Blood Oil: Tyrants, Violence, and the Rules that Run the World by Leif Wenar

| March 10, 2017
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Blood Oil: Tyrants, Violence, and the Rules that Run the World, Leif Wenar (New York: Oxford University Press, 2015), 552 pp., $34.95 cloth.

In 1865, upon witnessing firsthand the destitution of the urban poor of Moscow, Leo Tolstoy felt compelled to write What Then Must We Do? He was concerned that the condition of the poor was inextricably linked to the actions of others, including his own; and he became determined to pursue self-reliance, convinced that such a way of life would have the least harmful impact on others. In Blood Oil, Leif Wenar asks an updated version of Tolstoy’s question: What should we as consumers do, knowing that our thirst for natural resources contributes to the suffering of citizens in resource dependent countries?

Wenar’s primary audience is the citizens of Western industrial nations, whose consumption of imported natural resources is prodigious. Ultimately, Wenar does not advocate for the scaled-up version of Tolstoy’s solution, full-on autarky; rather, he suggests that resource consumers must accept their complicity in the various ills of exporting countries, and thus limit their trade with those countries in a way that incentivizes political change.

Blood Oil grows out of the rich literatures in political science and economics on the resource curse and rentier states, and focuses specifically on oil due to the highly lucrative nature of this commodity. The basic logic of a rentier state is that political elites of oil-rich countries claim substantial economic rents from the trade in oil, rents that are often collected secretly and in isolation from the rest of the economy, thus making it difficult for citizens to monitor and often excluding them from a share in the profits. In this way elites are able to avoid the democratic concessions they might otherwise have to make to their populace in exchange for tax revenue.

This accounts for the correlation between oil wealth and authoritarianism, corruption, and conflict. At the same time, it raises the question of how resource-rich success stories such as Australia, Norway, and Botswana have avoided both the curse and the rentier state outcome. Wenar adopts a conditional view of the resource curse, suggesting that the institutions present at the time of oil discovery determine whether these maladies follow, or whether oil revenues are used to the benefit of economic and political growth. Wenar modifies this view by arguing it is the “strength” of the citizenry, including interpersonal trust and confidence in government, that determines whether or not the curse takes hold (p. 11).

A pillar of the argument made in Blood Oil is that a large proportion of the world’s oil has its origins in countries that do not respect popular resource sovereignty. Wenar defines the popular resource sovereignty principle as the right of the people of a country to its land and resources, giving the people ultimate authority to freely dispose of these resources (p. 203). For this sovereignty to be properly respected by a state while managing a nation’s resources, four conditions must be satisfied: citizens can obtain reliable information about the management of resources; citizen authorization of state management is not forced; citizens can freely deliberate over resource management; and citizens can freely express dissent toward the state’s management without incurring extreme costs (pp. 227–28).

Many oil-dependent countries, such as Russia, Angola, or Equatorial Guinea, do not pass this test. Further, oil-importing countries endorse unlawful resource ownership on the part of these states; trade law in the United States, for example, validates the exclusive right of Equatorial Guinea’s ruling Obiang family to sell the country’s oil (p. 73). When it comes to the global resource trade, “might makes” right is still the prevailing practice.

Notwithstanding this reality, Wenar suggests that popular resource sovereignty is an example of “settled international law,” indicating that there is near-universal support for the principle (p. 216). Wenar relies on the questionable assumption that settled international law indicates some sort of broad agreement as to exactly what constitutes popular resource sovereignty; it is also not clear whether all democratic systems are equally capable of aggregating citizen preferences with regard to how resources are managed. Furthermore, while acknowledging the variety of property rights systems globally, Wenar does not fully explore the ethical implications of perfectly enforced property rights. Indeed, many property rights systems have been shown to reinforce inequalities, disadvantaging groups such as women, ethnic outsiders, and immigrants.

Wenar suggests that consuming nations should modify their trade laws in a way that will encourage oil-rich nations to respect the property rights of their citizens. He draws a parallel with Great Britain’s decision in the nineteenth century not just to ban the slave trade but also to restrict the import of goods made by slave hands, such as cotton products from the American South. This decision was costly indeed; Wenar cites an estimate that because of this policy Great Britain sacrificed approximately 2 percent of its national income each year for sixty years (p. 269).

Anticipating these kinds of costs as a line of attack against his own argument, Wenar argues that there are advantages to being a first mover in restricting resource trade with states that do not respect popular resource sovereignty. Wenar then spends the last third of the book detailing recommendations for a clean trade policy,making an important contribution to the literature on the trade in natural resources. Here Wenar is fairly convincing regarding the costs and benefits of his plans for importing countries, but is less clear about the costs faced by exporting countries; costs which have ethical implications, given the likelihood that they will be borne disproportionatelyby the poor and powerless. Further, we are left to wonder how it is that authoritarians will go about managing stable and peaceful transitions to respecting the resource sovereignty of their citizens.

Wenar shows an impressive level of engagement with the resource curse literature, and he relies on the most sophisticated iteration of its logic and evidence. And while Wenar acknowledges the existing skepticism regarding the curse, it is unfortunate that the book’s publishing time line likely did not allow him to address the very latest research on the skeptical side, which has grown quickly over the last couple of years. The question then becomes, does the argument in Blood Oil hold up in light of this new research? By the logic of the resource curse, continued engagement will simply prolong the rule of despots and delay reform. But if, as skeptics have recently argued, it is underlying institutions that explain both resource dependence and the economic and political maladies of the curse, it is possible that cutting off trade will not result in improvement, even over the long term. To understand what will lead to reform, we need a better understanding of authoritarians’ options in the event their resource revenue is reduced, and more clarity on what will prompt them to cede political power and opportunity to their citizens.

Despite these criticisms, Wenar deserves much praise for the careful and thorough way in which he has constructed his arguments and policy recommendations, and more still because his writing is both accessible and erudite. The periodic Western hand-wringing over entanglement with foreign oil is rarely articulated so clearly. Wenar has not only laid out a set of principles that explain our ethical predicament with this trade but has also provided plausible policies that might be effective in fixing the problem.

 

—WILLIAM GOCHBERG


William Gochberg is a PhD student at the University of Washington, and a fellow at the UW Center for Environmental Politics. His research focuses on natural resource management in low-income countries, with a recent emphasis on resource booms and their effects on property rights in sub-Saharan Africa.

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Category: Book Review, Issue 31.1

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