Role of Oil in the Prolongation of Conflicts

Introduction

In most ways, war is a like a business- one where commerce makes manners harsh and in return, war brings money. Oil raises capital and when put together with corruption and political instability war can be highly profitable. Oil being a non-renewable resource that is vital in the times of rapid industrialization and development makes it worth fighting for and worth fighting dirty for. Oil as a resource could inculcate responses and interest from many foreign nations more easily than any other resource. The abundance of oil in a state and its high market value leads to conflicts of many kinds (going by the ‘resource curse’ theory). This paper studies the role oil has played in prolonging conflicts. Firstly, it explains how oil resource could affect the duration of a conflict. Secondly, the paper provides three main case studies namely of Angola, Sudan and Nigeria. In conclusion, the paper studies newer cases and the role of multinational oil corporations in prolonging conflicts.

Oil and duration of a conflict

It is important to understand the nature of oil that makes it more problematic in this context than other resources. There is a high demand for oil which means its ‘perceived importance’ is very high and is very profitable for the country that is abundant in oil fields. The relationship between oil and the duration of conflicts can be studied. To a large extent oil prolongs an existing conflict; Macartan Humphrey in the Journal of Conflict Resolution suggests different mechanisms that explain how natural resources can prolong conflicts. Here are some of the mechanisms that are relevant in terms of oil conflicts.

Firstly, there is the Feasibility Mechanism wherein natural resource revenue finances and helps procure weapons acting as an incentive for combatants to fight for longer. It is the economics logic that longer wars need more weapons and weapons need money so oil pumps in the money. This mechanism could explain the Angolan conflict wherein both groups (MLPA and the UNITA) had access to huge funds arising from natural resources.

The second is the Military Balances Mechanisms- apart from just resource revenues financing buying of weapons and saving combatants, it acts as an incentive to inflict harm on the opponent and in return helps sustain damages inflicted upon the self. Michael Ross (2002) suggests that “booty futures” financing—financing to secure assets that can be gained after a war ends—can be associated with longer wars.[1] This is especially true when there is corruption in domestic politics together with a high inflow of oil revenues.

The third is Fragmented Organizational Structures Mechanism that suggests that organizational hierarchy, size and cohesion affects duration of conflict. To justify this, oil is a resource that could be a clear example as it requires more cohesion in its management and extraction than other resources like cattle or water. ‘Resource wealth can prolong conflict by weakening the prospects for third-party peace mediation.’[2]

There have been many studies proving that wars are longer in countries that are abundant in oil wealth and are less dependent on oil themselves. In addition, the role of the state, warlords and rebels play a key role- ‘conflict can create war economies, often in the regions controlled by rebels or warlords and linked to international trading networks; members of armed gangs can benefit from looting; and regimes can use violence to deflect opposition, reward supporters and maintain their access to resources. Under these circumstances, ending civil wars becomes difficult.’[3] Finally, the role of bunkering in the areas of conflict can affect the duration by avoiding peace measures.

Angola

Mineral wealth in Angola has not only been a source of finance for the war but has also clearly shaped the conflict itself. Oil has played a major role in the Civil war that the country faced from 1975 to 2002. Most of the developmental activities in Angola happened mainly around the oil resource. The discovery of offshore oil resources created a huge interest from foreign companies like Chevron. Angola seized the opportunity well understanding the fact that it was a good source of profit.

New oil discoveries in the 1990s lead to many new companies seeking for a share. ‘This was best demonstrated by the award of the ultra deepwater oil blocks 31-33 in 1999, which will be operated by BP, TotalFinaElf and Exxon-Mobil. Despite only limited seismic information being available, the foreign oil companies were prepared to pay over US$900 million in 'signature bonuses' - down payments for the exclusive right to explore for and produce oil in the delineated areas - for the blocks.’[4] This was also after the fall of the Soviet Union that was formerly of great military assistance to Angola after which the Marxist Popular Movement for the Liberation of Angola (MPLA) had to fund all the arms in cash after winning the election in 1992. The MPLA and the National Union for the Total Independence of Angola (UNITA) were the chief antagonists of the war. It is evident here that without the revenues from oil, the Angolan government would have faced serious difficulty in continuing to fight the war in the absence of the foreign powers.

‘The activities of foreign oil companies have affected the shape of the conflict; the intense competition for oil concessions has led to a number of different companies seeking the favour of the Angolan state elite through dubious charitable donations, weapons deals, and other forms of assistance.’[5] The MPLA government used the revenues from the oil to procure weapons in large quantities- from small conventional arms like guns and light artilleries to expensive jet aircrafts and tanks. Weapons as a result of oil trade were brought in from Russia, Portugal, Belarus, Brazil, Bulgaria and South Africa.[6] These weapons were mainly used to fight even if not defeat the UNITA rebels. On the other hand UNITA controlled most of the diamond deposits and hence were able to sustain a good fight against the MPLA. It must be remembered that the war originated out of political issues but its progress, timing and duration was purely determined by the oil revenues and its fluctuations.

Angola also learnt that such conditions of war could provide huge business opportunities to specific interest groups and under such conditions with heavy cash inflosw; the money could also go into the pockets of government officials. The war empowered the Angolan Armed Forces and allowed many senior officers to own private security companies as a private business. ‘One stark example of the link between the war and the government beneficiaries was the British Virgin Island registered CADA (Companhia Angolana de Distribuicao Alimentar). CADA has reportedly been awarded a US$720 million five-year contract to feed Angola's armed forces in 1999. Dos Santos reportedly obtained control over CADA just before the resumption of war in December 1998. As Global Witness (1999) pointed out, the more the army consumes, the more those who are associated with companies such as CADA can profit.’[7] These groups benefiting from the revenues during the conflict clearly prefer to fight than to come to peace terms.

As described earlier, this is also an example to show oil prolongs conflict by becoming uncompromising and deviated from peace moves. There have been several failed peace talks between the two groups. Infact, even the UNSC in 1993 laid restrictions on the availability of oil and arms to the UNITA also monitoring their diamond export. However, this was unsuccessful for two main reasons- a) the diamond market is very complex and difficult to keep track of illegal trades and b) the UNITA was forced to develop weapons as the MPLA were spending more and more on weapons- this acted as a catalyst for weaponization on both sides.

Sudan

War and conflict have dominated much of Sudan for the past few decades with the 23-year old Sudanese Civil War being the longest military conflict ever in Africa. The massive discovery and interest in oil in the late 1970s (first by Chevron in 1979) truly changed the socio-political and the military outlook in Sudan. In 1983, foreign oil companies formed the White Nile Petroleum Company with an aim to build pipelines to the port on the Red Sea. In the same year there were severe conflicts between the north and south of Sudan as a result of the Sharia Law and local non Arab tribes in the south started the Sudanese People’s Liberation Army (SPLA). Once the condition worsened Chevron was forced to leave selling their stakes to Sudanese companies.

These oil sources are mainly located in southern Sudan and the fight for the control of these reserves was one of the main aims of the rebellion by the SPLA. With more foreign investments being directed towards Sudan’s oil, they realised the value of the resource and acknowledged the fact that it is worth fighting for and gaining control over.

Like in Angola, the Sudanese government has used the revenues generated from oil to finance enormous arms purchases mainly from China. ‘Weapons deliveries from China to Sudan since 1995 have included ammunition, tanks, helicopters, and fighter aircraft. China also became a major supplier of antipersonnel and antitank mines after 1980.’[8] This demarcates the vicious cycle of oil revenues being used to proliferate which in response becomes an incentive to fight for longer dimming the light of peace.

There Sudanese government in Khartoum evidently needs to depend on the south as the main oil producing areas are located there. Even till recently, for South Sudan (Juba), oil represented 98 percent of total revenues for the year compared to Khartoum at 65 percent.[9] The more discoveries of oil in the south are an indicator that the north will continue fights against the SPLA. ‘The recent discovery of a possible 12.5 billion barrels in the South of the country further implies that the stakes in the war are getting higher, and that the north will continue to fight to ensure the ensure of what is likely to be one of the world’s largest oil fields.’[10]

Another facet of the story to mention is the fact that Sudan had a huge concern of militant security including that of China who was a main provider of weapons. ‘A report issued by Christian Aid, an international development agency, said: "Military protection is also part of the partnership. As in many conflict-ridden countries, the oil companies are themselves targets. The SPLA has declared oilfields and oil companies to be legitimate military targets...’[11]

In 2005, a comprehensive peace agreement was signed which provided for an equal share of oil and revenues between the two regions. Despite of this, there have been clashes between the Khartoum and the SPLA. In addition, the ongoing violence in Darfur shows that there is continuous source of weapons with no motives of moving towards a peace negotiation though millions of are at stake in Darfur.

Sudan is a clear example of a state rich in natural resources that is tied down to war and devastation. High incomes from oil resources have done little or no efforts to improve quality of life. In the absence of oil resources, would Sudan have been able to remain at war for so long? Could they have found a peace negotiation earlier?

Nigeria

Nigeria has held the reputation of being the first and technically the largest single oil-producing country in the world. This very reason has enabled Nigeria to attain a hegemonic dominant status in West Africa. Nigeria has purchased massive stocks of weapons with the proceeds of oil resources including combat aircrafts, armoured vessels, military tanks etc. This however was done more to sidetrack the money into the defence and military needs so the officers could pocket it. Corruption is a huge culprit that allows for a total misuse of revenues and that seeks to impose further damage upon other states.

Nigeria cunningly makes use of the proceeds from oil in sustaining a control or impact or an external actor/state that does not have access to oil. A good example of this is Nigeria’s involvement in Liberia- ‘it is possible that individual Nigerian soldiers might have deliberately prolonged the Liberian war to make more money from the oil allocation being made by the Nigerian government to assist in bringing about durable peace.’[12] This issue has come to light many times also leading to Nigeria and the Economic Community of West African States Monitoring Group (ECOMOG) with regard to keeping the interests of Nigeria at the forefront even if it meant sabotaging the peace process within Liberia.

Another important aspect stemming out of corruption and oil revenues is illegal bunkering which is seen in the case of Nigeria and the Niger delta. The Niger delta has been a strategic component of Nigeria’s activities. Nigeria’s prolonged military rule has been blamed for the violence in the Niger like kidnapping, sabotage, seizure of oil facilities and heavy loss of life and property. The local tribes like Urhobo, Ijaw and the Itsekiri have also fought over the natural resource in the area and in 2004, mainly the Ijaw tribe formed the Niger Delta People’s Volunteer Force (NDPVF) that fought with arms to gain control over the oil resources. Nigeria has been using the conflicts and instabilities in the Niger Delta to maximise their revenues through illegal bunkering- the old principle that two men fighting could be the third man’s win. A specialist on the Nigeria, Anthony Goldman, said the scale of attacks and the vast quantities of oil being siphoned confirms that senior Nigerian officials have protected and backed the armed militia that operate in the Niger delta.[13] The extent of this issue could be further substantiated with the incident where three naval officers were court-marshalled for the disappearance of a Russian ship which was previously detained for bunkering.[14]

Newer cases

Through this paper the issue has been exemplified in context to Angola, Sudan and Nigeria. The role of oil in prolonging conflicts can also be seen in Chadian politics where oil plays an important role ever since the President Tombalbaye was killed in 1975. The role of oil in prolonging conflicts is not something that is unique to Africa alone- it is present in other parts of the world as well but may not be in sure brutal forms. Another good example to study is the case of Venezuela. In 1975, Venezuela took control of the oil industries. It is the sixth largest oil producing nation in the world and managing resources have always been a problem. There have been constant riots within the nation and with the US regarding the pricing of oil (which closely determines 80% exports and over one third of the country’s GDP).[15] The constant interference of the US ignited the main conflict in 2002 when the US supported the opposition and played a role in overthrowing president Chavez.

Venezuela is using funds from the oil market to help get back against rival states like US and Colombia. The recent deal between Venezuela and Russia gives an insight to how this conflict now has the potential to breakout into a civil war. A 30 billion dollar investment from Russia and trade in arms including military tanks is the demand from President Hugo Chavez. In return, Russia gets access to Venezuela’s estimated 53 billion barrel oil fields.[16] This quid pro quo deal is intended to make Venezuela’s military ability stronger in response to the United States’ vast military presence in Columbia. This brings to light how a purely political conflict is being prolonged because Venezuela now has the funds that its oil has to offer.

Role of Multi-National Corporations

The presence of multinational oil corporations worsens the situation in two ways- a) they provide incentives to the state for reciprocal gains in oil trade b) they hinder peace negotiations directly or indirectly. MNC’S play a role in increasing corruption and further de-stabilizing a state by having different agreement of profit share with the governments of the oil producing state. MNC’s and foreign actors lack transparency in their activities and are often exploit states for their selfish gains including practising illegal trading, bribing and aided in deregulating markets for their own survival which results in the warring states finding easier ways to make money (like Nigeria and bunkering).

Concluding Assessment

In all the cases studied in this paper, it is evident that the ultimate sufferers are the people with surplus revenues coming in through oil and yet almost nothing is directed towards prospering development or living conditions of the people. It is not even ironic that countries like Angola, Nigeria and Sudan are among the poorest and most devastated nations in the world. This in its own way these countries justify the ‘resource curse’ theory which suggests that slow economic growth, corruption, authoritarian rule and unstable domestic politics are proportional to the abundance of natural resources.

Having said this, it cannot be generalized that not all oil producing nations go through the same kind of conflicts. Circumstances of instability can also reduce the duration of conflict by bringing the parties to an agreement of peace and sharing or by putting the protagonists in a stalemate situation. More than relating these issues to the resource itself, the nature of the state must be considered. Similarly, it would be difficult to hypothesise if good governance of oil would have shortened wars- the political situation, policy and context is a clincher.

BIBLIOGRAPHY

Alao, Abiodun (2007), Natural Resources and Conflict in Africa: the Tragedy of Endowment (University of Rochester Press), pp.160-190s

‘China’s Involvement in Sudan: Arms and Oil’, Available at- http://www.hrw.org/reports/2003/sudan1103/26.htm, 4 January 2010

Frynas, Jedrzej George and Wood, Geoffrey (2001) 'Oil & war in Angola', Review of African Political Economy, 28: 90, pp.587- 606

Humphreys, Macartan (2005), ‘Natural Resource, Conflict and Conflict Resolution: Uncovering the Mechanisms’ in Journal of Conflict Resolution 49; 508-537, p.1-12

Ian Bonnan and Paul Collier,eds (2003), Natural Resource and Violent Conflict: Options and Actions (Washington DC: World Bank)

‘Nigerian Oil fuels Delta Conflict’, BBC News, 25 January 2006. Available at- http://news.bbc.co.uk/1/hi/world/africa/4617658.stm

‘Oil, Arms and Violence in Africa’, http://www.concernedafricascholars.org/military/oilandarms.pdf, (5 January 2010)

‘Oil Fuelling Sudan Tensions’, Al Jazeera, 9 January 2008, available at- http://english.aljazeera.net/news/africa/2008/01/2008525173125124943.html

Samset, Ingrid, ‘Natural Resource Wealth, Conflict, and Peacebuilding’, Available at- http://www.cmi.no/publications/file/3283-natural-resource-wealth-conflict.pdf.

‘State Rules: Oil Companies and Armed Conflict in Sudan’, Third World Quarterly, 18 July 2007. Available at- http://www.globalpolicy.org/component/content/article/168/39773.html

‘The War in Angola’, http://www.raceandhistory.com/cgi-bin/forum/webbbs_config.pl/noframes/read/534, 3 January 2010

‘United Nations Mission in the Sudan- Background’, Available at http://www.un.org/en/peacekeeping/missions/unmis/background.shtml, 4 January 2010

‘U.S Energy Information Administration: Independent Statistics and Analysis’, Available at- http://www.eia.doe.gov/emeu/cabs/Sudan/Background.html, (3 January 2010)

‘Venezuela’, http://www.flashpoints.info/countries-conflicts/countries-conflicts.html, (3 January 2010)

Volman, Daniel (2003), ‘Oil, Arms and Violence in Africe’, Available at- http://www.concernedafricascholars.org/military/oilandarms.pdf, 2 January 2010

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[1] Humphreys,Macartan (2005), p.514

[2] Collier and Bannon (), p.218

[3] Samset, Ingrid, p.6

[4] Frynas and Wood (2001), p.6

[5] Frynas and Wood (2001),p.2

[6] ‘The War in Angola’ (2002)

[7] Frynas and Wood (2001), p.12

[8] ‘China’s Involvement in Sudan: Arms and Oil’, (2003)

[9] U.S Energy Information Administration, http://www.eia.doe.gov/emeu/cabs/Sudan/Background.html

[10] Alao, Abiodun (2007), p.181

[11] ‘Oil Fuelling Sudan’s Tensions’. Al Jazeera, 9 January 2008

[12] Alao, Abiodun (2007), p.183

[13] ‘Nigerian Oil Fuels Delta Conflict’, BBC News, 25 January 2006

[14] Alao, Abiodun (2007), p.183

[15] ‘Venezuela’, http://www.flashpoints.info/countries-conflicts/countries-conflicts.html

[16] ‘Russia and Venezuela: Deal in oil and arms’, Net Green News, 20 August 2009