realm Act of January 1918, which enabled the government to enter onto any land for the purpose of drilling for oil, were adopted across the colonies (Craig et al. 2018). These ordinances, as demonstrated by the amended Mining Regulation Ordinance of 2015 and the Mineral Oil Pre-Emption Ordinance of 1907 of the Gold Coast (now Ghana), conferred on the British colonial government jurisdiction of the ‘exercise of mining rights’ and the ‘rights of pre-emption of all crude oil obtained in the colony, and of all products of refining of such oil’. British control also required that any company that held a lease, its chairman, managing director, a majority of the other directors, local management and at least some local staff should be British (Venn 1986, p. 45). These ideas, which are often captured in the literature as ‘admiralty’ and ‘nationality’ clauses, drove the broader imperial logics of appropriation of oil for other colonising countries. The Netherlands, for instance, maintained restrictive policies that denied concessions to non-Dutch companies for the oil resources in the Netherlands East Indies (now Indonesia) (Venn 1986), while France maintained similar arrangements in Algeria around the 1920s (Salut 2006). The most tangible manifestation of the colonial strategies for oil in the early 1920s came in the shape of support for business ventures and geologists. In Nigeria, the initial sightings of petroleum in the Niger Delta around 1908 were followed by a protracted negotiation that eventually led the colonial government to finance deep-level drilling by D’Arcy Exploration Company, a subsidiary of the Anglo-Persian Oil Company, in 1921 (Wrigley 1986; Steyn 2009). To ensure that any discoveries would be led by a British company, the colonial administration also backed Société Française des Pétroles, another subsidiary of Anglo-Persian Oil, to dig six wells in the Gold Coast between 1909 and 1913 (Banful 2009; Oppong 2020a). The Portuguese-controlled areas of northern Angola also explored oil intensively, but in vain, in the 1920s (Wrigley 1986, p. 94). Portugal later sold concession rights to Sinclair Oil, an American firm, to explore for oil in Angola (Yates 2012). Countries such as France and Italy, which did not possess comparatively substantial levels of oil, either at home or overseas, capitalised on some of their rich inventions and technologies to deploy high-profile ‘oil finders’ to different parts of their colonies in Africa. Notably, after some initial failures in North Africa between 1909 and 1920, teams of French and Italian geologists ventured into the interiors of their respective colonies, which yielded some hydrocarbon discoveries of the region in 1923 in the Rharb Basin of northern Morocco (Traut et al. 1998). The French colonial government also used the Société des Pétroles d’Afrique Equatoriale Française, a subsidiary of the Bureau

184  Handbook on oil and international relations de Recherches de Pétrole (BRP), to undertake different seismic tests and water exploration (Yates 2012, p. 13). Across the Sahara Desert, the activities of two prominent French geologists, C. Kilian and Nicolas Menchikoff, who founded the Centre for Scientific and Technical Research on Arid Regions, helped to sustain the exploration drive after the First World War (Brunet 1958). The results of the early decades of oil exploration during the colonial period were largely disappointing, and well reflected in the many dry exploration wells during this time. Many offices of geological surveys reported sightings of seepages of bitumen and schists of heavy oil, without any meaningful commercial discoveries (see Pollett 1951). In the Gold Coast, for instance, a handbook prepared by the Historical Section of the British Foreign Office in 1920 only confirmed sightings of ‘oil-shales of poor quality, and a little bitumen and heavy oil’ (Foreign Office 1920, p. 46; Oppong 2020a). Consequently, by the 1950s, many geologists were convinced that Africa did not have any major hydrocarbon deposits (Baker 1977, p. 175). But others, particularly the independent and subsequent governments of the new sovereign states that would form on the continent in the next few decades, would hold on to the oil potentialities and imaginaries inspired by those technical, but not commercial, finds and created oil economies without the material markers of actual oil production on the continent (see Acheampong 2021). Early signs of that economy of oil anticipation started to emerge at the end of the Second World War. The post-war period witnessed some changes, as the colonial powers sought to channel some of the boom in commodity exports in the 1940s to placate social unrest and the nationalist drive across different colonies. As demonstrated by the revised Colonial Development and Welfare Acts that were introduced for British colonies from the 1940s, these undertakings revolved around expansion in social welfare, provision of some infrastructure and the promotion of light manufacturing aimed at Africans through the provisions of items such as textiles (Young 1994, p. 216). While these investments did not fundamentally alter the largely outward imperative of the colonial economy, they were pursued along with an increase in public investments to support expansion in exploration efforts for minerals and resources (Young 1994, pp. 216‒217). These investments were interwoven with some notable institutional changes and improvements that showed a more active role for the colonial state in oil exploration. In the United Kingdom, for instance, the Secretary of State for the Colonies created a Mineral Resources Division of the Colonial Geological Surveys to coordinate and consolidate scientific knowledge and technical facilities for research on raw materials in the colonies, following recommendations from the Committee of Eminent Geologists in 1944 (Dixey 1950). These changes were complemented by advances in technologies for tasks such as photogeology, along with investments in mineralogical and chemical laboratories (Dixey 1950, p. 9). These changes yielded immediate results from the late 1950s, as countries in North Africa (Egypt, Tunisia, Libya, Algeria and Morocco) and others adjacent in the Gulf of Guinea (Nigeria, Gabon, Angola, Congo and Zaire) announced commercial oil finds (Baker 1977).

OIL: AFRICA’S COLONIAL LEGACIES The decade after the Second World War produced a series of events within and outside Africa that ignited a powerful nationalist surge towards independence in the subsequent decades. Between March 1957, when Ghana gained independence from the United Kingdom, and

Africa: oil, colonialism and development  185 July 1962, when Algeria ended the bloody war with colonial France with a proclamation of independence, 24 African nations freed themselves from their former colonial masters.3 Consequently, commercial oil production in Africa had to grapple with post-colonial realities that saw some shifts in the formal arrangements that pre-dated independence and upended the primary interlocutors of the colonial regime. Nonetheless, the fundamental logics and patterns of colonial accumulation persisted and shaped the nascent oil industry in at least five fundamental ways. The first relates to the new geopolitical realities in the post-Second World War period, and the ways in which the colonial encounter firmed up Africa’s marginalisation due to the disappointing results of oil exploration. Globally, the prominence of oil as a strategic resource expanded after the First World War. During the war, collaborative engagements such as the Inter-Allied Petroleum Conference, where the Allied forces worked with Standard Oil and Royal Dutch to fashion out a strategy to address their oil needs, proved pivotal in their victory over the Central Powers.4 The Allied nations moved to apply this arrangement as the formula for maintaining post-war peace. Notably, the terms of the Treaty of Versailles and the subsequent San Remo Conference of 1920 spelt out provisions for securing access to vital oil resources and the rules of engagement for cartels operating in the hydrocarbon industry as a crucial cornerstone of interstate cooperation. During the interwar period, countries across the Middle East, the Caribbean and Latin America that ranked among the formidable hubs for oil production tested the terms of this post-war settlement and assumed an even more strategic place in global geopolitics. The state‒firm commercial arrangements that emerged accounted for the influence of seven European and American multinational firms, commonly referred to as the ‘Seven Sisters’,5 over the supply chain of oil between the 1940s and 1970s. With five out of the seven multinationals coming from the United States, the country often imposed import quotas and managed oil supply in ways that bolstered its image as a dominant superpower after the Second World War (Page 1976; Spero and Hart 2009). Countries in the Middle East, including Iran, Saudi Arabia and others in the Gulf, also rose in geopolitical prominence as they retained substantial oil reserves (Anthony 1975; Wincler 1993). The absence of any meaningful discoveries during the colonial period meant that Africa’s place in the evolving geopolitics of oil would come only after independence, when powerful Western governments, especially the United States, extended their control through support for regimes that protected the interests of their commercial oil undertakings (Le Billon and El Khatib 2004, p. 109). The second dynamic relates to an integral logic of the colonial project which presented Africa as the ‘Dark Continent’. This construct of Africa as a continent mired in primitivity has been linked with the disruption and delegitimation of so-called ‘indigenous’ knowledge, while privileging European ‘science’ (Tilley 2011). This meant that oil exploration was led largely by foreign geologists (mainly, Europeans and Americans), along with instruments and ideas that were largely not connected with local knowledge and tools. Acheampong reinforced this position when he characterised Africa’s oil blocks as frontiers dominated by ‘laboratories of exploration installations, including seismic survey vessels and drilling rigs with their accompanying engineers and geologists among other petroleum-related foreign professionals’ (Acheampong, 2021, p. 57). As he further observed, while these foreign mobile entities criss-crossed Africa’s Atlantic littoral to map out and survey the maritime spaces and zones falling under their licenses, they ‘gathered information on the physical properties of the earth’s subsurface including its rocks and fluids to determine the most appropriate locations to drill exploration wells’ (Acheampong 2021, p. 57).

186  Handbook on oil and international relations Third and relatedly, the reliance on foreign technology would lead to an even more assertive role for multinational companies that represented Western colonial powers in the post-independence Africa’s oil industry. As Douglas Yates observed: When you consider an African oil enclave, one of its single most striking features is the domination by and dependence upon foreign multinational corporations (MNCs) that own it. They hire their own exploration teams. They build their own offshore drilling platforms. They run their own pumping stations, pipelines, refineries, heliports, and tanker fleets as they please. Their global distribution networks, world-class investments, and superior technology give them a kind of sovereign power over poor rural African villages located around the enclaves. (Yates 2012, p. 35)

Fourth, beyond the high-profile role that multinational oil companies assumed, the privileges accorded Western geological constructs without domestic inputs opened new spatial zones that defined the contentious landscape of oil. From the costly rebellions of the Ndebele and Shona groups between 1896 and 1897, to the Angolan War of Independence, resistance by different social forces to colonial rule was often entangled in broader contentions over colonial appropriation of the resources (Young 1994; Alves 2017). While the interstate conflicts that emerged from the artificial borders that were imposed by European colonists are well known (see Ikome 2012), the multiple ways in which the colonists mischaracterised the landscape inspired some of the agitations that formed the nucleus of the nationalist movement. In the case of British West Africa, for instance, attempts to designate certain lands as ‘vacant’ to be vested in the ‘Crown’ through the Crown Lands Ordinance brought together a rare alliance of opposition forces, involving traditional rulers, the intelligentsia, religious groups and indigenous business that successfully pushed back against colonial intrusions on land-based resources (Agbosu 1980). Attempts to reverse colonial patterns of appropriation took centre stage in the anti-colonial struggle. Fifth and finally, among some of the first acts of independence, various countries in Africa working in concert with oil-rich countries in the Gulf used global forums, including the newly created United Nations, to assert their rights over their resources and renegotiate concessions that were signed by former colonial powers. African countries were handed a major boost when the principle of permanent sovereignty was affirmed through resolutions by the United Nations’ General Assembly from the 1950s to 1960s.6 Resolution 1803, among others, conferred on the states the right to explore and exploit natural resources, freely dispose natural resources, regulate foreign investment, and settle disputes based on national law (Ng’ambi 2014). Specifically, it affirmed that: ‘The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the state concerned.’7 The consequences of these affirmations for the journey of oil in Africa were manifold. Notably, various agreements that were signed between oil companies and the colonial administration were renegotiated, with demands for the payment of the further taxes and acquisition of concessions by either state-owned enterprises or new oil producers. The new configurations broke the monopoly of colonial firms in the oil sector with the entry of multiple firms. After the first consignment of oil was shipped from Nigeria in 1958, for example, three American companies – Mobil, Chevron, Texaco ‒ the French oil company ELF and the Italian company Agip became active players in the industry (Omeje 2008, p. 76). Nonetheless, given their financial and technological muscle, coupled with experience of exploration and production in other regions, multinational oil firms continued to dominate the oil industry. Hence, despite

Africa: oil, colonialism and development  187 the new-found assertiveness of African oil, the role of many African countries was largely confined to collecting royalties on what was produced (Baker 1977, p. 183). In Ghana, for instance, under the pre-1980s legal and institutional framework, multinational oil firms operated virtually on their own. At the expense of state interests, there was minimal monitoring of their corporate and technical activities. Multinational companies were not statutorily or contractually obligated to commit to any minimum expenditure, nor were they committed to any minimum exploration obligations. They also retained the right to and control over the petroleum data and the knowledge they acquired through their operations. In sum, there was no framework for resource sharing between the multinational companies and the state, beyond tax collection and other basic levies and royalties (Tsikata 2016; Acheampong 2021).

CONCLUSION Africa’s oil colonial encounter set the stage for the elite-centred approach to oil governance that is often associated with the continent’s producing countries. As demonstrated by Yates (1996), the bulk of analysis of the oil and politics in post-independence Africa has paid attention to the multiple dynamics of elite centralisation in a manner that especially approximates the rentier states of the Middle East and North Africa (Yates 1996). The historical account offered in this chapter affirms some of these centralising tendencies. The underlying machineries of elite control, which are commonly described today in terms of the curse of oil-based development on the continent, such as elite capture and the absence of any meaningful democratic accountability and the competitive forces of liberal markets, are rooted in the genealogies of the instruments that were structured to bolster appropriation by colonial powers (cf. Atuguba 2005). But that account of Africa’s failure to completely reverse this arbitrary nature of the colonial patterns of oil exploration is only one aspect of the colonial legacy. As the centralising tendencies of the colonial powers and their concomitant effects on poor linkages with the domestic political economy have proven more enduring, so have the broader contentious politics associated with Africa’s colonial struggles (cf. Atuguba 2005). These contestations that emerged from the broader mass of collective action from the colonised over issues such as land and extractive-based social disarticulation are reflected in the distributional contentions that have continuously worked to chip away the grip of Africa’s elite over oil (see Oppong 2020a). While cases such as Nigeria’s Niger Delta and the Cabinda region of Angola often evoked the painful violent consequences of such contentions, they raise fundamental questions over the distributional impasse of the colonial logics of the oil appropriation that have not been resolved by the affirmation of permanent sovereignty. Thus, rather than a passive account of the colonial situation, we need to locate African agency primarily within the contentious nature of its deployment across the continent, and how it continues to shape contemporary politics, institutions and laws of oil in Africa.

NOTES 1. The Company of Merchants was created 1756 as a non-profit regulated company that was established to facilitate Britain’s trade in Africa. See ‘The Company of Merchants trading to Africa’, https://​roadstomodernity​.wordpress​.com/​2016/​12/​19/​iii​-the​-company​-of​-merchan​,ts​-trading​-to​ -africa/​(accessed 4 February 2022).

188  Handbook on oil and international relations 2.

Prior to 1918, the Board of Trade worked as a committee of the Privy Council with a mix of principal officers of the state and dignitaries who included the Archbishop of Canterbury, but they never met (see Plaskitt and Jordan 1952, p. 106). 3. ‘African nations struggle for independence’, https://​www​.rescue​.org/​article/​african​-nations​-struggle​ -independence. 4. The Central Powers in the First World War consisted of Germany, Austria-Hungary, the Ottoman Empire and Bulgaria. 5. The term ‘Seven Sisters’ was reportedly popularised by an Italian tycoon, Enrico Mattei, and refers to the following companies that dominated the global oil industry until the formation of the Organization of the Petroleum Exporting Countries (OPEC) in the 1960s: Standard Oil, Gulf Oil, Texaco (which later merged into Chevron), Standard Oil of New York and Standard Oil of New Jersey (which merged under ExxonMobil), Anglo-Persian (later Anglo-Iranian, now BP) and Royal Dutch Shell. 6. 4 GA Res. 523 (VI) of 12 January 1952 and 626 (VII) of 21 December 1952. 7. 4 GA Res. 523 (VI) of 12 January 1952 and 626 (VII) of 21 December 1952.

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PART III OIL AND DEVELOPMENT

13. Oil nationalism, decolonization and fragmentation Wojciech Ostrowski

INTRODUCTION Studies of oil nationalism examine pivotal moments in the history of the oil industry characterized by the rising assertiveness of the producing states and their national oil companies (NOCs), and a declining dominance of international oil companies (IOCs). It is widely argued that oil nationalism took place during three distinct periods and that processes leading to nationalization were initiated by various types of states at different junctures: (1) revolutionary states, 1920s‒1930s (Soviet Union, Mexico); (2) post-colonial states, 1960s‒1970s (Asia, North Africa and the Middle East, sub-Saharan Africa); and (3) illiberal and/or anti-globalization states, 2000s‒2010s (former Soviet countries and South America). The first period is seen as an initial salvo in a struggle over the control of the global oil industry; the second as a seismic event which firmly re-ordered the balance of power between IOCs and NOCs; and the third as, most likely, the last eruption of oil nationalism in a classical sense (Li and Adachi 2017; Pryke 2017). The fact that oil nationalism occurred at three different periods, with a 30-year interval between each, has led economists (also referred to in the literature as realist scholars) to argue that oil nationalism is a cyclical phenomenon that is triggered by a combination of high oil prices and processes explained by the obsolescing bargain model (OBM). Industry experts have stressed that while these factors identified by economists are not without merit, the dynamics behind oil nationalism can be only fully understood if we also closely scrutinize the changes that the oil industry has undergone, in particular in the run up to the 1970s and 2000s. For their part, international relations scholars and historians have pointed out that economic and industry-centred analyses have tended to focus on triggers such as the price of oil, but ignored the wider geopolitical context, including the relative decline of the United States (US) that facilitated the rise of oil nationalism in the 1970s (post-Vietnam) and 2000s (post-Iraq). They have also stressed that oil nationalism is not an event, but a process. In a similar vein, political economists in the 1970s, and more recently historians, have emphasized the importance of the wider decolonization processes in the 1960s and 1970s and the associated long intellectual shadow as being vital for understanding oil nationalism. Discussions regarding oil nationalism have also featured prominently in other key debates within the field of oil studies, especially energy security, the rentier state or the peak oil debate. Overall, oil nationalism presents itself as a well-understood phenomenon that can be narrated and explained from a wide range of perspectives. Yet, the picture is anything but clear. Despite various studies concerning oil nationalism, the concept lacks a single definition, and the periodization and especially its central claim regarding the cyclicality of oil nationalism are problematic. While it is clear that the 1960s and 1970s were pivotal, the same cannot be said about the 1930s or even the 2000s‒2010s. The main focus in this later period was pre192

Oil nationalism, decolonization and fragmentation  193 dominantly on contract renegotiations and rebalancing relationships between weak IOCs and NOCs, rather than anything on a par with taking control over the industry from ex-colonial powers (Pryke 2017, p. 480). For this reason, the 2000s‒2010s sit uneasily next to the 1970s, as the magnitude of the events from the early twenty-first century had a very different scope and meaning to those in the 1970s. As the result of nationalization in the 1970s, the oil-producing and oil-exporting countries came to own and control between 77 and 90 per cent of proven world oil reserves (Vivoda 2009, p. 523), and 78 countries throughout the world established their NOCs (Pryke 2017, p. 482; Arbatli 2018, p. 103). Furthermore, comparison between periods is only possible if we focus on one or two economic triggers but largely exclude political factors, or just list them as of secondary importance, or only stress the populism and/or authoritarian/illiberal nature of the regimes in question (Kennedy and Tiede 2011, p. 3). Most importantly, decolonization, which was a vital driver behind oil nationalism in the second half of the last century, is often decentred in favour of other aspects; in particular, fluctuating oil prices. As such, this decentring contributes to a construction of a narrative that strongly privileges IOCs. The message has been quite simple: the companies, now as much as then, are casualties of various anti-Western populists, while decolonization, the most significant driver, has been marginalized. Such framing carries real political and economic weight and, at least partly, was aimed at pressuring countries into not challenging highly preferential contracts that the IOCs signed with producers in the late 1980s and throughout the 1990s. Any challenge to those contracts was painted as a ‘risk’ and a ‘barrier’ to the imperative of global investment flows (Childs 2016, p. 541). In order to rebalance the debate regarding oil nationalism, this chapter proposes to move away from the existing periodization, and argues that oil nationalism should be discussed as a single process that took place in a limited time frame between the 1960s and 1970s, the origins of which can be traced back to the events that occurred in the 1920s and 1930s. This requires an analysis that gives a much greater prevalence to intellectual debates behind decolonization and oil nationalism in this critical period. Such framing also prevents picking and choosing those aspects of oil nationalism that can be used in temporary debates. The chapter further proposes to decouple the 2000s and 2010s stage from earlier periods, and to analyse this period through the prism of a clash between neoliberal and state capitalist ideas that collided in the oil arena, rather than through references to disputes from the second part of the twentieth century that were of a very different nature. In short, this chapter argues that in relationship to oil nationalism, cyclicality should give way to greater historical contextualization. The chapter first addresses the issue of definitions and key triggers. Then it traces the developments that constituted the intellectual and political basis for oil nationalism in 1970s. The following discussion demonstrates that today’s state‒company relationship has greatly evolved since the period of oil nationalizations, and that in the 2000s and 2010s the tensions between states and companies have had a very different background and meaning. The dominant feature of the current relationship is one of fragmentation.

DEFINITIONS AND TRIGGERS One of the most striking features of the oil nationalism literature is a lack of agreement on one single definition. Indeed, the term ‘remains an ill-defined label; something with descriptive value but little analytic purchase’ (Pryke 2017, p. 474; see also Arbatli 2018, p. 102). This

194  Handbook on oil and international relations could be explained by the fact that oil nationalism is often discussed within a context of a wider and interconnected phenomenon of resource nationalism. In certain ways, resource nationalism is meant to be more inclusive than oil nationalism since it also includes the mining industry, which inevitably adds another level of difficulty. As such, coming up with one all-encompassing definition is highly problematic. In reality, resource nationalism discussions follow the same periodization as oil nationalism, and most of the studies about resource nationalism overwhelmingly focus on oil (Ward 2009, p. 6; Pryke 2017, p. 475). The more plausible explanation is that resource/oil nationalism (the two terms are often used interchangeably) has been a highly charged concept, and the way in which it is defined and applied points to a real tension between the interests of the companies and the interests of the producing states. For example, a group of scholars who studied the phenomenon of nationalism from the energy companies’ perspective noted that ‘the underlying issue – resource nationalism – tends to be cyclical in nature and thus represents a constant, if fluctuating, systemic risk to international operators’ (Joffé et al. 2009, p. 3). Similarly, Griffin (2015, p. 25) defines petro-nationalism ‘as the use of the coercive powers of the state to (a) override the market as a means of the provision of petroleum and thereby (b) gain some strategic advantage at the expense of others’. According to Bremmer and Johnston (2009, p. 149), two prominent consultants, resource nationalism ‘encompasses efforts by resource-rich nations to shift political and economic control of their energy and mining sectors from foreign and private interests to domestic and state-controlled companies’. In the same vein, Stevens (2008, p. 5), in his often-quoted definition, remarked that ‘“[r]esource nationalism” is assumed to have two components – limiting the operations of private international oil companies (IOCs) and asserting a greater national control over natural resource development’. These realist/economic definitions of resource nationalism thus focus on relations between states and firms, and are mainly preoccupied with the risk and opportunities that nationalism presents for their operations (Click and Weiner 2010, p. 783; Marston 2019, p. 3). They also contrast rather sharply with descriptions provided by their critics. The development-oriented analysis classifies resource nationalism as a ‘strategy where governments use economic nationalist policies to improve local returns from resource industries’ (Wilson 2015, p. 400). Scholars working within this tradition also argue that ‘[r]esource nationalism symbolically and materially equates increased national control of extracted resources with the more equitable distribution of their benefits’ (Childs 2016, p. 544). Critical scholars, in their critiques of industry-centred definitions, point out that resource nationalism is ‘a geopolitical discourse about sovereignty, the state, and territory, as well as rights and privileges of citizenship, national identity, and the values a group assigns to resources like oil, gas and minerals’ (Koch and Perreault 2019, p. 612); and that ‘[r]esources do not necessarily correspond with any sort of nationalism, and when they do correspond, they often do so unevenly, in association with local and regional histories as much as or more than national politics’ (Himley 2014, quoted in Marston 2019, p. 2). All these diverging quotations demonstrate that there are differing positions and interpretations and that it is difficult, if not impossible, to arrive at one definition of oil/resource nationalism that would satisfy everyone. Yet, the fact that oil nationalism is such a moving target – much more so than other key concepts such as energy security or rentier states – also points to the fact that this is a debate in which real economic and political interests are at stake (Arbatli 2018). For instance, Childs (2016, p. 541) rather bluntly refers to the realist proponents of resource nationalism as ‘free market apologists’.

Oil nationalism, decolonization and fragmentation  195 From the dominant realist/economist perspective, oil nationalism emerges due to two sets of factors being aligned, at least to some degree (Stevens 2008, 2013; Waelde 2008; Vivoda 2009; Guriev et al. 2011; Wilson 2015). The first is a very high oil price that ‘tempts governments to forego the efficiency advantages of private producers and, instead, to maximize state revenues in high price periods’ (Kennedy and Tiede 2011, p. 3). In this perspective, the nationalizations in the 1970s rode high on the back of a massive spike in oil prices. Once the price declined in the second part of the 1980s, oil nationalism became almost completely extinct (1986‒2005), and re-emerged only in the mid-2000s when oil prices (in real terms) returned to the levels of the 1970s and eventually exceeded them. The second factor is a process described by the OBM, and which argues that the maturity of a nation’s oil/resource industries is crucial to triggering oil nationalism. According to Vernon (1971, p. 53), ‘foreign investors in raw materials take the plunge into the dark and chilly waters of a less developed country’ only because states are prepared to offer attractive conditions. The agreement benefits not only the companies but also the host state, since the company bears the lion’s share of the initial cost. Yet, once a company invests money and projects become ‘sunk assets’, the tables turn and the initial agreements come to be seen to be obsolete in the eyes of the government (Vernon 1971, p. 52). The materiality of oil and other resources prevents companies from relocating to a different geographical location. Instead, companies are forced to enter into protracted renegotiations which, in the 1970s, led to nationalizations in various parts of the world, and which, in the case of oil-rich states, also resulted in the creation of national oil companies. In the 2000s, the alignment between high oil prices and the OBM was purportedly visible in post-Soviet Central Asia and South America. High oil prices and the OBM constitute the foundations on which the thinking regarding oil nationalism is built. However, these arguments have not been without their critics, and their validity has been brought into question. To begin with, Kennedy and Tiede (2011, p. 1), drawing on both qualitative observations and a dataset covering all cases of oil nationalism from 1960 to 2006, found little to support a causal connection between price and nationalization. They argued that government benefits from nationalization ‘are less about revenue, which could be obtained through changes in revenue sharing agreements, and more about issues of strategic control and linkages to the domestic economy’ (Kennedy and Tiede 2011, p. 3). Others pointed out that while it is natural to assume that higher oil prices motivate nationalization, ‘it is not immediately clear why a government would respond to a positive oil price shock with nationalization rather than simply imposing higher taxes’ (Guriev et al. 2011, p. 303). In the relationship to the OBM it was also emphasized that although the concept is very attractive largely due to its clarity, it peaked in the 1970s and has been ‘attracting less attention in recent years’ (Wilson 2015, p. 401) outside of oil nationalism studies. The crude application of oil nationalism that hangs solely on oil prices has been prominent in journalistic accounts. Those who study and research oil nationalism are much more nuanced in their analysis and stress the importance of additional factors and outcomes, but do not challenge the cyclicality of the process itself. In his influential analysis, Stevens (2008, p. 6) argues that ‘there is also an ideological component to “resource nationalism” strongly linked to the perceived role of the state in the operation of the national economy, and it is this that contributes to a cyclical appearance to the phenomenon’. Stevens notes that from the late 1940s until the mid-1970s in the Organisation for Economic Co-operation and Development (OECD) countries and in developing countries, the involvement of the state in the economy was seen as desirable, if not actually required, to promote a ‘big push’ towards development. In relation to the oil industry, one of the com-

196  Handbook on oil and international relations manding heights of the economy, this thinking resulted in direct state intervention in the sector and its eventual nationalization. The involvement of the state was brought into question in the oil-rich countries (among others) in the 1980s and the 1990s due to the spiralling debt crises that were followed by the rise of the Washington Consensus and the neoliberalism it promoted. The subsequent collapse of the Soviet Union led to further privatization, deregulation and general liberalization. However, the Asian and Russian crises from the late 1990s, the rise of anti-globalization politics and the ascent of state-capitalist China directed many producer countries into reconsidering the role of the state in strategic sectors, including in the oil industry. This re-evaluation played a hand in triggering the most recent cycle of oil nationalism in the 2000s‒2010s. Similarly to Stevens, Bremmer and Johnston (2009, p. 150) remarked that contemporary resource nationalism ‘has been a mainstay of commodity-market headlines, but with little nuance’. They argue that a ‘one size fits all’ approach is misleading and that there are at least four variants of resource nationalism that differ in the factors motivating the policy and in its impact on industry and investment patterns. The most ‘notorious’ cases of nationalism, the revolutionary resource nationalism characterized by wrenching away ownership of prized assets, was linked to broader political and social turmoil and associated mainly with Russia and Venezuela. Other forms of resource nationalism such as economic resource nationalism or soft resource nationalism focused either on shifting a large share of revenues from international to domestic hands, or on imposing royalty increases or tax changes through regulatory channels. Wilson (2015, p. 403) builds further on those points and, in his analysis of resource nationalism, argues that far too little attention has been paid to the political context surrounding policymaking that shapes state decisions. He asserts that ‘[p]olitical institutions play a key role in shaping how states make economic policy, as they establish the state’s responsibilities and relationships to societal groups, structure its interests and create incentives for certain policy approaches’. In his analysis he focused on rentier states, developmentalist states and liberal market economies. These studies that emphasize the need for widening the debate on causes and outcomes have significantly contributed to our understanding of the oil/resource nationalism. However, they did not go so far as to challenge the cyclical nature of the process. This is despite the fact that these researchers themselves have often stressed that the nationalizations of the oil industry in the 2000s‒2010s period were not as far-reaching or important as those in the 1960s or 1970s. Arbatli (2018, p. 103) also points out that it is increasingly ‘hard to differentiate between regulatory measures that are within the realm of conventional state interference and those that should be classified as resource nationalism’. Furthermore, as we have discussed, debates regarding key triggers are far from settled. I have argued that this lack of decoupling between the two periods of the 1960s‒1970s and 2000s‒2010s is important since it has opened the door for a type of narrative in the media which is built almost solely around the issue of high oil prices, that furthermore draws a straight line between the different phases and which seems to suggest, intentionally or not, that in all periods IOCs and other Western multinationals were treated unjustly by power-hungry autocrats (Friedman 2006). According to Ward (2009, p. 7): ‘[t]he central accusation is that the governments of natural resource-rich countries insist on governing natural resources, or doing deals, in a way that places national interests – or national political interests – significantly above established good practice norms for doing business with investors in a partially liberalised global economy.’

Oil nationalism, decolonization and fragmentation  197 An important element in all of this has been an absence of in-depth discussion concerning decolonization. While recent academic studies have never failed to mention that oil nationalization in the 1960s and 1970s took place in the context of decolonization, this element is not sufficiently accentuated (Stevens 2008, p. 10). As Pickel pointed out, economic nationalism cannot be adequately explained ‘in strictly economic terms without taking into account historical, political, cultural or social factors’ (quoted in Ward 2009, p. 17). The same goes for the changes that the oil industry has undergone since the late 1950s (Ilie 2009). Certainly, toning down the importance of these unique factors is understandable, since emphasizing them would weaken the argument concerning the cyclicality of oil nationalism.

OIL NATIONALISM AND LINKAGES The earlier waves of oil nationalism of the 1920s‒1930s and 1960s‒1970s are presented as two distinct phases. However, at an elementary level the origins of the two appear to be the same. Both are directly linked to the issue of colonialism and the West, and there is also an intellectual continuity between ideas that were generated around the time of the nationalizations that occurred in the 1930s and those in the 1960s (Kobrin 1985, p. 3). The first examples of oil nationalism, or more accurately expropriations, are usually associated with the early Soviet Union and Mexico in the late 1930s. Interestingly, the key driver in the case of the Soviet Union was not solely Marxist ideology. Lenin recognized that for the New Economic Policy, which was implemented between 1921 and 1928, to be successful the country needed ‘imperialist’ technology; and it was Stalin, due to his deep suspicion of foreigners and Western companies, who finally pushed for full-scale nationalization. In the Mexican case, nationalization was triggered by deep-seated resentment towards colonial attitudes, and by the underperformance of the oil industry. In the 1920s and 1930s, oil production in the country declined by a staggering 80 per cent. After the Second World War another high tide of oil nationalism erupted in the Middle East, with some clear links to the pre-war period. In Iran, Reza Shah, who deeply mistrusted the British, whom he saw as an oppressive colonial power, threatened to nationalize Anglo-Iranian as early as the 1930s, but it was only in the early 1950s that the oil nationalization law was finally passed (Mabro 2007). Nationalization was supported by an alliance of oil workers, religious political groups, the reformist-nationalist National Front and the clandestine Communist Party (Shafiee 2018, p. 629). The Iranian episode, which was infamously brought to an abrupt end by the US and the United Kingdom through a Central Intelligence Agency (CIA) engineered coup, signalled the beginning of a shift and laid the groundwork for subsequent nationalizations. For instance, in Venezuela the process that resulted in the transfer of all assets to government hands in 1975 started in the aftermath of the Iranian attempt in 1958 (Portillo 2016, p. 51). In the Middle East, as in some other cases such as Venezuela, key points of friction were the concession agreements which the seven international oil companies, the so-called ‘Seven Sisters’, signed before the Second World War (Joffé et al. 2009, p. 4). Most controversially, the areas subjected to these concessions were often almost the size of the countries involved (on average 88 per cent), with contracts that lasted up to nearly a century (on average 82 years) (Bina 1988, p. 356; Stevens 2008, p. 10; Kennedy and Tiede 2011, p. 11). The governments had also agreed not to increase tax rates during the lifetime of the agreements. It would not be an overstatement to say that the main aim of the concession agreements was to institutionalize

198  Handbook on oil and international relations neo-colonial relationships for many decades to come (Girvan 1975, p. 151); or, at least, they could be portrayed as such (Kennedy and Tiede 2011, p. 14; Shafiee 2018, p. 629). This resulted in a deep anxiety, widely felt by the post-war generation of oil elites, about the continuity of economic domination (Dietrich 2015, p. 67). By the 1960s, full or partial nationalization was driven by anti-colonial regimes in Iraq and Libya, and by the mid-1970s other Organization of the Petroleum Exporting Countries (OPEC) members followed suit. Since OPEC countries controlled 80 per cent of the world oil production at the time, ‘it was an important step towards changing the balance of power between oil companies and governments in favour of the latter’ (Arbatli 2018, p. 103). It is worth noting that while the Middle East was the epicentre, the takeover of the oil industries also engulfed other parts of the world throughout the 1960s: Burma in 1962, Argentina and Indonesia in 1963 and Peru in 1968. Overall, there were 43 instances of oil production nationalization in 24 countries over 21 years. In economic terms, the key benefit to nationalization was a short- to medium-term increase in the state’s take of revenues from the sale of oil (Mahdavi 2014, p. 229). On a structural level, nationalization demonstrated the degree of erosion of the IOCs’ control over the industry (Kobrin 1985, p. 7). Dietrich (2015, p. 63) argues that oil nationalizations and the energy crises of the mid-1970s were a result of a ‘[r]endezvous of elites from the oil-producing nations with anticolonial thought’ (see also Kobrin 1985, p. 14). The seismic events that re-ordered the structure of the global oil industry were forged with ideas and ideologies that were central to the views of oil elites and anti-colonial diplomats for a generation. One school of thinking argued that international law had a significant role to play in addressing the issue of imperial inequality, which remained the greatest problem at the heart of the international economy. This led to the rise of the concept of permanent sovereignty over natural resources that was originally developed by United Nations delegates from Iran, Bolivia and Mexico in 1952. This line of thought was further advanced as part of an intellectual project of the ‘new nations’ in ‘transnational law’ that began to capture the imagination of anti-colonial elites, including the leaders of the oil-producing states, and which also heavily impacted upon the thinking regarding existing oil contracts (Dietrich 2015, p. 65). The eventual legitimization of ‘raw material sovereignty’ in the 1960s ‘marked a remarkable transfer of legal power that challenged the international political and economic order’ (Shafiee 2018, p. 628; see also Pryke 2017, p. 474) and determined the sovereignty of the non-European nation-states within a new world order of separate nation-states (Garavini 2015). The economic representation of a project that aimed at improving the economic position of the Global South in relation to the Global North was the New International Economic Order (NIEO). The NIEO was promulgated as a United Nations declaration in 1974 and, in particular, called for an absolute right of states to control the extraction and marketing of their domestic natural resources, and for the establishment and recognition of state-managed resources cartels to stabilize (and raise) commodity prices (Ward 2009, p. 6; Gilman 2015, p. 3; Kaup and Gellert 2017, p. 276). These key ideas were formulated throughout the 1970s, but the origins behind some of these demands can be traced back to the Mexican revolutionary constitution of 1917. It is also worth mentioning that, on the intellectual level, many of these policy solutions derived from pioneering work by South American economists dating back to the 1940s, which subsequently became a cornerstone of dependency theory and provided the underlying rationale for import substitution industrialization strategies. The impact of these ideas has been studied extensively in recent years. For instance, Rosales in his examination of oil nationalization in Ecuador in the 1970s shows how proposals that were developed by the

Oil nationalism, decolonization and fragmentation  199 proponents of the NIEO and dependency theory came to dominate the thinking of a military dictatorship that took control of the country in 1972. As Rosales (2017, p. 107) explains, ‘the military shared the widely accepted view at the time that “underdevelopment” was a result of long-lasting colonial and post-colonial relations then illustrated in unequal terms of trade’. The military leaders also sought to join OPEC, because it embodied and crystallized the way in which natural resources under the government’s control could advance development (ibid., p. 103). Another good example of interpreting nationalization and oil shocks from an anti-colonial perspective is a 1975 essay by Norman Girvan, one of the Caribbean’s most respected social scientists and public intellectuals. The ‘OPEC offensive’, as he called it, stemmed from ‘the rebellion by Third World countries against the inequalities inherent in the participation forced upon them in the international capitalist order, which the process of political decolonization had done little, if anything, to correct’ (Girvan 1975, p. 148). In Girvan’s reading, it would be a major mistake to look at OPEC’s actions exclusively within the framework of the international oil industry. Rather, they should be viewed as a direct response to the structure of unequal power relations. Furthermore, according to Girvan (1975, p. 146), a real watershed moment was the adoption of the aforementioned NIEO, as it ‘revealed unanimity of stance among Third World governments that formed an important part of the political foundations upon which the OPEC offensive was built’. In addition, he asserted that apart from the nation-state, which provided a powerful source of leverage over the imperial centre, the critical actors were those engineers and professionals who had developed the numerous skills necessary to take advantage of the opportunities. Other interpretations from the time stress the importance of other, mainly oil-related factors, but do not reject or question the vitality of the anti-colonial context in which oil nationalism took place – quite the opposite. Lenczowski (1975, p. 59) asserts that oil-producing states, despite different political complexions and levels of development, were at the same time linked by several common bonds, ‘[c]hief among them … a simultaneous striving towards decolonization and modernization’. According to him, full nationalization of their oil reserves, including the control of transportation, refining and distribution, claimed a high priority as a means of achieving these goals. In 1970, the NOCs owned less than 10 per cent of their industries, but by the end of the decade the figure was 68 per cent. Ownership of all aspects of their industries gave producers much greater control over all key factors, such as the pace of development of their reserves, the rate of production and the destination of exports (Painter 2014, p. 195). Raymond Vernon, the intellectual force behind the OBM, also agreed that what had occurred in the 1970s was generally a symptom of something more profound and bigger than oil. Like Lenczowski, Vernon stressed the importance of a small but influential technical elite who would play a powerful role in negotiations, and who were strongly influenced by the NIEO and dependency theory. Moreover, in his view, events would have played out differently were it not for the rise of independent companies that entered the Middle East in 1954. The policy of introducing independent companies to the region was initially driven by the US government, which wanted to create opportunities for companies other than Exxon and Mobil. From this moment on, a dozen or so independent companies overcame the existing entry barriers of the international oil market (Vernon 1975, p. 4; see also Arbatli 2018, p. 103). The unintended outcome of this policy was an increase in the number of companies bidding for oil (Vernon 1981, p. 521). Eventually, governments of the new producing countries saw their bargaining position improve, which culminated in the Tehran‒Tripoli agreement that paved the way for

200  Handbook on oil and international relations the first wave of nationalizations in the Middle East (see also Luciani 2013, pp. 125‒127). It is worth noting that between 1953 and 1972, more than 300 private firms and 50 state-owned firms entered the industry (Kobrin 1985, p. 18). In a similar analysis, Kobrin (1985, p. 7), in his classical account of the oil nationalization produced ten years after the events, pointed out that the successes of initial nationalizations by ‘militant’ Algeria and Libya demonstrated the extent to which companies’ control over the industry was crumbling, and ‘triggered similar actions by the more conservative regimes such as Saudi Arabia’. In his view, independent international companies were also a key innovating factor and contributed to the diffusion of nationalization across the system. In line with other authors, he also remarked that ‘[t]hese structural changes took place in the context of a period of enormous change within the Third World as a whole’ (Kobrin 1985, p. 16; see also Arbatli 2018, p. 104). It is clear that the nationalization of the oil industry in 1960s and 1970s was an outcome of multiple factors that came together in a perfect storm and, as such, it would be impossible to do justice to all of them in this chapter (Vernon 1975, p. 3). Yet, this multifacetedness should not overshadow the fact that the driving force was an anti-colonial zeitgeist which captured the imagination of a whole range of actors, from the technocratic elite in the United Nations, to oil workers (Koch and Perreault 2019, p. 612) who were also greatly emboldened by the geopolitical developments of the time, not least by the Vietnam War, which ‘confirmed that small nations of the south could defeat even the determined military might of a traditional great power’ (Gilman 2015, p. 5; see also Painter 2014). In this sense a game-changing development such as the rise of independent oil companies provided a pathway towards nationalization, which, intellectually and politically, was in motion for more than a generation. All of this speaks to the uniqueness of the oil nationalizations in the second part of the twentieth century, which cannot be easily compared with what were essentially contract disputes in the 2000s and 2010s. It is argued here that the stress on similarities and cyclicality flattens the importance of the anti-colonial politics, and accentuates factors that often played a secondary or enabling role. In addition, if the context of decolonization is not sufficiently emphasized, we arrive at a position in which the actions of political and economic elites critical of the IOCs from across time and space can be simply interpreted as a never-ending assault by populist/ nationalistic/authoritarian regimes. On this interpretation, the major trigger is the greed of the self-serving political elite that is fuelled by high oil prices. Yet, as discussed, historically at least, the reality was much more complicated. As Childs (2016, p. 541) remarked, the ‘effect of setting up resource nationalism as binary between state versus private control serves to reduce the conceptual range of the phenomenon down to a language of economics alone and overlooks the political dimensions of identity and justice’. In similar vein, Marston (2019, p. 2) argued that the concept ‘should be treated as an uneven, fluctuating constellation of people, nature, and territory rather than an objective fact’.

FRAGMENTATION The oil nationalization of the 1960s and 1970s firmly shifted the balance of power in favour of oil-producing countries and facilitated the rise of NOCs, and these have subsequently shaped the global oil industry. The rest of the story of the NOCs‒IOCs relationship has unfolded in the shadows of those events (Marcel 2006; Victor et al. 2011). The dynamics between the two were significantly determined by the changing contours of the global economy, characterized

Oil nationalism, decolonization and fragmentation  201 by the debt crises, the Washington Consensus, liberal economics and a backlash against globalization (for more, see Kaup and Gellert 2017). In addition, oil prices have played an important role, as well as the domestic/rentier politics of the countries in question. Other vital elements are the NOCs’ abilities to explore and produce oil, as well as the struggles between domestic elites for the control of the NOCs or similar companies. As a result, the tensions that have often arisen between NOCs and IOCs have different degrees of intensity, and give rise to various outcomes. Overall, the system became highly fragmented and seemingly very few themes could be detected that cut across a diverse range of cases (Haslam and Heidrich 2016). According to Mabro (2007), in the 2000s disputes between NOCs and IOCs in countries such as Venezuela, Bolivia and Russia had, in fact, only one main feature in common: ‘dissatisfaction with the terms of contracts signed by previous governments with foreign oil companies’. The most controversial of all contracts were production sharing agreements (PSAs), which became widely popular in the 1970s. Under a PSA, the government retains ownership of the resource and the company receives a share of the overall production (Cameron and Stanley 2017). The point of contention became clauses stipulating division of the share of the overall production, since under the standard PSAs almost half of the profit produced went towards compensation of the investor’s expenditure (cost-recovery product), and only the second half was divided between investors and the state (Bindemann 1999, p.10). It is also important to keep in mind that PSAs were very different oil contracts than the concession agreements, which aimed to perpetuate neo-colonial relations. The nationalization of oil resulted in the dominant position of NOCs, but this did not mean that IOCs would cease to be an important part of the system. For instance, by the 1980s there was a recognition on the part of Algeria, Qatar and Kuwait, among other Middle Eastern states, that they would not be able to implement projects in upstream oil due to a lack of technology or the lack of managerial experience present in foreign companies. In other cases, other factors played a more significant role. In the case of Venezuela, the involvement of the IOCs was closely linked to the Petróleos de Venezuela, S.A. (PDVSA) NOC’s internal objectives and those of a managerial elite who had ‘lived in a privilege[d] reality’ (Mares 2010, p. 5; see also Stevens 2008, p. 16; Vivoda 2009, p. 519). In the Russian instance, the arrival of IOCs followed a highly controversial privatization of the Russian oil industry and was part of a larger push towards a market economy that had resulted from the collapse of the Soviet Union. Another important element was the technological shortcomings of the post-Soviet oil industry (Gustafson 2012). In both Venezuela and Russia, the new governments only engaged in disputes with the IOCs after regaining full control over key domestic companies (in Venezuela, PDVSA; in Russia, Gazprom and Yukos) (Kennedy and Tiede 2011, p. 2). In Venezuela, the key points of disagreement between the companies and the government centred on the very low royalties paid by foreign companies operating in the Orinoco belt. The late Hugo Chávez, who used to be known as the ‘revolutionary resource nationalist’, vowed to address this issue forcefully. Yet Rosales (2018, p. 440) points out that, despite all the radical rhetoric, Venezuela in the 2000s ‘did not follow a recipe of complete nationalization of its resource sector, as it was the case in the 1970s, but rather a renegotiation of the terms in which foreign companies can take part in the resource business to enhance state participation and control’. He also argues that Venezuela’s relationship between the state and foreign companies under Chávez was a hybrid model, and that the joint venture framework approved by law in 2001 was only applied in full from 2007 onwards when the Chávez administration shifted its

202  Handbook on oil and international relations relations with IOCs (Rosales 2018, p. 461; see also Childs 2016, p. 541), and BP and Statoil stayed on in a minority partnership with PDVSA. In the Russian case the most controversial dispute concerned the Sakhalin 2 project and the PSA, the terms of which were ‘highly unfavourable to the Russian state’ (Partlett 2010, p. 81). Most importantly, the cost-recovery clause in the agreement had no cap (usually between 70 and 80 per cent in every PSA), which meant that the Russian state received no revenues other than royalties after the start of production until the company had recovered all its costs. After a lengthy dispute, the majority shareholder and operator Royal Dutch Shell sold a controlling stake to Gazprom in 2006, following announced cost overruns of over 100 per cent and investigations into environmental violations of the consortium (Domjan and Stone 2010). However, Sakhalin 2 did not spell the end of the IOCs’ involvement in the oil sector, but rather led to a recalibration of the relationship between companies and the Russian state. BP and Shell have been downsized but had stayed in the country and as of early 2022 they continued to profit from the relationship with the Russian state (both companies have said they will withdraw from Russia following the invasion of Ukraine in February 2022). As such, the outcome was an arrangement between two parties that was no different to the one that took shape in Venezuela, at least until 2014. In short, in the case of Russia and Venezuela, the oil nationalism was never ‘as dramatic as commentators often imply’ (Pryke 2017, p. 480). In addition, the approach taken by Venezuela and Russia to IOCs was not surprising given the terms of the contracts, and would have also occurred in a low oil price environment. The rising oil prices from the mid-2000s onwards only magnified the scale of the problem, but these contracts were a source of friction long before that. In other instances from the 2000s‒2010s period, the issue of price played a much more important role than in the Venezuelan or Russian cases, while in some other cases it did not seem to matter at all. As Ward (2009, p. 5) remarked towards the end of the 2000s, ‘today resource nationalism seems surprisingly resistant to the commodity price collapse of the second half of 2008’. The role of the OBM is also not as clear as proponents of cyclicality would imply. In the case of Ecuador in the late 2000s, the key sources of tension between the IOCs and the state were also PSAs, nicknamed ‘give-away’ contracts, that were signed in the 1990s and early 2000s. As in the Russian case, in Ecuador the government kept only 20 per cent of profits under the PSA agreements (Rosales 2020, p. 82). After the terms became public knowledge, the contracts lost any legitimacy in the eyes of a coalition of domestic forces ranging from urban intellectuals to environmentalist groups, but the new administration of Rafael Correa (President 2007‒17) only moved against the companies once the oil prices climbed to historically high levels (Fontaine et al. 2019; Rosales 2020, p. 78). The new contracts were hastily negotiated by government officials with little input from other sectors of society. This led to criticism regarding the transparency and accountability of the process, and exposed the state’s weak regulatory capacity. As such, the OBM did not seem to be an important factor in this case. Similarly, in the case of Bolivia the contracts with foreign companies from the 1990s were directly challenged in the 2000s by a social movement whose leaders ‘have proven themselves masters at articulating resource nationalist frames that have broad emotional resonance that propel movement participants to action’ (Kohl and Farthing 2012, p. 228). The key point in the dispute was that tax and royalty payments had not kept up with the increase in investment and production. By 2002, hydrocarbons made up less than 7 per cent of state revenues. After contract renegotiation that happened in the wake of high commodity prices, the income from

Oil nationalism, decolonization and fragmentation  203 oil and gas accounted for more than half of the state’s revenues. This translated to an increase from $173 million in 2002, to more than $2.2 billion in 2011. At the same time, multinationals stayed in the country and extracted the majority of the country’s natural gas and minerals (Kohl and Farthing 2012, p. 230). As in the case of Ecuador, Bolivia has also suffered from weak state capacity, and there was widespread criticism of insufficient coordination between different departments, poor accounting and high levels of corruption. Again, in this case the OBM did not appear to play a significant role. On the other side of the world, in Central Asia and the Caucasus region, the state‒companies relationship developed very differently to South America, despite the presence of two essential factors: controversial PSAs and high oil prices. Azerbaijan, which had signed a number of long-term contracts with a consortium of IOCs in the mid-1990s, did not attempt to override contractual obligations or capture skyrocketing rents by the 2000s. This was due to the fact that for the Azeri state a good relationship with the US and Europe – both home states of IOCs – was more important than the possible opportunities resulting from contract renegotiations. The alliance with the West via IOCs was seen as vital for securing a favourable outcome for Azerbaijan in the ongoing Nagorno-Karabakh conflict. As Hayder Aliyev, a long-standing leader of Azerbaijan during Soviet times and during its first decade of independence, reportedly said during the 1990s: ‘My weapon is oil, and with that we will manage to win the war’ (quoted in Partlett 2010, p. 80). Across the Caspian Sea, Kazakh political elites were also reluctant to go down the Russian route, but for very different reasons than the Azeris. Despite criticism and dissatisfaction with the original agreements that were voiced as early as 1999‒2000 by President Nursultan Nazarbayev (1989‒2019), and by top oil officials during the time when oil prices were at a historical low, the Kazakh state recognized that the newly created KazMunaiGas NOC was unable to maintain adequate output and investment due to the lack of technology and capital, and did not push for expropriation and licence revocation (Nurmakov 2010, p. 33; see also: Ostrowski 2010). As a result, in the period of 2001‒12, the Kazakh government pursued a developmental policy that aimed at facilitating a partnership between the NOC and IOCs with the goal of strengthening local content and expertise (Orazgaliyev 2018, pp. 144, 148). Orazgaliyev (2018, p. 149) remarked that while the Kazakh government introduced a more advanced taxation system throughout the 2000s that increased budget revenues, the goal of increasing rent was less important than the aim of developing local expertise. This strategy in many ways reflected a Norwegian approach to oil extraction and building indigenous capacity in the 1970s, or the Saudi doctrine of ‘participation’ from the late 1960s which aimed to achieve training of local workers at all levels of the NOC. In sub-Saharan Africa the key driver behind contract renegotiations was a return of the notion of the developmental state, an idea that was sidelined at the height of the globalization debates in the late 1980s and 1990s. For instance, in Tanzania the main source of dissatisfaction was the fact that ‘liberal reforms to produce equitable socio-economic benefits combined to produce a popular discontent over MNCs [multinational corporations]’ (Poncian 2019, p. 85). As in the case of South American states, the push for change came from increased popular discontent, and academic and civil society criticism. The main points of frictions between the government and the IOCs were the terms on which companies operated in the country; most importantly, ‘generous fiscal regimes characterized by, among other, lower tax and royalty rates, profits repatriation, and laxity in employment requirements’ (Poncian 2019, p. 79). In other examples, the push towards the developmental state was also facilitated

204  Handbook on oil and international relations by the commodity super-cycle, global financial crises and the rise of the BRIC countries (Brazil, Russia, India and China) that ‘opened up new possibilities for African client states to reconsider their development paths and develop new international relations, the more so as these non-traditional customers presented attractive offers for greenfield resource exploitation’ (Kahn 2014, p. 371). Most importantly, China has become an active lender in offering infrastructure-for-oil in Angola, Ghana and South Sudan (Griffin 2015, p. 25). In the Nigerian instance, the IOCs started to de-invest in the country for reasons unrelated to contracts, price or the OBM. The main issues for the companies were the lack of security in the Niger Delta and a desire by IOCs to increase their focus on offshore, which was supposed to be protected from sabotage (Andreasson 2015, p. 314). This wide-ranging survey shows that, throughout the 2000s and 2010s, state‒NOCs relationships have gone through a period of renegotiation in various corners of the world. The main objective was to address the excesses of the 1980s and 1990s that were embodied in contracts that heavily privileged NOCs. In proposing such poor terms, companies themselves invited challenges by the producers. The comparison to the 1960s and 1970s has tended to be put forward to support the IOCs’ position and to invoke a sense of historical injustice against them. But the centrality of high oil prices and the OBM are unclear in the 2000s and 2010s. The high oil price might have accelerated the process of contract renegotiations, but did not trigger it in all cases. Furthermore, in a number of examples the producers were only willing to go so far in challenging companies, since they lacked indigenous capacity. This is to say that the phenomenon explained by the OBM did not trigger the process of renegotiations, but rather limited the extent to which smaller producers could push IOCs. Furthermore, it has been pointed out that ‘[d]irect expropriations and full-scale nationalizations have become exceptions rather than a norm’, and that ‘[m]ounting evidence suggests that states prefer to intervene in the natural resource sectors through regulatory control’ (Arbatli 2018, p. 105). In short, from the 2000s onwards a picture has emerged of the state‒companies relationship as one of increasing fragmentation in which the interactions are in a state of constant flux, but do not share the same characteristics as the oil nationalization from the 1970s, which resulted in the creation of NOCs and unprecedented transfers of economic and political power.

CONCLUSION The cyclicality thesis implies that there is an order to the way in which the relationship between producing states and IOCs has evolved. However, the two periods that oil nationalism aims to study share little in common, and the economic triggers do not sufficiently capture the complex realities. Decolonization, the most important driver in the first period, was de-emphasised, while the limits of privatization and the liberalization of national oil industries in the 1980s and 1990s in the major producing states were not appropriately accentuated. Furthermore, at its heart, oil nationalism is about contract renegotiations. Yet, contracts that were challenged in the 1970s and 2000s were poles apart. The fight against concession agreements was central for producing countries that were seeking to become sovereign states, whereas the renegotiations of PSA agreements did not carry nearly the same weight (Vivoda 2009, p. 519). This chapter has also argued that contract renegotiations in the 2000s‒2010s were not part of a long, historical process that have somehow ‘unjustly’ hindered companies’ operations, as a crude oil nationalism framing might suggest. In sum, it would be much more useful to treat the two

Oil nationalism, decolonization and fragmentation  205 periods as separate events rather than considering them as part of a wider, cyclical process without the appropriate historical contextualization. The oil nationalizations of the 1970s have held a special place in oil studies because of the way in which they re-ordered the oil industry in a number of ways that are discussed in this book. However, the climate change debate suggests that in the future, oil nationalization may also be remembered as a first step in the transition to a low-carbon economy, as it triggered a surge of investments in alternative energy and drastic improvements in energy efficiency. The nationalization of the oil industry and the rise of OPEC, coupled with fear of the imminent depletion of global oil reserves, led ‘to energy conservation and investment policies that fortuitously brought about enormous reductions in global emissions’ (Ross 2013; see also Sandbach 1978). In the US, policies introduced by Nixon, Ford and Carter led to a rapid deceleration of total carbon emissions. As Ross (2013, p. 4) pointed out: ‘[in] the decade before 1973, carbon emissions rose almost 4.5 percent annually in the United States; since 1973, they have risen less than 0.4 percent a year’ (see also Goel 2004, p. 470). Thus, the story of interpreting and reinterpreting the meaning and significance of oil nationalization is likely to continue for some time to come.

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14. Labour in the making of the international relations of oil: resource nationalism and trade unions Peyman Jafari

INTRODUCTION Until quite recently, the impact of oil on international relations was studied almost exclusively through the mediation of revenues, markets, corporations and geopolitics. Several chapters in this Handbook showcase the new directions in which research on oil and international relations has developed, producing deeper and more nuanced insights. The role of labour, however, has been inadequately examined in studies on both oil and international relations, and it is almost absent in studies that explore the relationship between oil and international relations. The relative absence of labour in oil studies is partly due to the capital-intensive nature of the oil industry, which has rendered invisible the relatively small number of people it employs. More importantly, it is a consequence of an approach that mystifies oil, attributing to it magical abilities to create geopolitical conflicts, civil wars and authoritarian states, while overlooking its actual processes of production and transport. Increased attention to those actual processes in the last two decades has revealed the material, technological, cultural, spatial and environmental realities in which oil is embedded (Bet-Shlimon 2019; Mitchell 2011; Santiago 2006; Shafiee 2018). Oil production and transport also rely on labour, as several recent studies have pointed out (Atabaki et al. 2018; Ehsani 2014; Jafari 2018; Jefroudi 2017; Vitalis 2007). These studies show that labour is a crucial factor in understanding the social, political and economic entanglements of oil and the modern world. The recruitment of labour, for instance, has created waves of internal and transnational migration, with important cultural, social and economic consequences (Ibrahim 1982; Louër 2008). The management of the labour force and the organization of labour relations has involved the creation of domestic and international institutions. Finally, despite their relative small numbers but strong positional power, oil workers have played a significant role in domestic politics, with often far-reaching international ramifications (Bini 2019; Muschik 2019). The strikes in the Baku oil industry in 1904‒05 and 1917‒18, and the oil strikes of 2002‒03 in Venezuela, were consequential for the domestic and international politics of, respectively, the Russian Empire and Latin America (Rosenberg 1989; Weisman and Beland 2010). Labour has fared relatively better in international relations (IR) studies. Once a field mainly preoccupied with states, IR has become increasingly attentive to the role of non-state actors, including workers and their organizations (MacShane 1992; O’Brien 2000; Silver 2003). Many aspects in which labour has shaped international relations, however, are understudied, including the role of labour in the oil industry. Labour has shaped the relationship between oil and international relations in multiple ways, for instance through the labour market and recruitment, labour migration and labour relations, as some of the examples provided above 208

Labour in the making of the international relations of oil  209 illustrate. In this chapter, I focus on two other aspects of this mediation: the role of resource nationalism, and international labour organizations. First, I discuss how resource nationalism (petro-nationalism) challenged and reconfigured the international relations of oil that emerged in the first half of the 20th century, using Iran as a case study. This is particularly relevant given the resurgence of resource nationalism in the 21st century, as illustrated by the attempts of governments in Latin America and the former Soviet republics to nationalize oil or curb the power of international oil corporations (Riofrancos 2020; Vivoda 2009). According to Verisk Maplecroft, a company that produces an annual Resource Nationalism Index, the risk of resource nationalism decreased in 51 countries in 2016‒20, compared to 66 countries recording a significant increase (Blanco and Machado 2021). I then explore the period of the Cold War, in which petro-nationalism and radical labour activism in the oil industry became real political forces. Worried by their possible alliance and disruptive impact on the oil market and the world order, the United States government and its allied trade unions tried to subdue, sabotage or incorporate oil workers in the Global South. I explore this relationship through the case study of the International Federation of Petroleum and Chemical Workers. This labour union’s history is still relevant, as labour mobilization in the oil industry remains an important factor, which important strikes in the last two decades in several oil-producing countries, including Nigeria and Iran, have demonstrated (Aborisade and Povey 2018; Kadivar et al. 2021).

PETRO-NATIONALISM AND OIL WORKERS Nationalism has been a major force in the making and remaking of modern international relations since the early 20th century, often operating through the medium of natural resources. Resource nationalism emerged as countries with extractive industries attempted to ‘shift political and economic control of their energy and mining sectors from foreign and private interests to domestic and state-controlled companies’ (Bremmer and Johnston 2009, p. 149). As national sovereignty stands at the core of resource nationalism, nationalization has been the main policy through which this goal has been pursued, although one can think of other less radical policies such as capturing rents via taxation, providing subsidized energy to consumers and developing downstream processing in the case of oil (Kaup and Gellert 2017, p. 277). To better understand the historical specificity of resource nationalism and its role in international relations, it is important to unpack its two components – resource and nationalism – through a relational approach that conceptualizes them as embedded in social relations and mutually constitutive. To begin with the former, natural resources are not ‘natural’, meaning that they do not stand outside social relations. As David Harvey has pointed out: resources can only be defined in relationship to the mode of production which seeks to make use of them and which simultaneously ‘produces’ them through both the physical and mental activity of the users. According to this view, then, there is no such thing as a resource in the abstract or a resource which exists as a ‘thing in itself.’ (Harvey 1974, p. 265)

Whether natural materials emerge as a resource at a certain point in time thus depends on the broader context of the social relations, and the political and economic institutions that give meaning and function to it as a resource. Oil and other fossil fuels are a case in point. As

210  Handbook on oil and international relations Matthew Huber has argued, fossil fuels emerged as a necessary aspect of capitalist production and circulation (Huber 2009). While this entanglement was embodied by coal in the 19th century, it became increasingly expressed in the dominant role of oil in the 20th century. As international oil companies rooted in the United States (US) and Europe gained control over oil resources in Eastern Asia, the Middle East, Africa and Latin America in the first half of the 20th century, oil started to occupy a prominent role in the nationalist imaginary in those regions, giving rise to petro-nationalism. In the Global South, the assertion of state control over the nation’s oil resources came to play a crucial role in the nationalist imaginary that developed in response to European and American imperialism. Therefore, most literature on resource nationalism has a state-centric approach. The pivotal role of the state (elites) in the development of resource nationalism, both as a discourse and as a political project, is undeniable, but it is important to decentre the state as the main site of resource nationalism by understanding why resources and nationalism are mutually constitutive. First, states and resources did not come into existence independently of each other. Building on the work of critical resource geographers, Natalie Koch and Tom Perreault aptly argue that ‘resources and states are territorialized and co-produced, materially and ideologically’ (Koch and Perreault 2019, p. 616). This idea becomes more concrete when we realize that, historically, ‘The embrace of resource management as a legitimate state function constitutes a significant moment in the evolution of the administrative state’ (Bakker and Bridge 2008, p. 220). Crucially, gaining control over resource management entailed the management of the labour force in a strategic sector as well. Thus, in peripheral countries dependent on oil extraction, the modern state did not predate resources, but state-making and oil-making developed in a co-constitutive process that includes labour. Second, the state and the nation are separate categories, and as a result the state is not the only site for the emergence of (resource) nationalism. Resource nationalism invokes an ‘imagined community’ that incapsulates not only the elites but also subaltern groups that claim to be part of the nation and demand their share of its resources. Workers of extractive industries such as oil where foreign capital and domination have been visibly present have often spearheaded nationalist movements, as their workplace experience of class and national subjugation resonated with the social inequality and foreign domination they observed in their country. The states of the Global South, for their part, attempted to establish their sovereignty by incorporating oil workers into an ‘imagined community’ by presenting themselves as the defenders of their social and national rights vis-à-vis foreign oil companies. Thus, since the early 20th century, oil workers have played an important role in the development of resource nationalism that challenged and reconfigured the international relations of oil. They have done so both directly, through their own syndicalist and political activism in which nationalist and class-based demands are entangled, and indirectly, through the state’s policies to incorporate oil workers as a way of responding to their pressure and to increase national sovereignty vis-à-vis international oil corporations. Iran In a heated meeting with his ministers on 26 November 1932, Reza Shah threw the file of oil negotiations with the British in the stove and signed a decree cancelling the D’Arcy Concession (Bamberg 1994, p. 33). This Concession had been given by Mozaffar al-Din

Labour in the making of the international relations of oil  211 Shah of Persia (Iran) to the British entrepreneur William Knox D’Arcy in 1901, who in turn assigned his concession rights to the Anglo-Persian Oil Company (APOC) that was established in 1909. According to the Concession, APOC had the right to exploit, transport and market oil until 1961 in all of Iran, except in five northern provinces. In return, it was to pay the Iranian government 16 per cent of the annual net profits. Over time, however, the definition and measurement of profits, the fact that the United Kingdom (UK) government was the majority shareholder in APOC and APOC’s policies towards its workers and the communities in southwestern Iran, created widespread resentment. Having come to power through a coup d’état in 1921, in 1926 Reza Khan crowned himself as the first king of the Pahlavi dynasty, becoming Reza Shah, and embarked on an ambitious project of authoritarian modernization, which entailed the bureaucratization and centralization of the state (Abrahamian 1982, pp. 102–165; Atabaki and Zürcher 2004). Before ascending the throne, Reza Shah had subjugated the Bakhtiari and Arab tribal leaders in the oil-producing Khuzestan province, who had been supported by the UK. What remained, however, was the operational autonomy of APOC in that region, and its financial revenues that were needed for state-building. Reza Shah thus became increasingly adamant that he would renegotiate the D’Arcy Concession to reinforce Iran’s sovereignty vis-à-vis APOC. The renegotiations started in July 1928 and were led by the Iranian court minister Abdol-Hossein Teymourtash and by APOC chairman Sir John Cadman (Brew 2017; Elm 1992; Elwell-Sutton 1976; Mueller 2016; Shafiee 2018). Two factors were causing resentment against the D’Arcy Concession among the elite and the public at large – the dealings of APOC with the Iranian government, and with its workers and fenceline communities – that were reflected in the debates in newspapers and the parliament. A few days after the cancellations of the Concession, one representative complained that instead of training and employing Iranians, APOC was bringing skilled workers and technicians from India; while another argued that: In the previous year [the share of the government in the oil income] declined from 1.2 million to 300 000 Lira. This is one of the acts of the Company [APOC] against our government, but it has done many wrongs to the people as well. Those who have been in Khuzestan or have travelled there, can understand very well how the Company treated the people. If, for instance, a decree arrived from London telling the Company to reduce its costs a little, it would then dismiss its workers. The servants of the British would earn three, four or even ten thousand toman. They wouldn’t touch those, but they reduced the hundred thousand toman [of the Iranian workers] to eighty thousand toman ... and thus destroyed them.1

It is evident why the parliamentarians and Reza Shah were concerned about APOC’s dealings with the state, but it is less evident why they should have been concerned about its dealings with Iranian workers, who in the rest of the country were living in dire conditions. From early on, Reza Shah realized that state-building, nation-building and resource-building were all entangled in a nationalist project, which required the incorporation of Iranians as citizens. Hence Reza Shah was not merely concerned about the unequal reward that Iran was receiving from APOC, but he was: especially concerned at the large proportion of foreigners employed [in APOC], at the time 6,000 out of 29,000, and felt that the company should be doing more to train Persians for higher posts. More serious was the very much higher living standard accorded to the British staff, and in general the preferential treatment of foreigners. (Elwell-Sutton 1976, p. 67)

212  Handbook on oil and international relations Given the importance of APOC, Reza Shah saw the Iranianization of its labour force and the elimination of national inequality inside it as an integral part of the state- and nation-building project. The pressures of nationalist public opinion and rising labour militancy galvanized his conflict with APOC. To begin with the former, he visited Khuzestan in November 1928 to make ‘clear to the whole of Khuzestan that the hand of Government was strong in the land and that Khuzestan was as much a part of the Persian Empire as any other province’, as E.H. Elkington (1929), the director of APOC in Abadan, reported. His visit to Khuzestan overlapped with nationalist agitation in the Iranian newspapers, and according to one of them, Shafaq-e Sorkh, Reza Shah did not visit APOC due to the popular dislike of the company. Complaints about the labour conditions of APOC’s workers occupied an important place in not only socialist newspapers, but also mainstream newspapers such as Ettela‘at, Shafaq-e Sorkh and Setareh-ye Iran (Bayat 2007, pp. 115–116). This public attention to labour conditions resulted mainly from increasing labour activism among oil workers. In the oil industry, the first reported strike occurred in 1914 (Floor 1985, p. 28). Seizing on the weakness of the central state during World War I, inspired by the Russian Revolution and spurred on by returning Iranian migrants from the oil fields around Baku, Iranian workers became more militant from 1918 to 1925. During the last weeks of 1920, Indian workers of the Abadan Refinery went on strike and were joined by their Iranian and Arab colleagues to demand higher wages. Other strikes in the oil industry occurred in April and May 1921, when Indian workers protested against the arrest of Mohandas Karamchand (Mahatma) Gahdhi, and then were joined by Iranian workers to demand a wage rise (Mahmudi and Saeedi 2002, pp. 201–203). In 1921, members of the newly established Communist Party of Iran, the Socialist Party of Iran and independent activists united nine trade unions in the Central Council of the Federated Trade Unions, but unionization among oil workers did not take off until 1927. In that year, Yusuf Eftekhari arrived fresh from the Communist University of the Toilers of the East (Moscow) and organized, with the help of seasoned oil workers such as Ali Omid, several cells in Abadan that operated underground and laid the foundation for the first mass strike in the oil industry, with great national and international impacts. On May Day 1929, Abadan’s refinery workers organised a demonstration to demand higher wages and shorter hours. Alarmed by the size of the demonstration, Elkington and the local authorities agreed on a swift crackdown by arresting a total of 45 workers, provoking a general strike and riots in Abadan on 6 May, the size and anger of which reverberated throughout the country (Cronin 2010). As Stephanie Cronin has argued, the 1929 strike signalled the emergence of an organised working class and the potency of a new type of protest in Iran. The strikers did not only put forward socio-economic demands, but also attacked the D’Arcy Concession and called for its cancellation. This is evident from the memoirs of Yusuf Eftekhari, the main union organiser of the strike, in which he draws a direct link between the strike and the negotiations on the D’Arcy Concession, writing that the strike was initiated to stop an unfavourable outcome and to demand the departure of the British (Bayat and Tafreshi 1991, p. 38). These nationalist demands also appeared in the shabnamehs (leaflets) distributed by the strikers. The Khuzestan labour union stated in its leaflet, for instance, that to stop the extension of the D’Arcy Concession, Cadman had to be chased out of Iran (Bayat and Tafreshi 1991, pp. 134–135). The support for the strike in the Persian Habl al-Matin weekly published in Calcutta, and in Egyptian newspapers, reflected the rising tide of transnational anti-colonialism.

Labour in the making of the international relations of oil  213 The 1929 strike had a contradictory impact on the nationalist stance of the Iranian government in its negotiations with APOC. On the one hand, it aided APOC in repressing the emergence of an independent labour movement while attempting to improve their conditions from above. Hence when Reza Shah planned to visit the Abadan Refinery eight months after the strike, in January 1930, Teymourtash pressured APOC to improve the wages of the oil workers, which resulted in a 5 per cent increase and the introduction of a minimum wage (Bamberg 1994, pp. 79–80). On the other hand, however, the repression of the oil workers’ movement undermined an important source of pressure on APOC. This contradictory outcome was visible in the events following the 1929 strike. In 1932, Reza Shah ordered the cancellation of the D’Arcy Concession after the negotiations with the British had stalled, but he signed a new agreement in 1933 with APOC, which did not provide Iran with any substantial improvements (Brew 2017). This is in contrast with the developments from 1946 to 1953, when labour activism among Iranian oil workers resurged as part of a popular nationalist movement, with important international consequences. In April and May 1946, oil workers organized several strikes against maltreatment by British managers and the repression of trade unions, while demanding higher wages, better housing, an eight-hour working day and a comprehensive labour law. During the May Day parade, a female orator ‘described oil as the jewel of Iran, accused the British of spending more on dog food than on workers’ wages, and urged the takeover of the AIOC. This was probably the first time that a public audience in Abadan heard the cry for oil nationalisation’ (Abrahamian 1982, p. 361). The protests, organized by the union led by the pro-Moscow Tudeh party, culminated in the mass strike of July 1946 in Abadan and gave enormous impetus to the formulation of two labour bills, and the approval of Iran’s first Labour Law in May 1946 by Prime Minister Ahmad Qavam al-Saltaneh, which had been one of the demands of the strikers (Ladjevardi 1985, pp. 62, 66–67). They also reflected the emergence of popular petro-nationalism, which in combination with class-based demands fuelled labour militancy among oil workers, culminating in large protests between 1951 when Prime Minister Mohammad Mosaddeq nationalized oil, and 1953 when his government was toppled by a US and UK instigated coup d’état. While oil workers are largely absent in the historiography of the oil nationalization movement that developed in the late 1940s and early 1950s, their role is reflected in parliamentary debates and newspaper articles. In the years following the 1946 oil strikes, the Iranian press gave ample attention to the conditions of oil workers in Abadan and in the oil fields in Khuzestan, aiding the spread of petro-nationalism throughout the country. By connecting their social conditions to national control over the oil resources, oil workers forced the Iranian government to give more attention to the labour condition at the Anglo-Iranian Oil Company (AIOC), as APOC was renamed in 1935. In 1948, the Iranian delegation to the Petroleum Committee of the International Labour Organization (ILO) requested it to study the labour conditions in the oil industry. A Commission was then appointed, which in 1950 surveyed the AIOC installations in Abadan and in the various oil fields in Khuzestan, a sign of the increasing importance of labour relations governance for international organizations that aimed to pre-empt nationalist and anti-capitalist convulsions in a strategic industry (International Labour Office 1950). Even more explicitly than in 1929, oil workers challenged the foreign domination of the Iranian oil industry, demanding and supporting its nationalization (Abrahamian 2013; Biglari 2020; Jefroudi 2017). On 20 March 1951, two days after the Iranian parliament passed a bill

214  Handbook on oil and international relations authorizing the nationalization of the oil industry, AIOC announced cuts in wages, travel allowances and housing subsidies. Two days later, oil workers in Bandar-e Shahpur went on strike. A larger-scale strike occurred on 25 March 1951 in the Aghajari oil field and spread to Naft-e Sefid and Masjed-e Soleiman, in which trade unions played a major role. In Abadan, students of the Technical Institute of the oil industry took to the streets, and by 1 April virtually all 30 000 Abadan Refinery workers and a quarter of the workers in the oil fields were on strike. Unsatisfied with AIOC’s concessions, the unions reacted by calling a general strike on 12 April in Khuzestan, to demand payment for the three weeks that they had gone on strike, and the nationalization of the oil industry. Though the general strike ended on 25 April 1951, it gave essential leverage to Prime Minister Mosaddeq, who ordered the nationalization of oil on 1 May 1951. Although the Tudeh party’s anti-British propaganda played an important role, the oil strikes were fuelled by long-standing grievances among oil workers about bad housing, low wages and structural discrimination that they linked to the semi-colonial hierarchy at AIOC, as nationality determined workers’ benefits and prohibited the progress of Iranians to higher managerial positions. This is evident not only from interviews with oil workers, but also from observations by the US embassy that highlight oil workers’ concerns over nationalization and anti-British resentment.2 Thus while the oil nationalization of 1951 was implemented at the top by Mosaddeq, oil workers contributed to the emergence of petro-nationalism that changed the international relations of not only Iran, but also many other countries in the Global South that were inspired by its oil nationalization.

INTERNATIONAL OIL WORKERS’ UNIONS AND THE COLD WAR If petro-nationalism was an emerging force in the first half of the 20th century, the oil nationalization in Iran signalled its development into a crucial factor in the second half of the 20th century. Moreover, the role of oil workers in petro-nationalism became even more pronounced as labour became more organized in many oil-producing countries of the Global South. Where anti-colonial movements had successfully achieved national liberation or were engaged in anti-colonial struggles, social struggles erupted around issues of class inequality and poverty, and oil workers could often be found at the centre of movements that combined these struggles. In the context of the Cold War, the growth of both (resource) nationalism and communism in the Global South were perceived as a serious challenge to the US-led liberal order, particularly when the oil industry and its workers were involved, given their strategic position. Sometimes pro-Moscow communist parties and trade unions were involved in directing oil workers’ protests, but more often their role was exaggerated; protests in the oil industry were rooted in real political and social grievances of oil workers. Western oil companies tried to create arrangements with the governments of (post-colonial) countries in the Global South to ensure that they used their power to control the labour force in the oil industry. These arrangements could be achieved through pressures, incentives and outright interventions (coups), or a combination of all those methods. To achieve this, the international oil companies also needed the support of their own states, which they tried to attract by associating oil with national security. Any disruption to oil extraction, transport or refining in the countries where these companies operated was framed as an attack on national security. This was an influential appeal to many American state officials who saw oil, for real or perceived reasons, as a pivotal

Labour in the making of the international relations of oil  215 geopolitical asset to which they and their allies should have free access, without interference of the Soviet Union or nationalist leaders of developing countries. Hence, during the Cold War, the international labour unions became an important arena where American officials directly intervened to counter the influence of nationalism and communism among oil workers in the Global South, as well as in Europe. American labour unions, prominently among them the oil workers’ unions and their international officials, played a central role in these efforts. The International Federation of Petroleum and Chemical Workers, in which oil workers’ unions of various countries collaborated in the second half of the 20th century, provides an excellent illustration of how labour mediated the interaction between oil and international relations. International Federation of Petroleum and Chemical Workers Labour unions started collaborating internationally long before the Cold War, beginning in the last quarter of the 19th century with the formation of the International Trade Secretariats (ITSs), in which unions based in one craft or industry cooperated. International cooperation between nationally organized unions started in 1901 with the establishment of the International Secretariat of National Trade Unions Centres, which was renamed the International Federation of Trade Unions (IFTU) in 1913 (Dale 1967). These collaborations collapsed during World War I, but swiftly revived after the war. Reflecting the international impact of the Russian Revolution, the Red International of Labour Unions (Profintern) was formally established in 1921 with an explicitly communist orientation (Tosstorff 2016). The formation of international labour unions was also shaped by the ‘Wilsonian moment’ of 1919 (Bellucci and Weiss 2020; Manela 2007). The International Labour Organization (ILO), an affiliated agency of the League of Nations, was established in 1919 to extend President Wilson’s pledge to make the world ‘safe for democracy’ to the world of labour, and to incorporate it into the international governance structures (McKillen 2018). In pursuing this project, and to counter its radical opponents who saw it as part of advancing capitalist interests internationally, Wilson involved the American Federation of Labor (AFL) leaders (Samuel Gompers in particular) in American foreign policy circles (Bender and Lipman 2015; Larson 1974). In the same year, the international collaboration of labour unions was revived and institutionalized with the reconstitution of the IFTU, which became known as the Amsterdam International and had a social-democratic orientation. The interwar years were marked by the emergence of competition between the IFTU as representative of ‘reformist internationalism’ and an important player in the ILO, and the communist Profintern, which ceased to exist in 1937 (Lorwin 1929). In 1945, the experience of fighting a common enemy united social-democratic and communist trade unions in Europe in the World Federation of Trade Unions (WFTU). Four years later, however, the WFTU split due to the anti-communist opposition of the AFL and Europe’s Christian unions, the reluctance of the British Trades Union Congress (TUC) and the Soviet Union’s attempts to instrumentalize it. As a result, the Cold War divisions became institutionalized in the international labour movement (Carew 1984). The WFTU continued as the international organization of communist-led unions and several large unions in the Global South, such as the All India Trade Union Congress. The other organization that emerged out of this split was the International Confederation of Free Trade Unions (ICFTU), while the International Secretariats continued to operate in alliance with the ICFTU, increasing their

216  Handbook on oil and international relations number to 20 by the early 1950s (Segal 1953, p. 372; Van der Linden 2000). In their Cold War rivalry, the Soviet Union and the US used, respectively, the WFTU and the ICFTU to project their power internationally (Cox 1977). The International Federation of Petroleum Workers (IFPW), the only International Secretariat with its headquarters in the US, was a major player in this Cold War rivalry. The idea to establish an International Secretariat for oil workers was first floated at the 1953 ICFTU convention in Stockholm by O.A. Knight, the president of the American Oil Workers International Union (OWIU). Knight, elected temporary president, and his assistant Lloyd Haskins, elected temporary general secretary, convened the inaugural congress of the IFPW in Paris in 1954, where their positions were formalized (Davidson 1988, p. 240). Although the extent of the involvement of US State Department officials at this stage remains unclear, Haskins was in contact with them before the Paris conference (Williams 2010, p. 51). Moreover, given the central role of the OWIU and its successor, the Oil, Chemical and Atomic Workers International Union (OCAW) in the IFPW and their close connections to the Central Intelligence Agency (CIA) and the State Department, the involvement of American officials in the establishment of the IFPW would not be surprising.3 More important than these connections, however, were the Cold War objectives shared by the State Department and the IFPW, which Knight defined as follows at the inaugural congress in Paris: ‘We might also demonstrate to those petroleum workers behind the iron curtain in Russia, China, and elsewhere that workers of the free countries can cooperate and can by legitimate trade union methods build for themselves a far better way of life than now exists anywhere’ (Williams 2010, p. 52). The goal of the IFPW was to disseminate the American conception of trade unions and to undermine the influence of communism and nationalism in the Global South. As in other international unions, the objective of higher wages was important as well, because the American OWIU/OCAW feared that the growth of the oil industry in other countries might undercut wages in the American oil industry. Thus, while the CIA and the State Department had a presence in the IFPW, its activities cannot be simply reduced to this, as its leaders shared a common ideology that informed their policies. By 1959, the IFPW represented approximately 300 000 oil workers employed in refineries, transport and oil fields in the US, Europe, Middle East, Latin America and Asia. This membership increased to 1 million in 1966 (Williams 2010, pp. 52, 59). By the early 1960s, it coordinated a network of 65 unions across the world from its headquarters in Denver, Colorado. A precondition for unions wanting to join the IFPW was adherence to democratic structures, although the reality was different, as unions from authoritarian countries joined as well. The initial activities of the IFPW were centred on surveying labour conditions around the world, and training union representatives from developing countries at its headquarters in Denver, as part of the International Cooperation Administration (ICA) programme that aimed to promote ‘free trade unions in countries where the labour movements are still in danger of Communist control’ (Williams 2010, p. 53). Perceiving this danger as a real threat in the countries that had decolonized or were decolonizing, the anti-communist IFPW leadership campaigned zealously to pull oil workers away from nationalism and communism. Petro, the magazine that the IFPW published from December 1954 under the editorship of Haskins, provides a good insight into the mindset and policies of its leadership. Although Petro stated its goal as tackling poor labour conditions, it clearly did so as part of its more general effort to uproot ‘those forces which, acting under the guise of trade unions, would enslave the workers by extending their totalitarian systems’ (Petro 1954, p. 7). As a fanatic ‘Cold Warrior’, Haskins

Labour in the making of the international relations of oil  217 made sure that every issue of Petro contained articles that promoted ‘free trade unions’ and agitated against communism and the WFTU. As the IFPW expanded its activities in the late 1950s, it started to publish Petro in five languages (English, French, German, Spanish and Arabic) and produced a bi-monthly magazine, the Union Builder, aimed at providing practical advice for creating American-style trade unions, and attacking anti-capitalist labour activism. In 1963, the IFPW allowed unions of chemical workers to join, and changed its name to the International Federation of Petroleum and Chemical Workers (IFPCW). In the 1960s, the involvement of the US Department of Labor, the State Department and the CIA in the IFPW/ IFPCW increased dramatically. The activities of the IFPCW increased in the 1960s, mainly due to large amounts of money funnelled to it by the CIA through various foundations. Both developments, however, generated internal conflicts that ultimately led to the downfall of the IFPCW, as will be described shortly. The IFPCW organized educational seminars in various countries, as it did in Beirut in 1960 for 22 union members from the region. In 1963‒64, it organized training programmes for 1042 IFPCW members across the world. Through its network of national unions and the staff it trained, it had a strong presence on the ground, providing practical advice for organizing strikes and other activities. The IFPCW developed genuine activities on the ground, such as support for the Adenese unionists in 1963‒64 against British rule, and for the Greek workers in 1964‒65. Due to its support for such labour protests, some historians have argued that it is ‘impossible to assert unequivocally that the CIA or a government agency directed the IFPCW or shaped its objectives’ (Williams 2010, p. 62). While this statement is an important corrective to accounts that reduce the IFPCW to an instrument of the CIA, it is an overcorrection that underestimates the CIA’s role in the IFPCW. On 14 February 1967, the New York Times revealed, based on investigative reporting by the underground publication Ramparts, that the CIA had financed the National Student Organization since the early 1950s in exchange for services. The article unleased a string of revelations in the New York Times and the Washington Post in the following two weeks about international CIA operations through several independent American organizations, most prominently among them the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and its member unions. It was revealed that the CIA had funnelled a monthly subsidy of $25 000 to the IFPCW through several independent foundations, most notably the Andrew Hamilton Fund, the Midland Foundation and the League for Economic and Social Development (Morris 1967, p. 151). The IFPCW depended much more on these contributions than on those made by its affiliated unions. According to one of its high-ranking agents, Philip Agee, the IFPCW was set up by the CIA through the American Oil Workers International Union (OWIU) and its successor the Oil, Chemical and Atomic Workers International Union (OCAW). The extent to which the CIA was involved in the formation of the IFPCW remains unclear, but it was certainly used as a cover for CIA operations in various developing countries, especially those in Latin America. This was facilitated by O.A. Knight, due to his anti-communism and the extensive relations he had developed with Latin American union leaders in his capacity as a vice-president of the AFL-CIO, and the president of its affiliate OCAW, and the president of the IFPCW from its creation in 1954 until his retirement in 1965.

218  Handbook on oil and international relations According to Agee: Much emphasis was given to the advantages of using agents in the different International Trade Secretariats in which, in Latin America at least, the Agency [CIA] has considerable control. Lloyd Haskins, Executive Secretary of the International Federation of Petroleum and Chemical Workers, gave us a lecture on how he can help in organizing Latin American workers in the critical petroleum industry. (Agee 1989, p. 112)

Agee also believed that Haskins functioned as the CIA agent inside the union. Corroborating this account, Tony Mazzocchi, a militant leader of OCAW, recounts: Haskins himself told me that he was in Iran when Mossadegh was overthrown [by the CIA and the British MI6]. He told me the race was on to beat the British to Mossadegh’s office, because the American oil interest wanted to jump the British, and they did. Haskins said he and the other Americans got there first and seized all of Mossadegh’s documents. He was in the middle of things. (Leopold 2008, p. 182)

While the IFPCW’s activities and influence expanded, it was confronted by two important setbacks in the second half of the 1960s. Firstly, in 1966, the IFPCW’s standing in the Middle East was tarnished as the Syrian Federation of Petroleum Workers walked away. Secondly, the ICFTU ended its financial support to the IFPCW, taking the side of the International Federation of Chemical and General Workers Unions (ICF) in its conflict with the IFPCW since 1963 over the question of which of the two should represent chemical workers’ unions. Despite these setbacks, the IFPCW continued to develop more activities in the early 1970s, representing 153 unions in 78 countries, according to its own claims. However, it moved also much more closely into the orbit of the American government, by participating from 1967 onwards in the AFL-CIO’s American Institute for Free Labor Development (AIFLD) and the African-American Labor Center (AALC), both of which were funded by the US Agency for International Development (USAID) and the CIA (Scott 1978). As the AFL-CIO and the CIA used the AIFLD to intervene against communist and socialist unionists in Latin America in the 1960s and 1970s, the IFPCW became a central linchpin in their operations, given the strategic importance of oil and the calls for oil nationalization in Latin America. The American intervention in the Latin American labour movement was organized first through the Organización Regional Inter-Americana de Trabajadores (ORIT) from 1951 to 1959, and then through the American Institute for Free Labor Development (AIFLD) that was established in 1961 as a training institute for Latin American trade union officials. AFL-CIO president Georgy Meany, who had worked closely with the CIA, helped the AIFLD to penetrate the Latin American labour movement with the financial support of USAID (Agee 1989; Alexander 2009, p. 267; Mader 1968, p. 354). The AIFLD was led by the AFL-CIO’s former ‘Inter-American’ representative Serafino Romualdi from 1962 until his retirement in 1965, after which he was followed up by William C. Doherty Jr who also had close links with the CIA and American business interests and led the organization for more than three decades.4 Next to the AIFLD, the IFPCW, which had developed a strong presence Latin America, operating in Argentina, Bolivia, Brazil, Colombia, Ecuador, Peru and the Caribbean, was a crucial linchpin in the AFL-CIO and CIA involvement in the labour politics of the continent (Van Goethem 2014). The IFPCW worked closely with ORIT in the 1950s and with the AIFLD in the 1960s and 1970s to pull away workers from WFTU affiliated unions in the oil industry. The IFPCW’s focus on Latin America was reflected in the allocation of its budget, of

Labour in the making of the international relations of oil  219 which 45 per cent went to Latin American projects, 30 per cent to African projects and 10 per cent to Middle Eastern projects (Van Goethem 2014). The IFPCW showed particular interest in Brazil, opening a branch there under the supervision of Efrain Velasquez, an American citizen, to influence Brazilian unions after the 1964 military coup (Correa 2013, pp. 190–191). The IFPCW’s activities were mainly directed towards moving Brazil’s petrochemical unions to affiliate with it, and it successfully prevented 16 major Brazilian oil workers’ unions from uniting into a National Federation of Petroleum Workers. The IFPCW in Brazil used the money ($30 000) it received from the CIA through its conduits, the Andrew Hamilton Foundation, to finance its campaign. An IFPCW representative at its São Paolo office (Alberto Ramos), for instance, sent the following note to one A. Nogueria in late 1967: I have with me 45,000,000 cruzeiros ($16,666.67) for you to distribute to the unions for campaigns in accordance with our plans. If you are not available before tomorrow, then arrange to be here on Wednesday, since I will be in Rio conversing with Velasquez about other trips to the US. (Radosh 1969, p. 432)

The note included an itemized expense sheet, covering such fees as $875 to Dr Jorge Filho of the Ministry of Labour; a bonus of $321.50 to a reporter for favourable newspaper coverage; and $140.63 to two labour leaders for helping the IFPCW defeat an opposition candidate for union office (Radosh 1969, p. 432). These bribes were covered widely in the Brazilian press, but vehemently rejected by IFPCW and US officials as falsification. Nevertheless, the reputation of the IFPCW as an instrument of American imperialism was further strengthened, leading to a parliamentary investigation and the closure of the IFPCW offices in February 1968. The IFPCW’s mounting problems were reflected in the departure of Dutch, Swiss and French unions in 1967, as the links between the CIA and the IFPCW were increasingly questioned. In 1975, the IFPCW collapsed under the pressure of four factors. Firstly, the stigma of its links to the CIA undermined its standing in the developing countries. Secondly, the disaffiliation of the American OCAW left it without essential funds from USAID. Thirdly, the call by the International Federation of Chemical and General Workers Unions, which saw itself as the representative of chemical workers, for the dissolution of the IFPCW found a hearing with the new leadership of the AFL-CIO. Finally, as a brief Soviet‒American détente developed in the mid-1970s, the IFPCW lost much of its appeal to the AFL-CIO and the US government (Williams 2010, p. 67). The rapid pace with which the IFPCW unravelled in the changing international context of the Cold War further strengthens the hypothesis that anti-communism and American support were essential to the IFPCW’s functioning.

CONCLUSION Petro-nationalism in Iran in the first half of the 20th century, and the role of the International Federation of Petroleum and Chemical Workers during the Cold War, are merely two case studies which illustrate the role that labour has played in shaping the international relations of oil. In the Iranian case, petro-nationalism was initially formulated by state and intellectual elites as an attempt to establish national sovereignty vis-à-vis foreign states and corporations, but also to incorporate oil workers as a strategic social group in the nation-state building project. More importantly, oil workers were not passive receivers of petro-nationalism: they

220  Handbook on oil and international relations were important actors in the formation of petro-nationalism, and through it reconfigured the international relations of oil. In the case of the IFPCW, a powerful international labour union became an important player in international relations of the Cold War. It was a medium through which American agencies intervened among oil workers in the Global South. Here too, however, this was not a passive role, as many IFPCW officials were ideologically aligned with the American officials and defined their role in the context of the Cold War: fighting against the influence of nationalist and communist tendencies.

NOTES 1. Minutes of the National Parliament, Eighth Parliament, Meeting 117, 10 Azar 1310/1 December 1932. 2. Peyman Jafari, Interview with Baran Karamad, 5 January 2013, Tehran; Peyman Jafari, Interview with Nasser Khaksar, 10 February 2013, Shahin Shahr. Telegram, US Embassy Tehran to US Secretary of State, 24 April 1951, box 5498, RG 59, National Archives and Records Administration (NARA). 3. In 1955, OWIU and the United Gas, Coke, and Chemical Workers union merged to form OCAW. 4. The AIFLD Board of Trustees included American business leaders from the Anaconda Copper Company, the United Corporation, Pan American Airways and the Ture Temper Corporation, indicating that one of the main goals of the AIFLD was to counter Latin American resentment against American capital (Alexander, 2009, p. 268).

REFERENCES Aborisade, F. and D. Povey (2018), ‘Mass strikes in Nigeria, 2000–2015’, in J. Nowak, M. Dutta and P. Birke (eds), Workers’ Movements and Strikes in the Twenty-First Century: A Global Perspective, Rowman & Littlefield: London, pp. 185–202. Abrahamian, E. (1982), Iran between Two Revolutions, Princeton University Press: Princeton, NJ. Abrahamian, E. (2013), The Coup: 1953, the CIA, and the Roots of Modern U.S.–Iranian Relations, New Press: New York. Agee, P. (1989), Inside the Company: CIA Diary, Bantam Books: New York. Alexander, R.J. (2009), International Labor Organizations and Organized Labor in Latin America and the Caribbean: A History, Praeger/ABC-CLIO: Santa Barbara, CA. Atabaki, T., E. Bini and K. Ehsani (eds) (2018), Working for Oil: Comparative Social Histories of Labor in the Global Oil Industry, Palgrave Macmillan: Cham. Atabaki, T. and E.J. Zürcher (2004), Men of Order: Authoritarian Modernization under Ataturk and Reza Shah, I.B. Tauris: London. Bakker, K. and G. Bridge (2008), ‘Regulating resource use’, in K.R. Cox, M. Low and J. Robinson (eds), The SAGE Handbook of Political Geography, SAGE Publications: London, pp. 219–234. Bamberg, J.H. (1994), The History of the British Petroleum Company: The Anglo-Iranian Years, 1928–54, Cambridge University Press: Cambridge. Bayat, K. (2007), ‘With or without workers in Reza Shah’s Iran: Abadan, May 1929’, in T. Atabaki (eds), The State and The Subaltern: Modernization, Society and the State in Turkey and Iran, I.B.Tauris: London, pp. 111–122. Bayat, K. and M. Tafreshi (eds) (1991), 1370. Khaterat-e dowran-e separishodeh (khaterat va asnad-e Yousef Eftekhari), 1299–1329 [Memories of a past bygone (memoirs and document of Yousef Eftekhari), 1920–1950], Ferdows: Tehran. Bellucci, S. and H. Weiss (ed.) (2020), The Internationalisation of the Labour Question: Ideological Antagonism, Workers’ Movements and the ILO since 1919, Palgrave Studies in the History of Social Movements, Palgrave Macmillan: Cham.

Labour in the making of the international relations of oil  221 Bender, D.E. and J.K. Lipman (ed.) (2015), Making the Empire Work: Labor and United States Imperialism, Culture, Labor, History Series, New York University Press: New York. Bet-Shlimon, A. (2019), City of Black Gold: Oil, Ethnicity, and the Making of Modern Kirkuk, California University Press: Stanford, CA. Biglari, M. (2020), Refining Knowledge: Expertise, Labour and Everyday Life in the Iranian Oil Industry, c.1933–51, SOAS University of London: London. Bini, E. (2019), ‘From colony to oil producer: US oil companies and the reshaping of labor relations in Libya during the Cold War’, Labor Hist., 60(1), 44–56. Blanco, J. and M.P. Machado (2021), ‘Latin America’s heavyweight economies spearhead global shift towards resource nationalism’, Verisk Maplecroft, accessed 13 September 2021 at https://​www​ .maplecroft​.com/​insights/​analysis/​latin​-americas​-heavyweight​-economies​-spearhead​-global​-shift​ -towards​-resource​-nationalism​-​-​-index/​. Bremmer, I. and R. Johnston (2009), ‘The rise and fall of resource nationalism’, Survival, 51(2), 149–158. Brew, G. (2017), ‘In search of “equitability”: Sir John Cadman, Rezā Shah and the cancellation of the D’Arcy Concession, 1928‒33’, Iran. Stud., 50(1), 125–148. Carew, A. (1984), ‘The schism within the World Federation of Trade Unions: government and trade-union diplomacy’, Int. Rev. Soc. Hist., 29(3), 297–335. Correa, L.R. (2013), ‘“Democracy and freedom” in Brazilian trade unionism during the civil-military dictatorship: the activities of the American Institute of Free Labor Development’, in R.A. Waters and van G. Goethem (eds), American Labor’s Global Ambassadors: The International History of the AFL-CIO during the Cold War, Palgrave Macmillan: New York, pp. 177–199. Cox, R.W. (1977), ‘Labor and hegemony’, Int. Organ, 31(3), 385–424. Cronin, S. (2010), ‘Popular politics, the new state and the birth of the Iranian working class: the 1929 Abadan oil refinery strike’, Middle East Stud., 46(5), 699–732. Dale, L.A. (1967), ‘International trade secretariats’, Ind. Relat., 22, 98–115. Davidson, R. (1988), Challenging the Giants: A History of Oil, Chemical, and Atomic Workers International Union, Oil, Chemical, and Atomic Workers International Union: Denver, CO. Ehsani, K. (2014), ‘The social history of labor in the Iranian oil industry: the built environment and the making of the industrial working class (1908‒1941)’, PhD diss., Leiden University. Elkington, E.H. (1929), ‘An appreciation of the political situation in Kkuzestan with special reference to the present unrest at Abadan’, 17 June 1929, 4/59010, British Petroleum Archives, Warwick. Elm, M. (1992), Oil, Power, and Principle: Iran’s Oil Nationalization and Its Aftermath, 1st edn, Contemporary Issues in the Middle East, Syracuse University Press: Syracuse, NY. Elwell-Sutton, L.P. (1976), Persian Oil: A Study in Power Politics, Hyperion Press: Westport, CN. Floor, W. (1985), ‘Labour unions, law and conditions in Iran (1900‒1941)’, Occasional paper series, Centre for Middle Eastern and Islamic Studies, University of Durham, Durham City. Harvey, D. (1974), ‘Population, resources, and the ideology of science’, Econ. Geogr., 50(3), 256–277. Huber, M.T. (2009), ‘Energizing historical materialism: fossil fuels, space and the capitalist mode of production’, Geoforum, Themed Issue: Postcoloniality, Responsibility and Care, 40(1), 105–115. Ibrahim, S.E. (1982), ‘Oil, migration and the new Arab social order’, in M.H. Kerr, J. Salacuse and I. Serageldin (eds), Rich and Poor States in the Middle East, Routledge: New York, pp. 17–70. International Labour Office (1950), Labour Conditions in the Oil Industry in Iran, ILO: Geneva. Jafari, P. (2018), Oil, Labour and Revolution: A Social History of Labour in the Iranian Oil Industry, 1973–1983, Leiden University: Leiden. Jefroudi, M. (2017), ‘“If I deserve it, it should be paid to me”: a social history of labour in the Iranian oil industry, 1951–1973’, PhD diss., Leiden University. Kadivar, A., P. Jafari, M. Hoseini and S. Khani (2021), Labor Organizing on the Rise Among Iranian Oil Workers, MERIP Online, accessed 14 December 2021 at https://​merip​.org/​2021/​08/​labor​-organizing​ -on​-the​-rise​-among​-iranian​-oil​-workers/​. Kaup, B.Z. and P.K. Gellert (2017), ‘Cycles of resource nationalism: hegemonic struggle and the incorporation of Bolivia and Indonesia’, Int. J. Comp. Sociol., 58(4), 275–303. Koch, N. and T. Perreault (2019), ‘Resource nationalism’, Prog. Hum. Geogr., 43(4), 611–631. Ladjevardi, H. (1985), Labor Unions and Autocracy in Iran, Syracuse University Press: Syracuse, NY. Larson, S. (1974), Labor and Foreign Policy: Gompers, the AFL, and the First World War, 1914–1918, Fairleigh Dickinson University Press: Rutherford, NJ.

222  Handbook on oil and international relations Leopold, L. (2008), The Man who Hated Work and Loved Labor: The Life and Times of Tony Mazzocchi, Chelsea Green Publishing: White River Junction, VT. Lorwin, L.L. (1929), Labor and Internationalism, Macmillan: New York. Louër, L. (2008), ‘The political impact of labor migration in Bahrain,’ City Soc., 20(1), 32–53. MacShane, D. (1992), International Labour and the Origins of the Cold War, Oxford University Press: Oxford. Mader, J. (1968), Who’s Who in CIA: A Biographical Reference Work on 3000 Officers of the Civil and Military Branches of the Secret Services of the USA in 120 Countries, Julius Mader: Berlin. Mahmudi, J. and N. Saeedi (2002), Shoq-e yek khize-e boland. nokhostin ettehadiyeha-ye kargari dar Iran [The excitement of a great leap. The first trade unions in Iran], Qatreh: Tehran. Manela, E. (2007), The Wilsonian Moment: Self-Determination and the International Origins of Anticolonial Nationalism, Oxford University Press: New York. McKillen, E. (2018), Making the World Safe for Workers: Labor, the Left, and Wilsonian Internationalism, University of Illinois Press: Urbana, Chicago, and Springfield, IL. Mitchell, T. (2011), Carbon Democracy: Political Power in the Age of Oil, Verso: London. Morris, G. (1967), CIA and American Labor: The Subversion of the AFL-CIO’s Foreign Policy, International Publishers: New York. Mueller, C. (2016), ‘Anglo-Iranian treaty negotiations: Reza Shah, Teymurtash and the British Government, 1927–32’, Iran. Stud., 49(4), 577–592. Muschik, E.-M. (2019), ‘“A pretty kettle of fish”: United Nations assistance in the mass dismissal of labor in the Iranian oil industry, 1959–1960’, Labor Hist., 60(1), 8–23. O’Brien, R. (2000), ‘Workers and world order: the tentative transformation of the international union movement,’ Rev. Int. Stud., 26(4), 533–555. Petro (1954), ‘The federation: blueprint for progress’, December, 7. Radosh, R. (1969), American Labor and United States Foreign Policy, Random House: New York. Riofrancos, T.N. (2020), Resource Radicals: From Petro-Nationalism to Post-Extractivism in Ecuador, Radical Américas, Duke University Press: Durham, NC. Rosenberg, W.G. (1989), ‘Understanding strikes in Revolutionary Russia’, Russ. Hist., 16(2–4), 263–296. Santiago, M.I. (2006), The Ecology of Oil: Environment, Labor, and the Mexican Revolution, 1900–1938, Cambridge University Press: Cambridge, UK and New York, USA. Scott, J. (1978), Yankee Unions, Go Home: How the AFL Helped the U.S. Build an Empire in Latin America / Jack Scott, Trade Unions and Imperialism in America, v. 1, New Star Books: Vancouver. Segal, M.J. (1953), ‘The international trade secretariats’, Mon. Labor Rev., 76(4), 372–380. Shafiee, K. (2018), Machineries of Oil: An Infrastructural History of BP in Iran, Infrastructures series, MIT Press: Cambridge, MA. Silver, B.J. (2003), Forces of Labor: Workers’ Movements and Globalization since 1870, Cambridge University Press: Cambridge, UK and New York, USA. Tosstorff, R. (2016), The Red International of Labour Unions (RILU) 1920–1937, Historical Materialism series, Brill: Leiden. Van der Linden, M. (ed.) (2000), The International Confederation of Free Trade Unions, P. Lang: Bern, Switzerland and New York, USA. Van Goethem, G. (2014), ‘Unattainable paradise: American Labor’s global activities and the petroleum workers during the cold war era’, in Labor Politics in the Oil Industry: New Historical Perspectives, Proceedings, Padua University. Vitalis, R. (2007), America’s Kingdom: Mythmaking on the Saudi Oil Frontier, Stanford University Press: Stanford, CA. Vivoda, V. (2009), ‘Resource nationalism, bargaining and international oil companies: challenges and change in the new millennium’, New Polit. Econ., 14(4), 517–534. Weisman, C. and D. Beland (2010), ‘The politics of institutional change in Venezuela: oil policy during the presidency of Hugo Chavez’, Canadian Journal of Latin American and Caribbean Studies / Revue canadienne des études latino-américaines et caraïbes, 35(70), 141–164. Williams, B.K. (2010), ‘Labor’s Cold War missionaries: the IFPWC’s transnational mission for the third world’s petroleum and chemical workers, 1954–1975’, Labor, 7(4), 45–69.

15. Oil, law, temporality and indigenous rights Suzana Sawyer and Lindsay Ofrias

INTRODUCTION In May 2021, a criminal contempt trial unfolded in the United States (US) District Court against Steven Donziger, the US advisory lawyer for the Ecuador legal team that won a $9.5 billion ruling against Chevron Corporation in 2011. While seemingly straightforward—Donziger defied the order of Judge Lewis A. Kaplan—upon closer inspection the case’s complexity triggers vertigo. On the one hand, stark irregularities in the criminal procedure challenge assumptions about how the US judicial system should work. On the other, a Kafkaesque labyrinth of legal proceedings reaching across decades, continents, and legal systems confound the legal truths upon which Judge Kaplan’s court order rests. Most relevant here, however, is Chevron’s US countersuit, which ultimately convinced Kaplan to delegitimize the 2011 Ecuador judgment and determine a new legal truth: that the corporation’s Ecuador $9.5 billion liability was procured through fraud. Engaging three intersecting registers, this chapter explores petroleum capital, legal process, and lived sites of extraction. How did a US court’s decision to nullify Chevron’s foreign legal obligation to clean up the contamination that its oil extraction wrought proclaim the second-largest US oil conglomerate a victim of racketeering, incriminate those seeking restitution for environmental racism, and forsake Amazonian peoples living and dying amongst extensive contamination? In the first register, our analysis situates a highly irregular US trial against Donziger within its deeper 20-year context of legal efforts to seek accountability for the long-term environmental effects of oil operations, and Chevron’s legal strategy to delegitimize those efforts. We describe the lawsuit against Chevron in Ecuador, fundamentally challenge Judge Kaplan’s finding that Chevron’s Ecuador liability was obtained through fraud, and trace the corporation’s pursuit of further legal action. In a second register, we consider how specific legal processes constitute distinct temporalities, and toward what consequential effect. We argue that, in these proceedings, US law congealed a temporality of legal time that we call the “recurrent past.” Those in the US trying to demand corporate responsibility were unable to escape this vortex, foreclosing any possibility to interrupt Kaplan’s fraud ruling. Equally disquieting, the purported truth of this recurrent past released a vastly endowed corporation from assuming an ethical role of reckoning its prior extractive wrongs. In a third register, our analysis touches on how Chevron’s fierce deployment of legal technique over the past decade has incessantly sought to disavow and obscure the conditions of living in the ruins of petrocapital. An emerging literature on law and temporality guides our analysis. This scholarship takes as its point of departure an understanding that time is not merely a pre-given natural background against which events occur. Rather, it understands time as actively produced (Greenhouse 1989) and fundamentally constituted by (and constitutive of) particular relations and things (Grabham 2016; Grabham et al. 2018; Mawani 2015; M’charek 2014). The question asked is: what work does a particular temporality do (M’charek 2014, 2013) and how is that achieved? Annalise Riles (2011, 2005) points to the “formidable power of legal form” in private law to 223

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Source:  Photograph by Mitch Anderson, AmazonFrontlines/Alianza Ceibo. Used with kind permission.

Figure 15.1

Indigenous leaders Emergildo Criollo (A’i Kofan), Flor Tangoy (Siona), and Nemonte Nenquimo (Waorani) and her daughter observe a waste pit near Lago Agrio, Sucumbios, Ecuador

engage “legal technique” so as to “reverse, redirect, and reorder the temporality of politics” (Knop and Riles 2016, p. 886), by which is meant the temporality through which asymmetric, relational entanglements are given meaning and force. With respect to the legal complex we examine here, specific legal forms and techniques took part in constituting time, with distinct political effects. Our argument is twofold. First, Chevron and its army of lawyers brilliantly deployed its claim under the Racketeer Influenced and Corrupt Organizations Act (RICO) as the legal form to reverse and redirect the temporality through which the Ecuador court had given meaning and effect to the contamination wrought by oil extraction: a $9.5 billion liability dedicated toward remediation. Using technicalities within the RICO form—conspiracy, bribery, manipulation—Chevron amassed a plurifaceted fraud narrative whose entangled density simultaneously curbed avenues for legal appeal. That is, Chevron’s mastery of legal technique created a world of conspiracy recited in Kaplan’s 485-page ruling so ensnared as to virtually foreclose appealing the labyrinth of constructed facts. With the appeal on legal grounds having failed, Kaplan’s “findings of fact” and the “truth of fraud” came to entrench an inescapable and irredeemable past. Here, legal form and technique did not simply contain Chevron’s opponents in an inexorable vortex. Doing so promised to secure Chevron’s management of the future. Second, the temporal trajectory that these legal technologies spurred in the US obscure a different temporality of reckoning presently unfolding in Ecuador. There, local collectives do not seek a once and for all closure. Rather, they are imbricated in an “expansive present” conditioned through “sequencing”; an attempt to address multidimensional harm through

Oil, law, temporality and indigenous rights  225 something other than solely the zero-sum game of normative law (Knop and Riles 2016). While continuing to pursue enforcement of the Ecuador judgment in other jurisdictions, they are creatively and pragmatically spearheading a multifaceted program for healing on the ground, which “expresses both the seriousness of their situation and their realistic hope for surviving it” (Cepek 2012, p. 410). What follows is an account of how Kaplan’s 2014 ruling and a series of derivative legal actions have codified Chevron’s fraud narrative and released the corporation from addressing extractive-related harms. With the temporal framework of the recurrent past packaging legal truths into a singular history resistant to revision, corporate impunity reigns. Understanding that process, and the response brewing in Ecuador, allows for a re-orientation toward the future and a reconceptualization of the work of decolonization. As anthropologists who collectively have conducted over 20 years of research on the effects of oil operations in this rainforest region, our analysis emerges from in-depth research.1 Donziger’s 2021 criminal indictment rests on a cascade of prior legal proceedings. Even a partial list is long: the 2003‒11 contamination lawsuit against Chevron for Texaco’s oil operations in the Ecuadorian Amazon; a 2011‒14 Chevron countersuit in the US seeking to delegitimize the Amazonian judgment against it; and the 2018‒20 New York legal procedures over Donziger’s bar license. These legal proceedings, and the immense energy and expense they demand (in excess of an estimated $1 billion on Chevron’s part) detract from the ethical investment needed to remediate contaminated rainforest lands. Within the law, there appears little space to interrogate the irregularities of Donziger’s criminal charges, and virtually no space to challenge the legal truths forming the basis of Kaplan’s order. Law obscures the obligation to heal and mend that which extraction harmed, and signals deep contradictions in our system of justice.

DONZIGER’S CONTEMPT TRIAL If weather could externalize a mood, the overcast skies outside the US District Court, Southern District of New York (USDC SDNY) on the morning of May 9, 2021 captured the cold tenor of a highly anomalous trial inside.2 Judge Kaplan—having presided over Chevron’s countersuit, in which Steven Donziger figured prominently—spurred a criminal contempt trial against Donziger. Assuming the role reserved for the Department of Justice (not a District Court judge), Kaplan appointed the like-minded Judge Preska to oversee the case. And, for the first time in the 232-year history of the USDC SDNY, he appointed a private law firm (Seward and Kissel LLP) to serve as prosecutors; a firm, it was later disclosed, that Chevron had retained as counsel. The charges against Donziger stem from Kaplan’s 2014 ruling delegitimizing Chevron’s Ecuador liability. In his ruling, Kaplan declared that Donziger—the purported mastermind of a conspiracy to defraud Chevron—“never benefit in any material way from the [Ecuador] Judgment.”3 In 2018, Chevron alleged that this was not the case and that Donziger was benefiting as the legal team pursued legal proceedings in Canada, seeking enforcement of the 2011 Ecuador judgment. Kaplan ordered Donziger to comply with various conditions and ordered him to “turn over all Devices in his possession, custody, or control to the Neutral Forensic Expert.”4 When Donziger did not comply, Kaplan transformed civil contempt of court charges into a criminal contempt indictment.

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Source:  Photo by Ryland West/ALM.

Figure 15.2

Steven Donziger, with supporters, outside the courthouse during the criminal contempt trial, New York, USA

Thus, Chevron was invested in the criminal contempt of court proceedings against Donziger.5 The proceedings are valuable to the corporation: obtaining Donziger’s electronic devices could provide information that would undermine future enforcement efforts. And it may deter entities interested in investing in such efforts.6 As disclosed during the trial, Chevron lawyers met on multiple occasions with the private attorneys serving as Department of Justice (DOJ) prosecutors, as well as with Judge Preska.7 The coincidence of the criminal trial, the excessive punitive measures Preska imposed before trial, and the enforcement proceedings in Ontario did not seem accidental. In August 2019, declaring Donziger a flight risk, Preska sentenced him to home confinement (bearing an electronic ankle monitor) approximately 650 days prior to his court trial, even though he was only charged with a misdemeanor carrying a maximum sentence of 180 days.8 On July 26, 2021, Judge Preska issued her verdict, which declared Donziger guilty of criminal contempt.

ECUADOR’S LEGAL RECKONING OF OIL CONTAMINATION’S TEMPORALITY Ecuadorian Litigation against Chevron, 2003‒11 Donziger’s misdemeanor indictment directly issued from the 2014 ruling of District Court Judge Kaplan, which in turn issued from the 2011 Ecuador ruling. In May 2003, 48 indígenas (indigenous peoples) and campesinos (small land holders) filed a lawsuit against Chevron in

Oil, law, temporality and indigenous rights  227 the Sucumbíos Provincial Court of Justice on behalf of 30 000 inhabitants of the Ecuadorian Amazon.9 The lawsuit alleged that between 1964 and 1992 Texaco (which merged with Chevron in 2001) used substandard technology in its Ecuador oil operations. Plaintiffs claimed that these obsolete technologies systematically discharged oil-extraction wastes into Amazonian waters and lands. Over the course of Texaco’s operations and beyond into the future, these industrial wastes were devastating the local ecology and endangering the well-being of local peoples with death, disease, deprivation, and dislocation. According to plaintiffs, cost-cutting and ecologically disruptive practices pervaded all aspects of Texaco’s operations. But most worrisome were the waste pits that Texaco excavated alongside each oil well. Open and unlined, these pits numbered two to five beside each drilled well, and pocked an inhabited landscape with festering chemicals. Vast pools brimming with crude oil, formation waters, and drilling refuse, these pits were holding receptacles for toxic seepage and overflow. A goose-necked overflow pipe engineered into each pit decanted its contents down embankments into adjacent gullies and local streams. Plaintiffs claimed this emulsion of hydrocarbons and subterranean fluids, spiked with influxes of chemical drilling muds and solvents, contaminated the surface waters, soils, and groundwaters on which all local life depended. Even during the early years of Texaco’s Ecuador operations, it was standard practice in the United States not to store hydrocarbon-laced drilling brine in open waste pits. Indeed, these pits were illegal in Texas from 1939.10 Increasingly, the norm was to re-inject emulsions of crude oil, formation waters, and sands back into the subterranean strata from which they emerged. In Ecuador, Texaco chose not to—despite doing so in the US, despite retaining a patent for re-injection technology, and despite publishing on the dangers that formation waters posed.11 The decision not to re-inject drilling wastes allegedly reduced the company’s per-barrel production costs by approximately $3 and saved the parent corporation roughly $5 billion over the course of its operations in Ecuador (Sawyer 2001, 2022). At a minimum, Texaco drilled 325 oil wells and excavated over 900 oil-waste pits in its Ecuador concession. Those pits were the centerpiece of the Ecuador litigation against Chevron and the sites at which 54 ground-proofing Judicial Inspections took place over the course of five years. The Judicial Inspections produced reams of scientific analysis of contamination, roughly 100 testimonials by local people of the contamination’s effect on their health, and the experience garnered by the participating judge, legal teams, and international observers. This evidence, in conjunction with Ecuador statutory law and internal Texaco documents, led the Provincial Court of Justice to rule against Chevron. In February 2011, following over seven years of litigation, presiding Judge Nicolas Zambrano found Chevron liable for $9.5 billion, the monies to be used to remediate the region and monitor the poor health of local people.

US LEGAL FORM’S SPECIOUS ENTRENCHMENT OF A RECURRENT PAST Kaplan’s Ruling on Chevon’s RICO Countersuit, 2011‒14 Two weeks before Judge Zambrano rendered his judgment, Chevron filed a counterclaim in the USDC SDNY.12 Having landed in Judge Lewis Kaplan’s courtroom, the lawsuit (with his help) soon transformed into a RICO claim, a type of litigation enabled by the 1970 US RICO

228  Handbook on oil and international relations Act. The RICO statute was enacted to facilitate the prosecution of organized crime. Rather than pursue isolated criminal acts, a RICO claim seeks to go after and intercept a criminal enterprise engaged in a pattern of racketeering activity. Deployed to litigate an array of prohibited conduct, this action can also take the form of a civil RICO claim. Such was Chevron’s 2011 lawsuit against Steven Donziger, the Ecuador legal team, their scientific experts, and the rainforest plaintiffs. Following a seven-week bench trial, Kaplan determined in 2014 that the 2011 Ecuador ruling had been procured through fraud. Kaplan’s decision rendered Chevron’s $9.5 billion Ecuador liability void and unenforceable in the United States. In 2016, the US Court of Appeals, 2nd Circuit, upheld Kaplan’s ruling, despite three higher courts in Ecuador having upheld the 2011 ruling and dismissed Chevron’s allegations of fraud.13 The US Supreme Court declined to review the case upon appeal. Following the doctrine of res judicata, once appeals have been exhausted, a fundamental ruling, if upheld, is taken as the legal truth. No future judicial proceeding involving the same subject matter and persons can relitigate the case or challenge its findings. As such, the seeming incontrovertible truth of Kaplan’s “corruption” and “conspiracy” narrative entrenched a particular temporality: one of a ceaselessly recurring past of no escape. Any derivative legal action and procedure in the US would inevitably become sucked into the vortex of Kaplan’s prior findings. This temporality had significant effects. Knowing that all ensuing legal action would be framed by fraud—endlessly caught in Dante’s Eighth Circle of Hell—Chevron was empowered to further pursue its critics and to disavow all responsibility.14 And it has distended an already bloated righteous exceptionalism within the US oil industry. Kaplan’s 2014 ruling, however, is deeply problematic. Here we focus on the circumstances surrounding two characters—Alberto Guerra Bastidas and Richard Cabrera Vega—upon whom Kaplan hung his findings of fraud. Alberto Guerra—the first judge to preside over the Chevron case, subsequently dismissed from the bench for corruption—was Chevron’s key RICO witness. Indeed, the corporation’s entire bribery and ghostwriting allegations pivoted on his testimony. An abridged version of his tale goes as follows. In summer 2009, Zambrano instructed Guerra to approach the plaintiffs’ legal team. In exchange for a price ($500 000), Zambrano would let the plaintiffs’ attorneys ghostwrite the 2011 judicial decision in their favor. Since the plaintiffs hardly retained such monies, the parties cut a deal. Zambrano would be paid upon the one-day enforcement of his would-be judgment. For his go-between labors, Guerra would receive 20 percent of the promised bribe. Furthermore, Guerra “fine-tuned and polished” (and thus was in possession of) the final ruling so as to make it read “like a judgment issued by the President of the Court of Sucumbíos.”15 In April 2012—a year after Chevron filed its RICO case—Guerra, apparently wracked with guilt, approached a Chevron lawyer to disclose the “truth” of how Zambrano’s ruling came to pass.16 Over the subsequent months, Chevron representatives paid Guerra for pieces of information; a practice that seemingly emboldened him to remember more details. Between summer and fall 2012, Chevron compensated Guerra $48 000 for various devices on which purported evidence of conspiracy resided: personal computer, flash drives, access to email accounts, cellphones, and so on. Guerra’s bribery tale was problematic on multiple fronts. To begin, the now repentant bribe-taking ex-judge was the recipient of what even Kaplan called Chevron’s “private witness protection program.”17 In January 2013, Guerra and Chevron signed a contract that offered

Oil, law, temporality and indigenous rights  229 him future security in exchange for undermining one of the more momentous foreign judicial rulings against a US corporation.18 Along with his wife, son, and son’s family, Guerra was whisked to the US and maintained by Chevron. Chevron hired an immigration attorney to arrange legal residency for him and his extended family (including offspring residing illegally in the US), leased a car for Guerra, paid his health insurance and his car insurance, hired a tax expert and paid his federal and state taxes, hired one lawyer to accompany him to all RICO proceedings and another to resolve proceedings in Ecuador, and paid Guerra a $10 000 monthly stipend and a $2000 monthly housing allowance.19 Guerra had leveraged testimony as collateral for procuring a lifetime annuity. Were Chevron’s support to wane, Guerra could change his story yet again. In addition to Guerra being dearly invested, his testimony was inconsistent and unsubstantiated. His claim of possessing evidence of conspiracy proved untrue. A copy of the ghostwritten ruling never materialized. The circumstantial evidence of a handful of freight records and bank receipts—alleged proof that he was paid by the Ecuador plaintiffs to draft court orders for Zambrano—was vague and inconclusive. And inconsistencies riddled Guerra’s testimony during the RICO trial, despite being coached by Chevron lawyers for three months. Within a few years of testifying before Kaplan, Guerra admitted before a tribunal of the Permanent Court of Arbitration to having embellished the bribery scheme in the hopes of garnering better returns from Chevron, and to having lied in Kaplan’s court.20 Clearly, Guerra proved himself an untrustworthy witness. But that is not how Kaplan received him in 2014: Guerra plays a leading role in the intricate 485-page judgment. Years later, however, Kaplan would note: “The judgment of this Court is final and enforceable. It stands, regardless of … comment on [the] testimony of Guerra” because “Guerra was far from indispensable” to the 2014 RICO opinion.21 Rather, the scandal around the Cabrera Report was much more central. Thus, enter Richard Cabrera, the engineer appointed by the Provincial Court of Justice to conduct a Global Expert Assessment known as the “Cabrera Report.” Cabrera’s charge was to synthesize all the data garnered during the 54 Judicial Inspections (and additional inspections his team conducted) and provide a breakdown of damages and their remediation costs, were damages to have occurred. As was their right under Ecuadorian law, the plaintiffs requested the Global Expert Assessment. And as was the norm in this litigation, the party that requested an expert assessment was the party that paid, had some say over who would take on that job, and could meet, direct, and contribute to the assessment. After a year of investigation, Cabrera presented his extensive report—over 800 pages with multiple appendices—in spring 2008. Nearly a year later, Chevron cried foul. The corporation claimed that the Ecuador legal team had collaborated and colluded with the Cabrera team. Deploying a little-used US federal statute (28 USC §1782), Chevron subpoenaed documents from Colorado-based Stratus Consulting, an environmental firm which the Ecuador plaintiffs had hired to conduct scientific analyses.22 Chevron obtained discovery documents and depositions detailing that scientists working with Stratus largely completed the analysis and drafted the report appearing under Cabrera’s name. The festering scandal that emerged demonstrated seemingly improper cooperation between the Ecuador lawyers and the Provincial Court’s Global Expert. Chevron, of course, presented its §1782 evidence of collusion to the Ecuador Provincial Court. Not wanting controversies to muddy his ruling, Judge Zambrano declared he would not engage the Cabrera Report.23 Indeed, the Cabrera Report was not needed to establish a judicial

230  Handbook on oil and international relations decision; incriminating evidence from over seven years of litigation was more than enough to substantiate the 2011 decision. Chevron, however, had invested heavily in its §1782 proceedings and, in the corporation’s eyes, what they discovered clearly implicated Steven Donziger. Discovery documents indicated that Donziger solicited the report, helped to determine its parameters, and coordinated its presentation to the court as the work of an independent neutral party. The irony here, of course, was that Stratus Consulting’s scientific integrity was impeccable, and far from biased. As the plaintiff’s legal team noted, the Cabrera Report was largely “a compilation of the vast record of scientific evidence in this case—a tool … to effectively cull relevant data from the record.”24 For a case as “massive and highly complex” as this, “party involvement in the preparation of a report [would be] especially necessary and appropriate.”25 There was nothing nefarious here; everyone knew that the plaintiffs had asked for this assessment, and how it would be produced. But Kaplan saw Donziger’s involvement in orchestrating the Cabrera Report to be replete with misdeeds. The key for Chevron was to solidify a link between Donziger’s meddling and the 2011 Ecuador ruling. And it needed a way to dismiss Zambrano’s insistence that the Cabrera Report did not figure in his judgment. Chevron achieved both goals by arguing that the Cabrera Report was crucially instrumental in determining the largest portion—$5.8 billion—of the $9.5 billion liability. The allegation hinged on a pit count; that is, a specific number of how many contaminated waste pits existed in Texaco’s former concession. In Zambrano’s ruling, that number was 880. According to Chevron, Zambrano obtained this number from, and only from, the Cabrera Report. The logic here stretches to the seemingly shameless; but here it is in brief. The Cabrera Report calculates a pit count of 917. The problem was how to equate that with Zambrano’s 880. Two Chevron experts bridged the gap. Having been given solely these two documents (the Cabrera Report and Zambrano’s ruling) to examine, they reasoned that by engaging a precise calculation (simple subtraction) one could reach 880. But what pits could justifiably be subtracted? The answer: specific pits designated as “unaffected” by contamination by a mid-1990s remediation contract between Texaco and the Ministry of Energy and Mines. Subtracting these 37 purportedly unaffected pits from 917 leaves you with the magic number, 880. For anyone familiar with the Ecuador litigation, this logic was specious.26 To begin with, years of Judicial Inspections made clear that Texaco’s mid-1990 remediation was genuinely suspect; repeatedly levels of hydrocarbon contamination in so-called remediated pits were staggeringly high. Why would Zambrano appeal to the parameters established by a compromised and highly questionable remediation agreement in his ruling? But even if one were to buy Chevron’s logic, however, it was faulty. Unbeknownst to Chevron’s experts—but common knowledge for anyone associated with the Ecuador litigation—the mid-1990s remediation agreement only addressed roughly 100 oil wells. Consequently, the pits deemed not affected by oil extraction only applied to one-third of all wells that Texaco drilled. Consequently, were the conclusions of the mid-1990s remediation contract to be applied to the entire concession (Zambrano’s focus of the lawsuit against Chevron), then the number of purportedly unaffected pits would triple. Multiplied by three (for 300, not 100, wells) the number of pits to be subtracted from a well total would result in a pit-count significantly lower than 880. Furthermore, Chevron’s experts neglected to realize that the $5.8 billion clean-up cost was not based on a pit-count pure and simple. Rather, it was based on a metric volume. And the

Oil, law, temporality and indigenous rights  231 way that Zambrano calculated metric volume was substantially different from how the Cabrera Report did. Meaning that not only did the two documents not have the same pit-count, but also each had a different way of calculating what a “pit” actually referred to. The 2011 judgment determined that a total volume of 7 392 000 cubic meters of soil needed clean-up; the Cabrera Report calculated 3 788 000 cubic meters needed remediation. If, as Kaplan claimed in his 2014 judgment, “the Cabrera Report in fact was relied upon by the author or authors of the Judgment and that it played an important role in holding Chevron liable to the extent of more than $8 billion”—with the “count of 880 pits” being the “essential predicate to more than $5 billion of the damage award”—then one would think that Zambrano and Cabrera were talking about the same thing.27 They were not. Contrary to Kaplan’s findings of fact, there is no credible evidence that the Ecuador legal team “ghost-wrote former Judge Zambrano’s purported decision.”28 And Kaplan’s finding that Zambrano “demonstrably relied on the fraudulent Cabrera report” is simply incorrect.29 Missteps by both parties marked the Ecuador litigation, but that does not mean those missteps affected the 2011 ruling. Chevron never, not once, produced substantive evidence of fraud, despite having obtained through subpoena the entire “universe” of their adversary’s internal strategizing and communications documents. There was much, however, in the Ecuador litigation to find Chevron responsible for Texaco’s contamination. As for Donziger, he never played the outsized role that Kaplan claims he did. Without doubt, he was key in securing monies to fund the lawsuit in Ecuador and to fight Chevron’s RICO countersuit. Equally, Donziger was and is a dynamic spokesperson, passionate in his advocacy to better the plight of the Amazonian peoples and ecologies harmed by decades of oil contamination. But Donziger was not core to the litigation process, regardless of how many times Chevron beknights him as the legal mastermind. He is the US face of a lawsuit that successfully sued the second-largest US oil corporation. Neither Chevron nor the oil industry are willing to tolerate this precedent. The RICO fraud temporality ensured that corporate rule would prevail.

THE INESCAPABLE VORTEX OF PRIOR FACTS FOUND Bar Hearing of Steven Donziger: 2018‒20 In September 2019, one month after Judge Preska placed Donziger in home confinement, a legal proceeding took place that in part challenged the reduplicating RICO fraud narrative of his misdeeds. The Supreme Court of the State of New York Appellate Division, First Department, held a hearing on the matter of Donziger’s bar license after the Bar Grievance Committee (the body that assures compliance to professional rules of conduct) raised concerns about his continuing to practice law. One year earlier, the Department had suspended Donziger after concluding that “Judge Kaplan’s findings constitute uncontroverted evidence of serious professional misconduct which immediately threaten the public interest.”30 Months prior to the hearing, in November 2018, John Horan, the appointed Referee, questioned whether Donziger had received “a full and fair hearing before Judge Kaplan” and determined that he be granted the right to dispute Kaplan’s findings of fact.31 The Appellate Division, however, quickly issued an order that expressly prohibited Horan from re-examining Kaplan’s court determi-

232  Handbook on oil and international relations nation and invoked the doctrine of “collateral estoppel,” a legal doctrine which forecloses the relitigation of an issue.32 During the 2019 hearing, Horan allowed Donziger “to continue a denial also asserted before the District Court to maintain his innocence in the face of what are tantamount to criminal charges”:33 that he neither bribed any judges in Ecuador nor ghostwrote the Ecuador judgment. The Bar Grievance Committee argued, however, that collateral estoppel prevented Donziger from contesting Kaplan’s findings of fact in the RICO case. It argued that Donziger’s appeal before the US Court of Appeals, 2nd Circuit, “only proposed a standard of review of de novo appropriate for legal questions,” rather than having sought to “reverse factual findings under the clearly erroneous test.”34 And as such, Donziger had waived his chance to rebut Kaplan’s facts. What emerged from the bar hearing was a display of how layers of legal technique can frame and foreclose avenues of appeal. The plurifaceted fraud narrative that Chevron had amassed in its RICO counterclaim was so intricate that it deterred Donziger’s appellate counsel from appealing on “clearly erroneous” legal grounds. Such an appeal would demand that Donziger’s legal team contest each infringement in all its dimensions of the elaborate conspiracy recited in Judge Kaplan’s 485-page ruling. Here, Chevron’s legal virtuosity exploited the RICO form to produce a web of conspiracy, bribery, and manipulation too densely enmeshed to disentangle. In the bar hearing, Deepak Gupta, the lawyer heading Donziger’s RICO appeal, disputed the Grievance Committee’s depiction. The Committee was conflating the question of whether Donziger had contested the allegations against him with “the narrower question” of whether reversal was sought specifically on “clearly erroneous grounds.”35 “Any appellate lawyer knows,” Gupta argued, that it is “a suicide mission” to appeal “500 pages of factual findings under the clearly erroneous standard of review,” especially when they could build their case on “extremely strong legal arguments.”36 Indeed, few appeals cases are filed on “clearly erroneous” grounds given the financial costs, time strains, and additional challenges at play in trying to overturn the decision of a trial court. In Gupta’s words, a “massive fortress” of findings (not simply a few facts) would have needed to be dismantled.37 The financial and human resources needed for such an endeavor would have been overwhelming. As Horan underscored in his “Recommendation” to the Appellate Division, the case before him was “decidedly unusual.”38 On the one hand, its subject matter was “unprecedented (findings criminal in nature in a civil RICO case).”39 On the other, it bore “none of the characteristics of a typical attorney grievance matter,” which tend to involve allegations of substance abuse or stealing client funds.40 Given these singular circumstances, Horan was hesitant to apply Kaplan’s findings of fact to the bar hearing on the grounds that they were established without the constitutional safeguards required for criminal convictions. In US criminal procedure, explanations to validate a decision must adhere to the strict “beyond a reasonable doubt” standard, whereas in civil disputes claims need only to pass as being “more probable than not.” With his hands tied by the collateral estoppel of Kaplan’s ruling, Horan’s Report and Recommendation issued on February 24, 2020 weaves documentary evidence to make a piercing commentary on how the codification of legal facts has denied Donziger the very “ability to dispute” Kaplan’s findings.41 Horan himself saw Donziger to be “essentially working for the public interest and not against it.”42 And his Recommendation leaves a record acknowledging how asymmetric power relations were influencing the direction of legal process, with perhaps the hope that one day the evidence could be reviewed from a new perspective.

Oil, law, temporality and indigenous rights  233 In addition to Gupta, Horan cites character witness testimonies from 14 people—from other lawyers involved in Donziger’s RICO defense; to environmental non-governmental organization directors; to the famous musician, and friend of Donziger’s, Roger Waters of Pink Floyd—who all bestowed praise on Donziger and shunned the oil corporation’s vilification of those waging the case for environmental accountability. Noting Kaplan’s “regard for Chevron,” the “disinclination of the United States Attorney’s Office” to charge Donziger, and Donziger’s contestation of Kaplan’s facts upon appeal, “however unsuccessfully,” Horan recommended that the “interim suspension” of Donziger’s law license “should be ended” and that he be “allowed to resume the practice of law.”43 Donziger’s victory was short-lived. On August 13, 2020, the Appellate Division, First Department reversed Horan’s recommendation with the argument that Horan had “exceeded his authority in permitting Respondent to continually offer protestations of innocence notwithstanding this Court’s prior orders.”44 Once again, Donziger’s “not guilty” plea was considered irrelevant, given that Kaplan’s RICO opinion had already declared him culpable. Despite Horan having extended a generous latitude to Donziger and his legal team, the soon to be disbarred lawyer was unable to escape the temporal vortex of the RICO fraud’s recurrent past. The situation in Judge Preska’s courtroom was perhaps even more stark as, in essence, Donziger was barred from pleading “not guilty.” Early on Preska determined it to be outside her jurisdiction to review Kaplan’s findings of fact in the RICO case, which Donziger’s criminal contempt defense rested upon. Preska made clear that Donziger was entitled only to elaborating on his “state of mind” in his disobedience to Kaplan’s orders. She did not find relevant the assertions by him, or others who testified, that Kaplan’s RICO judgment and subsequent orders were biased and flawed, and that an adversary with extraordinary resources was corrupting the legal process. Instead, the “truth” of the RICO recurrent past congealed all the more as the outcome of future legal action was essentially a foregone conclusion and Donziger’s inevitable culpability was already sealed. Chevron’s success arguably speaks to an imperial hubris through which US courts understand themselves as most fit to rule. Here a US federal judge believed himself more clairvoyant and capable than three higher courts in Ecuador to render the truth of fraud. This conceit—that the US judiciary reigns over truth—yields the possibility for a legal vortex’s unquestioned and unquestionable sanctity under the law. Given the truncated time of the recurrent past, there is no room to explore historical patterns, to consider the longue durée of imperialist policies and practices of oil exploitation, and take seriously the efforts of collectives pursuing equitable recompense.

PRACTICES OUTSIDE THE VORTEX In Ecuador, there is little interest in debating whether Donziger is a hero or a villain. In the eyes of the affected communities, their story of living amidst contamination has very little to do with him. Thus, while most journalists and legal scholars have focused on Chevron’s legal and public relations (PR) campaign to “demonize Donziger,” we focus below on the affected communities who have largely remained invisible throughout this legal saga. A good place to start is with Pablo Fajardo, the globally recognized face of the lawsuit that successfully sued Chevron. Fajardo is the lead lawyer of the Ecuador legal team that brought the

234  Handbook on oil and international relations Ecuadorian plaintiffs to victory in 2011 with the court ruling that found the corporation liable for $9.5 billion.

Note:  Banner reads: “End to the Gas Flares of Death.” Source:  Photo by UDAPT, as shared on the organization’s website.

Figure 15.3

UDAPT protest against gas flares, Sucumbíos, Ecuador

Today, Fajardo continues to direct the Union of People Affected by Chevron-Texaco (UDAPT), an Amazonian non-profit organization co-founded by six indigenous nationalities and 80 rural settler communities to coordinate grassroots objectives with the battle in the courts. UDAPT does not fit the image of a “corrupt enterprise,” nor does Fajardo resemble a “co-conspirator” or “pawn” in Donziger’s so-called master-scheme, as Chevron wishes to have it. In its legal work, UDAPT is pursuing the possible enforcement of the 2011 Ecuador judgment (which, despite Chevron’s opposition, still stands) in a new jurisdiction. Similarly, the organization is making legal demands on the Ecuadorian state to curtail ongoing extractive activities, especially the use of gas flares, which emit large quantities of carbon dioxide into the atmosphere. In its community work, UDAPT extends far beyond the court to quotidian practices of healing. Here, sequenced collective practice seeks to redress multidimensional harm by creatively and pragmatically engaging “different points of openness and closure” (Knop and Riles 2016, p. 927) in order to reckon the past with an eye toward the future. Although Kaplan’s RICO decision has foreclosed certain possibilities for remedy, the story does not end there. UDAPT’s main objective is to ensure the execution of “integral reparations”; that is, a holistic response to damages wrought by extractive industry. Towards that end, UDAPT has formed reparation committees to restore soil health, purify contaminated water, revitalize cultural livelihood, rebuild the local economy, and care for a growing population of cancer patients. Along with an environmental health clinic in the region, the Clínica Ambiental, the committees are addressing exposure to heavy metals and hydrocarbons by taking biopsies,

Oil, law, temporality and indigenous rights  235 diagnosing illnesses, and facilitating access to traditional medicine and hospital treatments. A collaborative study by the two organizations and the Geneva-based Centrale Sanitaire Suisse Romande found that one out of every four families living near oil installations have experienced at least one incidence of cancer.45 Without legal recompense, creativity is a necessity for building future possibilities. Joining forces with Amisacho, another community organization focused on healing, UDAPT is also involved in innovative experiments that explore how fungi and plants may be used to inexpensively break down hydrocarbons in soil and water. The efforts just mentioned take inspiration from a plan for healing that the Clínica Ambiental drew up during its formation in 2008. The plan envisions distributed responsibility for the Amazon’s well-being by acknowledging the importance of the individual, the family, and the collective in that endeavor. Against Chevron’s concocted image of the affected communities as involved in a “get-rich-quick ploy,”46 the plan obligates action by all. The reparation committees make it their mission to: visit patients at their homes on a bi-weekly basis; transport medical files between cities to allow patients to rest; promote organic farming and a vegetarian diet to limit toxic exposure; petition the Ecuadorian government to improve social security and health benefits; and organize free programs on meditation, psychotherapy, and herbal and other home treatment, among a plethora of other activities for improving access to clean water, air, and food. One of the main consequences of Chevron’s retaliation for the affected communities in Ecuador is that action must take a particular direction. And yet, never fully determined by the lawsuit, that action emerges from a distinct temporality: the “expansive present.” Traversing all tenses, the expansive present concerns the history of oil exploitation in the Amazonian frontier, the ethics of caring in the face of potentially permanent damages, and the pragmatics of orienting toward a hopeful future. It is a type of present that, to borrow from Silvia Rivera Cusicanqui, “contains within it the seeds of the future that emerge from the depths of the past”; with “the repetition or overcoming of the past” being “at play in each conjuncture,” it invites historical analysis of colonization and inspires experiments for carving a new path forward (Cusicanqui 2020, p. 48). In other words, by staging their fight on multiple fronts through a pluralistic theory of time, the affected communities are continually reconceptualizing the very meaning of justice and the work of decolonization. Overall, they demand that we think outside the legal vortex.

CONCLUSION Focusing on a subset of court proceedings involving Chevron, this chapter demonstrates how legal technique can foster a legal temporality that both exacerbates inequities pervading oil extraction, and relinquishes the corporation from addressing the harms integral to it. In 2014, a US District Court determined that a precedent-setting 2011 Ecuador judgment—hailed by environmental and indigenous rights advocates around the globe—was null and void in the US. Chevron’s US countersuit against the $9.5 billion Ecuador ruling was arguably brilliant, as its lawyers mastered the RICO legal form so as to “reverse, redirect, and reorder the temporality of politics” (Knop and Riles 2016, p. 886). The labyrinth of intrigue, corruption, bribery, and manipulation that Chevron’s army of lawyers wove virtually ensured (having persuaded the District Court) the irreversibility of fraud. In delegitimizing the corporation’s massive Ecuador liability, Kaplan’s decision instantiated a RICO fraud temporality—the recurrent

236  Handbook on oil and international relations

Source: 

Photo by Amisacho, http://​amisacho​.com/​.

Figure 15.4

An image from Amisacho’s website that reads: “Social Fabric: Creating spaces to strengthen and exchange seeds, knowledge and the arts,” Sucumbíos, Ecuador

past—that inverted, and thus gave new meaning and force to, the asymmetric relations that have largely configured oil operations in the Global South. Chevron thus became the victim of a racketeering scheme seeking to extract resources from it illegitimately. The ensuing legal vortex that the recurrent past created was damningly consequential. Admissible legal arguments in all court proceedings issuing from Chevron’s RICO case were constrained within the recurrent past of Kaplan’s fraud findings. That is, the “truth” of fraud both served as the underlying predicate act generating a panoply of legal proceedings, and it constricted those proceedings within its grip. As we detail above, Kaplan’s ruling is not truth. It is the convincing effect of a crafted conspiracy: an entire realm of machinations, of Chevron’s fraud-worlding that has scant grounding in processes and practices in Ecuador. Within the confines of law, however, Kaplan’s fraud findings are virtually impossible to interrupt. Maligned within the legal vortex are Steven Donziger, local Amazonian residents seeking reparation, and the Ecuadorian judiciary adjudicating contamination’s wrongs. Although Chevron’s legal strategy is singular, what the technique of law allows is certainly not unique to this case. As research in critical legal studies demonstrates, the embrace of a narrow, as opposed to a broad, time frame in Western judicial practice tends to enable the reproduction of social inequality and its obfuscation (Chowdhury 2017; Kelman 1981; Nousiainen 1994). In a poignant analysis by Tanzil Chowdhury on the “relationship between time, factual construction and responsibility,” the influence of Kantian temporality on legal practice in the United States has been a force for “normalizing oppressive conditions” (Chowdhury 2017, pp. 188, 204). By conceptualizing time as “divisible into uniform and separate units,” it becomes possible to remove a “unit” of time from a larger context and imbue it with the value of ultimate truth in “adjudication’s factual construction” of “ ‘what happened’ ” (Chowdhury 2017, pp. 188, 190, 194). Legal narratives of “what happened,” depend not on the “finding” of truth, but rather on the making of truth; a process that is significantly shaped by its temporal framing. Extending this analysis, we argue that in the RICO case Chevron first contrived specific events (that is, wrongly determined that the 2011 Ecuador ruling relied on the Cabrera Report) that then were removed from their spatial/temporal context and solidified

Oil, law, temporality and indigenous rights  237 as the “ultimate truth” by Kaplan. Decontextualized as a suspended event-unit from the forces and processes of which it is constituted and constitutive—and played on repeat—the recurrent past creates a singular history that hacks into the present in order to manage the future. This is to say that the incessant reiteration of the RICO fraud narrative constrains action in the present tense such as to limit the very potentialities latent within it. Instantiating the recurrent past—the truth of fraud—necessarily involves the production of selective past events; a production, as we demonstrate in the case of Chevron’s fraud-worlding, that is replete with interests. The broader context, however, is also ripe with prejudice. That the counsel for Chevron has argued that “transnational tort litigation” is not the appropriate venue for debating “the U.S. government’s historical treatment of indigenous peoples” or the effects of “American-style capitalism” (Boutrous 2013, p. 236), points to legal technique at work. By Chevron having made its countersuit specifically about the alleged corruption of its adversaries, Judge Kaplan was arguably restricted under the RICO form to not allow for evidence of the substance of the Ecuador liability to be admissible; thus, an unlikely story of victim and perpetrator was born. It has been near impossible to challenge the RICO decision in derivative proceedings, as the temporality of law has allowed only certain “types of facts” and “types of pasts” to emerge (Chowdhury 2017, p. 188). The case at hand is an egregious example of how law “expands and compresses time by emphasizing, erasing, and recasting historical events” (Mawani 2015, p. 261). Still, it is by no means extraordinary: marginalized communities around the world experience violent pushback when they demand accountability and challenge the dominant distribution of power, both in the streets and in the courts. The legal vortex of crafted conspiracy serves to conceal base injuries and undermine efforts to effect change. The Ecuadorian communities who are dealing with Chevron’s extractive harms warrant significantly more.

NOTES 1. See Suzana Sawyer’s (2022) book, The Small Matter of Suing Chevron, and Lindsay Ofrias’ forthcoming PhD dissertation “Healing Justice: Environmental Defenders and a Thriving Amazonia.” See also: Sawyer (2015, 2009, 2007, 2006, 2002, 2001); Ofrias (2017); and Ofrias and Roecker (2019). 2. USA v. Donziger, 1:19-cr-00561-LAP, DI 328, June 9, 2021, p. 4. 3. Chevron Corporation v Steven Donziger, et al. 11 Civ. 00691 [LAK-JCF] (hereafter: Chevron v Donziger, 1:11-cv-00691-LAK), DI 1874, March 4, 2014, p. 478. 4. Ibid., DI 2276, July 31, 2019, pp. 1‒2. 5. Ibid., DI 2108, October 18, 2018, pp. 2‒3. 6. See Donziger’s “Opposition to Contempt Motion,” which describes how Chevron has a history of “inflicting brutally costly and time-consuming discovery demands” on supporters, funders, and financial managers involved in the enforcement effort. Ibid., DI 2090, November 2, 2018, p. 3. 7. USA v. Donziger, 1:19-cr-00561-LAP, DI 328, June, 9, 2021, pp. 8‒13. 8. Ibid., p. 3. 9. Aguinda v. ChevronTexaco Corp., Superior Court of Justice of Nueva Loja (Lago Agrio) (subsequently renamed the Sucumbíos Provincial Court of Justice), No. 002-2003-P-CSJNL, May 7, 2003. 10. Railroad Commission of Texas, “Open Pit Storage Prohibited,” Texas Statewide Order No. 20-804, July 31, 1939. On the US Gulf Coast, states prohibited the release of formation waters and industrial wastes into water systems by the early 1930s and mandated that it be re-injected at least 1 mile below the surface of the Earth. Louisiana Department of Natural Resources (DNR),

238  Handbook on oil and international relations SONRIS/2000. “SRCN4282K Injection Wells by Parish.” http://​reports​.dnr​.state​.la​.us/​reports/​ rwservlet​?SRCN4282K​_p. 11. Texaco’s re-injection technology patents were as follows: United States Patent 3,680,389. Frederick H. Binkely, Jr, et al., assignor to Texaco Inc. August 1, 1972. United States Patent 3,817,859. Jack F. Tate, assignor to Texaco Inc. June 18, 1975. In 1962, Texaco’s director of Health and Safety published an article in an American Petroleum Institute (API) publication, The Primer of Oil and Gas Production, which among other things voiced its concern about the dangers of formation waters. 12. Chevron v. Donziger, 1:11-cv-00691-LAK. 13. The three higher Ecuador courts are: the Sucumbíos Provincial Court of Justice, Appellate Division, January 6, 2012; the National Court of Justice, November 12, 2013; and the Constitutional Court, July 11, 2018. 14. The fraud narrative also played an important role in the corporation’s 2018 win against the Republic of Ecuador in the Permanent Court of Arbitration in The Hague. 15. Chevron v. Donziger, 1:11-cv-00691-LAK. Witness Statement of Alberto Guerra Bastida, Plaintiff’s Exhibit 4800, DI 1596, pp. 19‒20. Court Transcript of Guerra’s testimony, DI 1802, October 25, 2013, pp. 1103‒1109. 16. Ibid., Court Transcript of Guerra’s testimony, DI 1800, October 24, 2013, p. 1069. ‘Agreement’, Guerra-Chevron, Plaintiff’s Exhibit 1671, January 27, 2013, p. 1. 17. Ibid., Ruling, March 4, 2014, p. 222. 18. The initial contract was to last 24 months. Its terms have been reinstated at 12-month increments since. PCA Case No.: 2009-23. Track 2 Procedural Meeting, April 24, 2015, pp. 855‒858. 19. Chevron v. Donziger, 1:11-cv-00691-LAK. Court Transcript of Guerra’s testimony, DI 1800, October 24, 2013, pp.  1053‒1064. “Agreement,” Plaintiff’s Exhibit 1671, January 27, 2013, pp. 3‒4. 20. Permanent Court of Arbitration (PCA) Case No.: 2009-23. Track 2 Hearing, Guerra Transcript, Tuesday, April 21, 2015, pp. 730‒731, 840‒845. 21. Chevron v. Donziger, 1:11-cv-00691-LAK. Judge Kaplan, Memorandum Opinion, DI 1963, March 1, 2018, p. 12. 22. 28 USC §1782 allows a litigant in a legal proceedings outside the United States to apply to a US court to obtain evidence for use in the foreign proceedings. The scale of the §1782 discovery proceedings campaign became breathtaking. Between 2009 and 2010, what had become Chevron’s army of lawyers submitted over 25 requests to obtain discovery from 30 different parties in 15 federal courts and jurisdictions across the country. By September 2010—when Judge Zambrano assumed the case—Chevron had already filed 20 disarming and threatening §1782 proceedings, and had won 12. 23. In rendering his ruling, Zambrano (2011, p. 51) wrote: “the Court accepts [Chevron’s] petition that said report not be taken into account to issue this verdict.” In his clarification order of March 4, 2011, Zambrano stated: “The Court decided to refrain entirely from relying on Expert Cabrera’s report when rendering judgment … [Chevron’s] motion was granted, and … the report had NO bearing on the decision” (ibid., p. 8). 24. Chevron v. Donziger, 1:11-cv-00691-LAK, Declaration of Juan Pablo Sáenz M., DI 145, February 27, 2011, p. 38. 25. Ibid., p. 37. 26. For a more extensive analysis of Chevron’s legal logic during its RICO countersuit, see Sawyer (2022). 27. Chevron v. Donziger, Case 1:11-cv-00691-LAK-JCF, DI 1874, March 4, 2014, p. 325. 28. Judge Lewis Kaplan, Memorandum Opinion, DI 1963, March 1, 2018, p. 12. 29. Ibid. 30. Supreme Court, Appellate Division, First Department, 2018 NY Slip Op 05128, “Matter of Donziger,” July 10, 2018. (Herein “Matter of Donziger”.) 31. Referee John Horan, Decision on Procedure for the Post-Suspension Hearing Under 22 NYCRR 1240.9(c) November 8, 2018, p. 3. 32. Matter of Donziger. County Clerk, Susanna Rojas, M-5782, January 17, 2019, pp. 1‒2. 33. Matter of Donziger. Referee John Horan, Report and Recommendation. RP No. 2018.7009, February 24, 2020, p. 29.

Oil, law, temporality and indigenous rights  239 34. Matter of Donziger. Gupta Cross-examination (by George Davidson), RP No. 2018.7008. Donziger Bar Hearing Transcript, September 17, 2019, p. 372. 35. Ibid., pp. 361‒362. 36. Ibid., p. 360. 37. Ibid., p. 360. 38. Horan Report and Recommendation, RP No. 2018.7009, February 24, 2020, p. 5. 39. Ibid. 40. Ibid. 41. Ibid., p. 10. 42. Ibid., p. 35. 43. Ibid., pp. 9, 10, 29, 33. 44. Matter of Donziger, NY Slip Op 04523, August 13, 2020. 45. UDAPT (2017), Clínica Ambiental and the Centrale Sanitaire Suisse Romande, “¿Sabías Qué?: Informe de Salud,” accessed July 11, 2021, http://​www​.clinicambiental​.org/​wp​-content/​uploads/​ docs/​publicaciones/​informe​_salud​_tex​.pdf. 46. Amazon Post, “Yet Another Get-Rich-Quick Ploy in Ecuador,” August 6, 2015, accessed July 15, 2021 at https://​theamazonpost​.com/​yet​-another​-get​-rich​-quick​-ploy​-in​-ecuador/​.

REFERENCES Boutrous, T.J. (2013), ‘Ten Lessons from the Chevron Litigation: The Defense Perspective’, Stanford Journal of Complex Litigation, 1(2), 219–240. Cepek, M. (2012), ‘The Loss of Oil: Constituting Disaster in Amazonian Ecuador’, Journal of Latin American and Caribbean Anthropology, 17(3), 393–412. Chowdhury, T.Z. (2017), ‘Temporality and Criminal Law Adjudication’s Multiple Pasts’, Liverpool Law Review, 38, 187–206. Cusicanqui, S.R. (2020), Ch’ixinakax utxiwa: On Practices and Discourses of Decolonization, trans. by Molly Geidel, Cambridge: Polity Press. Grabham, E. (2016), Brewing Legal Times: Things, Form, and the Enactment of Law, Toronto: Toronto University Press. Grabham, E., E. Cunliffe, S. Douglas, S. Keenan, R. Mawani, and A. M’charek (2018), ‘Exploring Relationships between Time, Law and Social Ordering: A Curated Conversation’, Feminist@​law, 8(2), 1–21. Greenhouse, C. (1989), ‘Just in Time: Temporality and the Cultural Legitimation of Law’, Yale Law Journal, 98(8), 1631–1651. Kelman, M. (1981), ‘Interpretive Construction in the Substantive Criminal Law’, Stanford Law Review, 33(4), 591–673. Knop, K. and A. Riles (2016), ‘Space, Time and Historical Injustice: A Feminist Conflict-of-Laws Approach to the “Comfort Women” Settlement’, Cornell Law Review, 102(853), 853–928. Mawani, R. (2015), ‘The Times of Law’, Law and Social Inquiry, 40(1), 253–263. M’charek, A. (2013), ‘Beyond Fact or Fiction: On the Materiality of Race in Practice’, Cultural Anthropology, 28(3), 420–442. M’charek, A. (2014), ‘Race, Time and Folded Objects: The HeLa Error’, Theory, Culture and Society, 31(6), 29–56. Nousiainen, K. (1994), ‘Times, Narratives and Law’, in J. Bjarup and M. Blegvad (eds), Time, Law and Society: Edited Proceedings of a Nordic Symposium, Stuttgart: Franz Steiner Verlag, pp. 23–39. Ofrias, L. (2017), ‘Invisible Harms, Invisible Profits: A Theory of the Incentive to Contaminate’, Culture, Theory and Critique, 58(4), 434–456. Ofrias, L. (forthcoming), ‘Healing Justice: Environmental Defenders and a Thriving Amazonia’, PhD Dissertation, Department of Anthropology, Princeton University. Ofrias, L. and G. Roecker (2019), ‘Organized Criminals, Human Rights Defenders and Oil Companies: Weaponization of the RICO Act Across Jurisdictional Borders’, Focaal—Journal of Global and Historical Anthropology, 2019(85), 37–50.

240  Handbook on oil and international relations Riles, A. (2005), ‘A New Agenda for the Cultural Study of Law: Taking on the Technicalities’, Buffalo Law Review, 53, 973–1003. Riles, A. (2011), Collateral Knowledge: Legal Reasoning in the Global Financial Markets, Chicago, IL: University of Chicago Press. Sawyer, S. (2001), ‘Fictions of Sovereignty: Prosthetic Petro-Capitalism, Neoliberal States, and Phantom-Like Citizens in Ecuador’, Journal of Latin American Anthropology, 6(1), 156–197. Sawyer, S. (2002), ‘Bobbittizing Texaco: Dis-membering Corporate Capital and Re-membering the Nation in Ecuador’, Cultural Anthropology, 17(2), 150–180. Sawyer, S. (2006), ‘Disabling Corporate Sovereignty in a Transnational Lawsuit’, Political and Legal Anthropology Review, 29(1), 23–43. Sawyer, S. (2007), ‘Empire/Multitude—State/Civil Society: Topographies of Power Through Transnational Connectivity in Ecuador and Beyond’, Social Analysis, 52(2), 64–85. Sawyer, S. (2009), ‘“So That the World Can Know”: Amazonians Take on Chevron’, NACLA, Nov., 46–49. Sawyer, S. (2015), ‘Crude Contamination: Law, Science, and Indeterminacy in Ecuador and Beyond’, in H. Appel, A. Mason, and M. Watts (eds), Subterranean Estates: Lifeworlds of Oil and Gas, Ithaca, NY: Cornell University Press, pp. 126–146. Sawyer, S. (2022), The Small Matter of Suing Chevron, Durham, NC: Duke University Press. Zambrano, N. (2011), ‘Judicial Opinion’, Aguinda v. ChevronTexaco Corp., Superior Court of Justice of Nueva Loja (Lago Agrio) (subsequently renamed the Sucumbíos Provincial Court of Justice), No. 002-2003-P-CSJNL, May 7, 2003.

Oil, law, temporality and indigenous rights  241

APPENDIX: SEQUENCE OF LEGAL CASES November 1993

Ecuador plaintiffs file contamination lawsuit against Texaco in US District Court, Southern District of New York.

May 2001

US District Court directs contamination suit to be heard in Ecuador. Texaco and Chevron merge.

May 2003

Ecuador plaintiffs file contamination claim in the Sucumbíos Provincial Court of Justice.

September 2009

Chevron files Bilateral Investment Treaty (BIT) claim in the Permanent Court of Arbitration in The Hague.

February 2011

Chevron files RICO countersuit in the US District Court, Southern District of New York, seeking to delegitimize the Ecuador judgment.

February 2011

Sucumbíos Provincial Court Judge Zambrano finds Chevron liable for contamination clean-up costs amounting to $9.5 billion.

October 2013

Chevron’s RICO trial commences in US District Court, Southern District of New York with Judge Kaplan presiding.

March 2014

US District Court Judge Kaplan issues a RICO ruling declaring the 2011 Ecuador judgment was procured through fraud.

September 2015

The Supreme Court of Canada rules Ecuadorians can seek enforcement in Ontario of the 2011 judgment against Chevron.

August 2016

US Court of Appeals, 2nd Circuit upholds Judge Kaplan’s 2014 RICO ruling.

January 2017

The Court of Appeal for Ontario rules Chevron Canada was a separate entity from Chevron Corp., thus barring the Ecuadorians from seizing its shares and assets.

August 2018

The Tribunal of the Permanent Court of Arbitration in The Hague rules in favor of Chevron’s BIT claim.

April 2019

The Supreme Court of Canada dismisses claims brought against Chevron’s wholly owned subsidiary Chevron Canada.

May‒June 2019

US District Court Judge Kaplan finds Donziger in civil contempt of court.

July 2019

US District Court Judge Kaplan drafts criminal contempt charges against Donziger and appoints Judge Preska to preside over the case.

August 2019

US District Court Judge Preska assigns Donziger to pre-trial home confinement.

September‒October 2019

The US Supreme Court of the State of New York Appellate Division, First Department holds hearings over Donziger’s bar license.

May 2021

US District Court Judge Preska presides over Donziger’s contempt trial.

16. The oil curse: pollution, authoritarianism, corruption, and conflict Douglas A. Yates

INTRODUCTION I like to screen The Treasure of the Sierra Madre (1948) in class, an old western directed by John Huston adapted from B. Traven’s 1927 novel. Set in the 1920s, driven by desperate economic plight, two down-and-out characters (played by Humphrey Bogart and Tim Holt) join an old-timer (Walter Huston) to prospect for gold in Mexico. Once they strike gold, Bogart’s character becomes paranoid and tries to murder his partners. This story has often been described as one about the corrupting influence of gold, a symbol for greed. But really it is less about gold than about character. After each screening, I ask my students to write an essay about the resource curse, using themes from the film. Most end up arguing that resources such as gold or oil or diamonds are not cursed in themselves. As Curtis, one of the main characters, says: Curse upon gold? I don’t see any curse on gold. Where is it? Old women’s tattle. Nothing to it. There is as much blessing on gold as there is curse. It depends upon who holds it—I mean the gold. In the end the good or the bad character of its owner determines whether gold is blessed or cursed. (Traven 2010, p. 68)

Extending that to states, it depends on good or bad governance. The oil curse, in short, is a set of negative outcomes associated with the mismanagement of oil wealth. The oil curse. A year seldom passes without new books and articles about its causes, its consequences, and its remedies; books and articles by scholars for scholars, by scholars for ordinary readers, and by ordinary non-fiction writers who presume to enter the fray, convinced that there is a new way to tell the story, what it really means, and why it still matters. This proliferation of books and articles, accompanied by a constant outpouring of related research papers, conference proceedings, non-governmental organization reports, Master’s theses, and doctoral dissertations, has proliferated into a pandemic of critique, with the “oil” curse radially expanded into a protean “resource” curse, something like a Pandoran theory from which all the evils fly out into the world. The phrase “resource curse” is sometimes credited to the economic geographer Richard Auty (1993) in his Sustaining Development in the Mineral Economies: The Resource Curse Thesis, although anyone who actually studies this would find his inspiration in Alan Gelb’s (1988) Oil Windfalls: Blessing or Curse? The phrase “oil curse” is credited to Michael Ross (2012) and his bestseller The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, who also cited Gelb in his bibliography and whom he praises as one of the “pioneers” he interviewed to write his own book. Reading that someone else coined the phrase “oil curse” can be hard on previously published scholars not credited with conceptual priority. We might attribute their bad fortune to yet another symptom of the curse. 242

The oil curse  243 The main problem with the oil curse expression, besides who gets the credit for coining it, is the word “curse.” For the past two decades, I have taught college classes and seminars on the so-called “resource curse in Africa.” I usually begin by lamenting that my epistemic community is identified under this accursed banner, despite having a number of other, better terms. The problem with the word “curse” is that it has a meaning in popular culture that is widespread and well understood: a solemn utterance intended to invoke a supernatural power to inflict harm or punishment on someone or something. People, when you draw their attention to this, immediately nod their heads knowingly and admit that, of course, no one is actually proffering any claims about black magic. But the human mind, being largely irrational, makes this association. It is beyond the scope of this chapter to discuss the larger “resource curse,” including blood diamonds, conflict minerals, coltan, or the curse of gold. This chapter will only outline the negative effects of the oil curse. For only one resource has been consistently correlated with dictatorship, institutional corruption, and war: oil, which is the key variable in the vast majority of the studies that identify some type of resource curse. But many scholars have found powerful negative associations with other natural resources so that, yes, one can sometimes extrapolate by analogy from oil to other natural resources. There are, broadly speaking, five bad effects of petroleum for any country that substantially depends upon it. The first is environmental. Oil is polluting. That is what brought me into this battle so many decades ago, as a boy swimming in the oil-polluted waters of southern California, using turpentine to wipe oil off my body after a day at the beach, and wheezing with asthma because of burning, hard-to-breathe smog, that brown carcinogenic poison in the sky. The second is political effects. Oil rent tends to make authoritarian regimes more durable, is strongly associated with dictatorship, and is harmful to democracy. The third is the corrupting effect of oil on government institutions. Oil rent corrupts. The fourth is oil’s tendency to cause and prolong violent conflict in poor regions of the world. This is especially true when it is located in territory of marginalized ethnic groups. The fifth is the “paradox of plenty”: the wealthier a country in oil, the poorer its people. Oil wealth should be an economic blessing, but is paradoxically harmful for economic development.

OIL AND POLLUTION Climate change, carbon emissions, gas flaring, oil spills, destruction of maritime and riverine environments, plastic garbage, smog, petrochemicals, fracking, toxic waste from refinement … the list goes on and on. Oil spills are a form of pollution released into the ocean or coastal waters, but also occur on land. Oil spills may be due to releases of crude oil from tankers, offshore platforms, drilling rigs and wells, as well as spills of refined petroleum products such as gasoline and diesel, and their by-products, heavier fuels used by large ships such as bunker fuel, or the spill of any oily refuse or waste oil (Murawski et al. 2020). Oil spills on land can occur via pipeline leaks, railroad accidents, poor oil storage, natural seeping into land or soil, poor working practices, drilling accidents. Inland oil spills can prevent water from being absorbed by the soil, and spills near agricultural operations or grassland can harm plant life and ecosystems. Cleaning up inland spills can depend on the kinds of soil affected, the geology of the area, the presence

244  Handbook on oil and international relations of groundwater, and how deep they are and access to the areas affected by the spill. Even clean-up, especially with chemicals, can damage the environment. Oil and gas development can pollute drinking water sources during drilling, fracking, refining, or disposing of waste water without measures to protect water resources. Methane and other gases can leak into drinking water. Methane and volatile organic chemicals can seep into groundwater sources near natural gas wells if the wells are poorly constructed or broken. Groundwater and surface water can also be impacted by surface leaks or when fracking fluid is spilled. Oil and gas industry wastes, which may contain petroleum hydrocarbons, metals, naturally occurring radioactive materials, salts, and toxic chemicals, have the potential to cause soil pollution, and prevent the growth of vegetation (Spellman 2012). Produced water, which may contain high concentrations of salts and other contaminants, is often stored in pits or disposed of in evaporation ponds. Spills of produced water can kill vegetation and sterilize soils. Contaminants that enter the soil can move down through the soil and contaminate groundwater, or up through the soil and be released into the air (Cheremisinoff 2017). Oil is a major contributor to air pollution. For example, when oil is burned for electricity, sulfur dioxide, mercury compounds, and nitrogen oxides are produced. So too are volatile organic compounds including benzene, formaldehyde, and other toxic substances that combine with nitrogen oxides to create ground-level ozone and smog. Benzene can cause cancer at high levels of exposure. Hydrogen sulfide is released by flaring and venting diesel fuel or natural gas. Polycyclic aromatic hydrocarbons are found in oil and gas formations and are produced when they are burned. They include over 100 chemicals so toxic that some are used to make plastic, dyes or pesticides (Sharma et al. 2018). Particulate matter is also released by dust, exhaust, and other emissions. Smaller particles can get lodged in the lungs and lead to public health problems. Oil is a major contributor to greenhouse gas emissions that are causing irreversible global climate change. A scientific study published in Nature estimates “globally, a third of oil reserves, half of gas reserves and over 80 per cent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2°C” (McGlade and Ekins 2015, p. 187). Unfortunately, the oil and gas industry plans to spend $1.4 trillion on new extraction projects between 2020 and 2024, producing 148 gigatonnes of cumulative carbon dioxide emissions: “85 percent of the expanded production is slated to come from the United States and Canada over that period” (Center for International and Environmental Law 2019). Oil pollution is an open secret. But if readers are not familiar with any of the above information, they should know that great amounts of money are being spent by oil producers to keep them uninformed, especially about the relationship between oil and irreversible climate change. “Over roughly the last three decades, five major US oil companies have spent a total of at least $3.6 billion on advertisements—not counting their investments in public relations programs such as sponsored beach clean-ups, or their influence through trade associations, dark money groups and campaign donations” (Holden 2020).

OIL AND AUTHORITARIANISM Oil stalls democratization. The greater a country’s oil revenue, the less likely its transition into democracy. This association between oil revenue and autocratic rule has long been known by scholars, back to the man whom I consider to be our true pioneer (although he never

The oil curse  245 used the term “oil curse”), the Iranian economist Hossein Mahdavy (1970), and those who followed him in the study of rentier states, oil monarchies, and petrostates in the Middle East (Beblawi and Luciani 1987; Crystal 1990; Gause 1994; Chaudhry 1997), Africa (Yates 1996; Vandewalle 1998), Latin America (Karl 1997), and Central Asia (Franke et al. 2009). Michael Ross, using a sample of 61 countries under authoritarian rule in 1960, and 43 others that gained independence after 1960, found: “No country with more oil and gas income than Mexico has successfully become democratic since 1960” (Ross 2015, p. 243). Yet Ross also shows that this was not a timeless phenomenon. Oil only gained its strong antidemocratic powers in the late 1970s after the nationalization of petroleum industries by oil-rich developing countries in the Middle East, Africa, Latin America, and Asia. By nationalizing their oil, the rulers of these countries acquired more access to oil rents. It is oil rent that hurts democratization, not oil itself. From 1960 to 1979, Ross shows, oil states and non-oil states were equally likely to transition to democracy. But after 1979, non-oil states were three times more likely to make democratic transitions: “The celebrated ‘third wave’ of democratic transitions in the 1980s and 1990s left most of the oil states untouched. Almost all the increase in global democracy since 1979 has come from the non-oil states” (Ross 2012, p. 75). Critics have challenged his claim, suggesting that a certain kind of regime accountability, despite problems, has nevertheless evolved (Soares de Oliveira 2007; Heilbrunn 2014). But a recent study shows that this anti-democratic trend is even stronger than either Ross or his critics knew: “Because authoritarian states typically report fewer data, list-wise deletion will tend to produce samples in which the most democratic nations in the data set are overrepresented” (Lall 2017, p. 1295). Oil also preserves autocrats. One of its most important effects is that it gives rulers more money to pursue strategies for staying in power. The way this works is simple. “Oil rents accrue directly in the hands of the state, and loyalty to the state is gained through patron‒client networks which help increase political stability” (Franke et al. 2009, p. 112). A study by British political scientists shows that oil revenues “lower the risk of ouster by rival autocratic groups” and “increase military spending in dictatorships” which “may deter coups that could have caused a regime collapse” (Wright et al. 2015, p. 287). Survival of so many absolute monarchs in the Persian Gulf may be due to oil. Like foreign aid and/or internationally borrowed money, external oil rents are non-tax revenues that can maintain authoritarian regimes in power (Andersen and Aslaksen 2013). Game theoreticians Bruce Bueno de Mesquita and Alastair Smith in their best-selling Dictator’s Handbook compared the anti-democratic effects of foreign oil rents with those of foreign aid, lending, and debt forgiveness. The advantage of natural resource rents over the other two is that it excels in the first rule of office-holding: to minimize the number of people whose support you need. All three are foreign sources of revenue that not only liberate dictators financially from their people, but perpetuate their rule by making them financially unaccountable to their own “selectorate”: that is, that small group of people—such as soldiers, businessmen, elites—who make up the effective winning coalition. Dictators must control the flow of revenue. Paying supporters is the essence of ruling. But patronage requires money. As many leaders have learned, the problems with raising revenue through taxation is that it requires people to work. Tax too aggressively or fail to provide an environment conducive to economic avidity and people simply don’t produce. Actually, extractive revenue from the land itself provides a convenient alternative, cutting the people out of the equation altogether. (Bueno de Mesquita and Smith 2011, p. 88)

246  Handbook on oil and international relations Petro-monial rulers do not have to encourage natural resources to work. While some effort is required to extract the oil, this can be achieved by foreign oil corporations without the participation of the local population. The oil rents enable dictators to massively reward their “selectorate” as well as corruptly accumulate enormous wealth. “The trouble is that once a state profits from mineral wealth, it is unlikely to democratize. The easiest way to incentivize the leader to liberalize policy is to force him to rely on tax revenue” (ibid., p. 91). An abundant flow of oil rents enables incumbents to both reduce their taxation and increase their patronage, a “rentier effect” (Mahdavy 1970) that makes it possible to buy off potential challengers and throw money at political dissenters. In this way large oil windfalls can also help democratic rulers, not just authoritarian ones. For example, they can use tax reductions to buy electoral support. “These revenues do not have ‘antidemocratic’ properties or even ‘prodemocratic’ properties,” said one scholar; “What they have are stabilizing properties” (Morrison 2009, p. 107). But tax reduction does mean that rulers have less need to be politically accountable to their own people (McGuirk 2013), which is surely harmful per se to any representative democracy. Or, as Hazem Beblawi formulated it, in an oil rentier state there will be “no representation without taxation” (Beblawi and Luciani 1987, p. 75).

OIL AND CORRUPTION Oil money corrupts. In part this is because there is so much of it. The amounts are just too great a temptation. But also because most oil money is economic rent. This kind of money has bad effects. All money is not alike. Stolen money is different from honestly earned money. Blood money is different from peacefully earned money. So too, rent—“that portion of the value of the whole produce which remains to the owner of the land” (Malthus 1815, p. 1)—is different from other factor incomes of production, such as wages, interest, and profit. In petroleum economics, rent is defined as the difference between the price of a given quantity of oil sold to consumers in the form of petroleum products, and the total cost of discovering, producing, refining, transporting, and marketing the crude. For example, total world petroleum product sales in 2004 were estimated to be worth $2.525 trillion, at a total cost of production, refinement, transportation, and marketing estimated around $545 billion. Therefore, in that one year alone, oil generated $1.98 trillion in oil rents: 59 percent earned by oil-consuming countries through taxation of petroleum products (that is right: those are “monopoly rents” paid to the state as territorial sovereign); 35 percent by oil-producing states for their ownership of the oil reserves (which they did not make, but simply owned); and the remaining 7 percent by oil corporations from their industry margins (Chevalier and Geoffron 2013, p. 139). One corrupting characteristic of oil rent is that it is unearned. Unlike wages paid to workers for their labor (a laborer earns his wages), unlike interest paid to lenders for the scarcity of capital (interest rates reflecting that scarcity), unlike profit paid to entrepreneurs for their successful management of risk (which, if they do not succeed, is loss), economic rent is paid to the owner of land simply for owning the land, not for any labor or management of risk. The rentier neither works for nor sacrifices anything for rent (except, of course, the land). This distinction between earned and unearned income is an important one for economic development, discussed below. Here my point is only to show that from a standpoint of economic production, rent is intrinsically corrupt. Classical economists had few kind words to say about rent and rentiers, whom they assaulted as unproductive, almost antisocial; sharing effortlessly

The oil curse  247 in the produce without, so to speak, ever contributing to it. The economic behavior of a rentier “embodies a break in the work‒reward causation” whereby rewards of income and wealth do not come as the result of work, but rather are the result of chance and situation, “a serious blow to the ethics of work” (Beblawi and Luciani 1987, p. 62). Oil rents also induce corrupt rent-seeking. Rent-seeking is an attempt to obtain rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. This is primarily the activity of rulers of states. An influential International Monetary Fund (IMF) study of this relationship found that capital-intensive natural resources create opportunities for rent-seeking behavior (Leite and Weidmann 1999, p. 30). In her well-known 1997 study of Venezuela’s oil economy, political scientist Terry Lynn Karl showed how oil wealth caused extraordinary corruption. Of all the natural resources they studied, only oil was consistently correlated with more corruption (Collier and Hoeffler 2004, p. 563). A more recent study, using a panel data set with observations on a large number of countries over an extended period of time, and employing an instrumental variable technique to account for endogeneity, found that “exports of natural resources have, above all, led to an increase in corruption” (Busse and Groning 2013, p. 1). Oil rents accumulated by rent-seeking elites escape taxation through corrupt global circuits of money laundering. The role of tax havens in providing an international outlet for grand corruption is notable. These tax havens are usually located far away from the oil-producing countries. Despite its scarcity of natural resources, for example, Switzerland is the location of many global players in the commodity sector, making it one of the premier trading hubs for commodities worldwide. “In raw oil, for example, 35% of trades are done in Switzerland” (Mühlemann and Mbiyavanga 2018, p. 4). A report by the Financial Action Task Force, a joint venture between the Organisation for Economic Co-operation and Development (OECD) and the World Bank, published 32 case studies of grand corruption related to oil rents, of which 27 involved foreign bank accounts and 21 involved bank accounts in just such tax havens (FATF 2011). When autocrats enjoy a rise in petroleum rents, and state institutions cannot control their behavior, there is a corresponding rise in rent transfers to these tax havens. Using data from banks in 43 countries (including the biggest tax havens: Switzerland, Jersey, Luxembourg, the Cayman Islands, the Bahamas, and Singapore), four Scandinavian economists found that “petroleum rents are associated with increases in hidden wealth, but only when political institutions are very weak” (Andersen et al. 2013). Finally, oil-rich Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela, and Yemen all have extremely low Corruption Perception Index scores. In these countries, explains Peter Eigen, “the oil sector is plagued by revenues vanishing into the pockets of western oil executives, middlemen and local officials” (Transparency International 2004, p. 2). Such optics create grievances, which can lead to conflict.

OIL AND CONFLICT Oil can fund, prolong, and even cause violent conflict. The conventional wisdom about the relationship between natural resources and conflict, going all the way back to Thomas Malthus, has been that resource scarcity is what triggers conflict. But since the end of the Cold

248  Handbook on oil and international relations War it has been argued that resource abundance—particularly oil abundance in developing countries—is also responsible for violent conflicts. Dependency on both consumption and/ or production of oil is strongly associated with various kinds of conflict. The first kind of oil conflict is over the control of scarce oil supplies. “Disputes over access to critical or extremely valuable resources may lead to armed conflict” are a special kind of violence called “resource wars” (Klare 2001, p. 25). When the resource is oil, these are called “oil wars.” Some scholars have argued that in going to war twice against Iraq and once against Afghanistan, the United States was seeking to put a lock on its future energy supplies there (Pelletiere 2004). Oil-consuming countries such as the United States have probably been fighting in Iraq for two decades because of their dependence on oil from the region, combined with the imperialist character of US foreign policy (Gendzier 2003). For their part, oil producers, such as Iraq, are also prone to war because of the presence of oil, but also because of the character of their states, societies, and economies (Kaldor et al. 2007). It is not oil per se that causes war, but its articulation with other factors. Major oil discoveries increase conflict. Grievances by locals living around the oil deposit are because they either feel deprived of their fair share of the revenues or suffer from oil pollution and can no longer pursue their traditional livelihood (known as “grievance theory”). Economist Paul Collier famously argued that greed and economic opportunism induced by oil revenues also led to conflict (known as “greed theory”): “Low income means poverty, and low growth means hopelessness. Young men, who are the recruits for rebel armies, come pretty cheap. Life is cheap, and joining a rebel movement gives these young men a small chance of riches” (Collier 2007, p. 20). Using data from 782 giant oilfield discoveries in 65 countries around the world since 1946, such big discoveries have been found to increase the incidence of internal armed conflict (that is, civil wars, rebellions, coups) by about 5 to 8 percent, and “discovery of giant oilfields is especially likely to fuel internal conflicts in countries with recent histories of political violence by about 11 to 18 percentage points when a country experienced one such conflict in the decade prior to the discovery” (Lei and Michaels 2014, p. 141). Location also matters. When oil is found offshore, it has no robust effect on a country’s conflict risk; when it is onshore, it appears to have a large effect. And if oil is located inside an actual conflict zone, “the duration of the conflict is doubled” (Lujala 2010, p. 15). Norwegian economists, studying a panel of 132 countries over the period between 1962 and 2009, reported that oil windfall revenues (caused by either a dramatic increase in the price, or by a major new discovery) statistically increased the probability of conflict in onshore oil-rich countries, while decreased this probability in offshore oil-rich countries. Why? “The government can use offshore oil income to increase its fighting capacity, while onshore oil may be looted by oppositional groups to finance a rebellion” (Andersen et al. 2017, p. 1). In sum, there are many kinds of phenomena linking oil and violence. Not all of them are actually wars. Rather, one finds many types of “oil violence.” Some are armed struggles about ownership and control over oil, which we may properly call oil wars. But others are struggles over distribution of revenues derived from oil. These are not oil wars, but revenue disputes. Some are about the inability of weak state institutions to cope with looting, misappropriation, and exclusion of significant sectors of society, which lead to violent protests. These are not wars at all, but domestic police matters of maintaining public order. Others are about states using their oil revenues to build up repressive security machinery and embark on violent terror against their own people. These are not wars, but one-sided violent tyrannies. Some are illegal uses of resource revenues by disgruntled factions of the governing elite to sponsor

The oil curse  249 anti-government insurgencies or secession movements. These are not wars, but factional politics using violence as a tool of leverage. Others are organized predation and extortion of big businesses in the resource extraction sector by aggrieved groups. These are not wars, but organized crime. Some are military interventions by foreign stakeholders to protect their investments. These are not wars, but “peacekeeping operations” (Yates 2012, p. 180, cf. Omeje 2008, pp. 14‒15). I believe that it is because there are so many different ways that oil can become a factor of political violence, from a mere object of greed, to a problem of public order, to a strategic military resource necessary for national defense, that it is more strongly correlated with conflict than any other natural resource. But this association is not perfect. Oil does not always cause or prolong conflict. German political scientists found that when an abundance of oil rents raises per capita incomes, makes people richer, and their governments use these revenues to embark on distributive policies, oil can also foster peace (Basedau and Richter 2011, p. 7). It is the mismanagement of oil money, not oil itself, that leads to conflict.

OIL AND UNDERDEVELOPMENT For decades, development economists could not get their heads around the counterintuitive idea that oil wealth can lead to poverty. A 1995 study of 97 developing countries by economists Jeffrey Sachs and Andrew Warner found that the more important natural resources were to a country’s economy, the lower was its growth rate (Sachs 1995). That petroleum can have serious negative impacts on low-income producing countries in Latin America (Karl 1997) and Africa (Gary and Karl 2003; Shaxson 2007) is now well documented. These negative effects include low, and sometimes negative, economic growth for the country, poor provision of basic public services, weak governance, widespread poverty, and insecurity. Typically, oil-exporting countries fail to diversify their economy. They become addicted to oil. A vicious cycle sets in. Yet we all know of counter-examples, countries such as Norway, Canada, or the United States that have produced large amounts of oil but have nevertheless enjoyed high per capita incomes and diversified economies, or those “petro-monarchies” such as the Gulf Emirates and the Sultanate of Brunei that are among the richest countries in the world. These exceptions to the rule aside, oil has been a massive driver for inequality in the developing world, especially the Organization of the Petroleum Exporting Countries (OPEC) member states. A meta-analysis of 69 empirical studies on the resource curse showed that only developing countries suffer from it (Dauvin and Guerreiro 2017). This takes Norway, Canada, and the United States out of our sample. The ratio between oil rents and population size is also a contextual factor. Oil rents and poverty intertwine in countries with much oil and small populations into a double helix of a tiny ultra-rich minority and a relatively poor majority servicing them. This explains the super-rich petro-monarchies. Meanwhile, for those countries with less oil but a huge population, such as Nigeria, “petroleum creates few jobs directly and generates a volatile, and ultimately unsustainable, revenue stream for the countries that produce it” (Meyers 2005, p. 1). The reasons for this correlation between petroleum and underdevelopment were explained long ago by Hossein Mahdavy in his analysis of the rentier state in Iran. Since the government of an oil rentier state is liberated from the necessity of having to extract revenue from

250  Handbook on oil and international relations its domestic society, because it receives its revenues from foreign companies in the form of unearned economic rent, the work‒reward causation mechanism is breached among its ruling rentier class, who do not feel alarm about persistent poverty or underdevelopment: “The welfare and prosperity imported from abroad pre-empts some of the urgency for change and rapid growth and coincides with socio-political stagnation and inertia” (Mahdavy 1970). Satisfied with their material conditions, “instead of attending to the task of expediting the basic socio-economic transformations, they devote the greater part of their resources to jealously guarding the status quo” (ibid.). A rentier economy produces a “rentier mentality” where “reward becomes a windfall gain, an isolated fact” rather than the fruit of hard work and sacrifice (Beblawi and Luciani 1987, p. 52). Income and wealth are seen as situational and accidental rather than as the end result of a long process of systematic organized production. Jobs, contracts and licenses are given as an expression of patronage and clientism rather than as a reflection of sound economic rationale. Civil servants see their principal duty as being available in their offices during working hours. Businessmen do not enter into industrial manufacturing, but into real estate speculation or finance or other special service sector activities associated with the booming oil economy. The best and brightest seek high-paying government posts. Everybody knows that the only way to get rich is somehow to get access to oil rents. All of this is catastrophic to economic development. The worst symbols of this rentier mentality are the hopeless prestige projects of rulers which consume revenues but do not produce any: palaces, skyscrapers, even factories, expensive capital-intensive turnkey projects imported for photo opportunities for rulers to launch them in lavish ribbon-cutting ceremonies, as if development were a product to be purchased rather than a process to be learned. Since oil prices rise and fall, their real economy (oil exportation) is highly vulnerable to external price shocks. When prices rise, oil money is spent lavishly. When there is not enough, then money is borrowed on future oil reserves to pay for projects with little or no market rationale. When prices fall, those projects are defunded, sometimes mid-construction. Even projects that were profitable will see their funds cut. What about those success stories, countries that have invested their oil revenues into sovereign wealth funds? The United Arab Emirates’ (UAE) sovereign wealth fund was worth about $683 billion by 2018, and Norway’s has exceeded $1 trillion since 2017. Have they not escaped the oil curse? Those who think that Scandinavian and Persian Gulf exceptions have escaped the oil curse because they have managed to successfully invest in massive sovereign wealth funds should consider this. A stock market crash is a sudden dramatic decline of stock prices across a major cross-section of a stock market, resulting in a significant loss of paper wealth. Would these rich countries still be considered as examples of development were their commercial paper to lose its value? The confusion of money with wealth is one of the great civilizational crises of our time.

CONCLUSION Critics of the “oil curse” such as John Heilbrunn (2014) think that all of this critical scholarship is a bunch of voodoo economics, that “oil revenues are hardly a curse; rather, they are an opportunity for poor states to grow economically and establish conditions for democracy” (p. 9), that “oil brings stability” (p. 115), that “as more money flows into their economies Africa’s emerging petrostates adopt better laws that enable benefits from oil production”

The oil curse  251 (p. 119), that “as a petrostate transits from being an emerging to a mature producer there should occur a reduction in the rates of corruption” (p. 140), that “the accumulation of wealth in even the most corrupt and autocratic state creates a possibility of development and, over time, the enactment of political reforms” (p. 151), and that “democracy and development are probable outcomes in oil-exporting states” (p. 219). “If oil has any economic or political impact in Africa,” Heilbrunn asserts, “it creates institutional conditions that are conducive to democracy and development” (p. 16). I will not refute these here point by point, but only want to inform the reader that in the same way that the oil curse literature has been proliferating, so too has literature of its critics. This is both bad and good. It is bad because much of it is being funded by big oil companies and oil-exporting countries, eager to maintain our current global consumption at 100 million barrels per day. It is good because as oil curse theorists meet the challenges of critics, they update their data, refine their methods, and improve their causal arguments. As John Stuart Mill argued in On Liberty, dissent is vital because it helps to preserve truth, since truth can easily become hidden in sources of prejudice and dead dogma. One of the most dynamic areas of research on the oil curse has been policy studies on how to deal with it. Some of these include reducing our consumption of oil; raising fuel taxes; regulating murky offshore finance that allows banks to receive funds corruptly stolen by rulers of oil-rich authoritarian regimes and their “selectorates” by attacking bank secrecy (Shaxson 2007, pp. 223‒230; FATF 2011); developing effective global transparency initiatives (Publish What You Pay n.d.; Extractive Industries Transparency Initiative n.d.); creating sovereign wealth funds as Norway has (Cleary 2017); and perhaps the most daring idea of all, directly distributing the oil revenues to the public (Sala-i-Martin and Subramanian 2003). There is much to be done to get these ideas from scholarship into practice, but all may be necessary to fight the oil curse. A great variety of ideas exist, because different scholars define the problem differently. But what all of them share is a sense that something can be done about the oil curse, that there is hope. When Pandora opened the jar which Prometheus warned to keep closed, all the evils that plague humanity, such as Old Age, Labor, Sickness, Insanity, Vice, and Passion, flew out in a cloud and attacked the race of men. The last to escape Pandora’s Box was Hope, “whom Prometheus had also shut in the jar to discourage them by her lies from a general suicide” (Graves 1992, p. 145).

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The oil curse  253 Mahdavy, H. (1970), ‘The Patterns and Problems of Economic Development in a Rentier State: The Case of Iran’, in M.A. Cook (eds), Studies in Economic History of the Middle East, London: Oxford University Press. Malthus, T. (1815), An Inquiry into the Nature and Progress of Rent, Vol. 994, No. 1, London: Murray. McGlade, C., and P. Ekins (2015), ‘The Geographical Distribution of Fossil Fuels Unused When Limiting Global Warming to 2 °C’, Nature, 517(1), 187–190. McGuirk, E.F. (2013), ‘The Illusory Leader: Natural Resources, Taxation and Accountability’, Public Choice, 154(1), 285–313. Meyers, K. (2005), ‘Petroleum, Poverty and Security’, Chatham House, Africa Program, Working Paper, AFP BP 05/01, June. Morrison, K. (2009), ‘Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability’, International Organization, 63 (1), 107–138. Mühlemann, D., and S. Mbiyavanga (2018), ‘Natural Resources and Money Laundering’, OECD Global Anti-Corruption and Integrity Forum Paper, Basel, Switzerland, cited from Swiss Academics (2018), Switzerland and the Commodities Trade Factsheets, 11 (1). Murawski, S., C. Ainsworth, S. Gilbert, D. Hollander, C. Paris, M. Schlüter, and D. Wetzel (eds) (2020), Deep Oil Spills: Facts, Fate, and Effects, Springer, New York. Omeje, Kenneth (ed.) (2008), Extractive Economies and Conflicts in the Global South: Multi-Regional Perspectives on Rentier Politics, Aldershot: Ashgate. Pelletiere, S. (2004), America’s Oil Wars, Westport, CT: Praeger. www​ .pwyp​ .org/​ areas​ -of​ -work/​ Publish What You Pay (n.d.), accessed July 7, 2020 at https://​ anticorruption/​. Ross, M. (2012), The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, Princeton, NJ: Princeton University Press. Ross, M. (2015), ‘What We Have Learned about the Resource Curse’, Annual Review of Political Science, 18(1), 239–259. Sachs, J. (1995), The End of Poverty: Economic Possibilities for Our Time, New York: Penguin Books. Sala-i-Martin, X., and A. Subramanian (2003), ‘Addressing the Natural Resource Curse: An Illustration from Nigeria’, NBER Working Paper No. 9804, June, National Bureau of Economic Research, Cambridge, MA. Sharma, N.N., A.K. Avinash, P. Eastwood, T. Gupta, and A.P. Singh (eds) (2018), Air Pollution and Control (Energy, Environment, and Sustainability), New York: Springer. Shaxson, N. (2007), Poisoned Wells: The Dirty Politics of African Oil, New York: Palgrave Macmillan. Soares de Oliveira, R. (2007), Oil and Politics in the Gulf of Guinea, London: C. Hurst & Co. Spellman, F. (2012), Environmental Impacts of Hydraulic Fracturing, Boca Raton, FL: CRC Press. Transparency International (2004), ‘Corruption Perception Index 2004’, Press Release, October 20, London. Traven, B. (2010), The Treasure of the Sierra Madre, New York: Farrar, Strauss & Giroux. Vandewalle, D. (1998), Libya Since Independence: Oil and State-Building, Ithaca, NY: Cornell University Press. Wright, J., E. Frantz, and B. Geddes (2015), ‘Oil and Autocratic Regime Survival’, British Journal of Political Science, 45 (2), 287–306. Yates, D. (1996), The Rentier State in Africa: Oil-Rent Dependency and Neocolonialism in the Republic of Gabon, Trenton, NJ, USA and Asmara, Eritrea: Africa World Press. Yates, D. (2012), The Scramble for African Oil: Oppression, Corruption and War for Control of Africa’s Natural Resources, London: Pluto Press.

17. Oil, global governance and transparency norm proliferation Nathan Andrews

INTRODUCTION The international political economy of natural resource extraction, and its global governance in particular, has witnessed a ‘transparency turn’ since the late 1990s and early 2000s (Rhodes 1996; Haufler 2010). Prior to this period, there was a great deal of secrecy around the activities of extractive companies worldwide; an opaqueness that resulted in the complicity of corporations in a number of malpractices. For instance, Global Witness’s pivotal report, A Crude Awakening, highlighted the role of the oil and banking industries in Angola’s 40-year war (Global Witness 1999). The release of this report was preceded by scholarly accounts of the ‘resource curse’ thesis, which sought to explain why resource abundance is not necessarily the magic bullet for economic growth (Auty 1993). The resource curse discussion posited the issue of ‘good governance’ institutions, or the lack thereof, as one of the main reasons why countries have not utilized natural resource endowment for development (Mehlum et al. 2006). More recently, a report by the Africa Progress Panel (2013) notes that corruption (that is, tax avoidance and other secret deals in the natural resource industry) costs Africa about £25 billion each year, an amount that exceeds what the continent receives annually in the form of aid or foreign direct investment. The reason why the global oil industry is particularly important to discussions of transparency is because scholars have argued that oil has peculiar characteristics that contribute to making it more susceptible to corruption, mismanagement and elite control (see Yates 1996; Le Billon 2005; Shaxson 2007; Okpanachi and Andrews 2012; Moisé 2020; Oppong 2020). Regarded as a ‘governance by disclosure’ initiative, the Extractive Industries Transparency Initiative (EITI) emerged as part of other global corporate social responsibility (CSR) norms designed to ensure that governments are reporting what they receive from companies, and companies are also reporting how much they pay to governments (Sovacool et al. 2016). To further expand on an earlier point, it is noteworthy that the EITI emerged from the confluence of four related trends dating back to the 1990s and early 2000s, as discussed by Van Alstine and Andrews (2016). The first of these trends was the growing evidence of lack of positive correlation between natural resource endowment and development outcomes. This phenomenon became theorized as the ‘resource curse’ or ‘paradox of plenty’ after scholars found sufficient empirical justification for this terminology (see Auty 1993). The second trend emerged when theorists and policymakers extended earlier discussions of the resource curse to capture it as a predominantly governance issue, one that is informed by the quality of political institutions instead of following mere conventional economic rationality. The third trend reflected growing international scrutiny of corporate practices that were hitherto taken for granted, and the emergence of several campaigns on issues of corruption, human rights abuses and environmental degradation (Dashwood 2012; Rich and Moberg 2015). The fourth 254

Oil, global governance and transparency norm proliferation  255 trend, related to the third, revealed a much broader questioning of multinational corporations, as several civil society campaigns highlighted child labour in Nike’s factories abroad, as well as Shell’s human rights allegations in Nigeria, which were the focus of Human Rights Watch’s (1999), The Price of Oil. The centrality of social forces in these four related trends discussed above partly explains why civil society remains core to the fabric of the EITI’s multistakeholder groups, which represent the primary forum in charge of implementing the initiative in specific local contexts. The other aspect of the explanation is the growing awareness of the state’s inability or unwillingness to individually monitor and regulate activities in the extractive industry. This means that although the EITI is a voluntary government-led initiative, its success relies on what Rich and Moberg (2015, p. 5) refer to as ‘the power of three’, which materializes in a tripartite architecture that brings governments, companies and civil society around the same table. This collaborative governance arrangement is deemed necessary because civil society is often suspicious of possible collusion between government and companies, whereas companies sometimes become wary of tactics by both government and civil society to undermine foreign investment and/or renegotiate existing contracts. The expectation is that these three parties would collectively hold each other accountable, with some onus placed on civil society as the group’s ‘watchdog’. Considering how obsessed regime theorists and institutionalists are with rule-making in international relations (IR) and its ability to prescribe and proscribe certain types of behaviour, it appears commendable that the initiative has become widespread over the span of nearly 20 years. Specifically, despite the challenges with the liberal order it presents, the prominence of the EITI reflects the power of ideas and institutions; in particular the role of norm entrepreneurs in shaping the adoption of international best practices. This explains why the EITI is considered by Haufler (2010) as a significant standard, representing a Swiss Army knife of policy tools to solve the diverse challenges faced by resource-based economies globally (see also Rich and Moberg 2015; Andrews 2016). In other words, the EITI has grown from an initiative mentioned in then United Kingdom (UK) Prime Minister Tony Blair’s speech at the World Summit on Sustainable Development in 2002 in Johannesburg, into an acclaimed global norm for transparency in the extractive industry. One of the most attractive features of the EITI earlier on was the participation of major oil companies such as ExxonMobil, Chevron and BP, which helped to harness the cooperation needed to boost uptake of the initiative (Bleischwitz 2014). As shown by Gillies (2010), reputational concerns of many leading actors (in particular, international oil companies and international financial institutions) around the absence of ‘best practices’ in the industry facilitated the rapid adoption of oil sector transparency as an international norm. The membership of the EITI has steadily increased since 2003, standing at 55 members at the beginning of 2021. For instance, while Azerbaijan, Niger and the United States (US) withdrew from the initiative in 2017, new members such as Mexico, Guyana and Suriname joined in the same year (EITI 2018). The Global Witness report A Crude Awakening called for oil companies in Angola to ‘publish what you pay’ as a way to counter corrupt activities. Today, Publish What You Pay (PWYP) is a conglomerate of transparency-oriented civil society organizations (Van Alstine and Andrews 2016). Established in 2002, the coalition has grown into a global movement with more than 700 members working to ensure transparency and accountability throughout the entire value chain of the extractive industry (PWYP 2018). All these developments in the civil

256  Handbook on oil and international relations society space underpin the growing momentum gained by actors that were not traditionally expected to be key players in international relations, also reflecting the shifts in and growing plurality of international rule-making. The timing of PWYP’s establishment in 2002 intersects with the EITI’s institutionalization in the early 2000s as well. In essence, PWYP’s objective of advocating for financial transparency in the extractive industry is directly connected to the EITI’s mission of establishing a global standard for the good governance of oil, gas and mineral resources. By connecting ongoing discussions around the oil‒transparency nexus with the EITI, this chapter seeks to explore the promise and pitfalls of global governance. This leads us to a deeper understanding of the complex set of factors and actors that shape understandings of power, agency, territoriality, sovereignty, legitimacy and international consensus-building that remain central elements in IR scholarship. The chapter is divided into three subsequent sections. The first section provides a brief theoretical discussion about how norms emerge and diffuse widely. The subsequent section represents the main crux of the analysis, which explores the geopolitics of oil and global norm proliferation with a focus on four regions of the world (that is, Africa, Latin America, Europe and North America). The final section provides some concluding remarks.

UNDERSTANDINGS OF NORM PROLIFERATION IN IR The theoretical persuasion around international norms and their diffusion or influence has been reinforced by the constructivist literature in IR. Scholars of this tradition envisaged the social theory of norms to ‘shake up’ the IR research agenda, while opening up new avenues for further inquiry (see Adler 1997; Finnemore and Sikkink 1998; Ruggie 2002; Onuf 2012). Two key questions of this research programme are: ‘why comply?’ and ‘what makes the world hang together?’ (Wiener 2003, p. 253). Both questions reflect the meaning of a norm as ‘intersubjective understandings that constitute actors’ interests and identities, and create expectations as well as prescribe what appropriate behaviour ought to be’ (Björkdahl 2002, p. 21). Embedded in the idea of norms being social facts, corporations, states and civil society groups are considered ‘social actors’ whose behaviours are influenced by an established logic of appropriateness (Hofferberth et al. 2011; see also Pouilot 2004). This logic emerges from a process often captured in a three-tier life cycle of norm diffusion that entails norm emergence, norm cascade and norm internalization (Finnemore and Sikkink 1998). The first stage of the norm life cycle – norm emergence – requires a norm entrepreneur or group of entrepreneurs to persuade other actors that the norm is worth endorsing. According to Gillies (2010), for instance, reputational concerns of leading actors in the oil industry led to the emergence of the EITI as a global norm. The idea then spreads and gains reputation via a variety of transnational advocacy networks (TANs), including groups of highly educated professionals and policy experts (an epistemic community). This socialization process therefore leads to the final stage where the norm becomes institutionalized as codified law or bureaucratic practice. At this stage, conformity to the established standards and rules is regarded as the most appropriate way of behaving. Overall, the social acceptance of a norm occurs in three different ways: ‘(a) leading countries serve as exemplars (follow-the-leader); (b) expert groups theorize the effects of a new policy, and thereby give policy makers rationales for adopting it; or (c) specialists make contingent arguments about a policy’s appropriate-

Oil, global governance and transparency norm proliferation  257 ness, defining it as right under certain circumstances’ (Dobbin et al. 2007, p. 452). The norm life cycle is understood to function in the following manner: ‘once diffusion reaches a tipping point, it often speeds up, and policies spread to polities for which they were not originally designed’ (Dobbin et al. 2007, p. 454). This characterization points to the implied logic of appropriateness, which provides part of the explanation for norm adoption. Admittedly, the norm diffusion literature has greatly advanced over the last decade (see Zwingel 2012; Bloomfield and Scott 2016; Zimmermann 2016; Niemann and Schillinger 2017; Zürn 2018; Andrews 2019; Deitelhoff and Zimmermann 2020), but the aforementioned general characterization still resonates with mainstream accounts of how norms such as EITI spread. For instance, the fact that the majority of the current adopters of this initiative are resource-rich economies located in the Global South, and that resource-based economies in the Global North such as Australia, Canada and the US are not considered ‘compliant countries’, suggests that global norm diffusion remains top-down to some extent. This opens up a more critical theoretical understanding of the global‒local nexus involved in norm diffusion. Experts, public intellectuals and authoritative professionals who theorized the existence of the ‘resource curse’ in the mid- to late 1990s and beyond (notably Richard Auty, Jeffrey Sachs, Andrew Warner, Terry Lynn Karl, Michael Ross and Paul Collier, among others) provided policymakers with the empirical rationale to adopt transparency norms. These experts are based at leading North American and European universities, and the EITI specifically notes on its website that these earlier academic writings on the resource curse contributed empirical evidence to justify the commencement of the initiative. This has two implications. Firstly, it reiterates the role of norm entrepreneurs and a critical mass of knowledgeable intellectuals and policymakers whose efforts have contributed to the institutionalization of the EITI as a global standard for transparency in the extractive industry. Secondly, it showcases an apparent provincialization of knowledge in the West, which presents a significant challenge for knowledge production and dissemination in the field of IR broadly (see Odoom and Andrews 2017); a challenge that goes beyond the material focus of this chapter on oil, while also reflecting the complexity of the positionality of oil within global governance. This understanding also yields to a more critical and post-colonial view that does not take the concept of knowledge for granted. The point is that ideas matter, and these ideas usually influence policy instruments and the broader geopolitics of oil and transparency norm diffusion discussed in the sections below. What the above discussion also points to in IR is the fetishism with the primacy of great power politics, and the claim of the norm diffusion process as a ‘neutral’ endeavour. However, what this fetishization does is to sideline the contributions and agency of ‘small’ states (usually seen as norm recipients) in adopting and localizing norms that benefit them, while rejecting those that are not useful to their contexts (Compaoré 2018a; Andrews and Oppong 2022). This presents both a challenge for IR and an opportunity for the field of study to re-imagine constructions and address critiques of norm proliferation that are primarily driven by Western countries.

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THE GEOPOLITICS OF OIL AND GLOBAL NORM PROLIFERATION Oil is indeed all about geopolitics, which points to the link between geographical space (that is, the place where oil is extracted) and political/economic power (see Bridge and Le Billon 2017). This is particularly so considering the global reliance on oil resources as a source of energy despite the growing shift towards renewable and more sustainable sources of energy. This geopolitical undertone explains the significance of international organizations such as the Organization of the Petroleum Exporting Countries (OPEC) as a congregation for oil politics, including the fierce contestations over the extraction of such highly priced resources and the distribution of resultant benefits (Crystal 1995; Sawyer 2004; Omotola 2009; Oppong 2020). Despite the contentious geopolitics that emphasizes the centrality of the state, ongoing trends in global governance point to the role of non-state actors and private authority as part of the new ‘global public domain’ in which the state is only one of the actors instead of the primary actor (Ruggie 2004). For instance, the EITI in particular is a normative initiative that was made possible by the activism of ‘social forces’ such as PWYP and other civil society groups that for decades have been advocating for greater transparency in the extractive industry. This decreasing centrality of the state presents an interesting challenge for how mainstream IR defines power, territoriality and sovereignty. Also, private authority is increasingly being regarded as part of the solution, which speaks to the complexity of power in IR and the growing trend in what may be deemed as ‘shared power’ in global governance (see Barnett and Duvall 2004). Within this context, the EITI is seen to present a unique opportunity to develop some intersubjective consensus or understanding around the need for transparency as a global norm (Haufler 2010; Van Alstine and Andrews 2016). An interesting element of this discussion is that oil still remains intricately linked to the state, its macroeconomics, its realpolitik and, in the case of rentier states (that is, those that rely on oil as a primary source of national income), oil represents a particular instrument of power both domestically and globally (Yates 1996; Bridge and Le Billon 2017). This points to a complex arena of geopolitics that involves powerful oil-rich states that are expected to participate in collaborative governance efforts that are meant to regulate their behaviour. Obviously, global governance has been shown to have its limitations due to the plethora of actors involved and the absence of a central authority that would ensure compliance and accountability, including the democratic deficit of such normative arrangements (see Andrews 2011; Scholte 2011; Zürn 2018; Lie 2021). However, this realist critique of global cooperation and interdependence is challenged by a neoliberal order that supports and actively propagates governance beyond the state (Wiener 2007; Weiss and Thakur 2010). In fact, some scholars believe that this form of non-state market-driven (NSMD) governance mechanism, through the attainment of political legitimacy, has the potential to be a strong regulatory instrument to embed global markets into the broader social fabric (Bernstein and Cashore 2007). An important question to ponder is: why do actors join the EITI? Regime theorists explain such behaviour as being propelled by a logic of consequences and/or a logic of appropriateness (Bernstein and Cashore 2007). The first logic is based on the understanding that it is, in fact, not in the best interest of resource-rich states to join the initiative, considering the consequences (for example, of naming and shaming, reduced global reputation for transparency, eventual ramifications for foreign investment, and so on). However, it is deemed as appropriate given the best practices that the initiative exposes adopters to, as well as the political

Oil, global governance and transparency norm proliferation  259 legitimacy provided through its multitiered governance structure. Along these lines, existing research shows that states join the EITI to maintain their global reputation as do-gooders, and perhaps continue to secure needed assistance from donors that require such institutional mechanisms to be in place as collateral for continuous governance improvements (Gillies 2010; David-Barrett and Okamura 2016). Others may join in order to assure diverse stakeholders (including civil society) of their efforts towards combating corruption and the embezzlement of state funds (Van Alstine 2014). In authoritarian regimes (for example, Azerbaijan, which is no longer an EITI member country), EITI implementation may proceed unabated while there are significant freedoms taken away from the same civil society actors who are supposed to serve as watchdogs on the EITI’s multistakeholder steering committees at the local level (Sovacool and Andrews 2015; Öge 2017). These points underscore the interesting politics that govern the global proliferation and implementation of the initiative, which showcases the complex intersection and fluidity of ideas around power, agency, territoriality, legitimacy and international consensus-building that are central to IR. The remainder of this section explores these complex intersections in the implementation of the EITI in Africa, Latin America, Europe and North America. The EITI in Africa The EITI has 24 member countries in Africa, which represents nearly half of the global total (EITI 2020). Some of the first governments to join the initiative and publish data in line with the EITI Standard were African, and there is still growing interest among other African countries to join. This outcome may signify the existence of a geographical and extensive norm diffusion mechanism in the region. Ghana and Nigeria were the first African adopters of the initiative in 2003 and 2004, respectively, and they were quickly followed by states such as Cameroon, Guinea, Mauritania and Niger (Öge 2016). One common feature among all the African countries that have currently adopted the EITI is that information about their extractive industries are becoming increasingly publicly available online through a variety of open data reporting systems, such as databases, portals, websites and other solutions (Bleischwitz 2014). For instance, Liberia and Sierra Leone are using a centralized register of licences that lists the largest mining companies in the country and links these companies to their licences and relevant payments. Guinea has an online contract portal with 71 published contracts, and Soguipami, the state-owned enterprise, is publishing audited financial statements on its website. The Nigeria Extractive Industries Transparency Initiative (NEITI) has been recognized as setting an exemplary standard for EITI audit reports, and Nigeria was named as the best EITI implementing country in 2013 (Van Alstine 2014). In particular, the NEITI Act of 2007 made NEITI an agency under the presidency and legally mandated reporting from the government and extractive companies. While corruption is still a major concern (Okpanachi and Andrews 2012; Andrews and Okpanachi 2020), the public disclosure of the government’s oil revenues in Nigeria has uncovered regulatory loopholes and discrepancies between what the government has actually received and what it should have received according to relevant laws and contracts (Asgill 2012). Ghana has also arguably done well with utilizing its EITI National Steering Committee, which is the governing arm of the Ghana Extractive Industries Transparency Initiative (GHEITI), as a multistakeholder group (MSG) to entrench principles of accountability in the extractive sector (Andrews 2016). The onset of oil production in 2010

260  Handbook on oil and international relations provided a further boost to such efforts, which culminated in the beneficial ownership requirement by the 2013 EITI Standard that seeks to uncover the ownership and control of corporate entities as a measure to track the flow of payments (Lemaître 2019). In Ghana, there is also the Public Interest Accountability Committee, which is a legally mandated institution tasked with facilitating the responsible management of oil revenues (Graham et al. 2019). The examples illustrated here point to a generally positive uptake of the EITI in Africa. For instance, all 24 African countries have committed to disclose the beneficial owners of all companies that apply for or participate in oil, gas or mining activities, with each national MSG developing detailed plans outlining a road map to achieve beneficial ownership transparency. They have also committed to disclose the names of any politically exposed persons with controlling interests in the sector, as a mechanism to monitor and curb illicit financial flows (Lemaître 2019). Yet, understanding the full impacts of the EITI across the continent is not a straightforward story, considering the historical and ongoing practices that still limit the potential of resource revenues to uplift and improve the living conditions of entire populations (see Van Alstine 2014; Rustad et al. 2017; Andrews and Okpanachi 2020; Oppong and Andrews 2020; Winanti and Hanif 2020). This is partly due to factors such as the limited role of civil society within the MSG framework and the lack of connection with local (community-level) needs and priorities. What this means is that the disclosure of payments does not directly result in significant changes in the livelihoods of people who may be directly impacted upon by extractive activities. This issue is symptomatic of global governance initiatives and is characterized by what I have referred to elsewhere as the ‘norm diffusion paradox’ (Andrews 2019). Some believe that the EITI can be characterized as a club of ‘poor’ African states, and an agent of Western influence due to the background and origin of the initiative (Munje 2014). This framing suggests a continuity of the imperialism that has been sustained via arrangements that hype international best practices. At least, the membership pattern of the EITI in Africa has shown the need for African governments to appease foreign investors and achieve ‘mock compliance’ of the transparency required (Öge 2016). Perhaps these are among the reasons why South Africa, for instance, has chosen to be excluded from the initiative despite its dominant role in the global extractive sector. Being part of BRICS (Brazil, Russia, India, China and South Africa), which is conceptualized in IR as an ‘emerging’ bloc, its failure to subscribe signals its growing power and agency vis-à-vis that of countries in the Global North who are equally not participating members of the initiative. While the same cannot be said for other resource-rich African countries that are not EITI members, the point may be stretched further to suggest that South Africa’s contestation is to prove that it is not merely a norm recipient that gets handed down orders from above (Compaoré 2018b; Andrews and Oppong 2022). Yet, the fact is that the logics of consequences and appropriateness that surround understandings of global governance and international rule-making generally have not particularly made a material difference in the country’s positionality or reputation among its global co-equals, given its own internal mechanisms for corporate responsibility and social accountability (Alorse and Andrews 2022). In other words, whatever the consequences are for not participating in this global rule-making initiative, they have not deterred South Africa from carving its own path; a path that decidedly counters the Western hegemony of cross-border diffusion of norms while (re)asserting non-Western agency.

Oil, global governance and transparency norm proliferation  261 The EITI in Latin America Latin America boasts many resource-rich states where export earnings from extractive commodities such as petroleum make up a significant portion of government earnings, estimated at over 50 per cent of government revenue in many cases (Mendoza 2016). Having joined in 2007, Peru was the first Latin American state to implement the EITI, and the Peruvian government was therefore the first to successfully administer the EITI Standard at the local level using the tripartite MSG (Aamot and Vieyra 2017). Colombia represents an interesting example where, though a state-owned oil and gas company (that is, Ecopetrol) is the largest extractive company in the country, the government joined the EITI in 2014 to signal a commitment to transparency and accountability. In 2013, Mexico passed a constitutional reform to allow, for the first time in almost a century, private investment in its oil and gas sector (Alpizar-Castro and Rodríguez-Monroy 2016). One of the central aims of the reforms was to improve transparency in the sector. From awarding licences, to collecting revenues from the companies, to the use of those revenues, the reforms sought to embed transparency in government practices and systems. Since 2016, Mexico has conducted a series of bidding rounds to allocate oil and gas blocks and, by joining the EITI in 2017, it is expected that best practices for transparency will be upheld. For instance, the 2018 EITI report describes the payments and obligations from all the contracts and allocations in the oil industry in the country (EITI 2018). Despite the relative lack of empirical research on EITI implementation in Latin America, emerging evidence suggests that the initiative faces similar challenges to those in Africa, including issues such as weak involvement of civil society, and lack of correlation between EITI implementation and reduced corruption (López-Cazar et al. 2020). Another issue is that there is a significant underrepresentation of Latin America in the initiative broadly, especially considering the major contribution of the extractive industry to respective economies in the region. Yet, as of February 2021, two states in this region (Guatemala and Honduras) were categorized as either making inadequate progress towards meeting the EITI Standard or suspended. Mendoza (2016) discusses three reasons for why the EITI has not seen widespread adoption in Latin America. The first reason is an issue of perception around the role of the EITI in perpetuating the stereotype of global governance for the very poor, or at least those that are poorly governed. This is informed by the resource curse scholarship that played an important role in the establishment of the EITI, a dominant thinking that primarily conceptualized the lack of correlation between resource abundance and economic development as a symptom of bad institutions or governance (Auty 1993; see also Andrews and Siakwah 2021). As shown in the previous section, the overrepresentation of African states reflects this stereotypical underpinning as a norm developed by leading countries for the ‘Third World’. By not endorsing or adopting the EITI, Latin American states are pointing to their established institutions that are working for them, while affirming their aspirations to maintain the reputation of high- or middle-income economies. As the case of South Africa shows, this behaviour also challenges understandings of why norms become widely accepted. The second reason, which is related to the first, is political ideology. Latin America has a number of populist regimes in states such as Bolivia, Ecuador, Nicaragua and Venezuela that maintain strong resistance to both international companies and international organizations (Mendoza 2016). There has been a historical opposition to Western neoliberal ideology that promotes globalization and the proliferation of foreign investment and normative

262  Handbook on oil and international relations arrangements (Silva 2009; Ruckert et al. 2017). Hegemony is a central concept in IR, at least according to some interpretations of how the international system is organized and sustained (see Rupert 1995; Robinson 2005; Hopf 2013). Resistance to global governance norms such as the EITI can be conceptualized as representing the anti-Western and counter-hegemonic stance of some states in this region, which points to a blatant defiance of so-called logics of consequences and appropriateness that underpin international rule-making. A particularly noteworthy characteristic in this context is how the state coalesces with social movements in pursuing such counter-hegemonic (and somewhat post-neoliberal) objectives. This also presents a challenge for mainstream understandings of how, through what is conceptualized as the ‘boomerang effect’ (Keck and Sikkink 2014), social movements are theorized to organize in tandem with transnational advocacy networks to put pressure on states for proper transparency and accountability. The third reason discussed by Mendoza (2016) is relevance. The EITI, like many ‘soft law’ global norms for the extractive industry, pays negligible attention to the issues that are of concern to activist groups and communities, such as environmental protection, community rights and local-level social transformation (Compaoré and Andrews 2022). Thus, considering the fact that contestations and protests over these crucial issues have been prevalent in this region (Carruthers 2008; Zaremberg and Wong 2018), it can be expected that the rationale for adopting an international standard that neglects them cannot be justified. The important question is why the norm should matter for the specific causes that advocacy groups (which have been EITI allies in other parts of the world) are fighting in the context of Latin America. The EITI, like global governance itself, is obviously not a solution to everything. The challenge, however, is making it relevant to a plethora of issues that are of importance to actors who are expected to subscribe to the norm and possibly become propagators subsequently. The EITI in Europe and North America The EITI can be regarded as having European roots, considering the usual reference to Tony Blair’s 2002 speech at the World Summit on Sustainable Development in Johannesburg as a pivotal moment in the global policy agenda for transparency in the extractive industry, followed by the EITI’s secretariat being subsequently established in Norway (Van Alstine and Andrews 2016). Yet, the UK, the Netherlands, Germany, Ukraine and Norway make up the only member states from Europe; states such as Denmark, Sweden, Finland, Belgium, France and Australia were only listed as supporting countries as of February 2021. There is also strong support from the European Union (EU), which in 2013 adopted a new Accounting Directive, similar to the EITI, that requires project-by-project reporting of revenue for all extractive companies based or listed in the EU. North America, however, is not represented in terms of EITI candidacy, although Canada and the US are listed as supporting countries. The few European members of the EITI (for example, Norway and Germany) are regarded as international examples of proper resource management. This reputation has been promoted via the resource curse literature that depicts these states as not being the typical ‘poster children’ for corruption, mismanagement and weak systems of accountability (Russell 2014). Thus, these states have made use of their strong reputation for transparency to promote the EITI as a tool for improved resource wealth management practices throughout the world. For instance, Norway was the first Organisation for Economic Co-operation and Development (OECD) state to implement the initiative. Designated as ‘EITI Compliant’ since March 2011,

Oil, global governance and transparency norm proliferation  263 Norway has submitted reports annually since 2009. Obviously, Norway’s leadership in establishing transparency resource wealth management practices prior to the establishment of the EITI provided sufficient justification for the location of the initiative’s international secretariat in Oslo. Although at least five European states are implementing members of the EITI, there are questions to be raised around why the majority of resource-rich states in that region and North America are excluded, and what that says about the state of global governance as something to be handed down to ‘others’ who are often not regarded as orchestrators of these initiatives. To reiterate an earlier point, discussions around the resource curse which informed the need to establish a normative arrangement such as the EITI were initially limited to the Global South, even though several of the challenges faced by resource-rich communities across the world are quite similar (Goldberg et al. 2008; Parlee 2015). The fact that many of the states in this region are not implementing the EITI questions the ‘follow-the-leader’ assertions around global regimes and the diffusion of international norms. For example, even the Norwegian government did not make an explicit commitment to implement the EITI until late 2007, possibly after it knew it was going to host the international headquarters, and it only became a ‘designated compliant country’ in early 2011, after states such as Ghana, Liberia and Mongolia had become compliant with the initiative. Whereas the EITI implementation in Europe has been described as being somewhat symbolic, the EITI has not been able to attract major producers in the oil and gas industry such as Russia, Saudi Arabia, Iran and China, which collectively produce about a third of the world’s hydrocarbon output (Öge 2016). Additionally, it is notable that several Organization of the Petroleum Exporting Countries (OPEC) member states such as Equatorial Guinea, Gabon, Kuwait and the United Arab Emirates are not part of the EITI. Similar geopolitical issues around ideology, relevance and counter-hegemony that were discussed in the previous section may account for why some of these powerful oil-rich states have not been convinced to participate in the initiative. However, the absence of some of these states indicates that the promises of collaborative or consensual international governance are not always as material as expected, and what we imagine as a ‘global standard’ may not really be global enough. The case of China is particularly curious when we consider its growing presence in the international oil arena, and hegemonic tendencies in the economic sphere at least (see Andrews-Speed and Dannreuther 2011). In essence, China is what may be regarded as a ‘wild card’ in global governance, since its international ambition (for example, its quest to maintain selective leadership in certain multilateral arrangements) often does not correspond with its characterization as a ‘revisionist’ state that seeks to overturn or at least challenge the prevailing international liberal order (see Summers 2016; Hameiri and Jones 2018). The fact that several key resource-rich states in Europe and North America are not implementing the EITI raises questions around the power of global interdependence and consensus-building about an important issue such as transparency. To be specific, the ‘intersubjective understandings’ or consensus that underpins normative mechanisms (Björkdahl 2002) is undercut if actors that are seen as leaders are essentially observers. One can argue that there are already internal mechanisms in respective countries that seek to achieve the same level of transparency as the EITI expects. Despite this evidence, not signing on to what is arguably the leading global standard for transparency in the extractive industry weakens the power that liberal IR scholars ascribe to interdependence or international consensus-building. In the case of Canada, there is the Extractive Sector Transparency Measures Act (ESTMA)

264  Handbook on oil and international relations of 2014, which requires mining companies and oil and gas producers listed on the Canadian stock exchanges to disclose payments made to governments (Linder and Marbuah 2019). The ESTMA is comparable to transparency directives in the EU and US, and does make Canada generally compliant with EITI provisions as it follows the mantra of ‘publish what you pay’. In fact, ESTMA’s reporting requirements are stringent and the Act is therefore considered to be an improvement upon EITI’s reporting standards, though both protocols have similar issues with lack of reporting oversight and the limited role of civil society (Ciupa and Zalik 2020). The question that is worth pondering here is: why the need for a global standard for transparency, and why should it be considered legitimate if ‘leading’ actors that should buy in are rather focused on implementing domestic versions of the same standard? This behaviour presents a double standard in international relations, where states present themselves as global leaders and yet fail to commit to specific international initiatives that demonstrate such leadership. The same can be said for Australia, which announced its intention to apply for EITI membership in May 2016 and yet is still not a member as of June 2022. Moreover, the US, which has historically been an entrepreneur of all sorts of governance norms, joined the EITI in 2014 but withdrew from the initiative in 2017. Domestically, there is the Foreign Corrupt Practices Act of 1977, among other legislative measures to deal with corruption in the extractive sector (Russell 2014). For example, the intent behind sections 1502 and 1504 of the Dodd‒Frank Wall Street Reform and Consumer Protection Act of 2010 can also be likened to the core purpose of the EITI (Linder and Marbuah 2019). The fact is, however, that many of the states that are EITI implementing members also have domestic measures to curb corruption and improve transparency. By not joining, the traditional role expected of major powers such as the US becomes limited, including its moral authority or legitimacy to use implementation of the EITI as a true measure of transparency or good governance in its diplomatic relations and foreign assistance practices.

CONCLUSION The fact that a global norm for transparency such as the EITI has thrived over its nearly two-decade history presents an interesting challenge for IR in terms of how earlier theorists predicted international politics to be driven by rational choice, hegemonic tendencies and fierce power politics (see Keohane 2005). In contrast, the EITI points to the growth of collaborative governance that goes beyond the state as a primary source of power and agency, further directing us to overcome the fetishization of the state as a central unit of analysis in IR. While discussions around oil often display the permanence of hard-core geopolitics or realpolitik (Bridge and Le Billon 2017), we are also made to see the presence of a complex assemblage of actors in the international arena (for example, private authority, civil society groups, international organizations) as signalling the shifting trends in governance, including considerations of interdependence, territoriality and sovereignty. To conclude, there are two outstanding questions to ponder as we reflect on oil within the context of global transparency governance. First, does transparency matter? Second, does global governance make a difference? The way these questions are answered has significant implications for prevailing IR approaches to governance. These questions can also be understood by reflecting on the role that both the logic of consequences and the logic of appropriateness play in the proliferation of NSMD global governance regimes such as the EITI (see

Oil, global governance and transparency norm proliferation  265 Bernstein and Cashore 2007). An example of the logic of consequences is being removed from the initiative, which would suggest that a member has repeatedly defaulted in living up to the standard, and has not submitted annual reports declaring payments and receipts; or the categorization of how countries are progressing towards meeting the EITI Standard as ‘satisfactory progress’ (for example, Timor-Leste and Norway), ‘meaningful progress’ (for example, Afghanistan and the UK), ‘inadequate progress/suspended’ (for example, Honduras and Guatemala) and ‘suspended due to political instability’ (for example, Myanmar and Central African Republic). Even within the context of what is seen as a ‘soft law’ mechanism, these action-focused consequential measures resonate with a general understanding around what is appropriate behaviour for EITI member states, although contextual interpretations of appropriateness can be quite varied and contested, which speaks to the dual and paradoxical quality of international norms (see Wiener 2007; Bloomfield and Scott 2016; Zimmermann 2016; Niemann and Schillinger 2017; Zürn 2018; Andrews 2019). In terms of whether transparency matters, it has been shown that despite the effect of the EITI on certain operational practices in the extractive industry, it has not facilitated significant changes in terms of how resources are governed (Sovacool and Andrews 2015; Sovacool et al. 2016). Corruption in particular, which is one of the main issues in the oil industry that the EITI seeks to tackle, has not been eradicated after nearly two decades of resource transparency measures via the EITI (Ostrowski 2020). This is because transparency on its own is never enough in capturing the complex set of factors, issues and actors involved in determining the beneficial outcomes of resource extraction (Andrews and Okpanachi 2020; Andrews and Siakwah 2021). Also, a recent article in The Extractive Industries and Society, titled ‘Beyond transparency: rethinking the government of extraction’, further shows how a preoccupation with transparency overshadows a complete account of the full cost of extraction, including the socio-economic and environmental injustice that resource-rich communities encounter on a daily basis (Zalik and Osuoka 2020; see also Andrews et al. 2021). The argument, therefore, is that transparency only matters to the point where it is not considered in isolation from intertwined (in)actions, structures, systems, histories and the ongoing geopolitics of oil management and governance. In exploring the question of whether global governance matters, the categorization of power along the lines of big and small states is instructive here. The EITI presents an interesting example of how the behaviours associated with these categories are in constant flux. For instance, the US, which has historically been seen to perpetuate such normative arrangements for good governance and transparency, decided to leave the initiative, whereas ‘medium’ states such as South Africa and ‘small’ states such as Bolivia and Nicaragua have never joined in the first place. In other words, the leadership role that the US may be expected to perform is relinquished, while some small states are behaving in ways that lead us to examine their purported subservient global power and agency with much complexity. As noted previously, such behaviour poses a challenge for IR but also presents us with new and multifaceted ways of understanding the power and pitfalls of international regimes and collaborative governance involving, or even beyond, the state.

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Oil, global governance and transparency norm proliferation  269 Shaxson, N. (2007), ‘Oil, corruption and the resource curse’, International Affairs, 83(6), 1123–1140. Silva, E. (2009), Challenging Neoliberalism in Latin America, Cambridge: Cambridge University Press. Sovacool, B.K. and N. Andrews (2015), ‘Does transparency matter: evaluating the governance impacts of the Extractive Industries Transparency Initiative (EITI) in Azerbaijan and Liberia’, Resources Policy, 45, 183–192. Sovacool, B.K., G. Walter, Y. Van de Graaf and N. Andrews (2016), ‘Energy governance, transnational rules, and the resource curse: exploring the effectiveness of the Extractive Industries Transparency Initiative (EITI)’, World Development, 83, 179–192. Summers, T. (2016), ‘Thinking inside the box: China and global/regional governance’, Rising Powers Quarterly, 1(1), 23–31. Van Alstine, J. (2014), ‘Transparency in resource governance: the pitfalls and potential of “new oil” in Sub-Saharan Africa’, Global Environmental Politics, 14(1), 20–39. Van Alstine, J. and N. Andrews (2016), ‘Corporations, civil society and disclosure: a case study of the EITI’, in T. Van de Graaf, B.K. Sovacool, A. Ghosh, F. Kern and M.T. Klare (eds), Palgrave Handbook of the International Political Economy of Energy, London: Palgrave Macmillan, pp. 137–152. Weiss, T.G. and R. Thakur (2010), Global Governance and the UN: An Unfinished Journey, Bloomington and Indianapolis, IN: Indiana University Press. Wiener, A. (2003), ‘Constructivism: the limits of bridging gaps’, Journal of International Relations and Development, 6(3), 252–275. Wiener, A. (2007), ‘The dual quality of norms and governance beyond the state: sociological and normative approaches to “interaction”’, Critical Review of Social and Political Philosophy, 10(1), 47–69. Winanti, P.S. and H. Hanif (2020), ‘When global norms meet local politics: localising transparency in extractive industries governance’, Environmental Policy and Governance, 30(5), 263–275. Yates, D.A. (1996), The Rentier State in Africa: Oil Rent Dependency and Neocolonialism in the Republic of Gabon, Trenton, NJ, USA and Asmara, Eritrea: Africa World Press. Zalik, A. and I.A. Osuoka (2020), ‘Beyond transparency: a consideration of extraction’s full costs’, Extractive Industries and Society, 7(3), 781–785. Zaremberg, G. and M.T. Wong (2018), ‘Participation on the edge: prior consultation and extractivism in Latin America’, Journal of Politics in Latin America, 10(3), 29–58. Zimmermann, L. (2016), ‘Same same or different? Norm diffusion between resistance, compliance, and localization in post-conflict states’, International Studies Perspectives, 17(1), 98–115. Zürn, M. (2018), A Theory of Global Governance: Authority, Legitimacy, and Contestation, Oxford: Oxford University Press. Zwingel, S. (2012), ‘How do norms travel? Theorizing international women’s rights in transnational perspective’, International Studies Quarterly, 56(1), 115–129.

18. Oil and subsidies Subhes C. Bhattacharyya

INTRODUCTION Subsidies exist when prices are below the cost-reflective price that would exist in a market in the absence of any distortion or market failures. Subsidies to producers help to lower the cost of production, while subsidies to consumers lower the prices faced by them. Subsidies for petroleum products are pervasive in both oil-importing and oil-exporting countries, as well as in developing and developed countries. Subsidies have emerged as a major theme in international discussions and negotiations aimed at promoting sustainable development. Subsidies normally have a number of perverse consequences: they send wrong price signals to consumers and promote overconsumption, often inefficiently; they divert scarce financial resources at the cost of depriving other needs; they hinder growth of alternatives and act as a trade barrier (Moerenhout and Irschlinger 2020). Oil product prices vary widely across countries. A comparison of common products such as gasoline and diesel prices shows this clearly (see Figure 18.1). Prices in Venezuela, Iran and Angola are on the lowest end, whereas countries such as Norway, the Central African Republic and Hong Kong are on the highest end of the range. According to IEA (2020), global oil subsidies followed a cyclic pattern between 2010 and 2019 (see Figure 18.2). The lowest subsidy was around US$100 billion in 2016 and the highest was around US$300 billion in 2012. In recent times, the subsidy has fallen significantly. Subsidies have followed the crude oil price trend closely (see Figure 18.2). Between between 2015 and 2019, episodes of low oil prices contributed to lower subsidies, which in turn also led to renewed calls for subsidy removal. Oil subsidies in developed countries have often supported particular fuels such as diesel. The dieselisation of the transport fleet in Europe is the perverse outcome of this differential pricing policy. On the other hand, subsidies in developing countries have been used to support lower-income groups, but other consumers often pay higher taxes to compensate for the revenue losses. Some developing countries also provide much more extensive subsidies, often across the board, but being non-targeted, the effectiveness of the subsidies is questionable, as the benefits do not reach the desired groups. This chapter provides an analysis of oil subsidies in oil-exporting and oil-importing countries. The subsidy mechanism is first presented, which is followed by a comparative analysis of subsidy estimation based on two recent studies. The implications of subsidies and the effect of subsidy removal are considered in the following section. Finally, concluding remarks are presented. The main takeaway points from this analysis are as follows: the estimation of petroleum subsidy is not easy, due to the presence of multiple pricing objectives and the possibility of using different baselines for comparison purposes. Any attempt to remove subsidies completely has the potential to generate welfare loss for the poorer section of the population, which in turn could lead to a consequent potential return to traditional fuel wood use for meeting energy needs by the poor. Any subsidy removal programmes need to take care of such regressive outcomes. 270

Oil and subsidies  271

Source: 

Data from https://​www​.globalpetrolprices​.com.

Figure 18.1

Variation in gasoline and diesel prices

Source:  Data from IEA (2020) and BP (2020).

Figure 18.2

Global oil subsidies

272  Handbook on oil and international relations Table 18.1

Direct and indirect subsidies in the oil sector

Participants

Subsidies

 

Direct

Indirect

Producers

–

Low interest finance; Tax breaks; Reduced duties for imported equipment

Refineries

Subsidised crude oil;

Low interest finance;

Financial subsidies for revenue losses

Tax breaks; Reduced duties for imported equipment; Accelerated depreciation

Marketing companies

Government subsidies to public companies Low-interest finance

Consumers

Subsidies for targeted fuels;

Subsidies on appliances (such as LPG cooker);

Promote certain fuels (such as LPG)

Preferential tax treatment for certain goods

Source:  Bhattacharyya (1995).

SUBSIDY MECHANISM IN THE PETROLEUM SECTOR Oil subsidies target two main groups in the oil sector: producers and consumers. On the supply side, three main participants, namely the producers of crude oil (or companies that import crude oil and oil products), the refineries and the marketing companies, benefit from producer subsidies. On the consumer side, subsidies target consumers from different sectors, such as the commercial, residential, agricultural, industrial and transport sectors. The purposes of subsidies for these groups (producers and consumers) are different, and the consequences tend to be different as well. Moreover, subsidies can be direct or indirect. This is true for both groups. Direct subsidies refer to direct payments in the case of companies, or direct beneficiaries of a subsidised product in the case of consumers. Cheap local crude oil, for example, is a direct subsidy for refineries. Similarly, kerosene in many countries is a direct subsidy for its consumers. Indirect subsidies can take different forms and may go beyond the petroleum sector. Low-interest finance is the widespread indirect subsidy for many public companies in many countries. For consumers this may include, for example, subsidies on equipment or appliances designed to change consumption patterns. In Table 18.l, some direct and indirect subsidies for different groups of participants are identified. However, it is quite difficult to take into account all these indirect factors, due to data problems. The objectives for direct and indirect subsidies for each group can be quite different. For example, direct subsidies for consumers normally target the underprivileged sections of the population. Subsidised oil products for lifeline support and for reduction of wood fuel use are quite common in developing countries. Subsidies have also been offered to promote new products in the market: for example, liquefied petroleum gas enjoyed subsidies when it was introduced, but subsequently it proved difficult to remove them due to political reasons. For producers, direct subsidies are meant to either compensate for losses in providing social services or to keep the producer solvent. Other objectives include protecting local industry (for example, the fertiliser industry in India) and helping agriculture, which contributes substantially to the gross domestic product of many developing countries.

Oil and subsidies  273 Indirect subsidies, on the other hand, result from a different perspective. Low-interest finance is offered to state oil companies based on the justification that these companies deal with public goods, which supports the case for a differential interest rate compared to private companies. Subsidy programmes can be designed in different ways: common approaches of in-kind subsidies include price reduction systems, gifts and voucher schemes, and all-or-nothing systems (where the recipient must either accept the offered package or reject it) (Rosenthal 1983). The choice of any system depends on the objective of the policymaker. For example, if the objective is to ensure a minimum level of consumption of a commodity, subsidies acting through the price mechanism are preferable to direct cash transfers. If, however, the objective is to improve general welfare, purchasing power transfers are better than price reductions. Moreover, there seems to be a conflict of interest between donor and recipients. Taxpayers wishing to minimise the cost of assuring a target level of consumption of a particular good by recipients will prefer the minimum-cost all-or-nothing subsidy to the price reduction subsidy. The price reduction subsidy, in turn, is superior to cash grants. On the other hand, recipients will prefer cash grants to a price reduction subsidy for a given total subsidy cost to the taxpayer, and they will prefer a price reduction subsidy to the minimum-cost all-or-nothing scheme. This suggests that choice of any system can always be subject to criticism.

OIL PRICING AND SUBSIDY ESTIMATION Pricing remains a major instrument of the overall energy policy of any country, and this is used to accomplish different objectives such as security of energy supply, demand management and internalisation of environmental externalities. However, oil has been used as a major source of revenue for the treasury in many countries. For example, 49 per cent of the composite price of every barrel of oil in Organisation for Economic Co-operation and Development (OECD) countries was collected as tax (OPEC 2019). Oil being a tradable commodity, domestic prices are directly influenced by the prevailing conditions in the international market. In addition, macroeconomic and sociopolitical conditions of a given country such as inflationary pressure, energy poverty or poor income distribution could also justify government interventions in the pricing system. Therefore, any analysis of oil subsidies requires a reference price against which the market prices could be compared, but the theoretical basis is not straightforward. For example, the opportunity cost of petroleum can be considered as the basis for domestic pricing of oil. However, the opportunity cost varies depending on the country’s level of indigenous supply. For a self-sufficient country with limited potential for export, the marginal cost of supply forms the basis of domestic pricing. On the other hand, the opportunity cost is the appropriate border price for the exporters and importers. For exporters, the free on board (FOB) price prevailing at any time is relevant, whereas the cost, insurance, freight (CIF) price is the relevant basis for any importer. However, several issues arise when this principle is applied to different parts of the petroleum value chain. Normally, the freight charges are higher for petroleum products than for crude oil, and there is even variation by different types of products. Countries with indigenous refining capacity import crude oil, rather than products, although there could be some product trading at the margin. Accordingly, pricing based on the border price inflates the profits of oil refineries if they are efficient, and penalises them when they operate at a lower efficiency

274  Handbook on oil and international relations compared to the international refineries. Aligning the local price with the border price also introduces the same price volatility as in the international market, which can make pricing less acceptable to consumers. This can also fuel inflationary pressures, thereby affecting the economic performance of the country. Pricing of petroleum products involves the allocation of joint costs among different products. Only the total cost can at best be related to the total value of the products. The total value of the products, however, depends on the demand pattern in a given market. In order to maximise the value and minimise the imbalances in demand, the relative product price structure has to be aligned with the demand pattern. This is not just a matter of reflecting the opportunity cost of the resource to society. And the issue of social welfare cannot be neglected. The broader issues of welfare, however, involve a range of adjustments to the prices, many of which remain subjective and less quantified, particularly for developing countries. These include the following. First, security of supply considerations. Although benchmarking the oil price to international markets is presumed to indicate the resource use cost, the real cost of security of supply may not be reflected by the international markets. There always exists a risk of a deliberate attempt to interrupt supply, and the impact of such interruptions in terms of inflation, balance of payments and employment is not reflected in the border prices. Some of the costs related to supply security may be external to a country and could be borne by others globally. Similarly, some other measures, such as cost of maintaining a strategic stock, may be borne by the general budget and not attributed to oil users. There could also be a deliberate attempt to support local industries and discourage dependence on international supply through charges on petroleum products and through direct subsidies to other domestic products or supplies. Second, environmental externalities. Oil production, refining and consumption lead to environmental damage and contribute to global warming. A part of the costs related to the environmental and climate-related damage is borne by society and is not reflected in the pricing of the product. These externalities related to production and consumption should be internalised, and the true cost of oil consumption faced by the producers or consumers would thus be higher than the border price. However, the valuation of environmental externalities of oil products is fraught with many difficulties due to, among others, the severe limitations of information specifically related to dose-response relationships, the spatial distribution of atmospheric pollution and the lack of transferability of data from one location to another. As a result, studies on subsidies rely on generalised information based on developed countries, but there remains a significant risk of misrepresenting the external costs as a result. Further, the subsidy issue becomes complex when two related goods need different treatments. For example, public transport is considered to be a substitute of private transport and both depend on oil products. As the pollution intensity of public transport is less than private transport, the public transport could be subsidised to promote a demand shift. However, differential internalisation of the externality of the same fuel is difficult in practice. Another related issue is the dilemma of internalising externalities of oil products that could otherwise be used to support access to clean energies in place of traditional wood fuel. A case in point is kerosene, which is widely used for lighting and cooking in many rural areas. Since traditional energy sources are acquired largely through non-monetary transactions, they tend to be cheaper than kerosene, but they impose large social and private costs that are often neglected in most analyses. Charging the true price of kerosene may lead to reduced consumption, improvement in refinery balance, reduction in fuel imports and an improvement in the

Oil and subsidies  275 balance of payments in many countries. But the cost of continued reliance on wood fuel can be far greater than the benefits derived from kerosene subsidy removal. Third, equity considerations can hardly be ignored by any democratic government. Policies that improve economic efficiency generally have distributional impacts. The main concern for equity derives from the fact that poorer households spend proportionately higher amounts on oil than their richer counterparts, and are adversely affected by a price increase. Minimising the adverse effects on the poorer households is a major social consideration for providing subsidies to oil products. However, targeting the proper sections of the population and reaching them, while avoiding unintended consequences, and providing subsidies at low cost remain difficult in practice. Fourth, externalities related to transport. Three types of external costs exist in the transport sector. The first category involves those experienced by concurrent road users, but decisions on activity levels do not take this cost into account. Road accidents, road damage and congestion fall into this category. The second category concerns the interaction between transport investment, transport demand and land use. The third category is environmental externalities, which has been considered previously. Road users, particularly heavy vehicles, cause damage to road infrastructure and the damage is proportional to the square of axle power. Accordingly, the cost of repair and maintenance of the road network represents the cost of road damage. The cost of congestion is related to the cost of infrastructure development. Congestion costs vary widely across different roads and at different times of the day. Each vehicle will support this congestion cost on the basis of equivalent vehicle kilometres. Similarly, the costs related to road accidents can also be considered as an externality arising out of fuel consumption. These costs arise from deaths due to road accidents, treatments for injuries of different types (minor, temporary and permanent) and other administrative costs (policing, legal and similar costs). However, the attribution of accident-related costs to different fuels (gasoline, diesel and liquefied petroleum gas, LPG) remains problematic. Fifth, macroeconomic concerns. With oil being an intermediate input for different productive activities in any economy, and a final consumer good, a rise in its price increases the cost of production and increases the expenses of the consumers. In addition, the cost of imports rises and this affects the balance of payments situation, particularly in developing countries. These macroeconomic pressures lead to an inflationary spiral and can even affect employment opportunities and contribute to economic recession. Based on the above discussion, estimation of oil subsidies depends on a number of factors. Depending on the application of the fuel and where it is used, the elements that need to be considered will vary. The valuation of some subsidies can be location-specific and can even be time-dependent (see Table 18.2). Accordingly, it is often difficult to estimate the subsidies at an aggregated level. This needs to be kept in mind for the study of energy subsidy.

COMPARISON OF RECENT OIL SUBSIDY ESTIMATES Two recent studies by international agencies, the International Energy Agency (IEA 2020) and International Monetary Fund (IMF 2018), have provided estimates of oil subsidies. Here a comparative picture is presented to highlight the importance of subsidy estimation.

276  Handbook on oil and international relations Table 18.2

Different factors affecting energy subsidies

Relevant factors

Gasoline

Diesel

LPG for

Fuel oil for

Kerosene for

LPG for

transport

industry

cooking and

cooking

lighting Border price

√

√

√

√

√

√

Pollution externalities

√

√

√

√

√

√

Road damage costs

 

√

 

 

 

 

Road accident costs

√

 

 

 

 

 

Congestion costs

√

√

√

√

√

√

√

Demand management

√

√

√

√

√

√

Macroeconomic

√

√

 

√

√

√

Equity issues

considerations Security of supply

√

√

√

√

√

√

Deforestation

 

 

 

 

√

√

Source: Author.

Both the studies have presented a global estimation of energy subsidies, including oil subsidies. However, due to differences in the methodology and coverage, they offer different estimates. For example, the IMF (2018) estimated that the oil subsidies for 2017 amounted to US$2068 billion, whereas acording to the IEA (2020) the estimate is US$146 billion, or just 7 per cent of the IMF estimate (see Table 18.3). The IMF estimate includes a tax on energy at the same level as other goods and a charge to internalise the externalities, whereas the IEA estimate is based on the price-gap approach, which compares the average end user price with the full cost of supply, but this does not include the externality component. Table 18.3

Oil subsidy estimates for 2017 (billion USD)

Regions Advanced economies

IMF (2018)

IEA (2020)

763.7

 Not covered

Commonwealth of Independent States (CIS)

199.49

4.23

Developing Asia

622.77

51.36

38.35

 Not covered

Developing Europe Latin America and Caribbean

148.48

14.76

Middle East, North Africa

268.63

74.32

SS Africa Global

26.93

1.20

2068.35

145.87

Note:  IMF estimate relates to the post-tax subsidies. Source:  Compiled from IEA (2020) and IMF (2018).

In terms of post-tax subsidies estimated by the IMF, seven major providers of subsidised petroleum products accounted for almost 67 per cent of the total subsidies (see Table 18.4). The top seven providers from the IEA study, on the other hand, accounted for 78 per cent of the subsidies. However, the ranking of countries in terms of annual volume of subsidy is clearly different in the two studies. For example, in terms of the IMF study, China and the United States (US) were major oil subsidy providers in 2017. Saudi Arabia and Iran are the top two oil subsidy providers as per (IEA 2020). Table 18.4 captures these differences clearly.

Oil and subsidies  277 Table 18.4

Major providers of oil subsidies in 2017

Country

IMF (2018)  

Country

in billion USD

IEA (2020) in billion USD

China

425.98  

Saudi Arabia

24.75

US

423.26  

Iran

20.63

Russia

170.2  

India

18.47

Japan

122.11  

China

18.07

Indonesia

89.57  

Egypt

12.06

Iran

85.15  

Indonesia

11.11

Saudi Arabia

80.38  

Venezuela

Total

1396.65  

Total

% of total

67.52%  

% of total

8.59 113.68 77.93%

Source:  Based on data from IMF (2018) and IEA (2020).

It is important to note that it is not possible to reconcile these estimates with financial subsidy estimates. This is because financial estimates are based on actual transactions, and accordingly, external costs not covered through taxes or charges and will not appear in such calculations. The financial calculations also do not rely on opportunity costs: only actual costs paid by the producers or consumers would be considered. IEA (2020) also provides estimates of subsidies provided for transport fuels. In 2017, transport fuel subsidies accounted for 52 per cent of the total oil subsidies covered in this report. This suggests that although transport fuels are generally widely taxed for revenue purposes, many countries continued to subsidise them. Figure 18.3 presents the trend in transport fuel subsidies in selected countries (which accounted for 72 per cent of transport fuel subsidies).

Source:  Data from IEA (2020).

Figure 18.3

Trend of transport fuel subsidies in selected countries

278  Handbook on oil and international relations Transport fuel subsidies have followed the same pattern as oil subsidies and crude oil prices (as shown in Figures 18.2 and 18.1 respectively). The transport fuel subsidies peaked in 2012 and reached their lowest level in 2016. But the trend has reversed, and a lower peak was reached in 2018. Indonesia, Iran and Venezuela are still continuing with significant amounts of transport subsidies in recent times.

IMPLICATIONS OF SUBSIDIES AND POSSIBLE EFFECTS OF SUBSIDY REMOVAL Subsidisation of oil products introduces several economic, environmental, trade and societal implications. This section briefly presents some of the these. Effects of Producer and Consumer Subsidies Producer subsidies have been used to maintain the competitiveness of domestic industries and to support expansion of market share in the international sphere (Moerenhout and Irschlinger, 2020). Crude oil subsidy directly reduces the cost of supply and this cost advantage is passed on to domestic refineries that reduce the cost of production of oil products. Lower domestic product prices benefit energy-intensive users, increase their demand and consequently lead to higher levels of environmental damage. The producer subsidy also encourages domestic production and local output increases. This in turn can lead to accelerated depletion of local crude resources (see Figure 18.4).

Source:  Adapted from Moerenhout and Irschlinger (2020).

Figure 18.4

Subsidy implications

Oil and subsidies  279 Consumer subsidies lead to two effects, namely price effect and demand effect. Subsidies lower oil prices, which in turn increase oil demand. Higher oil consumption causes higher local air pollution and environmental damage. Trade Implications Subsidies can have significant trade implications, although the channels through which the impacts occur are not always well understood. Cross-border smuggling of products is a commonly identified problem. This illegal trade can also lead to corruption, crime and increased costs of security. On the other hand, higher local demand for subsidised products has the potential to exert pressure on international supply, which in turn could encourage higher prices in the international market. This has implications for all countries dependent on the international oil trade. An indirect effect is that the industrial outputs produced with subsidised oil enjoy a competitive advantage compared to other producers who use non-subsidised oil. These industries can expand their market shares in foreign countries and enjoy market share protection in the domestic market. This is likely to provide undue advantage to them (Moerenhout and Irschlinger 2020). Revenue Implications Any subsidy given to producers or consumers has a revenue implication for the subsidy providers, particularly governments. In many countries, governments do not compensate for the financial losses and the burden falls on the national oil companies. A common strategy is to charge taxes on certain products to offset the loss for subsidies. For exporting countries, the revenue from exports also compensates for the loss. However, the revenue implication can be significant, particularly during periods of economic recession or when oil export revenue suffers due to low oil prices. Maintaining the subsidy puts extra financial pressure on the government. Subsidies lead to fiscal imbalances and contribute to higher budget deficits or borrowing. They also reduce or remove the opportunity for investing in other emerging areas, and crowd out government spending (Aune et al. 2016). Recent oil market conditions have brought new challenges to maintaining subsidies, and various efforts to control subsidies have been undertaken. The recession after the coronavirus pandemic has further aggravated the financial position of countries, and the continuation of oil subsidies in the future remains uncertain. Removing subsidies also faces political challenges. But a low oil price offers a good opportunity to carry out a subsidy reform.

EFFECTS OF OIL SUBSIDY REMOVAL A range of effects of oil subsidy removal has been discussed in the literature. A brief summary is presented below. Effect on Final Consumers Removal of oil subsidy directly leads to increases in oil price for consumers. For final users, who have no option of passing the cost to others, the impact is felt immediately. For example,

280  Handbook on oil and international relations removal of LPG or kerosene subsidies increases the cost of cooking energy for residential users. Depending on the price elasticity of demand, the demand for the fuel will reduce, but the demand reduction may be quite limited due to inelastic demand. In such cases, the consumers spend a higher share of their income for purchasing the oil product. If there are opportunities for fuel substitution, consumers could switch to other fuels. However, given the path dependency of demand due to reliance on appliance stock, such a substitution is not instantaneous in most cases. This is also true for the transport sector’s use of oil and residential use of oil. A study by Aune et al. (2016) found that transport fuel subsidy removal in Organization of the Petroleum Exporting Countries (OPEC) results in welfare loss for consumers due to the price shock. Consumers, however, are likely to become more conscious about energy use and reduce wasteful use as well. Subsidy removal can thus trigger a more efficient use of oil in the economy. The impact of such subsidy removal on different sections of the population remains poorly studied. The increased cost burden on a rich consumer may trigger a shift to other commercial fuels such as electricity, and if the electricity supply is subsidised, a part of the oil demand may manifest in a rise in electricity demand. However, this option may not be available for the poorer consumers, for two reasons: (1) they may not be able to afford the appliance cost to enable such a transition; and (2) they may not have access to electricity networks. In such cases, there is a significant potential for returning to traditional energies such as wood fuel, which they may collect and use without incurring any monetary cost. However, a return to traditional energies brings several unintended consequences. The burden of energy collection falls heavily on women and children, thereby removing their opportunity to undertake studies and other capacity-building training. The use of such fuels leads to health damage due to higher exposure to toxic fumes and particulate matter. Women, children and the aged population are unfavourably placed in sharing the health damage, and this has significant social costs. The contribution to pollution and global climate change also remains a major issue. Accordingly, such a return to traditional energy is not a desirable outcome from a policy perspective. However, studies on subsidy removal rely on modelling techniques that are not capable of dealing with non-monetary transactions taking place in the informal sector, and ignore traditional energies. Without explicit treatment of non-commercial transactions and energy options, the real impact of oil subsidy removal cannot be analysed. Accordingly, the policy prescriptions emanating from such studies fail to consider the whole ecosystem and remain partial in nature. Effect on Intermediate Consumers For intermediate use of oil, particularly in industry, the cost of oil increases the input cost of production. The firm may absorb a part of the cost, engage in fuel substitution, improve energy efficiency and pass on the cost to the final consumers (Rentschler et al. 2017). The specific mix of strategy choice and extent of each option retained in the strategy varies by firm, depending on the overall management independence, management vision (short term versus long term) and the firm’s overall financial position. Energy-intensive industries (such as petrochemicals) are likely to face greater challenges in the adjustment process due to the relatively higher share of energy cost in their overall cost of production. Here also, the commercial user will search for cheaper substitutes, and if alternative options are available, they will switch to alternatives to ensure a limited impact on the cost of production. However, such substitution possibilities

Oil and subsidies  281 may be limited in practice and the cost of production may rise. This is likely to be the case for domestic producers and, accordingly, an oil subsidy removal may make local production less competitive compared to imported goods, and local output may face stiffer competition in the export market. Depending on the market condition (supply and demand), consumers may find a rise in prices, which is likely to lead to demand substitution where consumers shift to alternative products. This changed condition can have impacts on the viability of the business and employment generation. According to Rentschler et al. (2017), subsequent to a significant reduction in fossil fuel subsidies in Saudi Arabia in 2016, several of the largest petrochemical firms reported a loss of profit of between 6.5 per cent and 44 per cent compared to 2014. Similarly, the Saudi Cement Company reported an increase in cost of production of $18 million as a consequence of subsidy removal. Effect on National Oil Companies Any subsidy removal from domestic consumption benefits the national oil companies in two ways: they do not have to use their revenue to support the oil subsidies, and the reduced demand for oil products reduces product imports. This is true for both oil-importing and oil-exporting countries. In addition, oil exporters find an additional opportunity of exporting additional crude oil that results from reduced local demand. These two effects help to improve their financial health and profit outlook. An example from India would clarify the point. Oil subsidy affected the financial health of state-owned oil distribution companies in India due to the high interest burden on debt. In one year after reform (that is, between 2013‒14 and 2014‒15), their debt fell by 41 per cent and the interest burden by 30 per cent. The profit of oil distribution companies has trebled between 2014 and 2017 (Jain 2018). Reduced local demand and the possibility of exporting surplus oil can influence the global oil price by reducing it, and thereby transferring part of the benefits to importers. This also leads to a loss of producer surplus and constitutes a leakage (Aune et al. 2016). Another issue that has been indicated is the ‘green paradox’, where oil producers may accelerate their production if they expect reduced demand in the future. In view of recent initiatives towards net zero carbon emission pathways, oil producers may adjust their strategy in order to deplete their resources quickly, before the expected global transition to alternative forms of energy. The dynamic effect of price subsidy removal and accelerated depletion can be significant for oil companies. Effect on the Government From a financial perspective, oil subsidy removal has a direct effect on the state budget. The direct outflow of funds to support oil companies is eliminated and this helps in reducing the budget deficit or improving the financial health of governments. However, as indicated earlier, there is limited transparency oil subsidy mechanisms, and the existence of cross-subsidies and borrowing from different funds to support the subsidies obscures the process. Accordingly, the impact of subsidy removal can be less visible as well. The finances of oil companies normally will record an improvement, which in turn allows them to make use of income more productively. This has the potential of improving the return on investment and of reducing the deadweight loss.

282  Handbook on oil and international relations Oil subsidy reduction also brings a number of other advantages for governments. The funds could be deployed in other services such as education, health or social services. These areas often remain underfunded, and higher investments could reduce the social attainment gaps. Similarly, reduced budget deficits or market borrowing by governments improve the fiscal imbalance, and this transfer of financial resources leads to welfare gains (Aune et al. 2016). Environmental Benefits One of the stated benefits of subsidy removal is the reduction in pollution and carbon emissions. This arises from the reduction in oil demand as a result of a price increase after the subsidy removal. The improvement in local air quality, particularly in urban areas, can be an important benefit which brings health benefits to local residents. The climate benefits also derive from the same source: reduction in oil demand. A study by Gerasimchuk et al. (2017) found that global fossil fuel subsidy removal is likely to reduce global carbon emissions by 1.1 Gt per year; and over the period 2017–50, a total reduction of 37 Gt of carbon dioxide (CO2) is likely. The contribution of oil in this overall emission reduction has not been identified.

CONCLUSION Energy subsidy has been analysed since the mid-1980s, and reforming energy prices has been the standard prescription of the international organisations. But it has proved difficult to reform prices to remove subsidies on fossil fuels. Low prices in recent times have ignited the debate once again, and many countries have tried to reform oil subsidies by taking advantage of the international price dynamics. This chapter has presented alternative mechanisms of oil subsidies and indicated that the estimation of subsidies depends on a number of considerations and factors. Accordingly, the estimation can vary significantly. Using two recent studies, the wide variation in oil subsidy estimation has been highlighted. For example, the IMF (2018) estimated that the oil subsidies for 2017 amounted to US$2068 billion, whereas according to the IEA (2020) the estimate is US$146 billion (or just 7 per cent of the IMF estimate). The effects of subsidies and possible impacts of subsidy removal are also highlighted. It is shown in Figure 18.1 that very low oil prices still continue in several countries. This suggests that subsidy removal remains a challenge. Experience of successful efforts towards subsidy removal suggest that a long-term plan is essential, and a phased subsidy removal plan works better (IMF 2013). The shock of subsidy removal could be better absorbed through a phased, long-term reform process. It also helps if the reform process can take advantage of any favourable international market conditions. However, this chapter also indicates the potential loss of welfare for poorer sections of the population, and unless careful safety measures are adopted, the subsidy reform could lead to a return to traditional sources of energy for cooking, which would be a undesirable outcome from the perspective of sustainable development. Successful reforms therefore require a strong public engagement programme to communicate the planned changes, and a targeted support system for the most vulnerable (Atansah et al. 2017).

Oil and subsidies  283

REFERENCES Atansah, P., Khandan, M., Moss, T., Mukherjee, A., and Richmond, J. (2017), When do subsidy reforms stick? Lessons from Nigeria, Iran and India. CGD Policy Paper 111, Center for Global Development, Washington, DC. Aune, F.R., Grimsrud, K., Lindholt, L., Rosendahl, K.E., and Storrøsten, H.B. (2016), Oil consumption subsidy removal in OPEC and other non-OECD countries. Oil market impacts and welfare effects. Discussion Papers, No. 846, Statistics Norway, Oslo. Bhattacharyya, S. (1995), Fossil fuel subsidies: the case of petroleum products in India. OPEC Review, 19(1), Spring, 71‒88. BP (2020), BP Statistical Review of World Energy 2020. London: BP. Gerasimchuk, I., Bassi, A., Merrill, L., Ordonez, C.D., Doukas, A., et al. (2017), Zombie Energy: Climate Benefits of Ending Subsidies to Fossil Fuel Production. Winnipeg, Manitoba: International Institute for Sustainable Development and Overseas Development Institute. IEA (2020), World Energy Outlook 2020. Paris: International Energy Agency. IMF (2013), Case Studies on Energy Subsidy Reform: Lessons and Implications. Washington, DC: International Monetary Fund. IMF (2018), How Large are Global Energy Subsidies? Cross-Country Estimates. Washington, DC: International Monetary Fund. Jain, A. (2018), A fine balance: lessons from India’s experience with petroleum subsidy reforms. Energy Policy, 119(C), 242‒249. Moerenhout, T., and Irschlinger, T. (2020), Exploring the Trade Impacts of Fossil Fuel Subsidies: GSI Report. Winnipeg: International Institute for Sustainable Development. Retrieved from https://​www​ .iisd​.org/​system/​files/​publications/​trade​-impacts​-fossil​-fuel​-subsidies​.pdf. OPEC (2019), OPEC Annual Statistical Bulletin. Vienna: Organization of the Petroleum Exporting Countries. Rentschler, J., Kornejew, M., and Bazilian, M. (2017), Fossil fuel subsidy reforms and their impacts on firms. Energy Policy, 108(C), 617‒623. Rosenthal, L. (1983), Subsidies to the personal sector. In R. Millward, D. Parker, L. Rosenthal, M.T. Summer and N. Topham (eds), Public Sector Economics. London: Longman, pp. 79–128.

19. Qatar: energy abundance and small powers Betul Dogan-Akkas

INTRODUCTION In downtown Doha, an old neighborhood called Msheireb has been under renovation by a sustainable urban transformation project of the Qatar Foundation. There are four signature museum houses in the Msheireb properties, called the Msheireb Museum (Msheireb Properties n.d.). The Company House, sponsored by Shell, is one of these historic houses in the heart of downtown directing the visitors to learn about Qatar’s short history (Msheireb Museums n.d.). An old truck under sidra trees welcomes the visitors at the Company House entrance, taking them back to the original story of the Qatari pioneers who worked in the oil fields in the early days of discovery. My feelings were complicated in the excessively air-conditioned, clean, and nice-smelling Company House. A Filipino worker kindly offered us water and dates while we were listening to Qatar’s socio-economic history. A short documentary shown in the museum is an excellent chance to hear stories of the Qataris who were the first to engage in energy-based transformation. The brief interviews with people who labored in the field thus give us firsthand observations of the early days of the Qatari petroleum industry. One laborer recalled his rough journey to an Dukhan oil field, stating his amazement at the current condition of Doha with its shining skyscrapers. I could not agree more with him on the social, political, and economic upheaval that has changed Qatar. This is precisely why its journey from being a small sheikdom in the Peninsula to a tiny energy giant is remarkable. Qatar’s transformation is founded on a national vision initiated by Father Emir, Sheikh Hamad, in the early 1990s, devising and nurturing a foreign policy and domestic strategies that went beyond traditional limits. Thus, Qatar provides a unique example of a small-state actor that has gone through rapid economic development. There has been much analysis on Qatar’s multi-vectoral foreign policymaking. The Qatari state has engaged global actors, international organizations, mediations, and soft-power tools that support branding and visibility (Barakat 2014; Kamrava 2015; Khatib 2013; Peterson 2006; Roberts 2012; Ulrichsen 2014). Studies that focus on Qatar’s rapid global rise note energy politics or the role of natural resources in its financial policies, while other studies have discussed Qatar’s extraction and sale of natural gas and oil (Crystal 1995; Dargin 2007, 2009; Krane and Wright 2014; Miller 2020; Piet and Wright 2016; Rogers 2017; Ulrichsen 2020; Wright 2017). Specifically, some approaches analyze Qatar’s political economy (Kamrava 2015; Ulrichsen 2012, 2016; Wright 2019). Gulf Cooperation Council (GCC)-wide perspectives also elaborate on the impact of oil and gas on domestic consolidation, foreign policy motivations, and economic welfare (Ehteshami 2020; Gause 1994). There are also studies that link Qatar’s foreign policymaking and its energy policies, focusing on foreign policy relations with East Asia (Piet and Wright 2016), global and regional energy markets, and economic vulnerabilities over the changing oil and gas prices (Al-Marri 2017; Dargin 2007; Ulrichsen 2020; Wright 2017). Notably, only a few studies scrutinize energy security and the role of natural resources in this small state’s strategic vision (Miller 2020; Ulrichsen 2020). 284

Qatar: energy abundance and small powers  285 This chapter examines Qatar’s strategic thinking and power projection through its journey of combining small statehood and abundant energy resources. This comprehensive approach combines Qatar’s foreign policymaking and energy strategies, and discusses the rematerialization of natural resources in Qatar. Thus, the central focus is on Qatar’s outstanding success as a liquefied natural gas (LNG) exporter. The study examines the strategies and challenges behind it to discover the factors that underpin Qatar’s influence and regional power as a small state. Furthermore, Qatar’s role in oil and gas interactions in the Gulf’s international relations is explored by elaborating on strategies in the global energy market. The chapter argues that Qatar’s foreign policymaking and its monetizing of energy resources share the same goals and strategies to increase its national power. Qatar’s power projection in terms of its diplomatic influence overlaps with its economic welfare, which is rational considering its small size as a state. The nexus of sustainable wealth and political consolidation highlights the interrelations of external, domestic, economic, cultural, and energy-oriented policies. Two substantial strategies of Qatar have led to its emergence as a small energy giant: firstly, multiple methods are in place to monetize its natural resources; and secondly, ambitious strategic planning moves beyond monetizing gas, and helps in leveraging the output for greater political autonomy. The chapter begins with a brief illustration of the technical details of Qatar’s energy profile, providing essential information on the country’s natural resources and its input in the economy. The next section is devoted to analyzing the small state’s role and positioning in the GCC political complex. Qatar’s political strategies to increase its domestic, regional, and global influence is discussed through the nexus of sustainable wealth and political consolidation. Finally, the chapter focuses on two major elements of Qatar’s energy policy: the impact of the 2017 siege, and Qatar’s decision to leave the Organization of the Petroleum Exporting Countries (OPEC).

QATAR’S ENERGY PROFILE This chapter is not a technical or policy-oriented research paper for understanding Qatar’s extraction and marketing of LNG. Instead, it seeks to understand the strategic planning of a small state in the regional and global market. However, detailed elaboration of Qatar’s energy profile is required to assess its competitive market strategies as a small state. This section is devoted to defining Qatar’s energy profile and milestones for its energy industry. The following section conceptualizes how Qatar was able to become a small energy giant through its strategic planning. Qatar is an inordinately wealthy tiny monarchy located on the Arabian Peninsula, and a member of the GCC. According to preliminary data by Qatar’s Planning and Statistics Authority released in February 2021, without specifying the number of Qataris and overseas residents, the total population of the country is 2 660 788 (Planning and Statistics Authority 2021). Qatar’s gross domestic product (GDP) per capita is more than $62 000 which is higher than the GCC countries’ average of approximately $33 000 (see Figure 19.1). The North Field is the largest non-associated gas field globally. Since its discovery in 1971, it has been divided by the Qatari and the Iranian maritime border (Qatargas 2021d). The North Field is more than 6000 square kilometers, covering an area equivalent to approximately half of Qatar’s total land area. Qatar’s north coast reserves possess approximately 10 percent of

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Source: 

World Bank, https://​data​.worldbank​.org.

Figure 19.1

GDP per capita of the GCC countries (current US$)

the world’s known natural gas, making Qatar the world’s largest holder of proven gas reserves after Russia and Iran (Qatargas 2021d). The total recoverable reserves of Qatar are more than 900 trillion standard cubic feet of gas. The first oil well, Dukhan, was drilled in 1939, and research and development of offshore and onshore discovery and extraction of oil continued after World War II. The umbrella company for Qatar’s entire natural resources, Qatar Petroleum (QP), was created in 1974 (Qatar Petroleum 2020b). In the initial years, the discoveries were limited to oil. Indeed, Qatar’s oil production was bottom of the OPEC rankings (Miller 2020, p. 124). In 1994, the first company under Qatar Liquefied Gas Company Limited, Qatar Gas 1, was established with shareholders Qatar Petroleum (65 percent), ExxonMobil (10 percent), Total (10 percent), Mitsui (7.5 percent), and Marubeni (7.5 percent) (Qatargas 2021b). Qatargas has pioneered the LNG industry in Qatar. It is the leading provider of quality LNG and other hydrocarbon products – natural gas liquids (NGLs), gas-to-liquid (GTL) products, refined products, petrochemicals, fertilizers, steel, and aluminium (Qatar Petroleum 2020a) – to the global market, with 11 companies working under it (Table 19.1). It is the largest LNG-producing company in the world (Qatargas 2021a). In 1992, Qatargas signed the first sale and purchase agreement (SPA) with Chubu Electric to deliver 4 million tons per annum (MTPA) of LNG. Another milestone in Qatargas’s short history was the establishment of Ras Laffan Liquefied Natural Gas Company Limited (RasGas) in 1993. The Qatargas and RasGas companies integrated in 2018. By 1995, the offshore drilling operations commenced, and the initial agreement with the Korea Gas Cooperation (KOGAS) for the supply of 2.4 MTPA was concluded. Qatar’s first LNG vessel,

Qatargas 2

Qatargas 3

Ras Laffan Liquefied Natural Gas

7

8

9

(LR2)

Laffan Refinery Company Limited 2

To produce of pure helium

and 5)

To produce LNG and related products (Trains 3, 4

customers in Qatar

To produce sales gas and related products for

2)

To produce LNG and related products (Trains 1 and

Marubeni (1%)

2014 Qatar Petroleum (84%), Total (10%), Cosmo (2%), Idemitsu (2%), Mitsui (1%), and

(10%), Mitsui (4.5%), and Marubeni (4.5%)

2006 Qatar Petroleum (51%), ExxonMobil (10%), Total (10%), Cosmo (10%), Idemitsu

2007 Qatar Petroleum (70%), and Royal Dutch Shell (30%)

2005 The State of Qatar

2005 Qatar Petroleum (68.5%), ConocoPhillips (30%), and Mitsui (1.5%)

in Train 5: Qatar Petroleum (65%), ExxonMobil (18.3%), and Total (16.7%)

loading, and marketing of refined products

The operation of refinery facilities and the production,

sale, and marketing of refined products

The operation of refinery facilities and the production,

To produce LNG and related products (Mega Train 7)

7)

To produce LNG and related products (Trains 6 and

To produce LNG and related products (Mega Train 6)

4 and 5)

2004 Shareholders in Train 4: Qatar Petroleum (70%) and ExxonMobil (30%). Shareholders To produce LNG and related products (Mega Trains

2003 The State of Qatar

2001 The State of Qatar

2000 Exxon Mobil and Qatar Petroleum

1993 The State of Qatar

Note:  * Qatar Petroleum took full ownership of Qatargas Liquefied Natural Gas Company Limited in 2022. For further details see: https://​qp​.com​.qa/​en/​MediaCentre/​ Pages/​ViewNews​.aspx​?NType​=​News Qatar Petroleum (2021). Source:  Qatargas (2021b).

12

Laffan Refinery Company Limited

11

(LR1)

Qatargas 4

10

Company Limited (3) (RL3)

Ras Laffan Helium

Company Limited (2) (RL2)

Ras Laffan Liquefied Natural Gas

Marketing Limited (Al Khaleej Gas)

ExxonMobil Middle East Gas

6

5

4

Company Limited (RL1, RasGas)

Ras Laffan Liquefied Natural Gas

1, 2 and 3)

3

LNG and related products from its three trains (Trains

Marubeni (7.5%)

(Qatargas) 1*

industry

Qatar Liquefied Gas Company Limited 1984 Qatar Petroleum (65%), ExxonMobil (10%), Total (10%), Mitsui (7.5%), and

The sustainable development of the oil and gas

Production Type/Role

2

Shareholders

1971 The State of Qatar

Qatar Petroleum

1

Date

Qatar’s leading energy companies

Name of the company

Table 19.1

Qatar: energy abundance and small powers  287

288  Handbook on oil and international relations named Al Zubara, was delivered to Qatargas and the first LNG production shipped to Japan in 1996. By 2000, the first LNG spot cargo was shipped to Spain’s Enagas, and 10 million tonnes of LNG were shipped to Japan (Qatargas 2021c). Qatargas has been working with international energy companies such as BP, ExxonMobil, and ConocoPhilips for the supply and construction of LNG trains1 and joint ventures. In 2003, Qatar Petroleum and ExxonMobil Corporation agreed on a supply of 15.6 MTPA of LNG to the United States (US). Another indication of Qatargas’s customer portfolio diversification is agreements with Petrochina and China’s CNOOC. Qatargas has managed LNG deliveries and SPA agreements to many countries in addition to its domestic investments, such as Italy (Adriatic LNG), Mexico (Altamira), Canada (Canaport LNG), the United States (Golden Pass), Poland (PGNIG), Brazil, the United Kingdom (Centrica), Malaysia (Petronas), Thailand (PTT), Japan (Kanasia Electric and Chubu Electric, Tokyo Electric Power), Singapore, Jordan, the United Arab Emirates (UAE), Oman, and Pakistan. Qatar was the largest exporter of LNG in the world in 2007 (Qatargas 2021c). In 2010, the country’s LNG production capacity reached 77 MTPA, making Qatar the world’s largest LNG producer since then. According to Saad Sherida al-Kaabi, the chairman of Qatargas board of directors, the state has built 14 liquefied natural gas (LNG) processing trains so far, and is planning more (Qatargas 2021e). Another milestone in Qatar’s LNG history is the moratorium imposed in 2005 to provide time to study the environmental effects of production, so as to reach a sustainable production level. As stated, the North Field is shared with Iran, and because of sanctions and the economic conditions, Iran has not been able to use its natural resources as much as Qatar. The decision could also be related to preventing any potential problem over this shared area with Iran. However, Qatar’s energy minister, Abdullah al-Attiyah, stated publicly that the moratorium was planned as a short “period required for modelling the reservoir to assess its potential longevity” (Krane and Wright 2014, p. 13); nevertheless, it remained in effect until 2017. Qatar announced that it is ready to increase production capacity to 110 million MTPA in 2017. As Saad Sherida al-Kaabi notes: “in just over three decades, Qatar has managed to transform itself from a small oil producer to a well-placed, reliable, and dedicated global supplier of energy” (Qatargas 2021a). In parallel with Qatar’s rise as an energy giant, its economic and political profile has been amplified. Thus, while delving deeply into Qatar’s LNG strategies, it is critical to reveal the power projection model behind its success as a small state.

THE NEXUS OF SUSTAINABLE WEALTH AND POLITICAL CONSOLIDATION Qatar’s foreign policymaking and its monetizing of its energy resources share common goals and strategies as instruments for increasing national power. Qatar’s power projection for its diplomatic influence and economic welfare is embedded in its strategies. Furthermore, this chapter argues that Qatar’s energy policy to extract, sell, and monetize its natural resources for the country’s long-term benefit is pivotal in the nexus of sustainable wealth and political consolidation. This section elaborates briefly on Qatar’s foreign policy pillars and how a small state has gained autonomy through using its natural resources. In scrutinizing Qatar’s energy calculations, some background on its foreign policy and national strategy is required. In relation to the political and economic consolidation of rentier countries, a discussion of “the curse or panacea effect” is the first thing that comes to mind.

Qatar: energy abundance and small powers  289 The discovery of Qatar’s oil in 1939 and the early years of oil income led to the initial state formation. As such, the infrastructural and political elements constructing the Qatari state out of a small and vulnerable sheikhdom are based on oil income. Qatar is a small state that is well-represented in the global economy and international organizations, and allies itself to Saudi Arabia in regional affairs (Kamrava 2015). The country’s economic and political development was limited during the reign of Sheikh Khalifa (1972‒95), the sixth ruler, known for the government’s re-organization and signing of several agreements to extract and market oil (Amiri Diwan 2021). Sheikh Hamad, the Father Emir, overthrew his father’s rule in a bloodless coup d’état (Ulrichsen 2014). During the reign of Sheikh Hamad, substantial steps were taken, not only for marketing and developing the logistics of LNG, but also for complete economic, social, political, and cultural development. As indicated above, Qatar started using its energy resources earlier than the LNG exports in the 1990s. The period until the mid-1990s was the pre-gas era, and the income from natural resources, notably oil, was limited compared to the role of LNG today. As such, Miller (2020, p. 124) argues that Qatar’s energy wealth is rapidly improving its domestic and external policymaking based on the LNG era. Considering Qatar’s demographic size, geographic features (located on a land area of 11 581 km2), weak military power, and its original political power as a newly established nation-state, a variety of resources categorize it as a small state (Almezaini and Rickli 2017; Kamrava 2015; Peterson 2006; Rickli 2016; Roberts 2012; Ulrichsen 2014). However, nimble foreign policy tools have enabled Qatar to exceed its limits. The study of small states highlights the fact that many other small states have expanded their network of political influence, economic investments, and cultural policies by employing niche foreign policy instruments (Almezaini and Rickli 2017; Chong and Maass 2010; Elman 1995; Keohane 1969; Long 2017; Neumann and Gstöhl 2004; Nye 2009; Rickli 2016; Ulrichsen 2012). However, the definition, categorization, and discussion of a small state’s role and power in international relations are elusive. As Chong and Maass (2010, p. 381) note, it is vital to recognize that “small states are by no means powerless.” Studies of international relations have examined small states’ unique methods to exert power (Elman 1995, p. 172). While the conventional understanding of power does not prioritize addressing humanitarian and moral issues, environmental problems, cultural policies, and many other soft power tools, small states leverage their power by combining limited hard power capabilities with soft tools (Nye 2009, p. 160). For Nye: power is one’s ability to affect the behaviour of others to get what one wants. There are three basic ways to do this: coercion, payment, and attraction. Hard power is the use of coercion and payment. Soft power is the ability to obtain preferred outcomes through attraction. If a state can set the agenda for others or shape their preferences, it can save a lot on carrots and sticks. But rarely can it totally replace either. Thus the need for smart strategies that combine the tools of both hard and soft power. (ibid.)

The “payment” option for gaining power was highlighted by Chong and Maass (2010, p. 382) for natural resource-rich small states such as Trinidad and Tobago: “leveraging on natural gas to ‘purchase’ influence.” Conversely, the “attraction” pillar is usually related to the soft power tools, such as branding in Qatar’s case (Peterson 2006). As opposed to substantial military forces of great powers, “small states’ survival and territorial integrity are protected by norms and institutions” (Long 2017, p. 185). However, critics of small states argue that “it might

290  Handbook on oil and international relations be said that while small states are not powerless when they are confronted directly by a great power, the logic of Thucydides still holds” (Long 2017, p. 186). Although small states exerting unconventional powers in regional and international politics is noted by international relations scholars, they “are often treated as objects, not as subjects” (Neumann and Gstöhl 2006, p. 19). In this asymmetrical relationship of power among great, middle, and small powers, is it fair to categorize diverse states such as the Vatican, Singapore, Qatar, and Norway in the same way? In other words, there might be more than one way of achieving a niche in foreign policymaking at a global stage, despite being a small state. Thus, there is a developing literature in Gulf studies on the GCC states’ smallness (Almezaini and Rickli 2017; Kamrava 2015; Peterson 2006; Rickli 2016; Ulrichsen 2012) that demonstrates the state’s subtle steering capabilities. Peterson (2006, pp. 743‒748) argues that Qatar as a micro-state raised its power and role through global branding. Later studies also address “nimble and ambitious leaderships capable of taking and executing quick decisions” of small GCC states such as Qatar and the UAE in a rebalancing of the Gulf and the global geo-economic patterns (Ulrichsen 2012, p. 5). The GCC states’ strategies to form alliances in an effort to consolidate their military and political power, and providing room for maneuver under Saudi leadership, have led to hedging diplomacy dominating their foreign policymaking (Rickli 2016, p. 134). Kamrava (2015, pp. 46‒49) supports the view of Qatar as a subtle power, due to its “highly calibrated and carefully maintained policy of hedging; an equally aggressive global campaign of branding; significant capacity on the part of the state; and prudent use of the country’s comparative advantage concerning neighbours near and far.” Thus, Qatar’s small state strategies create a tiny energy giant conceptualizing its tools and institutionalizing its natural resources. Qatar’s foreign policymaking and domestic political consolidation, based on five overlapping pillars, lie in the nexus of sustainable wealth and political consolidation. Sheikh Hamad planted the seeds of these strategic and geopolitical objectives, and they are all implied in the Qatar National Vision 2030 (2008): (1) promotion of political power; (2) construction and diversification of military security; (3) cultural and social policies for improving Qatar’s human and social capital; (4) economic diversification; and (5) utilization of natural resources for sustainable wealth (see Figure 19.2). Although these five pillars intersect contextually and have a strong influence in domestic‒external relations, the sustainability of the first four requires an initial wealth and economic comfort provided by the natural resources (Wright 2017, p. 154). In other words, Qatar’s strategic objectives and success have maintained a delicate balance with the nexus of sustainable wealth and political consolidation based on revenue from LNG. The Qatar National Vision 2030 (2008, pp. 26‒28) also interrelates energy and other development goals of Qatar under the title of “Responsible Exploitation of Oil and Gas Suitable Economic Diversification”: Optimum exploitation of hydrocarbon resources, establishing a balance between reserves and production, and economic diversification and the degree of depletion. A vigorous oil and gas sector generates advanced technological innovations and contributes to the development of human resources and economic capacities throughout Qatar. A fully developed gas industry that provides a major source of clean energy for Qatar and for the world. The long-term maintenance of strategic reserves of oil and gas to meet the needs of national security and sustainable development.

Qatar: energy abundance and small powers  291

Figure 19.2

Five pillars of Qatar’s strategic and geopolitical objectives

Miller (2020, p. 124) also underlines the relationship between Qatar’s consolidation of political sovereignty and economic autonomy as an evolving small state: Qatar’s energy sector has been a central instrument in the country’s attempts to think and act strategically in the decades since the 1990s when gas revenues replaced oil revenues as the country’s primary source of income for both international activity and its massive program of domestic economic development. (ibid., p. 123)

Thus, the overlapping strategy of power projection in energy and other vectors is the key to understanding Qatar’s “punching above its weight” (Roberts 2011). One of Qatar’s five pillars, energy policies in terms of utilization of natural resources for sustainable wealth, is a central focus of this chapter. The following section delves into Qatar’s strategies for institutionalization and rematerialization of its energy policy, including two milestones: the siege of 2017 and Qatar’s decision to leave OPEC.

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BEYOND MONETIZING THE LNG: AUTONOMY OF A SMALL STATE The Qatar National Vision 2030 (2008, p. 13) defines the first pillar, Human Development, stating: Hitherto, Qatar’s progress has depended primarily on the exploitation of its oil and gas resources. But the country’s hydrocarbon resource will eventually run out. Future economic success will increasingly depend on the Qatari people’s ability to deal with a new international order that is knowledge-based and extremely competitive.

Thus, in Qatar’s long-term power projection, the utilization of natural resources for sustainable wealth is one of its most central concerns, as a small state whose economy is dependent on natural resources. There are two substantial elements in terms of Qatar’s energy strategies that created a tiny energy giant. Firstly, Qatar has employed more than one way to monetize its natural resources. Secondly, its strategic planning has aimed beyond monetizing the natural resources, to leverage the output extensively across the five overlapping pillars in the nexus of sustainable wealth and political consolidation. Notably, therefore, Qatar’s energy policies require attention to assess how a small state has gained autonomy through strategically investing in its natural resources. Monetizing the Natural Resources Qatar has effectively monetized its natural resources, particularly gas, since the early 1990s. Qatar’s natural gas rents (percentage of GDP) have increased through LNG exports (see Figure 19.3), and reached 107.1 billion cubic meters in 2019 (see Figure 19.4). In respect of Qatar Petroleum’s and Qatargas’s business strategies, the Qatari policymakers have employed more than one method to monetize gas. Firstly, gas is kept as an economic commodity that can be exported worldwide. Even though the Middle East region is gas-deficient and a proximate gas market, Qatar has developed LNG facilities and a network of long-term SPAs with various companies and states beyond the region. Although long-term agreements of Qatar were criticized for offering less flexibility to consumer companies compared to the US’s LNG strategy (Wright 2017, p. 157), it is still a heavily supported option for Qatar’s monetizing of gas (Piet and Wright 2016, p. 165). Initially, Qatar expanded its export globally and resisted the gas-short neighbor countries’ demand for lower pricing. In contrast to Qatar’s LNG-based economy, the rest of the GCC members face a gas shortage (Krane and Wright 2014). The five gas-short Gulf monarchies possess oil reserves; however, especially for domestic use, they need gas. Ideally, they would turn to Qatar, given its enormous resources and geographic proximity; however, they could not reach a solid agreement, and the regional demand remained unmet (Krane and Wright 2014). Qatar’s initial policy was to supply regional markets, and in the early days of monetizing natural gas, a regional pipeline network was the central discussion. Qatar offered an export agreement including the cost of a pipeline network to the five GCC countries at a total cost of US$2 billion (Hashimoto et al. 2004, p. 16). However, the project failed to develop cross-border trade. Krane and Wright (2014, p. 1) define the five gas-short GCC countries’ reactions and policymaking toward a regional pipeline project as an institutionalized undervaluation of natural gas. Saudi Arabia withdrew from the project and even

Qatar: energy abundance and small powers  293

Source: 

World Bank, https://​data​.worldbank​.org.

Figure 19.3

Comparison of Qatar’s natural gas rents (% of GDP) and total natural resources rents (% of GDP)

refused to grant transit rights to deliver gas to Kuwait using Saudi territory. Qatar’s disputed border issue was also influential in this decision (Krane and Wright 2014, p. 5). However, another problem was with pricing (Dargin 2009, pp.1‒2, 5). The GCC states were not willing to pay what Qatar saw as a reasonable price (Krane and Wright 2014, p. 2). In the end, the Dolphin Pipeline was constructed between Qatar and the UAE in 2007. An extension of the pipeline that transmits gas to Oman is working under capacity (33 bcm per year) with just 20 bcm/year because of pricing disputes; nonetheless, none of the parties are eager to increase it (Krane and Wright 2014, p. 5). However, Qatar has kept its main strategic target towards a global rather than a regional market. The second strategy of Qatar monetizing LNG is to engage with multiple actors in SPAs. As BP’s (2020) Statistical Review of World Energy 2020 demonstrates, Qatar’s trade movements in 2019 as an exporter of LNG were conducted through various states in Europe, the Middle East, and Asia. As presented in Figure 19.4, Qatar exported its LNG to Asian countries in 2020. Among these Asian countries, South Korea is the most popular destination for Qatar’s LNG, followed by India, Japan, and China. However, European countries’ share is relatively lower than the average of Qatar’s LNG exports to the rest of the world. This is to geographically and politically diversify its source of revenue. For instance, when the siege was imposed on Qatar in June 2017, Qatar’s LNG deliveries were not affected by the embargo, giving Qatar economic flexibility; if Qatar’s main export targets were the states involved in the blockade, the country would have faced enormous financial problems. Diversifying the trade partners also helps Qatar to ease its conflicts of interest with the countries critical for Qatar’s

294  Handbook on oil and international relations

Source:  BP (2020).

Figure 19.4

Natural gas: trade movements from Qatar in 2019 as LNG (billion cubic meters)

other needs. Qatar’s food security relations with Australia are essential (Dogan Akkas 2018, pp. 75‒80); however, it could face competition over LNG exports because Australia is also a leading gas producer. Another example is Qatar’s security ties with the USA. The American army is one of Qatar’s leading security suppliers, and a potential strain over the shale gas could weaken Qatar’s military position (Robert Strauss Center n.d.). Qatar shares its largest gas field, the North Field, with Iran, thus, it is also balancing political relations with Iran to avoid any conflict over natural resources extraction. Qatar’s third way to monetize its natural resources is by diversifying Qatar Petroleum’s investment portfolio, including joint ventures, new gas/condensate discoveries, and construction of LNG terminals. Diversifying the types of LNG business amplifies Qatar Petroleum’s profile as a leading LNG company, and can provide an opportunity for Qatar to steer the globally volatile LNG market. In other words, going beyond the national borders for LNG business supports Qatar’s profile as an energy leader and its investments. For instance, Qatargas commissioned Thailand’s (the Map Ta Phut) and Petrochina’s (Rudong) first LNG terminals in 2011. Later, in 2020, Qatar Petroleum and Total agreed to acquire blocks for new gas/condensate discoveries in the Republic of Côte d’Ivoire, Mexico, the southern coast of South Africa, and Angola (QP News 2021). Another prominent example of the construction of LNG terminals is South Hook Gas in the United Kingdom (UK), established in 2004 as a joint venture between Qatar Petroleum (70 percent) and ExxonMobil Qatargas (II) Trading Company Limited (30 percent). South Hook Gas is part of the Qatargas 2 value chain, the world’s first fully integrated LNG venture, with 7.8 million tonnes of LNG per annum (South Hook Gas 2021). Qatar is already the UK’s

Qatar: energy abundance and small powers  295 biggest LNG supplier, and in October 2020 it reserved 7.2 million tons of LNG capacity per year at the Isle of Grain terminal for 2025‒50 (Ratcliffe and Shiryaevskaya 2020). Autonomy Backed by LNG Diplomacy The discussion of the energy factor in foreign policymaking includes foreign policy behaviours influenced by growing energy dependence (Ziegler 2006), use of oil power (Newnham 2011), development of national identity, and consolidation of the internal political dynamics while counterbalancing among the global partners (Ipek 2007). Bringing a different approach to the energy factor in politics, Noreng (2002, p. 42) delineates energy as “a politicized commodity” that is “critical to economic and military strength and therefore vital to national security.” In this perspective, Ziegler (2006, p. 2) states: The significance of energy as a component of foreign trade far outweighs its proportion of the total value of turnover. Simply put, political leaders view oil in a different category than footwear, electronics, or automobiles. Energy, and in particular oil, is too important to be left to market forces alone.

Qatar uses energy for political bargaining in external relations, and for consolidating its domestic power. Qatar’s energy resources as a foreign policy tool support its economic power, its global position, and its international recognition. However, the main impact of energy on Qatar’s foreign policymaking is that it provides essential support for its other policy tools and enables an independent Qatari foreign policy. Thus, Qatar’s LNG diplomacy, conducted with multi-vectoral actors and strategies, furnishes Qatar with great flexibility and autonomy in foreign policymaking (Miller 2020, p. 129; Piet and Wright 2016, p. 171). As Noreng (2002) affirms, the significance of LNG for Qatar is, of course, interrelated with its economic welfare; however, its materiality as “a politicized commodity” for political independence is substantial. As Miller (2020, p. 126) argues, Qatar’s milestones in LNG production and marketing match Father Emir’s expeditious multidimensional development projects. This is not a coincidence. The more Qatar can manage and amplify its diplomatic network, supported by its LNG business, the more room it has for political maneuvers to balance the regional dominance of Saudi Arabia and to promote Qatar’s pursuit of independent policymaking. Piet and Wright (2016, p. 171) argue that Qatar has secured “less tangible benefits, such as global influence, political autonomy, and enhanced security,” through its energy policy, which takes Qatar beyond monetizing the natural resources. This is also why “Qatar tied its wealth and economic development to East Asian countries, rather than to neighbours such as Saudi Arabia and the UAE that had become increasingly critical of Doha’s nascent independent political agenda” (Piet and Wright 2016, p. 173). Although Qatar’s leverage of its position as an independent policymaker led to “a cost of regional estrangement” (Petersen 2020, p. 119), the siege of 2017 was not the end of the autonomy era. The Siege The Arab “Quartet” states, Saudi Arabia, the UAE, Egypt, and Bahrain, declared an air, land, and sea blockade of Qatar on June 5, 2017. The blockade countries’ surprising decision, the GCC crisis of 2017, was toned down with positive mutual steps between Saudi Arabia and Qatar in late 2020 with the Al Ula Declaration (Aljazeera News 2021). However, the Gulf

296  Handbook on oil and international relations Crisis will remain one of the most significant events in the history of the GCC, requiring special attention when assessing Qatar’s LNG policies as a small state. Despite the imposed embargo and political allegations made by the Quartet states, Qatar continued to supply natural gas to the UAE through the Dolphin Pipeline, indicating its reliability as an energy supplier (Ulrichsen 2020, p. 166). This gas trade accounts for almost a quarter of the Emirates’ daily need (Ulrichsen 2018). Considering the hot Gulf weather in June, any decision by Qatar to cut the transit of natural gas could be a social disaster given the use of air-conditioners (Dargin 2009; Rogers 2017; Ulrichsen 2020). After the blockade, Qatar’s LNG agreements have continued globally. In September 2018, Qatargas signed a deal to supply China with around 3.4 million tons of LNG annually for 22 years (Reuters Staff 2018). Qatar Petroleum sanctioned the first phase of the North Field LNG project expansion to increase the LNG output by 40 percent, to 110 million t/y from 77 million t/y. This is the largest single LNG project ever to be approved (Evans 2021). Qatar Petroleum signed a deal with global trader Vitol to supply 1.25 million tons of LNG per year to Bangladesh, and a new long-term SPA with Pakistan State Oil Company Limited to provide up to 3 million tons per annum (MTPA) of LNG (QP News 2021). Lastly, on March 22, 2021, a new ten-year LNG Sale and Purchase Agreement with Sinopec of China for the supply of 2 MTPA of LNG was initiated (QP News 2021). OPEC-Free Qatar Qatar joined the Organization of the Petroleum Exporting Countries (OPEC) in 1961 (OPEC 2021); however, its central element in the energy industry has been natural gas, especially since the 1990s. Qatar announced its exit from OPEC in 2018, after long years of an integrated membership era. Although some scholars were surprised, calling it “Qataxit” (Wass 2019) or interpreting it as a purely symbolic decision after the Gulf Crisis of 2017, it is, in fact, strategically normal behavior, considering Qatar’s energy diplomacy. As Qatar’s Energy Minister, Saad al-Kaabi, stated in his comments, leaving the cartel was not political, and it is parallel to Qatar’s transition towards (LNG) production: “we did not see ourselves fitting anymore (in OPEC)” (Reid 2018). Similarly, Wright (2018) expounds that Qatar’s decision to leave OPEC is based on its long-standing LNG strategies emerging from economic concerns, rather than driven by political reactions. Firstly, Qatar never became a major oil player. Its oil exports remained relatively modest compared to the other monarchies in the GCC (Ulrichsen 2018). Qatar was the second-smallest producer in OPEC, ranking 13th in the world’s proven oil reserves. Another dimension of Qatar’s oil production lies in its 12 000 square kilometer tiny territory that concentrates its oil production in three main oil fields (Robert Strauss Center n.d.). When its LNG production reached its target of 77 million tons per year in 2010, the gas income was almost double that of the oil revenues (BP 2020). As Figure 19.5 indicates, Qatar’s oil production (in thousands of barrels) per day was fourth among the GCC’s five oil producer countries. Its natural gas rents (percentage of GDP) had risen by LNG exports in the 1990s, and the total natural gas rents (percentage of GDP), referring to the sum revenue from all natural resources, have decreased (see Figure 19.3). Additionally, Figure 19.6 represents LNG exports of Oman, Qatar, and the UAE (billion cubic meters), highlighting the remarkable role of LNG in Qatar’s economy, considering its neighbors’ dependency on oil rather than natural gas. In other words, Qatar’s energy policy has been driven by LNG, as opposed to other GCC countries.

Qatar: energy abundance and small powers  297

Source:  BP (2020).

Figure 19.5

Oil production in thousands of barrels per day

Source:  BP (2020).

Figure 19.6

Natural gas: LNG exports of Oman, Qatar, and the UAE (billion cubic meters)

298  Handbook on oil and international relations Although Wright (2018) interprets Qatar’s decision to leave OPEC politically as “too simplistic and does not reflect Qatar’s long-term economic strategy,” he also notes a substantial element in Qatar’s LNG production: being free from OPEC. Qatar’s exit from OPEC is based on its focus on LNG rather than oil, and the cartel’s maladministration of the oil prices and the market (Wright 2018). However, even before the decision to leave, Qatar’s mainstream energy policies rooted in LNG marketing and joint venture LNG investments were free from OPEC, with great flexibility, because LNG is from non-associated gas, which is not under the cartel’s operation. Thus, “the North Field’s lack of crude oil has thus become a crucial ingredient in Qatar’s ability to develop the field independently of OPEC – and Saudi – oversight, aiding the tiny monarchy in its long quest to reduce Saudi hegemony” (Krane and Wright 2014, p. 5). As seen in Qatar’s energy policies during the embargo, the decision to leave OPEC is underpinned by its major strategies of monetizing LNG and increasing its political autonomy. Although OPEC defines its objective on the website as “to co-ordinate and unify petroleum policies among Member Countries, to secure fair and stable prices for petroleum producers” (OPEC 2021), Qatar did not agree and saw it as a threat to its pursuit of independent policymaking. As Ulrichsen (2018) states in the New York Times, Qatar’s decision to leave OPEC is a strategic response as an energy-driven economy to changes in the energy landscape, and an indication of reinforcing its autonomy from its Persian Gulf neighbours after the GCC crisis in June 2017. This is why Qatar was the first of the energy-rich Gulf States to withdraw from OPEC, showing its disapproval of Saudi interference in the organization (Ulrichsen 2018). For instance, during a meeting held in Doha, there was tension between the Saudi Crown Prince Mohammed bin Salman and the Qatar’s Emir Sheikh Tamim over an agreement between OPEC and non-OPEC states to disinvite Iran (Ulrichsen 2018).

CONCLUSION This chapter assessed Qatar’s strategies as a small state that is calibrated for the globally competitive energy market. Qatar’s foreign policymaking and its strategies to utilize its energy resources overlap. The pursuit of long-term economic welfare and political autonomy are embedded in the overall power projection strategy. In the nexus of sustainable wealth and political consolidation, Qatar has employed multiple methods to monetize its natural resources and utilize them to amplify political autonomy. Thus, the role of LNG in Qatar’s policymaking provides essential economic welfare for policymaking, and provides a space for more independent strategies. Although several challenges were especially visible in the Gulf Crisis of 2017, Qatar has worked hard as a small power to maintain its energy policies that support its power projection ambitions. Most notably, its journey to become a tiny energy giant is a remarkable example of monetizing natural resources and autonomous policymaking, despite the regional exclusion of 2017.

NOTE 1. The concept of LNG train refers to a facility that transfers the natural gas into a liquefied gas, that allows practical and commercially viable transport of natural gas from one country to another by reducing its volume and compressing the gas.

Qatar: energy abundance and small powers  299

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PART IV OIL AND GLOBAL MARKETS

20. International relations and oil: towards a networked power framework of analysis Llewelyn Hughes and Andreas Goldthau

INTRODUCTION Oil has been afforded a privileged role in the study of international relations. An important trend since the 1970s has been the systematic replacement of oil by other energy sources in electricity grids and in heating. Yet oil continues to dominate primary energy supply globally. Oil products such as diesel and kerosene play an important role in supplying energy services in locations that are isolated from centralized electricity networks. Oil also continues to play a central role in the transport sector as well as the petrochemicals industry, and world production of plastics – an important product derived from oil – is increasing globally. A small number of countries even continue to use oil in electricity production and heating. Even in a world that moves towards decarbonization, oil will remain important. While the overall size of the market may shrink, in the short to medium term crude remains an important feedstock for industry, air traffic and petrochemicals. Though these sectors will ultimately move to clean alternatives, liquid fuels will continue to be important through the middle of the century (IEA 2021). Thus, the politics of oil will continue to be an important subject to scholars of international relations. In this chapter we argue that changes in the structure of the international oil market – centred on the deverticalization of the industry, the emergence of new types of actors with a diverse set of interests and preferences, and climate change policies – make it important to develop new theoretical frameworks to understand how oil affects international relations. Scholars of the international relations of oil need to take seriously the rise of new forms of corporate actors in the international oil market, such as trading houses and exchanges, and strategies for managing price volatility. More broadly, we need to adopt new notions of power and how it is exercised in the international relations of oil. We propose the need for frameworks that recognize the networked structure of power, which we argue are at least complementary to, if not ought to replace, the focus on the politics of bilateral sanctions imposed to affect the physical supply of oil, which have been core to studies of the politics of oil until now. We do not argue that oil has become less politicized. A significant share of global reserves is owned by countries that have a national oil company (NOC), which typically has a large shareholding owned by the state. There is substantial evidence that the economic rents derived from oil have negative political effects, from harming development, to undermining other social goals and – at the extreme – increasing the likelihood of civil conflict (Ross 2015). Yet the core risk to physical supply security due to state behaviour has fallen substantially due to changes in the structure of the international market for oil. Instead, new actors have emerged following the deverticalization of the industry and help to manage the oil market, but their political implications are poorly understood. Moreover, the energy transition will call into 303

304  Handbook on oil and international relations question the revenue streams of NOCs, and by extension of producer states. Thus, the oil industry will remain highly politicized. The chapter is organized as follows. In the next section we review historical approaches to the study of oil in international relations. We then argue that the historical focus on states, NOCs and international oil companies (IOCs) misses crucial structural changes in the international oil market – chiefly, deverticalization and financialization – that are central to any understanding of the exercise of power in the international oil market. We conclude by noting two implications of our argument for the study of international relations, highlighting the potential of notions of relational power as a useful potential direction for future research.

INTERNATIONAL RELATIONS AND THE PROBLEM OF OIL The field of international relations has a long-standing interest in oil that re-emerged in the 2000s after a period of relative quiet in the 1980s and 1990s (Hughes and Lipscy 2013). Oil has two dimensions that make it of particular interest to scholars of international relations: the role of market structure in shaping the potential for coercion, and the high levels of state intervention are proposed to affect the behaviour of oil-producing states. Strategic Goods and Coercion The locations of oil production and consumption have historically been distant from one another.1 This geographic distance between production and consumption led oil to be defined as a strategic resource. For industrialized states, oil came to dominate energy demand in the aftermath of World War II. For the economies of many producing states post-decolonization, whose governments secured control over pricing and production decisions beginning in the late 1960s, oil has also been central for state income and industrialization (Parra 2004). Combined with high levels of state intervention in the sector, it also meant that the problem of energy security – defined narrowly as the risk that physical supplies of oil may not be deliverable as contracted – has been a core concern of governments in oil-importing states. Given this, it is unsurprising that international relations scholarship has focused on oil and national security, and whether and how market power translates into political power. A key debate focuses on the theoretical and empirical evidence concerning the strategic choices of major powers – many of which are large importers of oil – in response to perceived vulnerability to coercion using oil, including choices to engage in war. Oil has also been related to interstate conflict. For example, Said et al. (2007) investigated whether and why oil-rich countries are more prone to war than other nations. Klare (2001) posits that emerging economies demanding their share of the oil cake gives rise to conflict over resources, including oil. Coming more from a critical Marxist tradition, Harvey (2003) portrays oil as subject to ‘new imperialism’, in which the United States seeks to control Middle Eastern oil as a way to exert political and economic power. The assumed oil‒conflict link has become somewhat of a truism in the international relations debate, often pointing to finite resources and their assumed effect on international zero-sum games. A recent contribution by Kelanic (2016) argues that vulnerability to the physical disruption of oil and the level of net imports affect the strategies that states adopt in the oil market, which can include the application of military force. Colgan suggests a number

International relations and oil  305 of causal pathways through which oil may lead to war, including mechanisms working through domestic political economy (Colgan 2013). If we move beyond a narrow definition of energy security to incorporate price volatility and its implications for economies, there are other characteristics of oil that made it a strategic good that is distinct from economic goods. In the transport sector in particular, until recently, there has been no useful and competitively priced substitute for oil products, with important implications for maritime transport, land transport and air transport. This means that demand is comparatively inelastic, and there is an economic cost associated with reduced supplies that is borne by consumers. In fact, as argued by market observers, oil has never been physically scarce; instead, market volatility is seen as a function of economics and politics (Maugeri 2006). This opens up a second focus on market power in oil. Here, the focus of the literature is on the role of international cooperation, notably the role of the Organization of the Petroleum Exporting Countries (OPEC). Studies in economics seek to understand the significance of OPEC in oil price setting (Kaufmann et al. 2004), with results suggesting that the influence of OPEC on price setting varies over time. Studies in international relations, on the other hand, understand oil as a source of power projection. Generally, the power of OPEC in coercing others through oil has found to be limited (Goldthau and Witte 2011). A key question more recently addressed is what increased production from unconventional oil, coupled with possible falling long-run demand for oil, means for the importance of OPEC (Van de Graaf 2017). A complementary focus has been on the International Energy Agency (IEA), the rich countries’ organization, and the extent to which it has managed to address energy security concerns. The role of the IEA has been described as an important element of global energy governance (Florini 2011). Representing the consumer side in global oil, however, its role as a truly global energy organization has been found to be limited, though the agency has been credited for its institutional innovation towards a broader mission and stakeholder base (Urpelainen and Van de Graaf 2013). A related set of writings focused on the opportunities and limits of producer‒consumer relations in global oil, with a view to addressing the joint challenge of oil market volatility (Harks 2010). This academic conversation clearly moves from the zero-sum paradigm and towards a liberal approach to international relations. National and International Oil Companies and State Power A second reason why oil has been of interest to international relations scholars is because of the corporate entities that have dominated the production, refining and distribution of oil and oil products. The nationalization of oil production decisions led to the creation of a large number of NOCs in major oil-producing countries. For international relations scholars and scholars of comparative political economy, a key question centres around the relationship between NOCs and their governments. In fact the relationship between NOCs and host governments varies significantly by country (Marcel 2006), and firms adopt quite different strategies and have different capabilities (Victor 2013). This includes decisions by NOCs to increase investments internationally, which has been an important trend since the late 1990s (Cheon 2019). In addition, scholars are interested in how the presence of economic rents produced by oil affects the nature of the state and its behaviour. An interesting finding is that – just as high oil prices led governments in oil-importing states to diversify fuels beginning in the 1980s – it was also an important factor determining the nationalization of upstream oil assets, as the benefits

306  Handbook on oil and international relations of expropriation outweighed the costs (Mahdavi 2014). More broadly, nationalizations have distinct benefits in authoritarian political settings (Mahdavi 2020). Petroleum extraction is also associated with the longevity of authoritarian regimes, as well as corruption (Ross 2015). In this context, NOCs emerge as important channels for exerting power in the domestic political economy. Of lesser focus for scholars of international relations – although it has been important in business studies – is the intersection between the multinational IOCs headquartered in the West, and states. The relationship between these IOCs and governments was not a simple one. For their oil-rich host governments, IOCs represented an important source of state income. For example, the rise of the house of Saud and Saudi Arabia on the international stage is directly linked to the oil revenues flowing from the Arabian‒American Oil Company (ARAMCO), with United States (US)-based Standard Oil of New Jersey and Socony-Vacuum Oil as central stakeholders. At the same time, the IOCs’ technological and economic advantage represented an impediment to building up a domestic oil industry in resource-holding states. In particular the concession system governing the IOCs’ extraction rights and activities in overseas countries has been likened to the exercise of ‘colonial and semi-colonial supremacy of consuming countries over producing countries’ (Mommer 2000, p. 1). Companies’ influence stemmed from their ability to mobilize substantial financial resources, technical capabilities in managing exploration and production tasks, and control over refining and marketing (Turner 1983). For their Western ‘home’ governments, the Seven Sisters – Standard Oil of New Jersey, Gulf Oil Corporation, the British Petroleum Company, Royal Dutch-Shell, the Texas Company, Standard Oil of California and Socony Mobil Oil Company – represented important vehicles to secure supplies of oil from overseas. Until the nationalization of production in oil resource-owning countries started to gain traction in the 1960s, the market share of these seven IOCs amounted to up to 80 per cent of non-US and non-Communist production (Hartshorn 1967, p. 117). Western states such as the United Kingdom (UK) and the US, however, also used ‘their’ IOCs to exert hegemonic power, notably in the Middle East (Bromley 1991). As is driven home by more historical analyses, great power struggles between the UK, France, Russia and the US, in the Middle East but also in the context of the Cold War, centrally involved oil companies as proxy organizations: to control supplies, influence the market or project power (Barr 2018; Yergin 1991). Host governments also had capabilities that were useful to firms in pursuing market strategies, and firms successfully used those capabilities in pursuing market share both at home and internationally (Hartshorn 1967; Nowell 1994). The Historical Evidence on Oil and Coercion There are a number of reasons why the historical focus on NOCs, IOCs and states is insufficient to understand the relationship between international relations and oil. An important aspect here relates to the fact that oil and coercion are empirically weakly linked. In fact, counter to dominant public perceptions and policy discourses on oil, war and power, there exist only a few incidents in which oil has been used as a political weapon. Some of the most prominent cases prior to the 1970s oil crises also happened in the context of a belligerent environment; that is, during wartime. A case in point is the 1941 US embargo on oil exports to Japan. The embargo hit the Japanese military machinery and industry hard, as US oil constituted the bulk of overall crude imports. The Allied blockade of Nazi Germany during World War II was meant to curb

International relations and oil  307 supplies of raw materials crucial for warfare, including oil. The blockade deprived Germany of much of its seaborne crude imports and made the country switch to domestically produced synthetic petroleum, in addition to seeking crude supplies from Romanian oil fields. The blockade also informed Operation Edelweiss, the German attempt to seize military control over the Baku oil fields. Arguably the most prominent example of how oil was used for diplomatic coercion during peacetime is the 1973 oil embargo. At the time, the Organization of Arab Petroleum Exporting Countries (AOPEC) stopped oil supplies to Western countries, in reaction to the latter’s support of Israel during the Yom Kippur War. The embargo is widely perceived as a failure, as it did not alter the Western countries’ stance towards Israel, nor did it substantially disrupt supplies. However, in conjunction with a simultaneous and sharp increase in oil prices executed by the Organization of the Petroleum Exporting Countries (OPEC), the oil cartel, it ended a post-war economic growth trajectory in Western economies. Though not directly linked to coercive efforts, US operations in the Middle East have been linked to oil supplies. This goes for the 1990s Gulf War, but also the 2003 Iraq War, which have both been claimed to be ‘wars for oil’, and by extension acts of imperialism (Ahmed 2014; Jhaveri 2004). Control over Middle East oil supplies is conceived as a goal of US military action, but also a means to coerce global competitors such as China (O’Sullivan 2013). Yet, arguably, there exists little empirical evidence of the US exerting control over Iraqi oil in a post-conflict environment. Neither do US-based companies play a dominant role in upstream production; nor do they own or control the ownership of Iraqi crude reserves, which by law are owned by ‘the Iraqi people’. Overall, there is little empirical evidence for oil being used for coercing political adversaries, nor for it being very successful. Meierding (2016) notes that while oil has important military and economic value, the empirical record suggests that oil has not been a source of attempts at conquest historically. An important contribution is by Gholz and Press (2010), who identify four key mechanisms through which the oil market adjusts to weaken the threat of coercion by oil producers, including increased prices inducing growth in production and undermining cartel cohesion, and the presence of private and state-owned inventories that act as a hedge against supply shortages. More generally, the ability to coerce third parties using oil depends on market structures, an aspect we turn to next. Nationalization and Actor Proliferation Suppliers’ ability to impose costs on oil importers is determined by the market concentration at different stages of the supply chain, and the elasticity of demand. Over the past 40 years, however, the structure of supply has undergone significant change, altering the way the market is organized and how oil is priced. These structural changes have combined to make it difficult for single market players to exert coercive power. Prior to the 1970s, the entire oil supply chain was organized by a few major corporations, typically IOCs. IOCs represented vertically integrated businesses that took care of producing, refining and shipping the crude, including bringing it to the end consumer market. The period of IOC dominance was interlinked with colonialism, with concession agreements determining the revenues accruing to host governments, and with terms highly favourable to the IOCs (Parra 2004). The vertically integrated business model came under pressure when a number of oil-producing states nationalized their reserves and seized control over pricing and production

308  Handbook on oil and international relations decisions, a movement starting in the 1960s. This deprived the IOCs of significant sources of production upstream, hastening the deverticalization of the industry. Rather than being vertically integrated, with the key distinction being between countries that import oil and countries that export oil, the oil sector – including questions of market power from which security externalities emerge – is best understood as a series of linked but disaggregated markets, including exploration and production, refining, transport and distribution, and retail (Hughes and Long 2015). This means that the economic rents that are secured within the oil market accrue to a more diverse range of actors, although oil production from fields where it is cheap to lift oil remain the part of the industry that enjoys by far the largest margin, compared to low-margin, high-volume segments such as refining. As a result, oil shifted to become organized in a series of interrelated but discrete markets, incorporating exploration and production, transport, refining, and distribution and sales. Notably, the dynamics in each of these key segments differ substantially. For example, while scholarship has examined Chinese investment patterns internationally as net imports of oil have increased, an overlooked but important point is that rigidities in refinery infrastructure can limit the range of crude oil types able to be processed in the short term, which can affect the ability of states to manage supply shocks, and can also affect the location of investments made upstream (Kim 2016). In addition, private trading houses such as Vitol, Glencore and Trafigura stepped in to match buyers and sellers of crude oil and products, diversifying the range of actors involved in the physical supply of oil and oil products to final consumers (Blas and Farchy 2021; Goldthau and Hughes 2020). Overall, the incumbent academic concern with IOCs and NOCs no longer does justice to the core tenets of the modern oil market.

NEW ACTORS, AGENDAS AND IMPERATIVES The changes in the structure of the international oil market summarized briefly above bring into relief the importance of addressing three questions about the relationship between the oil sector and international relations. First, how we are to understand the new actors that play increasingly important roles in managing physical supply security and managing supply volatility, the two issues that have been the focus of studies on energy security and international relations. Second is the changing nature of traditional actors within the international oil market, as they have reorganized in response to changes in the international oil market, and the implications this has for the preferences of firms themselves. Third is the impact of climate change. Whilst climate change policies do not put an abrupt end to the oil age, ambitious decarbonization will see demand for oil products fall by 4 per cent year on year to 2050, and refinery runs fall 85 per cent over the same period by volume (IEA 2021, pp. 101‒102). This change fundamentally alters the incentives for incumbent actors and challenges their core business model. We address each below in turn. Emergence of New Actors Under a vertically integrated structure, security of supply and price volatility were managed by the international oil companies. The current market structure, in contrast, is characterized by a diversification of actors and interests, providing new capabilities designed to manage supply and price risks.

International relations and oil  309 In terms of price volatility, deverticalization led to the emergence of new actors and mechanisms for managing price volatility. A range of indices were created to price different grades of oil, along with financial products designed to limit the exposure of buyers and sellers to volatility in oil prices. Given that a core concern of the expanded definition of energy security includes the economic impact of price volatility, energy security necessarily incorporates financial market participants and their capacity for managing the economic impact of price volatility. A deverticalized market relies on index pricing and forward and futures markets as key mechanisms for managing price volatility. The reason here lies in the necessity to manage risk and to hedge against a possible mismatch in supply and demand, given that the upstream and downstream segments of the supply chain are operated by different market actors. Naturally, it was trading houses that in the early 1980s were the most prominent users of futures contracts in petroleum and petroleum products on NYMEX and the International Petroleum Exchange (Roeber and Kennington 1985, p. 25). Crude inventories held by private trading houses also play a central role in post-1970 oil market governance. Storage allows realizing opportunities for arbitrage, at the same time buffering possible supply shocks in the market. In addition, oil services companies such as Schlumberger have come to play a crucial role in exploration and development activities globally, including to NOCs, and in weakening the dominance IOCs had over the technologies and expertise involved in oil project development. It is fair to argue that nationalization-induced deverticalization, therefore, swung the pendulum toward private governance arrangements organizing the international oil market (Goldthau and Hughes 2020). Changing Interests of Established Actors A second and related change brought about through deverticalization is the changing interests of established actors. Changes in the international oil market have had important implications for the structure of traditional actors, centred on the NOCs, IOCs and states. The internationalization of NOCs in major oil-producing countries, for example, means that they have a broader and more globalized set of interests than was the case when they primarily operated assets within national boundaries (Cheon 2019). In terms of state‒firm relations, this does not mean that there is no capacity for host governments to influence NOCs, and vice versa. But these changes do mean that the relationship between the interests of NOCs and host governments are more varied, and the mechanisms through which the state is able to influence NOCs have also changed. The relationship of IOCs headquartered in oil-importing states with host governments has also changed. Most notably, the level of ownership of IOCs by host governments in oil-important states has fallen over time, and barriers to trade and investment in oil and oil products have also fallen (Hughes 2014). One reason for this is the changing interests of the companies themselves, which took advantage of the new opportunities that emerged following deverticalization of the industry to invest in new markets. States also face a more complex and diverse set of issues beyond the focus on availability and affordability at the heart of classical notions of energy security (Cherp and Jewell 2014). Emblematic of this new complexity is the role of information asymmetry between states and market actors in understanding energy security risks. A sustained period of oil price growth in the early 2000s, for example, prompted Western governments to investigate whether speculation was causing oil price changes. Speculation can be differentiated from hedging, as

310  Handbook on oil and international relations transactions in oil futures without direct commercial interest in the crude market. Buying or selling oil futures may be motivated by small arbitrage opportunities between crude contracts, which typically are short-term activities. Other forms of speculation may be more long term (Brunetti et al. 2013). While it has been argued that speculation is an important element of effective pricing, it may also increase market volatility. Responding to calls by the G8 Finance Ministers in 2008, the Task Force on Commodity Futures Markets, formed by the Technical Committee of the International Organization of Securities Commissions (IOSCO), investigated evidence of manipulative trading on commodity futures markets. The Task Force concluded that available evidence does ‘not support the proposition that the activity of speculators has systematically driven commodity market cash or futures prices up or down on a sustained basis’ (IOSCO 2009). The US Interagency Task Force on Commodity Markets came to similar conclusions when assessing oil price volatility for West Texas Intermediate oil contracts. IOSCO did recommend, however, that transparency of trading on commodity markets should be improved, and that state regulatory agencies should strengthen surveillance capacity. The Impact of Climate Change Although orthogonal to changes in the structure of the international oil market itself, it is also important to recognize that climate change is introducing a vastly different operating environment for both NOCs and IOCs. One of the key effects that climate change brings to the market is that it is likely to put an end to oil use. Though oil may be phased out later than coal, it is a fossil fuel energy carrier that eventually will leave the energy system, and that will be replaced by technological alternatives such as batteries or power-to-liquids in the mobility and heavy-duty transport sector. The effect on the value of oil in the market is not immediate, so prices may not be affected for some time to come. In the medium term, however, major oil-consuming nations, including those in the European Union (EU) and the US, will decrease demand. The EU, for example, is likely to lower oil consumption significantly as of 2030, as part of its decarbonization pathway towards meeting its Paris Agreement targets by 2050. The US has also announced ambitious carbon reduction targets and pledged to achieve carbon neutrality by 2050. Parts of the demand reduction in advanced economies may well be compensated by increments in emerging states such as China and India. That said, China, the world’s largest emitter of greenhouse gases, has set the target of being carbon neutral before 2060. The country is emerging as a key market for electric vehicles (EVs), which may at least dampen demand increments in oil related to transport. It is fair to state that the overall trend away from oil as a fuel of choice in transport, and possibly also elsewhere, points to structurally softer oil markets going forward (IEA 2021). Demand growth is projected to level off before eventually coming down. Short of adjustments in supply, climate change policies therefore put downward pressure on oil prices. Moreover, climate change policies alter the investment environment for oil. If oil scarcity, and sufficient supply at affordable prices, have been concerns in the past, the tables have turned: we now live in the age of abundance. The problem is no longer that there is not enough crude oil available; by contrast, if all available reserves were burnt, this would lead to disastrous climate change. In other words, oil needs to stay in the ground. By some estimates, around half of the world’s proven oil reserves will not be exploited in a Paris

International relations and oil  311 Agreement-compatible decarbonization pathway (IEA/IRENA 2017). This has important knock-on effects. Significant oil assets will need to be written off balance sheets, which is likely to affect producer states more than private Western oil corporations. If this process does not happen fast enough, companies, and possibly even entire states, face the risk of significant stranded assets (Manley et al. 2017). Furthermore, investment into developing oil assets will only happen if the investment pays off even under the conditions of tightening climate policies. One direct implication is that it will also be higher-quality types of oil with a relatively lower carbon content that will see investment going forward, whereas heavier types of crude will find it hard to attract capital. Venezuela, a country producing some very heavy oil, will likely be affected more than many countries in the Middle East, which produce light and sweet crude. For many oil-rich countries, this implies that they urgently need to rethink their economic model. Taking the EU’s decarbonization pathway as a benchmark, the time that is left to fundamentally diversify single-export product economies amounts to a good decade, and possibly a bit longer for states blessed by low lifting costs and high-quality oil. What is more, this challenge extends to their national oil companies. The imperative here is to diversify their business model away from extracting and selling crude, which by definition is challenging for corporate actors that were set up and designed to own and manage oil reserves. Some business observers argue that NOCs may become agents of change towards a low carbon economic model, leading the way because of their central role in the political economy of producer states (Alkadiri and Ewers 2020). It may well be, however, that the incumbent role NOCs play instead results in inertia and resistance to change. The very fact that producer states and their NOCs have not changed course away from an extractive business model testifies to the strength of path dependence and lock-in, and how difficult it is for rentier states to leave an economic model based on fossil fuel revenue streams. The Energy Transition and OPEC Market Share The world moving away from oil is indeed about to significantly impact upon producer economies. Yet the way in which rentier states are affected differs significantly. As Goldthau and Westphal (2019) demonstrate, a key role is played by the lifting costs and the social price of oil. Lifting costs determine which producer countries stay in the market going forward, and whether their oil production remains competitive in a softening market environment. The social price of oil, by contrast, tells whether countries can in fact live with the revenues derived from a given oil price level. Oil producer states tend to have inflated public sectors; heavily subsidize energy, water and other services; or feature an oversized military and intelligence apparatus. These budget lines not only push upward the fiscal break-even price of oil, that is, the price that is needed to balance the budget. They are also hard to change without endangering the often fragile social contract in producer states. As the oil market becomes softer, a corollary of an advancing energy transition, competitive lifting costs and an acceptable social price of oil become the key determinants for which countries remain players in the market. Saudi Arabia, Kuwait and the United Arab Emirates, for example, feature low production costs and are able to maintain the social contract even in a softer price environment. Norway and Canada may manage with a low social price of oil but clearly face high lifting costs. Iran and Iraq arguably have the opposite problem: that is, low lifting costs but a fragile social contract to maintain, which requires high oil prices. Venezuela

312  Handbook on oil and international relations and Nigeria arguably are both high-cost producers with high social prices of oil. Against this backdrop it is fair to argue that some players will leave the oil market with possibly dire consequences for the economy and social peace. It is not inconceivable that some former producer states may even become a source of regional instability (Bazilian et al. 2020). As a corollary of fewer players populating the oil market, the market itself is set to become more concentrated. Though the market will shrink in total volume, some players may also claim a larger share. The demand side, by contrast, remains preoccupied with decarbonizing energy systems, and market power remains dispersed. Saudi Arabia and other Middle Eastern oil producers may well end up being able to organize producer interests more effectively than ever before, given that a number of high-cost producers will have left the game. Ironically, therefore, the low carbon energy transition may in fact mean that OPEC and its NOCs play an ever more important role in the oil market. In other words, the energy transition is about to significantly change the international political economy of the oil market. Yet, rather than tilting market power towards consumers, as postulated by some (Scholten 2018), it may well be the market incumbents on the producer side that stand to gain – until the world ultimately leaves fossil fuels altogether.

NEW FRAMEWORKS FOR THINKING ABOUT POWER AND INTERNATIONAL OIL What, then, are we to take from the changes in the structure of the international oil market, and the emergence of new actors and preferences that have occurred because of that change in structure? And what are the implications for international relations in understanding the international oil market? The analysis above presents a call to develop new frameworks that are able to incorporate a broader array of actors, and their roles in shaping oil markets in ways that are relevant to enquiry for scholars of international relations, and political economy. A promising approach to grasp how power and oil are linked, in light of increasing complexity in market interactions and actor proliferation, is networked power. This strand of research has gained increasing prominence in international relations scholarship in recent years, particularly due to the rise of globalization. It lies within the broader liberal tradition of the discipline, which has always favoured more pluralist frameworks compared to the state-centric realist approach. The key aspect that a networked power approach brings to the study of oil is that it allows capturing markets that are characterized by a proliferation of actors interacting according to different logics, but with different degrees of power over one another. The latter depends on the nature of the instruments that actors have available to them, and on their position within the actor network (Kahler 2009). Rather than looking at the international relations of oil as being tied to hierarchical, vertically integrated organizational structures, a networked power approach therefore acknowledges a plethora of market players, from public to private, and the specificities of the relational network they operate in. Indeed, the congressional hearings that were held in the 2000s to examine the causes of rapidly increasing oil prices is an example of this networked structure of power in practice. Congressional committees responded to this oil price volatility by exercising a form of power over a range of different economic actors involved in the oil market, with the purpose of under-

International relations and oil  313 standing what their position is, and the position of other actors, within this complex network of power and governance that characterizes the oil market today. Furthermore, as noted by Kahler (2009), networked power can be understood as far more varied than more traditional notions of power that are typically used within studies of the international oil market, which focus on the power to coerce. Thus, Kahler (2009, p. 12) identifies several forms of power that are prevalent with networks. The ones particularly relevant to the analysis of the politics of international oil are bargaining power and social power. Each of these offers promising ways to capture pertinent phenomena of contemporary oil. Bargaining power essentially focuses on the ability to extract some kind of benefit from another actor within the network. Here, the notion of the obsolescing bargain (Vernon 1971) is important, as it captures the nature of bargaining between governments and companies that are investing in long-lived assets with high capital costs, as typically found within the oil industry. As such, the obsolescing bargain model has been widely used to assess the relations between host states and IOCs (Vivoda 2011). Understood as an element of networked power within the international oil market, it explains the significant empirical differences in IOC‒host state relations. For example, in the aftermath of the wave of oil sector nationalizations, there exists significant variation in the degree to which governments in oil-producing states allow inward foreign direct investment in their oil sectors. Social power refers to the social capital that a given actor obtains as a result of participating in a network. Once again, there are examples of the exercise of this kind of power within the oil industry, primarily as part of membership in international organizations such as OPEC, which is made up of major oil exporters, or the International Energy Agency (IEA), which is made up of the major oil-importing countries of the Organisation for Economic Co-operation and Development (OECD). Colgan (2014), for example, shows that membership of OPEC confers diplomatic benefits on countries, through their ability to exercise greater diplomatic power than they would be able to absent that membership. Member states within the IEA are able to sponsor studies by the organization on particular technology solutions that are of interest to them, and in doing so seek to shape the technology pathways that are chosen during the transition to the use of low carbon technologies. Clearly, the role of social power is not systematically studied for the case of oil, and promises important insights into how different types of power materialize for different types of actors.

CONCLUSION In conclusion, it is imperative to move beyond the so-far dominant notion of coercion in international oil relations. This begins by acknowledging the multiplicity of agents beyond states, IOCs and NOCs, which enables scholars to understand the incentives of these new actors, and assess their implications for the functioning of the international oil market and how they influence states’ energy security. It also focuses on the need to understand the nature of the relationship between this broad range of actors pursuing different aims within the market that ultimately seeks to match buyers and sellers at a given price. A potentially fruitful approach, we posit, is to expand our understanding of the political economy and the international relations of oil by focusing on networks of power within the international oil market. There is clearly a new and broad agenda here, and the call is for international relations scholars to describe and explain the nature of power within this complex and diverse market, and to use

314  Handbook on oil and international relations the international oil market as an opportunity to test general theories about how best to understand power in the international system.

NOTE 1. There are exceptions. The United States was both a major producer and a growing consumer of oil in the period prior to World War II, as was the Soviet Union. Today, although China has emerged as the world’s largest importer of crude oil, the country is also a significant producer of crude oil. In addition, the goods being traded have changed over time. In the pre-World War II period the United States was a major exporter; however, its exports were in the form of refined products such as heavy oil and gasoline, rather than crude oil. European states and Japan introduced policies designed to increase refining capacity within their own countries, partly in response to the desire to increase control over the supply chain within their national borders.

REFERENCES Ahmed, N. (2014), ‘Iraq invasion was about oil’, The Guardian, 20 March. Alkadiri, R. and B. Ewers (2020), ‘Preparing national oil companies for a new energy landscape’, Washington, DC and United Arab Emirates: Boston Consulting Group. Barr, J. (2018), Lords of the Desert: Britain’s Struggle with America to Dominate the Middle East, London: Simon & Schuster. Bazilian, M., M. Bradshaw, J. Gabriel, A. Goldthau and K. Westphal (2020), ‘Four scenarios of the energy transition: drivers, consequences, and implications for geopolitics’, WIREs Climate Change, 11 (2). https://​doi​.org/​ 10.1002/wcc.625. Blas, J. and J. Farchy (2021), The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources, Oxford: Oxford University Press. Bromley, S. (1991), American Hegemony and World Oil: The Industry, the State System and the World Economy, University Park, PA: Pennsylvania State University Press. Brunetti, C., B. Büyükşahin and J.H. Harris (2013), ‘Herding and speculation in the crude oil market’, Energy Journal, 34 (3), 83‒104. Cheon, A. (2019), ‘Developing global champions: why national oil companies expand abroad’, Economics and Politics, 31 (3), 403‒427. Cherp, A. and J. Jewell (2014), ‘The concept of energy security: beyond the four As’, Energy Policy, 75, 415‒421. Colgan, J. (2013), ‘Fueling the fire: pathways from oil to war’, International Security, 38 (2), 147–180. Colgan, J. (2014), ‘The emperor has no clothes: the limits of OPEC in the global oil market’, International Organization, 68 (3), 599‒632. Florini, A. (2011), ‘The International Energy Agency in global energy governance’, Global Policy, 2 (1), 40‒50. Gholz, E. and D.G. Press (2010), ‘Protecting “the prize”: oil and the US national interest’, Security Studies, 19 (3), 453‒485. Goldthau, A. and L. Hughes (2020), ‘Saudi on the Rhine? Explaining the emergence of private governance in the global oil market’, Review of International Political Economy, 28 (5), 1‒23. Goldthau, A. and K. Westphal (2019), ‘Why the global energy transition does not mean the end of the petrostate’, Global Policy, 10 (2), 279‒283. Goldthau, A. and J.M. Witte (2011), ‘Assessing OPEC’s performance in global energy’, Global Policy, 2 (Special Issue), 31‒39. Harks, E. (2010), ‘The International Energy Forum and the mitigation of oil market risks’, in A. Goldthau and J.M. Witte (eds), Global Energy Governance: The New Rules of the Game, Washington, DC: Brookings Press.

International relations and oil  315 Hartshorn, J.E. (1967), Oil Companies and Governments: An Account of the International Oil Industry in Its Political Environment, London: Faber & Faber. Harvey, D. (2003), The New Imperialism, Oxford: Oxford University Press. Hughes, L. (2014), Globalizing Oil: Firms and Oil Market Governance in France, Japan, and the United States, New York: Cambridge University Press. Hughes, L. and P.Y. Lipscy (2013), ‘The politics of energy’, Annual Review of Political Science, 16, 449‒469. Hughes, L. and A. Long (2015), ‘Is there an oil weapon? Security implications of changes in the structure of the international oil market’, International Security, 39 (3), 152–189. IEA (2021), ‘Net zero by 2050: a roadmap for the global energy sector’, Paris: International Energy Agency. IEA/IRENA (2017), ‘Perspectives for the energy transition – investment needs for a low-carbon energy system’, Paris, France and Abu Dhabi, UAE. IOSCO (2009), ‘Technical Committee Report of the Task Force on Commodity Futures Markets’, Madrid. Jhaveri, N.J. (2004), ‘Petroimperialism: US oil interests and the Iraq War’, Antipode, 36 (1), 2‒11. Kahler, M. (2009), Networked Politics: Agency, Power, and Governance, Ithaca, NY: Cornell University Press. Kaufmann, R.K., D. Stephane, P. Karadeloglou and M. Sanchez (2004), ‘Does OPEC matter? An econometric analysis of oil prices’, Energy Journal, 25 (4), 67‒90. Kelanic, R.A. (2016), ‘The petroleum paradox: oil, coercive vulnerability, and great power behavior’, Security Studies, 25 (2), 181‒213. Kim, I. (2016), ‘Refining the prize: Chinese oil refineries and its energy security’, Pacific Review, 29 (3), 361‒386. Klare, M. (2001), Resource Wars: The New Landscape of Global Conflict, New York: Henry Holt. Mahdavi, P. (2014), ‘Why do leaders nationalize the oil industry? The politics of resource expropriation’, Energy Policy, 75, 228‒243. Mahdavi, P. (2020), Power Grab: Political Survival through Extractive Resource Nationalization, Cambridge: Cambridge University Press. Manley, D., J. Cust and G. Cecchinato (2017), ‘Stranded nations? The climate policy implications for fossil fuel-rich developing countries’, OxCarre Policy Paper 34, Oxford: Oxford Centre for the Analysis of Resource Rich Economies. Marcel, V. (2006), Oil Titans: National Oil Companies in the Middle East, Baltimore, MD: Brookings Institution Press. Maugeri, L. (2006), Age of Oil: The Mythology History and Future of the World’s Most Controversial Resource, Westport, CT: Praeger Publishers. Meierding, E. (2016), ‘Dismantling the oil wars myth’, Security Studies, 25 (2), 258‒288. Mommer, B. (2000), ‘The governance of international oil: the changing rules of the game’, Oxford: Oxford Institute for Energy Studies. Nowell, G.P. (1994), Mercantile States and the World Oil Cartel, 1900–1939, Ithaca, NY: Cornell University Press. O’Sullivan, M.L., 2013. ‘The entanglement of energy, grand strategy, and international security’, in Andreas Goldthau (ed.), The Handbook of Global Energy Policy, Chichester: John Wiley & Sons, pp. 30–47. Parra, F. (2004), Oil Politics: A Modern History of Petroleum, London and New York: I.B. Tauris. Roeber, J., and A. Kennington (1985), ‘Futures trading and the oil industry: a slow revolution’, Journal of Energy & Natural Resources Law, 3 (1), 21‒30. Ross, M.L. (2015), ‘What have we learned about the resource curse?’, Annual Review of Political Science, 18 (1), 239‒259. Said, Y., M. Kaldor and T.L. Karl (eds) (2007), Oil Wars, London: Pluto Press. Scholten, D. (2018), ‘The geopolitics of renewables ‒ an introduction and expectations’, in D. Scholten (ed.), The Geopolitics of Renewables, London: Springer, pp. 1–33. Turner, L. (1983), Oil Companies in the International System, 3rd edn, Winchester, MA: Allen & Unwin.

316  Handbook on oil and international relations Urpelainen, J., and T. Van de Graaf (2013), ‘The International Renewable Energy Agency: a success story in institutional innovation?’, International Environmental Agreements: Politics, Law and Economics, 15 (2), 159‒177. Van de Graaf, T. (2017), ‘Is OPEC dead? Oil exporters, the Paris agreement and the transition to a post-carbon world’, Energy Research and Social Science, 23, 182‒188. Vernon, R. (1971), Sovereignty at Bay: The Multinational Spread of US Enterprises, New York: Basic Books. Victor, D.G. (2013), ‘National oil companies and the future of the oil industry’, Annual Review of Resource Economics, 5 (1), 445‒462. Vivoda, V. (2011), ‘Bargaining model for the international oil industry’, Business and Politics, 13 (4), 1‒34. Yergin, D. (1991), The Prize: The Epic Quest for Oil, Money, and Power, New York: Simon & Schuster.

21. Global capitalism and oil Tim Di Muzio and Matt Dow

INTRODUCTION While finance and the practice of investing for profit predates the widespread use of fossil fuels, by at least the eighteenth century capitalism was becoming ever more wedded to this new source of energy (Goetzmann 2016). This began with the first industrial revolution in Britain (1760–1840) that was heavily reliant on coal, steam and labour power (Allen 2012). There is little doubt that many factors contributed to this revolution, but the primary outcome resulted in the fact that British capitalism, industrialism and social reproduction was no longer bounded to traditional sources of energy (for example, peat, timber, animals) (Barca 2011; Goldstone 2002; Malm 2016; Nef 1977; Wrigley 2010). Though coal and capitalism were fused in Britain’s first industrial revolution, it was the discovery of petroleum in the nineteenth century that would revolutionize global capitalism as a socio-political-economic system (Di Muzio 2015a). It is important to recall the exceptionality of oil in human history, having only been consumed in abundance, albeit unevenly, for a little over a century. From this point on, global capitalism, economic growth, geopolitical power and the social reproduction of life would become increasingly tethered to the global production and consumption of oil. This chapter explores past, present and future aspects of global capitalism’s dependence on the production and consumption of oil for financial accumulation and social reproduction. To do so, we use the critical political economy framework known as ‘capital as power’, and argue that this perspective is more convincing than its rivals for understanding the relationship between global capitalism and oil. To demonstrate our argument, we have divided this chapter into three main sections. In the first, we outline the capital as power approach and juxtapose it with traditional international relations and political economy theories that have often framed oil as a ‘strategic commodity’ used to project military power, or an ‘input’ for the capitalist mode of production that should be managed through the price mechanism of the market. We then demonstrate how global financial and physical infrastructure as well as modern warfare emerged during an era of relatively cheap, accessible and abundant fossil fuels. In the third section, we engage in a debate on the need for a renewable energy transition and examine the prospects of such a change considering the importance of oil, the logic of pecuniary accumulation and the global climate emergency. We conclude with a summary of the main points presented in the chapter.

CAPITAL AS POWER AND OIL It is our contention that to have a considerable appreciation of the relationship between global capitalism and oil, we first must come at the problem with a convincing theoretical framework. In this section, we will outline the capital as power framework and differentiate it from traditional international relations and political economy theories. As Stoddard’s (2013) summary 317

318  Handbook on oil and international relations of the literature on international energy affairs suggests, mainstream approaches are bifurcated into two major perspectives: the realist/geopolitical and the liberal/economic. To be sure, both approaches have something to offer to the debates on the importance of oil, but as we will show, they also have shortcomings. The realist/geopolitical approach largely considers oil as a strategic commodity with the potential to ignite international conflicts. This is due to oil’s non-renewability, its geographical locations and its importance for modern warfare and economy (Colgan 2013; Klare 2002). In this approach, theorists and foreign and national policy advisers are largely concerned with matters of energy (in)security, energy access and disparity, and the balance of lethal force to ensure or contest energy provisioning (Luft and Korin 2009; Painter 1986). Yet, there is virtually no discussion or attempt to theorize global capitalism in general, and little if any theorization of the relationship between capitalism and oil (Di Muzio and Dow 2019; Di Muzio and Ovadia 2016). This is largely because this approach takes on international energy relations from a methodological position that prioritizes the state as the basic ontological unit of international affairs. Thus, the relationship between capitalism and oil takes a back seat to the role of the state in securing energy through warfare or diplomacy. One would think that the liberal/economic approach to energy would be more open to examining the relationship between global capitalism and oil. But here too we find a failure to engage with debates on capitalism or any deep theorization of how integral oil is to financial accumulation and social reproduction (Di Muzio and Ovadia 2016). In this second approach, we find a focus on oil scarcities, oil prices and the price mechanism of the market as the chief regulator of oil’s supply and demand, as well as the belief that states can cooperate to overcome the insecurity of energy provisioning (Hancock and Vivoda 2014; Keohane 1978). In other words, the need for oil does not have to lead toward international conflict, as energy security can be accomplished through global free market exchanges between buyers and sellers. Another approach to understanding the relationship between capitalism and oil is that of Marxism. There are far too many micro-differences amongst competing variants of Marxism to address here, but there are three underlying ontological assumptions that most Marxist schools of thought subscribe to.1 The first assumption, unlike the previous two approaches, is that Marxists do have a theorization of global capitalism and energy. Capitalism is a distinct mode of production where most of humanity are waged workers who to survive must sell their labour power to the owners of the means of production (Brenner 1977; Wood 2002). The second assumption is that Marx and his followers have largely treated oil and energy more broadly as the fourth factor of production alongside land, labour and capital (Debeir et al. 1991; Tanzer 1969, p. 3). Similarly to the realist/geopolitical approach, global oil insecurity or conflict takes place due to oil’s importance for militarism and capitalism. The major difference, though, is that Marxists understand the balance of powers in the world system as inseparable from social relations and forces within the global capitalist economy (Anievas and Nişancioğlu 2015; Callinicos 2009; Cox 1987; Gill 2008; Harvey 2003). Simply put, the position of nation-states in the world system are determined by their relationship to the capitalist world economy. As a result, some (neo)Marxists study the importance of oil through the theorization of imperialism, which illustrates that, due to oil’s significance to industrialism and militarism, both the Global North’s and the United States’ foreign policies and military interventions are rooted in exploiting or controlling the Global South’s oil reserves (Bromley 2005; Harvey 2003; Labban 2008; Stokes and Raphael 2010). The third assumption, by some

Global capitalism and oil  319 Marxists, is to understand this mode of production as ‘fossil capitalism’ or ‘fossil capital’, which argues that the British industrial revolution is the actual origin of capitalism (Angus 2016; Foster 2018; Malm 2016; New Dragett 2019). This transformation by the British capitalist class replaced the water wheel with coal and the steam engine to expand and increase the subordination and exploitation of workers to capital accumulation, starting with the mass production of British textiles (Malm 2016). Thus, the use of fossil fuels and the emergence of capitalism are intertwined, and remain so to this day. There are some major theoretical shortcomings with the Marxists’ interpretation of the relationship between oil and capitalism. The first is that some Marxist schools of thought have conflated industrialism with capitalism, and maintain that the central feature of global capitalism is the exploitation of labour power during the production of commodities (Braudel 1983; Di Muzio and Dow 2017). The reason for this is that the tradition of Marxism is still very much anchored to Marx’s labour theory of value (Foster 2018). There is no doubt that labour can be exploited and disciplined, but Marx’s economic theory was an attempt to argue that all commodity prices and the accumulation of earnings and losses by corporations can only be explained by specific forms of labour power exploitation or resistance. Empirically, this has never been demonstrated (Nitzan and Bichler 2009). This leads to the second shortcoming, as most Marxists still treat oil and energy systems, more broadly, as simply an input or auxiliary in industrial production, as Marx did himself (Alam 2009, p. 171; Di Muzio 2015a; Di Muzio and Ovadia 2016; Georgescu-Roegen 1976). Therefore, Marxists have a limited theoretical approach to understanding the fundamental relationship between global capitalism and oil outside of the industrial production of commodities and militarism. The above liberal, realist and Marxist approaches have their merits, but we prefer to examine the relationship between oil and capitalism through the lens of the capital as power perspective. The genealogy of the capital as power approach is far too long to address here (see Bichler and Nitzan 2020). But the capital as power approach is radically different from the previous political economy approaches insofar as it theorizes capitalism as a mode of power, which highlights hierarchical social power as the fundamental driving force of accumulation, not just exploitable production/property relations or voluntary exchanges. In the capital as power approach, the accumulation of capital is theorized as commodified differential power (measured in money). What this suggests is that capital exists as ‘finance and only finance’, not as socially abstract labour time or utils (Nitzan and Bichler 2009, p. 7). This is one of many departures between the capital as power approach and Marxism, as the latter understands finance as ‘fictitious capital’ whereby finance only distorts, absorbs or parasitically lives off all surpluses generated in the production process (Nitzan and Bichler 2009, pp. 168ff; see Durand 2017). The capital as power perspective starts from the idea that the primary act of capitalists or investors – defined as individuals who make more money from their investments than their labour – is the capitalization of one or more income streams. The chief entities that are capitalized for profit are corporations, through their sale of stock and corporate bonds, and states, through the issuance of government securities. For instance, since capitalists do not all have the same ownership portfolio, and corporations have different and fluctuating revenue streams and earnings, and the interest rates on government bonds differ, the capital as power approach speaks of differential accumulation. To the scholars that developed this new perspective on capitalism, differential accumulation means that there are different rates of return for both individual capitalists and corporations (Nitzan 2001; Nitzan and Bichler 2009). Those corporations with the largest market capitalization (also referred to as market value) are called

320  Handbook on oil and international relations ‘dominant capital’ and are reasoned to be more powerful in shaping the terrain of social reproduction than their weaker counterparts with lesser earnings and therefore lesser capitalization. This is because, in the long run, investors are capitalizing greater corporate earnings, and earnings are a matter of having the power to shape and reshape the economy and the wider terrain of global social reproduction. By social reproduction, we mean ‘the way in which any given society produces, consumes, and reproduces its lives and lifestyles, how it conceptualizes these actions and how it defends them both discursively and materially – for example in war or legal action’ (Di Muzio 2015a, p. 16). What this suggests is that the financial accumulation of earnings and rising share prices are not a narrow offshoot of producing goods and services, but the result of a broad power process exerted over society by corporations. Put simply, the profit of firms depends on several social, environmental, legal, political and geographical factors (Cochrane 2020). The process of capitalization involves discounting expected future profits into a present value which then can tell us something about the future expectations of investors. In this sense, capitalization of the oil and gas sector of the global economy can be taken as an indicator of what investors expect in the future. This is so because of the time value theory of money in modern finance: the idea that a dollar is worth more today than it is tomorrow, since it can start making a return; and in the capitalist worldview, money should always make more money. To provide a quick and simple example: you would not invest $100 today to receive $75 next week (a $25 dollar loss). Obviously, this goes against the practice of investing to gain a return. But you might pay $75 today for a future return next week of $100 (a $25 dollar return). This example, however simple, demonstrates to us why investors discount expected future profit. Knowledge of this practice gives us some insight into how we might weigh the power and importance of the global fossil fuel industry, because capitalization is a window into what investors expect in the future. This does not mean that they will be correct in their estimations, but it does mean that there is at least an attempt to discount future trends. Not surprisingly, given the centrality and magnitude of fossil fuels for the global economy, the oil and gas industry is still one of the most heavily capitalized sectors of the global economy (PWC 2020). The PricewaterhouseCoopers report demonstrates that out of the top 100 corporations, by market capitalizations, there are still eight dominant oil and gas companies listed,2 having a combined market capitalization of US$2.4 trillion (March 2020) (PWC 2020).3 If we take a larger snapshot of the top 78 oil and gas corporations, the market capitalization of the sector is US$3.7 trillion (November 2020).4 The oil and gas industry is the fifth-largest economic sector by market capitalization out of the 11 that comprise the world stock market. This is because oil not only remains a lucrative and unique asset class that offers investors ‘overall scale, liquidity, value growth, and dividend yield’, but it is also one of the most consumed substances on the planet, at 91.3 million barrels per day (Bullard 2014, p. 1; IEA 2020a). However, if the oil and gas industry is unlikely to continue to generate earnings, and has the potential to be replaced by the renewable energy industries as the primary source of global energy, this should result in a rapid decline in market capitalization. Between 2015 and the start of the COVID-19 pandemic in 2020, oil prices have been trending lower, at an average of US$40 to US$60 a barrel, than the historic average highs of 2005–11 that ranged from US$50 and US$147 (WTI 2020; see Figure 21.1). Yet, due to the Russian and Saudi Arabian oil price war and the COVID-19 pandemic, oil prices collapsed at one point in 2020 to US$11.26 a barrel. Hillier (2020) reported that from the last financial quarter of 2019 to the end of the first quarter of 2020, the top 25 oil and gas

Global capitalism and oil  321

Notes:  ‘Interactive charts of West Texas Intermediate (WTI or NYMEX) crude oil prices per barrel back to 1946. The price of oil shown is adjusted for inflation using the headline Consumer Price Index (CPI) and is shown by default on a logarithmic scale. The current month is updated on an hourly basis with today’s latest value. The current price of WTI crude oil as of November 20, 2020 is $42.37 per barrel’ (Macrotrends 2020).

Figure 21.1

Crude oil prices: 70-year historical chart

corporations lost a median of 52.2 per cent of their market value. For example, ExxonMobil’s market capitalization was around US$300 billion at the end of 2019, and as of 20 January, 2021, it was US$206 billion (Hiller 2020).5 But this is not the whole market value, or the whole story of the global oil and gas industry, because a distinction must be made between oil and gas corporations whose shares trade on the stock markets of the world, and national oil companies. The actual owners of the global oil and gas industry are not publicly listed oil and gas corporations, but state-owned oil firms that control roughly 75 to 90 per cent of all known oil reserves in the world (Hoyos 2007; Jaffe and Soligo 2007). This only leaves 10 per cent of oil reserves that are controlled by publicly listed firms, which only have 11.1 years of oil left to produce at the current rate if no new oil reserves are found, purchased or rented (Bousso 2018).6 As a result, ExxonMobil, the largest publicly listed oil company by oil production, only produces 2.3 million barrels (mbbl) per day, which means that it only supplies the world with 2.5 per cent of its oil energy needs (Ali 2019). The Organization of the Petroleum Exporting Countries (OPEC), which comprises 13 countries, controls roughly 79.4 per cent of global oil reserves, and as of 2018 produces roughly 35.6 mbbl/day, which represents 36 per cent of global oil production per day (OPEC 2019). Since the 1990s, the global oil industry, once again, has been consolidated not by public corporations but by state-owned oil firms such as Saudi Aramco, Russia’s Gazprom/Rosneft, China’s Sinopec and PetroChina, the National Iranian Oil Company, Venezuela’s PDVSA, Brazil’s Petrobras and Malaysia’s Petronas, to name just a few. Back in 2006, the Financial Times attempted to estimate the value of the 150 non-public oil and gas firms and put their estimated market value at US$3.1 trillion. Adjusted for inflation in 2020, it would be roughly US$4 trillion (Guerrera 2006). However, there are

322  Handbook on oil and international relations Table 21.1 Location

National and joint stock oil and gas companies Country’s oil reserves,

% of government Company name

Profits

Market capitalization

($ million)

($ billion)

world %

ownership

Venezuela

18.2

100

PDVSA

$22 492*

N/A

Saudi Arabia

16.2

98.5

Saudi Aramco

$88 210.9

$1 759.625

Iran

9.5

100

National Iranian Oil

$19 233*

N/A

Company Iraq

8.7

N/A

Consortium

$80 027*

N/A

Kuwait

6.1

100

Kuwait Petroleum

$52 433

N/A

United Arab

5.9

60

Abu Dhabi National

$603.86**

$44.250

Company Emirates

Oil Company For Distribution

Russia Libya

4.8 2.9

50.23

Gazpom

$18 593

$58.185

50

Rosneft

$10 943.6

$50.915

100

National Oil

$24 188*

N/A

$45 106

N/A

Company Nigeria

2.2

100

Nigerian National Petroleum Corporation

China Brazil

1.5

98.15

Sinopec

$6 793.2

$72.126***

96.79

PetroChina

$4 443.2

$114.559***

$10 151

$56.377

1

54

Petrobras

Mexico

0.59

100

Pemex

$-18 038.7

N/A

Norway

0.3

64

Equinor

$1 843

$48.049

Malaysia

0.2

50

Petronas

$7 975.1

$8.09****

Sources:  Data retrieved from Fortune.com and https://​www​.worldometers​.info/​oil/​. * Data retrieved from OPEC, Value of petroleum exports. ** Data retrieved from https://​www​.dnb​.com/​business​-directory/​company​-profiles​.abu​ _dhabi​_national​_oil​_company​_for​_distribution​.51​d20f28daa0​bb41a2ae72​1c1aa1f0d0​.html. *** Data retrieved from https://​finance​.yahoo​.com/​quote/​SNP/​ and https://​finance​.yahoo​.com/​quote/​PTR/​. **** Data retrieved from https://​ markets​.businessinsider​.com/​stocks/​petronas​_gas​_bhd​-stock (all data accessed and collected 23 November 2020).

aspects of this that need unpacking. Firstly, while imputing an estimated market value to state-run oil and gas companies is useful, they do not have a market value that fluctuates with the future expectations of investors. Secondly, due to OPEC and Russia’s economies being directly tied to oil prices, they have suffered from low oil prices because they need oil at a certain price not only to finance their deficits but also to generate state revenue (IMF 2020).7 Thirdly, we would suggest that this is probably a very conservative market value estimate even with the current state of affairs, relatively volatile oil prices and the reduction of global production and transportation due to COVID-19 (see Table 21.1). As seen in Table 21.1, most national oil corporations are still completely government owned. Yet, some have released limited amounts of stock, as seen in the Initial Public Offering (IPO) of Saudi Aramco when it became the largest company in the world with a US$2 trillion valuation on 11 December 2019 (Cohen 2019). The major reason for this incredible valuation is not only that the world economy is tied to oil consumption, but that the peak of conventional oil has already taken place. At current rates of oil consumption, the world only has an estimated 47 years left of production (BP 2020). This may or may not escalate the price of oil, but one thing is for sure: these governments, in control of the world’s largest remaining oil

Global capitalism and oil  323 supplies, will want to generate as much revenue as they can from selling carbon energy before it becomes unprofitable to do so. With these facts in mind, we can now argue that global capitalism: is a politico-economic system premised on the social property relations between hierarchically arranged owners and non-owners whereby income-generating assets are differentially capitalized based on the institutional power of businesses and governments to generate income streams by shaping and reshaping the landscape of social reproduction through the market and price system (Di Muzio and Dow 2017, p. 9)

What has energized this politico-economic system for 300-plus years has been carbon energy; hence, we call this period of capitalism ‘carbon capitalism’. Energy can be defined as the capacity to do work, and consuming more energy means the greater capacity for more work, but also that accumulation is bound up with the monetization of energy across all sectors of the global economy (Hall and Klitgaard 2012; Smil 1994, 2010). Carbon capitalism not only highlights the central importance of carbon energy in production and social reproduction, but it also helps us to understand how the acceleration and relative universalization of capitalist development would have been impossible without abundant, affordable and accessible fossil fuels (Di Muzio 2015a). Therefore, the next section will explore the historical and present conditions of the petroleum-dependent world order.

THE GLOBAL POLITICAL ECONOMY OF PETROLEUM In this section, we explore how oil became essential to the global capitalist political economy and everyday life in most parts of the globe. The reason for this is that the original ‘Big Oil’ corporations, known as the Seven Sisters – Britain’s Anglo-Persian (now British Petroleum), the Netherlands’ Royal Dutch Shell, and the United States’ Standard Oil Company of California (now Chevron), Gulf Oil (now Chevron), Texaco (now Chevron), Standard Oil Company of New Jersey (now ExxonMobil) and Standard Oil Company of New York (now ExxonMobil) – were able to make oil production and consumption inseparable from global finance and foreign policies/warfare, and were able to subordinate potential energy alternatives. This trend has continued under the relationship between dominant public and national oil companies. After the fall of the Seven Sisters and the rise of OPEC, this relationship between global capitalism and oil intensified because of the global energy crises of the 1970s. We explore the present social conditions and logic of accumulation that have made the global capitalist economy dependent on oil for global production and social reproduction. In our view, global energy transitions are never a complete phenomenon because all human societies not only still use prior sources of fuel for their social reproduction, but also are established through social class, gendered and racial relations and formulations of power and resistance (Di Muzio 2015a; Gellert and Ciccantell 2020; Malm 2016; New Dragett 2019; Newell 2019; Podobnik 2006; Smil 2010). Most literature on energy transitions reduces energy to a scientific principle and does not acknowledge the wider historic and social dimensions and structures that are embedded in the past and present conditions of the production and consumption of all energy sources (New Dragett 2019; Pearse 2021). Moreover, there are usually ahistorical and teleological assumptions built in to the histories of energy transitions, developed from liberal narratives, that the human development trajectory is linear, progressive

324  Handbook on oil and international relations and is generally driven by human technological advancement (Gellert and Ciccantell 2020; Homer-Dixon 2009; Kuzemko et al. 2019). Our ontological starting point is the idea that relations of power, historical structures and social reproduction cannot be understood outside of the contemporary use of energy, or in this case, oil. To understand historic and present social conditions on the central importance of oil in global capitalism, oil cannot be theorized as standing outside of social relations of power on an international scale. Therefore, we focus on how hierarchical social power, by dominant capital and nation-states, is not only deeply embedded in energy transitions, but also attempts to shape and reshape energy production and consumption. This process will be experienced differentially due to the very nature of uneven power across the social universe. The global political economy of petroleum started in Russia and Canada where originally crude oil was refined into kerosene, which replaced the whale oil industry (Black 2000). But it was in the United States that John D. Rockefeller and his company Standard Oil revolutionized both the business side and the industrial side of how oil was produced, sold and bought (Yergin 1991). Rockefeller was the first to standardize the quality of kerosene, hence the name Standard Oil, and he was well known for his brutal forms of corporate sabotage and other illegal strategies that allowed him to consolidate North America’s oil refining industry by 1880, under Standard Oil ownership (Sampson 1975; Tarbell 1904). By 1881, the Standard Oil Company was capitalized at US$3 500 000, and by 1907 that figure jumped to US$37 million (or roughly US$1 billion in 2020) (Fursenko 1991, p. 450; Montague 1903, p. 298). Rockefeller and his investors understood that the key to greater profitability and therefore rising share prices was in controlling the oil industry through distribution and the ownership of pipelines (Fursenko 1991, p. 454). This tactic was primarily about reducing any risk of overproduction or any other factor that could potentially reduce the price of oil, unless Rockefeller did it himself to undercut rivals (Sampson 1975, p. 25; Stork 1975; Tarbell 1904). Another reason why Standard Oil’s market capitalization was one of the largest in the world was because of this fusion between ‘oilmen’, ‘investors’ and ‘credit lenders’ (Montague 1903). We should recall that Rockefeller bought a controlling share in the Chase Manhattan Bank and had family connections to First National City. This made Standard Oil ‘serve as its own financier and regarded all financial operations, domestic and foreign, as an “internal affair.” More creditor than debtor, Standard Oil was the most independent of all-American oil companies’ (Fursenko 1991, p. 445). Rockefeller and his allies not only helped the largest banks to create specific energy divisions for investment purposes, but also made sure that leaders in both banks and insurance would ‘sit on the board of directors of the major energy companies and hold large quantities of those companies’ stock, significant portions of their bond issues, and manage their trust funds’ (Stork 1975, pp. 134‒137). The first attempt to thwart Rockefeller’s monopoly position was by the Sherman Anti-Trust Act, which was signed in 1890. He and his associates were able to contest this break-up until May 1911, when the United States Supreme Court finally forced Standard Oil to break up into 38 ‘different companies’. However, it was still owned ‘by the same oil men’ and Rockefeller had controlling shares in all of them at 25 per cent (Sampson 1975, p. 32). The importance of this early beginning is that it laid the very foundation of how the global oil and gas industry would operate, through oligarchical power, by controlling the price and distribution of oil, the technology needed in the extraction process and by being deeply connected to global finance (Nitzan and Bichler 1995; Nowell 1994). This started with the Seven Sisters, and later, with OPEC.

Global capitalism and oil  325 Yet in 1882, this whole industry could potentially have collapsed with the invention of the electric light bulb and commercially viable electricity provisioning by Thomas Edison and his banker J.P. Morgan, who showed that illumination no longer needed kerosene (Yergin 1991, p. 63). To survive, the industry’s engineers and corporate chieftains would have to find a new usage for refined crude oil that would reinforce both the global political economy and the dependence on oil for social reproduction. By the early twentieth century, and accelerating after World War I, the answer to the oil industry’s problem would be the internal combustion engine, petrochemicals, warfare and, later on, physical infrastructure and global transportation (Huber 2013; Latham 2002; Lewis 1921; Nowell 1994; Yergin 1991). The oil industry quickly moved towards the internal combustion engine, and by 1905, gasoline beat out other fuel types (alcohol, electricity, and so on) and became the standard for American transport fuel. The internal combustion engine, unlike other inventions of its time, remains to this day the primary engine in global transportation, ranging from the automobile to aeroplanes to supertankers to the machines of war (Huber 2013; Nye 1999; Paterson 2007). As a result, this oil‒transportation complex not only became fundamental to shaping and reshaping social reproduction in the United States, but also globalized rapidly. For example, in 1900, there were only 8000 registered vehicles; but by the end of ‘World War II, there were 30 million gasoline-powered automobiles on the road’ (Di Muzio 2015a, p. 150). The consequences of World War I demonstrated that the outcome of war was going to be dependent on the linkages between warfare, energy production and access to oil. This accelerated the ‘evolution’ of nation-states towards a new mode of warfare known as ‘industrialized total warfare’, whereby military power ‘rested upon three pillars – mass destruction, mass mobilization and mass production’ (Latham 2002, p. 241). These three pillars would become dependent on oil by World War II. With oil consumption now tethered to warfare and transportation, this allowed the Seven Sisters to largely dictate their host nations’ foreign policies on oil’s production and consumption, especially towards other nation-states that had oil reserves but were not under their control (Bichler and Nitzan 2017, 2018).8 The most important agreement amongst the Seven Sisters and their host governments was the Achnacarry or As-Is Agreement, which was signed on 17 September 1928. This agreement focused on restricting global petroleum production, distribution and prices on a world scale, because new oil reserves were being discovered globally, especially in the Middle East and the United States, that could threaten their control over the price of oil (Sampson 1975).9 This agreement consolidated the oil industries into the hands of the Seven Sisters and their subsidiaries, because they became so entangled with each other that they were able to reduce ‘output from any country with which they were in conflict, they could easily increase output elsewhere to supply their markets’ (Andreasjan 1989, pp. 42‒43; Penrose 1989, p. 10; Sampson 1975). This alliance between the Seven Sisters and their host nation governments allowed them even to stop the process of coal becoming liquefied into fuels and chemicals, through obtaining patent rights, combined with the fact that petroleum is superior to coal in many ways (for example, easy to transport, cheap to refine and energy-dense) (Nowell 1994; Yergin 1991). Due to the linkages between global finance and oil in the United States, this logic became globalized, as seen in countries such as Germany, Belgium and France as they were essentially bank‒oil (or finance‒energy) companies. In 1904, ‘the Deutsche Bank, together with its allies, founded the Deutsche Petroleum Aktiengesellschaft with a share capital of 20 million marks’ and France’s Compagnie Française des Pétroles and Petrofina, which later became Belgium’s Total Société Anonym (Furensko 1991, p. 460).

326  Handbook on oil and international relations Most notable, of course, was the Rothschild family. The Rothschild family were an incredibly famous and wealthy Jewish family who started in the banking business in the 1760s, in the Free City of Frankfurt of the Holy Roman Empire (Ferguson 1998). Between 1815 and 1914, the family’s multinational partnership was easily the biggest bank in the world (Ferguson 1998, p. 2). While their main source of income in the nineteenth century was in public finance (lending to governments, speculating on government bonds, and so on), they also owned a good portion of the oil industries of Germany, France, Russia and Belgium (Fischer 1926; Klinghoffer 1977). This alliance between the global oil industry and financial banks was so powerful it was able to control even the Soviet Union, which nationalized all Russia’s oil by 1922, which at the time was owned by Royal Dutch Shell and Standard Oil. The Seven Sisters owned and controlled all the distribution networks (railways, pipelines and tankers) and, more importantly, had deep linkages to North American and European banks that refused to provide the Soviets with much-needed credit and foreign currency for the technology, machinery and other commodities that are needed in oil production (Klinghoffer 1977). In short, the government of the Soviet Union had little choice but to succumb to the power of the Seven Sisters and international bankers. The government worked cooperatively with them, accepting their global price, allowed them to be the main distributors and refiners of Soviet oil, and in return would receive international credit and currencies. As a result, the Seven Sisters forged the transition to an oil-based global carbon capitalism with the primary aim not only to create forms of globalized social reproduction dependent on oil, but also the global financial and wider political economy (Di Muzio 2015a). This is seen in the rapid increase in the consumption of oil that ‘expanded from 6.4 million barrels in 1899, to more than 91 million barrels in 1909, and to more than 300 million barrels in 1920’ (Nye 1999, p. 123). By the late 1950s, King Coal was toppled as the major source of the total primary energy supply, and was limited to specific purposes such as the making of steel and electricity (see Table 21.2; and IEA 2017, p. 39). The importance of Table 21.2 is not so much to demonstrate that King Coal was replaced by Big Oil, but to show that global primary energy consumption was rapidly increasing, as was the consumption of fossil fuels overall. The Seven Sisters and Anglo-American governments consistently attempted to prevent any form of nationalization of oil industries in the Middle East, ‘through assassinations, military coups and the support of human rights abusing autocratic rulers to protect “their” assets’ (Di Muzio 2015a, p. 164; see also Blum 2004; Mitchell 2011). The week of 10–14 September 1960 saw the birth of OPEC, whose primary goal was to limit the power of the Seven Sisters (Stork 1975). This was a major blow to the Seven Sisters, which lost most of their oil reserves, going from 89 per cent to just 3 per cent over the next two decades. We should recall public oil corporations are motivated to inflate reserve figures, because they are capitalized on their future earnings from these reserves and the ability to find more to book on their balance sheets (known as the reserves replacement ratio) (Di Muzio 2015a, p. 160ff). More importantly, if we look at the largest oil reserves in the world that do not belong to OPEC and are not nationalized, only Canada (170 863 000 000/bbl, or 10.4 per cent) and the United States (35 230 000 000/bbl, or 2.1 per cent) hold any form of significant reserves. The Middle East alone is providing 36.7 per cent of the world’s oil needs (IEA 2017, p. 39). Thus, many liberal and realist international relations and political economists have declared the creation of OPEC as one of the largest threats to not only United States energy security, but also the world’s (Hancock and Vivoda 2014). Moreover, this only intensified

Nuclear

0

Solar

Source: 

(TWh)

17 963

0

1930

19 837

0

36.41

0

0

0.66

0

3.04

8.85

51.04

1940

22 528

0

32.06

0

0

0

0.85

0

3.88

11.78

51.43

1950

27 972

0

26.81

0

0

0

1.19

0

7.48

19.46

45.06

1960

40 589

0

21.9

0

0

0

1.7

0

11.02

27.34

38.04

1970

64 105

0

14.73

0

0.04

0

1.83

0.12

15

41.66

26.61

1980

83 167

0

12.02

0

0.06

0

2.08

0.86

17.12

42.78

25.08

1990

98 551