Oil, the State, and War: The Foreign Policies of Petrostates

Russia’s invasion of Ukraine has brought renewed attention to energy security and the key role of oil and natural gas in today’s interconnected global economy. But how well do we understand the different ways in which being a petrostate such as Russia can decisively affect the foreign policies of this select group of states?

According to Emma Ashford, a resident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council, our understanding of the effects of oil wealth on foreign policy is far less developed than the study of its repercussions in internal politics.

In her recently published book, Oil, the State, and War: The Foreign Policies of Petrostates, Ashford seeks to close a knowledge gap that, as she convincingly argues throughout the volume, we ignore at our own peril.

"There is a clear association between oil wealth and arms sales, military spending and proxy sponsorship"

Although present in the title of the book, the author is by no means enthusiastic about the “petrostate” concept, which she considers too vague. Thus, from the very beginning, the author introduces the reader to a granular typology of petrostates.

Whereas any state whose oil rents are greater than 10 percent of the GDP (the so-called oil-dependent states) or has oil revenues of more than $1,000 per capita (the so-called oil-rich states) qualifies as a petrostate, only those who produce more than 2 percent of global supply can be called super-producer states.

Among them, we find super-exporter states, which are not only top producers but also able to export part of their production. Whereas China is only a super-producer, Saudi Arabia or Qatar are textbook examples of a super-exporter. It is important to note that throughout the book, the author uses the term “oil” expansively, as it refers to “hydrocarbon production, notably oil and gas production.” 

Ashford explores several pathways connecting the economic power of petrostates with foreign policy behaviour. She does so by smartly resorting to both qualitative and quantitative methods, sustaining her findings with case studies and statistical analysis that is presented in an accessible manner through numerous graphs.

The reader may have welcomed at least one case study of African countries, especially considering the growing importance of the continent in energy matters. This notwithstanding, the overall structure of the book is almost flawless.

The author finds that there is “a clear association between oil wealth and arms sales, military spending and proxy sponsorship.” However, we are told that oil wealth can also be responsible for what Ashford calls “oil altruism”, namely the use of oil revenues “in charitable and diplomatic endeavours.”

Leaving aside the discussion on whether there are purely disinterested uses of oil wealth, the “oil altruism” concept turns out to be too broad in its scope. It attempts to accommodate such different phenomena as Norway’s generous contributions to international organizations and Saudi lobbying in Washington to sideline Doha in the middle of the 2017-21 Qatar blockade.

Some of the pathways connecting oil wealth to foreign policy can only be understood in conjunction with the effects of oil wealth in internal politics. On average, Ashford explains, oil-wealthy states are less likely to be democratic since oil profits provide an opportunity for authoritarian leaders to buy off elites and bankroll state repression. This confirms previous research showing that oil-rich countries “are 50 percent more likely to be ruled by autocrats.”

Moreover, in oil-wealthy states citizens usually pay low taxes or are not taxed at all, cutting off an avenue for popular mobilization to press for democratic changes. Oil-wealthy states often have weak institutional development.

This has important repercussions because “weak institutions make foreign policy less deliberative and therefore less rational.” The problem is compounded by a phenomenon that often goes hand-by-hand, which Ashford calls “petro-personalization.” Oil wealthy states are often led by an authoritarian ruler or a small group of elites, leading to the personalization of decisions.

Personalized decision-making processes, characterized by the absence of an open discussion about different policy options, are more likely to be sub-optimal. There is no better exemplification of these problematics, as Ashford explains than Saddam Hussein’s decision to attack Iran in 1980, and a decade later, march south to invade Kuwait.

Although all oil-rich states see their foreign policy impacted by the resources they possess, the extent of these effects varies greatly across these countries. See, for instance, one of the cases Ashford does not discuss. Equatorial Guinea, on the western coast of Central Africa, is an extreme example of an oil-dependent and oil-rich state, with 90% of its export earnings coming from crude oil.

At the same time, Equatorial Guinea is far from being a super-producer since its oil production represents only 0.2% of global production. Super-producers, and more specifically the subgroup of super-exporters, whose leading status derives from market share, are endowed with a foreign policy toolkit that is unavailable to other oil-rich states such as Equatorial Guinea, Oman, or Malaysia.

"Oil, the State, and War presents insights that may help us better understand key issues surrounding oil, and natural gas. Considering the ongoing war in Ukraine, the book’s core findings appear particularly relevant"

One of the tools at the disposal of super-exporters is the oil weapon, which can be defined as the possibility of threatening and occasionally materializing oil shutoffs in the pursuit of foreign policy gains. However, they normally do not need to resort to such drastic measures to achieve their goals because oil provides them with soft power.

Policymakers in importing states are going to think twice before imposing sanctions for human rights violations or terrorism promotion on super-exporters. Also important, super-exporters might enjoy what Ashford aptly calls the “hegemonic umbrella”, a concept meant to define the support some super-exporters receive from superpowers in the form of “protection of their resources, and potentially for their states and regimes”.

That was the case of Kuwait during the Iran-Iraq War. With its oil exports under the threat of continuous Iranian attacks, Washington committed to protect Kuwaiti shipping in the Persian Gulf in 1986.

Oil, the State, and War presents insights that may help us better understand key issues surrounding oil, and natural gas. Considering the ongoing war in Ukraine, the book’s core findings appear particularly relevant. Russia, as a super-exporter state, can resort to the oil weapon and shut off oil and natural gas exports to Europe.

Actually, it has already halted gas flows to Poland, Finland, and Bulgaria and to some firms in the Netherlands, Denmark, and Germany. This notwithstanding, Ashford notes that “effective use of the oil weapon is challenging.” 

Moscow used the oil weapon and shut off natural gas transfers to Ukraine in 2006 and 2009, but the moves proved ineffective. They actually motivated a moderate rethinking of the European Union’s energy strategy towards less dependency on Russian energy.

Regarding the war in Ukraine, Ashford has explained in a recent virtual discussion of her book that “the EU has spent the time since 2006 (since the first shutoff of Russian gas to Ukraine) trying to insulate themselves from exactly that kind of shock.” Countries in Europe, however, attached very different levels of priority to the project of decreasing dependency on Russian energy.

On the lower side of the spectrum we find the EU’s largest economy, Germany, where energy cooperation with Russia had bipartisan support until the last months. Germany is particularly dependent on Russian gas imports, whereas alternative sources for oil are easier to find.

Ashford’s book is not only a cautionary tale for Russia and the possible use of the oil weapon, but also for the effectiveness of sanctions on Moscow. In late May, the EU announced it would impose an oil embargo on Russia.

The announcement followed previous monetary, financial, trade, and investment sanctions. Ashford remarks that sanctions are “rarely successful unless they are multilateral in nature.”

Although Washington and Brussels appear to be increasingly on the same page regarding sanctions against Russia, China and India are taking a very different course of action. The case of India deserves special attention; New Dehli is buying about 600,000 barrels a day from Russia, as compared to 90,000 a day last year, encouraged by the discount prices offered by Moscow.

Ashford also notes that the economic pain brought by sanctions “does not necessarily translate into policy change.” This is a lesson worth keeping in mind, especially considering how long-running and far more intense sanctions on Iran for its nuclear program and regional activities have failed to effect regime change in Tehran.

Oil, the State, and War is a book that helps understand the times we live in. It will be a great addition to the library of both the general reader interested in global affairs and the political scientist. Ashford’s book combines, in a difficult feat, expertise with an accessible style.

Marc Martorell Junyent is a graduate in International Relations, currently finishing a MA in Comparative and Middle East Politics and Society at the University of Tübingen (Germany). He has been published in the London School of Economics Middle East Blog, Middle East Monitor, Inside Arabia, Responsible Statecraft and Global Policy. 

Follow him on Twitter: @MarcMartorell3