In Box

A New Law of Petropolitics

Sorry, Tom Friedman, higher oil prices don't always mean lower levels of democracy.

In a 2006 cover story for this magazine, New York Times columnist Thomas Friedman proposed what he called the First Law of Petropolitics. "The price of oil and the pace of freedom always move in opposite directions in oil-rich petrolist states," he wrote, noting that "the higher the price goes, the less petrolist leaders are sensitive to what the world thinks or says about them."

The law makes a lot of intuitive sense. If you look around the world at countries that are highly dependent on oil profits -- Saudi Arabia, Russia, Nigeria, Iran, Venezuela -- many have high levels of authoritarianism and corruption. Dig into the numbers, as University of California/Los Angeles economist Romain Wacziarg did for a recent study, however, and the picture gets murkier. "If you look at countries that have a lot of resources, compared to countries that don't, they do tend to have a more autocratic regime," he says. "But if you look within a country, and if they discover a natural resource, do they then become more autocratic? There's no evidence for that."

Wacziarg looked at petroleum-producing countries between 1961 and 2007, comparing their Polity scores -- a commonly used quantitative measure of democratic conditions -- with the price of crude oil. He found no correlation. In fact, in some countries, such as Egypt, Indonesia, and Mexico, the level of democracy markedly improved between 2000 and 2007, when oil prices were skyrocketing.

He also found no evidence to suggest that low oil prices make regime change more likely. "In fact, the Arab Spring happened just at a time when oil prices were pretty high," he notes, pointing out that under Friedman's First Law of Petropolitics, the autocratic regime of Muammar al-Qaddafi in oil-rich Libya would have been the least likely Arab government to fall. Meanwhile, the tiny Persian Gulf kingdom of Bahrain -- which Friedman cited as a country forced to liberalize by its dwindling oil reserves -- has only become more repressive.

Asked to comment, Friedman argues that Wacziarg's study focuses too closely on the effects of oil prices and "overlooks something that was implied in my article (and is explicit in most academic studies) -- that it also matters how much oil and gas a country produces."

"While Wacziarg is correct in showing that higher oil prices have not made oil-rich countries less democratic," Friedman adds, "it has allowed them to remain steadily undemocratic at a time when the rest of the world has become vastly more democratic."

Stay tuned: As oil prices climb once again amid increased uncertainty across the Middle East, both sides of the debate should soon have plenty more data.

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In Box

The Law Still Stands

Why I stand by my arguments about oil and dictatorship.

Thank you for sharing Romain Wacziarg's paper challenging my 2006 FP cover story, "The First Law of Petropolitics." I am flattered that Wacziarg took my argument so seriously as to do this in-depth statistical analysis. I would urge readers to read his critique, but to also read several other major statistical analyses that broadly support my arguments in favor of the oil resource curse. These include:

As for the specific critique of my argument, I would simply note that Wacziarg focuses on the effects of oil prices, which is a literal reading of the "first law." But he overlooks something that was implied in my article (and is explicit in most academic studies) -- that it also matters how much oil and gas a country produces. Higher oil prices have a more powerful political effect in major producers (Russia, Venezuela) than in minor ones (Thailand). In-depth studies, like those by University of California/Los Angeles political scientist Michael L. Ross, and others, find the strongest effect of oil revenues is to help undemocratic (or semi-democratic) regimes stay in power, such as Saudi Arabia, Qatar, Azerbaijan, Russia, Gabon, Iran, Algeria, and Equatorial Guinea. Opinion is divided on whether higher oil revenues also lead to the deterioration of accountability in democracies. Ross argues that under some conditions -- basically outside the industrialized democracies -- it does, as exemplified by Hugo Chávez's Venezuela. Most of Wacziarg's analysis lumps together all oil-producing countries, democracies and autocracies alike. I could cite other statistical techniques that were used by Wacziarg to come to his conclusion. One has to do with the time frame of his study. In most countries, oil wealth only became an important political factor after the oil shocks of the 1970s. The other has to do with the fact that, while Wacziarg is correct in showing that higher oil prices have not made oil-rich countries less democratic, as Ross has shown in his statistical work, it has allowed them to remain steadily undemocratic at a time when the rest of the world has become vastly more democratic. Oil has made it possible for these regimes to avoid the Third Wave of democratization. Again, I hope readers will read my original piece, read others that have come to similar conclusions, and read Wacziarg and decide for themselves.

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