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Turkish Claims and the Oil Crisis in the Eastern Mediterranean

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by Rafaella Piyioti

The RV MTA Oruç Reis, named after the Admiral in the Ottoman Navy and chief governor in the Western Mediterranean, near the coast of Antalya, Turkey (Image credit: AP)

Over the past decade, discoveries of large amounts of natural gas in the Levant Basin as well as in the territorial waters of Israel and Cyprus show that the area is rich in resources. Their successful exploitation potentially holds enormous economic benefits. For this reason, a strong alliance between Cyprus, Israel, Greece, and Egypt led to the signing of maritime boundary agreements, establishing an Exclusive Economic Zone (EEZ) for each country. The presence of these resources, however, also presents a challenge for regional stability. Turkey, for example, is left excluded from this initiative. As a result, tensions in the Eastern Mediterranean are growing. The roots of this dispute over energy resources, nevertheless, is part of the conflictual histories of the actors involved, thus holding wider implications for the international community. 

In January 2020, Cyprus, Greece, Israel, Egypt, the Palestinian Authority, and Jordan formed the EastMed Gas Forum to establish the basis for cooperation and exploration of the natural resources in the Eastern Mediterranean. France made an official membership request while the US asked to become a permanent observer of the forum. At the same time, Turkey officially criticised the forum as an organised attempt to exclude Ankara. Part of the reason why, however, is that Turkey did not sign the UN Convention on the Law of the Sea. According to the UNCLOS, the territorial waters of a nation extend up to 12 nautical miles from its shore and up to 200 nautical miles from the shore of its EEZ. Natural resources found within this territory belong exclusively to that country. Contrary to UNCLOS, Turkey formed its own continental shelf theory, which excludes islands, and states that a country’s EEZ extends underwater only to the very edge of its continental shelf. The absence of formal agreements between Turkey, Greece, and Cyprus on their maritime borders, leads to competing claims on the extension of their territorial rights at sea made by Cyprus and Greece, and Turkey and Northern Cyprus.

(Image credit: FT)

With Northern Cyprus under Turkish control since the 1974 invasion, Turkey officially does not recognise the Cypriot Republic to the South. As such, President Recep Tayyip Erdoğan rejects any Cypriot drilling activities in the region and refuses to recognise Cyprus’ agreements with Israel, Greece, and Egypt over the exploitation of natural resources found in the Eastern Mediterranean. Instead, Turkey considers the maritime territory of Northern Cyprus to be part of its EEZ and following its own continental shelf theory the exploitation of hydrocarbons found in the region is a Turkish legal right. Northern Cyprus, however, is not recognised by any country other than Turkey itself and Erdoğan’s actions are deemed illegal by the international community.

More recently, tensions over the ownership of the natural resources under the seabed of the Mediterranean between Turkey and Cyprus escalated, with Turkey holding military exercises in the Mediterranean. In May 2019, Turkey sent its first drilling ship to conduct exploratory drillings off the north coast of Cyprus. The European Union (EU), in response, imposed economic sanctions on Turkey. Erdoğan refused to de-escalate tensions stating that European sanctions will not affect Turkey’s determination to continue exercising what it sees as its legal rights in Cypriot waters. At present, two Turkish ships, Yavuz and Barbaros Hayrettin Paşa, are in territorial waters around Cyprus searching for natural resources.

Tensions between Greece and Turkey are more complicated. The two countries find themselves in an ongoing dispute over Kastellorizo, a Greek island located to the east of the Aegean Sea close to Turkey’s Anatolian coast. Greece insists that, according to UNCLOS, the island enjoys a full EEZ of 200 miles leaving Turkey with a very small EEZ relative to its coastline. Turkey rejects Athens’ claims and has continued to conduct drilling south of the island. In response, Greece has attempted to push for additional sanctions against Turkey but there is little appetite for such a response at the European level. German attempts to mediate between Greece and Turkey called for official negotiations, which failed to reach a mutual agreement over the EEZ of Kastellorizo. A maritime-boundary agreement between Greece and Egypt, viewed by Turkey as a move of aggression violating its maritime territory, thereby ending the negotiation process.

Renewed illegal drillings by Turkey in August 2020, this time with the presence of Turkish Navy warships in the area. Greek warships often shadow them creating a tense and potentially escalating situation. As Erdoğan renews his aggressive rhetoric, the Greek PM, Kyriakos Mitsotakis, introduced a new defence plan, increasing the country’s military capabilities. But as Turkey and Greece are NATO allies a push towards a new phase of negotiations seems more appealing than a military confrontation. France condemns Erdoğan’s violations of Greek and Cypriot maritime rights offering military assistance to Greece. Germany attempts to mediate between Greece and Turkey and the rest of the EU is still indecisive.

(Image credit: FT)

Turkey’s behaviour in the Eastern Mediterranean is part of Erdoğan’s ‘neo-Ottoman’ foreign policy, which aims at renewing Turkish influence in neighbouring countries, formerly part of the Ottoman empire. With the Turkish lira facing one of its lowest recorded values, the President is attempting to turn people’s attention away from the economic problems, by emphasising Turkish influence in the region. Turkey’s isolation from its NATO allies over their conflicting interests in the Eastern Mediterranean also pushed Erdoğan towards adopting a rather more Islamist tone, promoting himself domestically as the protector of all Muslims. After his long-lasting military presence in Syria since 2011, Erdoğan turned his attention to Libya. Turkey and Libya signed a maritime accord in November 2019 violating the Greek EEZ. To escalate things further Erdoğan sent military aid to the UN-recognised government (GNA) in Tripoli to help Fayez al-Sarraj defeat General Haftar’s Libyan National Army.

Turkey’s involvement in Libya could lead to further destabilisation in the region and draw the involvement of additional international actors. France, Greece, Egypt, Israel, and the UAE publicly backed Haftar, with the latter two signing a historic peace deal. Paradoxically, the U.S. did not take a clear position on Libyan tensions despite its’ close ties with General Haftar who holds U.S. citizenship. Turkey’s recent involvement in the Nagorno-Karabakh conflict is another example of Erdoğan’s assertive foreign policy. Amid recent increases of violence in the region Erdoğan pledged his nation’s support for Azerbaijan. The Azerbaijani forces are using Turkish-made drones in their fight against Armenians. Turkey is growing into a major drone player but the use of Turkish drones in Nagorno-Karabakh received international scrutiny.

Erdoğan envisions Turkey as a regional power and pursues an assertive foreign policy to extend its regional influence. Turkish claims at a sea, as well as its pursuits on land, fall within the scope of its neo-Ottoman vision, which sees Turkey advancing its influence in the region. The EU remains indecisive on how to approach Turkey; Germany acts as the mediator whilst France takes a tougher stance, pledging military support to Greece. Without the U.S. in its traditional, since the 1974 Turkish Invasion in Cyprus, mediating and stabilising role in the region, it is time for the EU to decide on a new approach to handle this crisis. The U.S. under President Donald Trump reduced its foreign involvement and distanced itself from its NATO allies. Under the future President Joe Biden, the USA might wish to think anew of taking up its traditional role in NATO and its presence in the Eastern Mediterranean. Turkey is a strategic partner of the EU but if Erdoğan continues his aggressive behaviour in the Eastern Mediterranean, tensions could escalate further jeopardising the future of EU-Turkey cooperation.

Rafaela is a part-time MA student in the Conflict Resolution in Divided Societies programme at King’s College London. She received her BA in War Studies and Philosophy and is a Staff Writer for Strife Blog, Shield, and writes for a Cypriot newspaper. Currently, she is a Research Analyst for London Politica. Her main academic interest is on the role of intelligence in policymaking. Rafaella also has a passion for Human Rights and has interned at the Cyprus Refugee Council. Rafaella enjoys travelling and learning about new cultures in her free time.

Resource-Induced Conflicts, Part I: Petro-violence in the Niger Delta

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By: Obi, Cyril and Siri Aas Rustad

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Since the turn of the century, petro-violence has brought the oil-producing Niger Delta to the forefront of international energy and security concerns for strategic, socio-economic, historical and political reasons. However, the root causes of this conflict lie in decades of marginalisation of the region’s inhabitants, pollution and the highly centralised state control of oil revenues.[1] Over five decades of oil production has largely contributed to the enrichment of international oil companies and national and local elites, while at the same time leading to the disempowerment and impoverishment of the local population through direct dispossession, repression, and pollution of the air, lands and waters.[2]

The turn to violent resistance in the early 2000s took place in the context of prolonged military rule, marginalisation, and repression of community protests. Militias, riding on the back of widespread frustration about the ineffectiveness of prior non-violent protests, resorted to violence. The attacks on oil installations and the kidnapping of expatriate oil workers were initially intended to gain attention and support for their cause. Subsequently, however, the activities of some militias began to acquire other characteristics and goals that went beyond demands for resource control.[3]

While some scholars point to greed and personal enrichment as the motivation for violent conflict[4], there is a growing quantitative literature pointing to resource-related grievances as the main explanation of the statistical correlation between oil in particular and violent conflict. Østby, Nordås, and Rød (2009) find that regions with high level of group inequalities, combined with resource endowment, have a higher risk of conflict, while Rustad (2016), in a study of the Niger Delta, concludes that those who believe their region to be worse off than others are more likely to support violence. Similarly, Must and Rustad (2016) observe that a perception of unfair treatment also increases the likelihood of supporting the use of violence. The case of the Niger Delta brings some of these issues to the fore.

The petro-violence in the Niger Delta is closely linked to revenue sharing between the Nigerian state and oil-producing areas, control over the resources, as well as feelings of exclusion, marginalisation and exploitation endured by ethnic minority groups compared to larger groups on national level, such as the Ogoni and Ijaw communities. Perhaps most relevant are the ways in which the high stakes involved have fed into a vicious cycle of exploitation, protest, repression, resistance, militarisation and the descent into a volatile mix of insurgent violence and criminality[5]. Both these processes place great strain on the relationship between the local and the national levels.

The Niger Delta is a vast coastal plain in the southernmost part of Nigeria, with an estimated population of 31 million people. Traditionally, the local people earned their livelihood as farmers, fishers, and traders of items linked to the principal subsistence economies. At the same time, the region is also home to over 75% of Nigeria’s petroleum production and exports, including oil multinationals, state and local oil companies, oil service companies, ‘thousands of kilometers of oil pipelines, ten export terminals, four refineries and a massive liquefied natural gas (LNG) sector’.[6] The great challenge to forging a balanced relationship between the local and national level is the coexistence of a vast petro industry alongside the local grievances related to the subsistence livelihoods of the population.

At the national level, oil accounts for over 70% of government revenues[7] and 90% of merchandise export earnings[8], making it the fiscal basis of both state and federal power, as well as economic development. Thus, at the local level there is the strong feeling among ethnic oil minorities that the non-oil producing ethnic majority groups (Igbo, Yoruba and Hausa-Fulani), which dominate the federal government, also control the oil wealth, while those who produce the oil suffer from neglect, exploitation, and pollution.

Marginalisation

The feelings of marginalisation among the ethnic minorities in the Niger Delta compared to the larger national ethnic majorities gained momentum in the wake of Nigeria’s independence from British rule in 1960. In 1966, there was an attempt at secession by a group of ethnic Ijaw youth, the Niger Delta Volunteer Force (NDVF) led by Isaac Adaka Boro, who wanted to create a Niger Delta republic that would ensure Ijaw self-determination, and ownership and control of the oil in its territory.[9] The attempted secession failed. Instead, Colonel Odumegwu Ojukwu led the Biafran secession, ostensibly to fight for Igbo self-determination against perceived northern domination, but also to assert control over the Niger Delta oil fields. Boro joined the federal war against Biafra, to repel Biafran claims to oilfields in Ijaw territory. This struggle over oil riches in the 1960s, both amongst various ethnic groups within the Niger Delta, and between the ethnic minorities and the federal government, underline the grievances and claims that feature in many of the struggles witnessed today.

Several developments during and after the Biafran civil war had implications on the agitation for minority rights in the Niger Delta. The first was that the oil from the region became the main source of national revenues and export earnings. Secondly, the federal military government had seized control of oil through Decree No. 51/Petroleum Act of 1969. Specifically, it provided that “the entire ownership and control of all petroleum in, under or upon any lands…shall be vested in the state [Federal Government]”[10]. In section 2, the Act granted the federal oil minister “the sole right to grant oil mining leases to oil companies”. This legislation expropriated oil from the Niger Delta much to the chagrin of the ethnic minorities of the region, who had hoped that the individual states would own the oil within their respective territories. This meant a loss of power over the oil resources by local people and the loss of compensation for the full value of appropriated land. It also meant that multinational corporations (MNCs) could directly get oil and land leases from the government without recourse to local communities.

These feelings of exclusion, dispossession and disappointment were further reinforced by the progressive downward revision of the derivation principle for revenue allocation (i.e. the share of the revenues being returned to the producing state) from 50% in 1966 to 1.5% in the mid-1990s. While this level was raised to 13% following the return of democracy in 1999, the relationship between the Niger Delta and the federal government worsened when demands from the oil-producing states for an increase to 25% were blocked by the northern elites.[11]

Protests and militants

However, what followed was a systematic repression of Ogoni protests, including military raids on Ogoni villages, and arrests of suspected MOSOP cadres and sympathizers. This culminated in a trial, widely held as flawed, where Saro-Wiwa and eight MOSOP members were found guilty of the murder of four pro-government Ogoni leaders. In spite of worldwide pleas for clemency, they were executed in 1995.[12]

The return to democracy in 1999 also had negative ramifications for the human rights and pro-democracy movement. Politicians of the Niger Delta tapped into the groundswell of popular anger among the large number of unemployed or alienated youth in the region, frustrated over the lack of local jobs within the oil industry.[13] Some of these youths became ready tools of politicians, feeding into a spiral of local violence in the 1999 and 2003 elections. By 2006 these violent outbursts, combined with communal conflicts, politics of local resistance, and the struggle for resource control, evolved into a full-fledged insurgency. Although initially rooted in the militarization and coming together of youth groups and their protests at several levels, the insurgency quickly took on other agendas and dimensions. The complex conflict that raged in the Niger Delta involved broad militant alliances like the militant group Movement for the Emancipation of the Niger Delta (MEND), linked to the ethnic minority group Ijaw. This insurgent faction combined lethal attacks and sabotage of oil installations with the effective use of global media to publicize its campaign of fighting for the control of oil revenues by indigenes of the Niger Delta.[14]

Amnesty

Rising domestic and international concerns surrounding the conflict, alongside the inability of the government’s military Joint Task Force in reining in MEND – which had successfully managed to shut down a third of Nigeria’s oil production – formed the basis of a Presidential Amnesty granted to the Niger Delta militants in 2009. The aim was to restore security by ending the disruption of oil production and exports, which had contributed to the loss of oil revenues and profits, and offer the battle-weary militias an opportunity to partake in state patronage and assistance programs. The offer to ‘drop their guns in exchange for peace’ was accepted by the main militia leaders, while a faction of MEND remained opposed to the Amnesty. Consequently, there was a remarkable reduction in the level of violence between 2010-2011.

Over time, however, the region has been once again engulfed by violence; a trend mainly caused by ex-combatants who have either turned to criminality, or have engaged in protests over their perceived exclusion from the benefits of the Amnesty. Their behaviour can be traced back to several factors. The first was the election of President Muhammadu Buhari from north-central Nigeria in 2015. After taking office, Buhari reorganized the Amnesty program and fired the leadership appointed by former President Goodluck Jonathan, while reviewing and reducing the funding of the program. Secondly, speculations emerged on the alleged expiry of the Amnesty program at the end of 2017. These rumours arose, in part, due to on-going investigations of corruption in the program, as well as the allegations (raised by some ex-militia leaders) that the new President is hostile to the interest of the region and seeks to perpetuate northern domination of regional oil resources. Thirdly, Nigeria felt the negative impact caused by the crash of global oil prices on its oil-dependent economy and fiscal federalism. The stakes of gaining access to shrinking oil revenues in the midst of an economic recession led to intensified struggles.

The foregoing broadly defines the context within which a new group, the Niger Delta Avengers (NDA), emerged after over five years of relative peace in the Niger Delta, attacking MNCs’ oil installations in early 2016. While the Amnesty succeeded in buying some respite for a few years, it failed to address the underlying causes of the violent conflict. The local population still feels marginalised and the federal government retains control over the region’s natural resources. While the establishment of the Amnesty was a window of opportunity for the federal government to deal with the Niger Delta crisis, it seems that this window is about to close.[15] If the root causes continue to be left unsolved, and the old and new protagonists of the conflict see the struggle for power over oil in zero-sum ways, the oil-rich region could be engulfed by another wave of violence in the near future.

 

 

 

Siri Aas Rustad is a senior researcher at the Peace Research Institute Oslo (PRIO). She has extensive experience with research on natural resource management, conflict, peace and the extractive industry both in Africa and Latin America.

 

Dr. Cyril Obi is a program director at the Social Science Research Council (SSRC) and leads the African Peacebuilding Network (APN) program. Dr. Obi is well published, and is a member of the editorial boards of many international journals. He is also a research associate of the Department of Political Sciences, University of Pretoria, South Africa, and a visiting scholar to the Institute of African Studies (IAS), Columbia University, New York.

 

This article was based on:

Obi, Cyril and Siri Aas Rustad (2011a), “The Complex Politics of an Insurgency?” in Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petroviolence edited by Cyril Obi and Siri Aas Rustad. Zed Books. London

 

 

Notes:

[1] Obi, Cyril (2014). “Oil and Conflict in Nigeria’s Niger Delta Region: Between the Barrrel and the Trigger”, The Extractive Industries and Society, 1: 147-153; Obi, Cyril Obi (2016), “Understanding the Resource Curse Effect: Instability and Violent Conflict in Africa”, in Pamela Aall (ed.), Minding the Gap: African Conflict Management in a Time of Change, Ontario: CIGI.; Watts, Michael J. and Ibaba Samuel Ibaba (2011), “Turbulent Oil: Conflict and Insecurity in the Niger Delta”, African Security, Vol. 4, Issue 1.

[2] Obi, Cyril (2010), “Oil Extraction, Dispossession, Resistance and Conflict in Nigeria’s Oil-Rich Niger Delta,”, Canadian Journal of Development Studies, Vol. 30, Issue 1-2.; Nwajiaku-Dahou, Kathryn (2012), “Then political economy of oil and Insurgency ‘rebellion’, Review of African Political Economy, Vol. 39, Vol. 39, Issue 132.; Agbiboa, Daniel (2013), “Have we heard the Movement for the Emancipation Last? Oil, environmental insecurity, and the impact of the amnesty programme on the Niger Delta and the empowerment of violence” Review of African Political Economy, Vol. 40, Issue 137.

[3] Boås, Morten (2011), “Mend Me’ the Movement for the Emancipation of the Niger Delta and the empowerment of violence” in Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petroviolence edited by Cyril Obi and Siri Aas Rustad. Zed Books. London; Ikelegbe, Augustine (2011), “Popular and Criminal Violence as instruments of struggle in the Niger Delta Region” in Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petroviolence edited by Cyril Obi and Siri Aas Rustad. Zed Books. London

[4] Collier, Paul and Anke Hoeffler (2004), ‘Greed and grievance in civil wars’, Oxford Economic Papers 56:663–595.

[5] Obi, Cyril and Siri Aas Rustad (2011b), “Is the window of opportunity closing for the Niger Delta?” in Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petroviolence edited by Cyril Obi and Siri Aas Rustad. Zed Books. London

[6] Watts, Michael (2007), “Petro-Insurgency or Criminal Syndicate? Conflict and Violence in the Niger Delta,” Review of African Political Economy, vol. 34, no. 114, p. 639.

[7] http://www.resourcegovernance.org/our-work/country/nigeria

[8] http://data.worldbank.org/indicator/TX.VAL.FUEL.ZS.UN?locations=NG&view=chart

[9] Obi (2010), ‘Oil Extraction, Dispossession, Resistance and Conflict in Nigeria’s Oil-Rich Niger Delta’, p. 225

[10] http://www.lexadin.nl/wlg/legis/nofr/oeur/arch/nig/petroleumact.pdf

[11] Ukiwo, Ukoha (2011), “The Nigerian State, Oil and the Niger Delta Crisis” in Oil and Insurgency in the Niger Delta: Managing the Complex Politics of Petroviolence edited by Cyril Obi and Siri Aas Rustad. Zed Books. London

[12] Obi, Cyril (1997) “Globalization and Local Resistance: The Case of Ogoni versus Shell”, New Political Economy, Vol. 2, Issue 1.;  Obi (2010), ‘Oil Extraction, Dispossession, Resistance and Conflict in Nigeria’s Oil-Rich Niger Delta’

[13] Ukoha (2011), “The Nigerian State, Oil and the Niger Delta Crisis”

[14] Rustad, Siri Aas (2016), “Socioeconomic Inequalities and Attitudes Towards Violence: A Test with New Survey Data in the Niger Delta”. International Interactions 42(1): 106-139

[15] Obi and Rustad (2011b), “Is the window of opportunity closing for the Niger Delta?”

Image Credit: Socialist Youth League of Norway (Sosialistisk Ungdom (SU)),  Flikr, https://c2.staticflickr.com/4/3607/4560583670_991d50ea04_b.jpg, (April 6 2010)

 

Resource-Induced Conflicts: Introduction to the Series

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By: Annabelle Vuille

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In 2001, Michael T. Klare published his ground breaking work Resource Wars: The New Landscape of Global Conflict. In it, he argued that humanity’s growing dependence on a finite supply of critical resources – from oil and minerals, to water and land – at a time when demand for such resources was expected to soar, meant that our future would increasingly be characterised by what he termed ‘resource conflicts’; that is, armed conflicts or civil strife revolving ‘to a significant degree, over the pursuit or possession of critical materials.’[1] Today, this analysis seems prescient.

According to the United Nations Environment Program (UNEP), at least 40% of all internal conflicts recorded over the past 60 years, including at least 18 violent conflicts since the 1990s have been fuelled by issues relating to the exploitation and control of either scarce or ‘high value’ commodities. With the world population expected to exceed 9 billion by 2050, and the effects of climate change and environmental degradation placing increased pressure on commodity supplies, it is highly likely that the new fault line underlying world politics will be natural resources: who has them, who needs them, and which actors have the necessary means to secure them. While natural resources can foment war both between states – such as the ongoing petroleum clash between the Angolan and Congolese government in the Cabinda region, or the Spratly Islands dispute in the South China Sea – and within states – as is the case in both Iraq and Yemen, where disagreements over resource-wealth sharing have caused ethnic fragmentation and civil strife – it is the latter that will be the focus of this Strife series.

Since the turn of the century, there has been a growing body of literature dealing with the link between intrastate conflict and natural resources. The contentious issue on the matter is whether armed conflicts within a state are linked to an abundance or scarcity of resources, commonly referred to as the ‘resource curse’. Proponents argue that an abundance of natural resources leads to economic underperformance, fuels corruption, and creates socio-political ills that may lead to civil strife. Contrastingly, critics point to other countries such as Norway, Botswana and Chile, as examples of peaceful states possessing significant resource endowments. [2]–[3]  However, although scholars remain divided on the salience of the resource-curse theory, there is common consensus that while resources may not be the sole cause of conflict, stresses related to their exploitation can have a significant impact on civil strife. From inciting initial acts of violence, financing or sustaining conflict by providing the revenues necessary to purchase arms and secure loyalties, to undermining peace building efforts due to concerns over disenfranchisement and loss of income – natural resources can be implicated in all phases of the conflict cycle.[4]

Over the coming weeks, Strife will be featuring a five-part series on the role of natural resources in triggering, escalating, or sustaining violent conflict within states. Jasper Humphreys will start by surveying the theoretical underpinnings and debates surrounding ‘resource wars’, and subsequently offer insights into where and over which resources future violent conflict might ensue. The three subsequent pieces will provide an insight into current cases of ‘resource conflicts’. Sourojeet Chakraborty will discuss the drawbacks of fracking for shale exploration, how these effects have led to public uprisings from the U.S. and the UK to Algeria, and offer an assessment of what energy companies might do to alleviate such tensions. Siri Camilla Rustad and Cyril Obi will take a closer look at petro-violence in the Niger Delta, the evolution and causes of the conflict, and offer insights into why the Amnesty granted to the Niger Delta militants in 2009 ultimately failed. Dr. Charles Schmitz will use the case of Yemen to argue that though linking natural resource scarcity or abundance to conflict has an attractive conceptual simplicity, the roots of conflict are far more complex.  Social relations—economy, politics, social institutions—mediate the relationships between the natural environment and people and bear far more responsibility for scarcity, abundance, and conflict than simple Malthusian equations. Finally, Päivi Lujala will place ‘resource conflicts’ into the context of peacebuilding and discuss the ways in which increased transparency in contract formulation, ownership schemes, and revenue flows may prevent resource-rich states from sliding back into violence.

With soaring global population growth, and the subsequent rise in the demand for resources – from oil and gas, to water and livestock – there is significant potential that the coming decades will experience an intensification of civil strife and conflict over resources. In this five-part series Strife hopes to provide a deeper understanding of the dynamics shaping such conflicts and the means available to states and non-state actors to address their root cause and (hopefully) create a sustainable road to peace.

 

 

Annabelle Vuille is currently based in Switzerland and in her final year of the MA programme in International Relations and Contemporary War at the Department of War Studies at King’s College London. Having studied International Business in Rome, she is specifically interested in applying her economic background to the sphere of conflict and security. Her main research interest is the interplay between geopolitics and energy security, particularly in the maritime domain.

 

 

 

Notes:

[1] Klare, Michael (2001), Resource Wars: The Changing Landscape of Global Conflict (New York, United States: Henry Holt), p. 23.

[2] Wright, Gavin and Czelusta, Jesse (2004), ‘Why Economies Slow: The Myth of the Resource Curse’, Challenge, Vol. 47, No. 2, pp. 6-38.; Varisco, Andrea (2010), ‘A Study on the Inter-Relation between Armed Conflict and Natural Resources and its implications for Conflict Resolution and Peacebuilding’, Journal of Peace, Conflict and Development, Vol. 15, pp. 38-58.

[3] Michael L. Ross, “The political economy of the Resource Curse”, World Politics 51, no.2 (1999): pp. 297-322 explains the so-called Dutch Disease effect, Indra De Soysa, “The Resource Curse: Are Civil Wars Driven by Rapacity or Paucity?”, in Greed and Grievances: Economic Agendas in Civil Wars, ed. Mats R. Berdal and David M. Malone (Boulder: Lynne Rienner Press, 2000) pp. 113-136 introduces the concept of ‘honey pots’. See also Philippe Le Billon, “The political ecology of war: Natural Resources and Armed Conflicts”, Political Geography, 20 (2001): p. 564.

[4] United Nations Environment Programme (2009), From Conflict to Peacebuilding: The Role of Natural Resources and the Environment (Nairobi, Kenya: United Nations Environment Programme).

Image Source: http://tantec.no/TantecNorgeAS/produkter/iptv/content/photogallery_8925791b-a11d-4323-8228-c5e02616d6f4/images/1353664924198/istock_000020867570large.jpg

Why won’t the USA leave the Persian Gulf? The story of the ultimate ‘frenemies'

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By Mazhid Kat:

The US Secretary of Defense meets with the Minister of the National Guard of Saudi Arabia in Washington DC (21/11/14). Photo: Adrian Cadiz
The US Secretary of Defence meets with the Minister of the National Guard of Saudi Arabia in Washington DC (21/11/14). Photo: Adrian Cadiz

In 1945 Franklin Roosevelt was the first President to admit that the United States had become oil-dependent.[i] This occurred because the American government had introduced a ‘conservation policy’ aimed at reducing the production of domestic oil and saving reserves for future generations by substituting it with imports.[ii] As a result, Roosevelt and King Abdul Aziz Ibn Saud – of Saudi Arabia – signed the Quincy Pact, which included the promise of an American monopoly to develop oil fields in exchange for protecting Saudi Arabia from external threats.[iii]

During the Cold War period, the Persian Gulf represented an important region for US strategy against the Soviet Union.[iv] In order to contain Soviet influence in the area, the Truman Doctrine was elaborated,[v] followed by the Eisenhower Doctrine in 1957, which stressed the importance of the Middle East in terms of a global strategy against the expansion of ‘international communism’.[vi] For states like Saudi Arabia, the US became an ally, always willing to support resistance against any possible leftist advance, like the internal opposition in the Saudi royal family represented by the ‘Red Prince’ Talal bin Abdulaziz Al Saud in the 1960s, who was inspired to see Saudi Arabia developing in a similar way to Egypt with its Arab socialist ideology.[vii]

At the same time, Saudi Arabia (and its local satellites) and the US became the ‘ultimate frenemies’. This term points to the contradictions inherent in America’s relations with these states, specifically the tension between Wahhabism and American liberalism. Wahhabism is the religio-political movement that constitutes the basis of Saudi foreign policy. It is a doctrine which resists the idea of democratization and modernization; instead emphasizing the role of Islam in society. This principle is at odds with the democracy-promoting policies of Washington.[viii] Therefore, the American support for liberal values in the region has always been fighting against the ‘dark side’ of oil and security matters, which results in Washington opposing democratic changes, viewed as a threat to the status quo in the Persian Gulf.

At the beginning of the 21st century, President George Bush uttered a famous phrase: ‘America is addicted to oil’.[ix] Although the major U.S. oil suppliers are in the Western Hemisphere, the Persian Gulf countries accounted for about 25% of the total U.S. crude oil imports in 2013.[x] In addition, Saudi Arabia provided discounts on oil for the U.S., amounting to $8.5 billion from 1991 to 2003.[xi] Partly as a result of this, currently U.S. troops are deployed in Kuwait (13,021), Bahrain (3,227), Qatar (592), Saudi Arabia (332), United Arab Emirates (313), Egypt (267) and Iraq (750).[xii] However, in recent years domestic oil production in the United States has significantly increased as the result of the shale revolution.

During Obama’s tenure in office, large shale oil deposits have reduced America’s dependence on Middle Eastern oil, gradually eliminating the need for such a considerable military presence to help their Gulf allies. This has provided Washington with greater flexibility in its relations with the Gulf monarchies to solve the conflict with Iran. Sanctions have led to Iran showing a willingness to let observers inspect their nuclear facilities in exchange for the supply of uranium being enriched to 20%.[xiii] This means that the United States may accept the ‘threshold status’ of Iran, which would be an important milestone in the thawing of relations between the two countries.

Above all, the shale revolution alleviates American dependency on foreign oil: imported fuel now accounts for 30% of overall oil consumption compared to 60% in 2005.[xiv] The U.S. government has minimized risks of exogenous oil shocks, and so the recent turmoil in the Middle East did not significantly affect oil prices.

Nevertheless, the new trends in the oil industry are not all rosy for the USA. American oil reserves constituted only 2.6% of the world’s total reserves at the end of 2013,[xv] suggesting that the shale revolution will not completely eliminate American energy dependency. That is part of the reason why the US-Saudi coalition has neither been weakened, nor strengthened, by the Shale revolution.

In addition, Washington still needs the support of Riyadh to affect the global oil market through its domestic production and alliance with Saudi Arabia. Some experts argue that the recent drop in the oil price level is an American attempt in cooperation with the Saudis to put pressure on Russia and Iran.[xvi] (This was discussed in Strife a couple of weeks ago.) That is what happened in 1985 when Saudi Arabia increased oil exports from 2 million barrels per day to 10 million, dropping the price from $32 to $10 per barrel. As a result, the Soviet economy lost approximately $20 billion per year.[xvii] This development undermined the ability of the USSR to continue its anti-Western strategy. Another example is when the United States used energy supplies as a mechanism of control over Japan during the Cold War. The ability to manage oil exports to Japan was a unique method of imposing restrictions on Japanese industrial and military policy.[xviii]

Part of the reason why Washington wants to maintain its strong influence in the Persian Gulf is to secure diminishing but still substantial oil imports. But, most importantly, retaining the ability to affect the global oil market represents a tool to increase the bargaining power of Washington in relation to Moscow and Tehran. Of course, Russia and Iran are quite sustainable today, but the continuing trend of low oil prices can weaken their positions.

At the same time, oil can be used by the American government to improve internal governance, civil rights and increase transparency in the Islamic monarchies, thanks to the increased flexibility over the issue of oil supplies. This can shrink the social base for terrorist organizations, which often emerge in response to petro-dictatorships. It is a crucial measure against transnational terrorism because, for example, the majority of hijackers on 9/11 terrorist attack were Saudis. Although they were not working from within Saudi Arabia, they were members of al-Qaeda, and as Hilary Clinton indicated in 2009: “Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban, LeT and other terrorist groups”.[xix] The only question is whether the current administration is willing to begin a transformation to make its allies in the Gulf more democratic and to eliminate the ‘dark side’ of its foreign policy.

 

Mazhid Kat is an MA student on the International Political Economy programme at King’s College London. His research interests include the political economy of the Middle East and the Post-Soviet region.

 

[i] Colin S. Cavell, America’s dependency on Middle East oil, Global Research, April 11 2012 http://www.globalresearch.ca/america-s-dependency-on-middle-east-oil/30177

[ii] Wallace F. Lovejoy, Oil conservation, producing capacity, and national security, Natural resources journal, January 1970

http://lawschool.unm.edu/nrj/volumes/10/1/05_lovejoy_oil.pdf

[iii] Louisa Dris-Aït-Hamadouche and Yahia H. Zoubir, The US-Saudi relationship and the Iraq war: the dialectics of a dependent alliance, Journal of Third World Studies, 24(1), 109-135, Spring 2007

[iv] Michael J. Butler, U.S. Military Intervention in Crisis, 1945-1994: An Empirical Inquiry of Just War Theory, The Journal of Conflict Resolution, 47(2), 226-248, April, 2003 http://www.jstor.org/stable/3176168

[v] Pierre Tristam, The Truman Doctrine and the Middle East, About.com http://middleeast.about.com/od/usmideastpolicy/a/truman-doctrine-explained.htm

[vi] Salim Yaqub, American Orientalism: The United States and the Middle East since 1945, by Douglas Little, Reviews in American History, 31(4), 619-625, December 2003 http://www.jstor.org/stable/30031381

[vii] Sandra Halperin, The Post-Cold War Political Topography of the Middle East: Prospects for Democracy, Third World Quarterly, 26(7), 1135-1156, 2005 http://www.jstor.org/stable/4017808

[viii] Febe Armanios, The Islamic Traditions of Wahhabism and Salafiyya, CRS Report for Congress, December 22, 2003

http://iglhrc.info/crs_country/CRSReportTheIslamicTraditionsOfWahhabismAndSalafiyya(December22,2003).pdf

[ix] Michael T. Klare, Blood and oil, Media Education Foundation, 2008 https://www.mediaed.org/assets/products/124/presskit_124.pdf

[x] U.S. Energy Information Administration (EIA), http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbbl_a.htm

[xi] Jennifer R. Peck, Do Foreign Gifts Buy Corporate Political Action? Evidence from the Saudi Crude Discount Program, Job Market Paper, 1-51, October 2012

[xii] Total Military Personnel and Dependent End Strength By Service, Regional Area, and Country, Defense Manpower Data Center, 2014 https://www.dmdc.osd.mil/appj/dwp/getfile.do?fileNm=SIAD_309_Report_P1406.xlsx&filePathNm=milRegionCountry

[xiii] Iran dilutes enriched uranium stockpile, Aljazeera, July 21, 2014 http://www.aljazeera.com/news/middleeast/2014/07/iran-dilutes-enriched-uranium-stockpile-201472111930102600.html

[xiv] Christian Berthelsen, U.S. Oil Exports Would Lower Gas Prices, Government Report Says, Wall Street Journal, October 20, 2014

http://online.wsj.com/articles/u-s-oil-exports-would-lower-gas-prices-government-report-says-1413820500

[xv] BP Statistical Review of World Energy 2014, British Petroleum http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.pdf

[xvi] Thomas L. Friedman, A Pump War?, The New York Times, October 14, 2014 http://www.nytimes.com/2014/10/15/opinion/thomas-friedman-a-pump-war.html?ref=opinion&_r=1

[xvii] Ibid

[xviii] Noam Chomsky, After the Cold War: U. S. Foreign Policy in the Middle East, Cultural Critique, No. 19, The Economies of War, pp. 14-31, Autumn, 1991

[xix] Declan Walsh, WikiLeaks cables portray Saudi Arabia as a cash machine for terrorists, The Guardian, December 5, 2010 http://www.theguardian.com/world/2010/dec/05/wikileaks-cables-saudi-terrorist-funding

Until the last drop (…of oil)

by

By Eugenio Lilli:

Photo: Carsten ten Brink (creative commons)
Photo: Carsten ten Brink (creative commons)

Eight percent: that is how much the price of oil fell after OPEC’s decision last Thursday to maintain its oil output unaltered. This sharp drop was only the latest development in a trend that has seen oil prices on the world market tumble by nearly 40 percent since mid-June. At one point, the international crude benchmark even traded below $70 a barrel, the lowest since May 2010.

The current situation is the result of a combination of factors. On the one hand, a slowdown in the Chinese and European economies has led to a decrease in demand for oil. On the other hand, the so-called “fracking revolution” in the United States, added to an ahead-of-target OPEC production, has generated an increase in oil supply.

Despite a clear situation of overproduction, and repeated calls for a cut, OPEC, and especially Saudi Arabia, decided to keep its production ceiling unchanged. Given the undeniable strategic importance of oil for modern economies, such a decision is likely to have far-reaching implications. Here, we limit our discussion to the relationship between Saudi Arabia and the United States: a time-honored relationship that has come under pressure recently due to openly divergent opinions over events like the Arab Awakening and US-Iranian nuclear negotiations.

Experts have given several interpretations of Saudi Arabia’s decision to convince OPEC to adopt a policy that contributes to the ongoing fall in oil prices. Two of these are particularly worth noting.

The first interpretation depicts Saudi Arabia’s decision as being in line with US interests in the region. According to this view, Saudi policy to keep the price of oil low is part of a wider strategy to help the United States put meaningful economic pressure on Russia. In fact, according to the Financial Times, Russia needs to sell oil at a price of at least $110 a barrel to guarantee stability to its economy and financial system. An oil price at $70 a barrel therefore has the potential to further slow Russia’s embattled economy, since around half of the country’s annual budget revenue comes from oil and gas exports.

The current decline in oil prices has also affected the value of the Russian currency – the ruble. Since the beginning of the year, the ruble has weakened by 34% against the US dollar. A weak ruble makes it harder for Russian companies – including the energy giant Rosneft – to pay the interest on their foreign debts. In other words, by keeping oil prices low Saudi Arabia is actively contributing to the Obama administration’s effort to rein in a recalcitrant Russia.

A second interpretation takes the opposite view and describes Saudi Arabia’s decision as a foreign policy tool to test US shale production. According to this interpretation, a policy of cheap oil is primarily aimed at challenging US shale operators and driving out the highest-cost producers. In fact, the break-even price required for shale oil developments in the United States ranges between $40 and $115 a barrel. A Saudi strategy for a long period of low prices may therefore push many US producers out of the market and slow down the development of these new energy sources. In other words, Saudi Arabia may be assertively resisting the US’ steady rise to being the world’s top oil producer.

Certainly, the above interpretations are not mutually exclusive. In fact, the Saudis could be cooperating with the Obama administration against Putin while, at the same time, they could be challenging the United States for supremacy in the global oil market. However, a Saudi policy mainly based on a rationale of “cooperation” instead of one of “competition” could be a revealing sign of where the US-Saudi relationship is heading.

 

Eugenio Lilli is a PhD Candidate at the Defence Studies Department, King’s College London. His research focuses on US foreign policy toward the Greater Middle East, in particular on the Obama administration’s response to the Arab Awakening. Eugenio is also the founding chairperson of the King’s College London US Foreign Policy Research Group. You can follow him on Twitter @EugenioLilli