Clean Trade in Natural Resources

By Wenar, Leif | Ethics & International Affairs, Spring 2011 | Go to article overview

Clean Trade in Natural Resources


Wenar, Leif, Ethics & International Affairs


The "resource curse" can strike countries that derive a large portion of their national income from exporting high-value natural resources, such as oil, gas, metals, and gems. Resource-exporting countries are subject to four overlapping curses: they are more prone to authoritarianism, they tend to suffer more corruption, they are at a higher risk for civil wars, and they exhibit greater economic instability. (1)

The correlations between resources and such pathologies as authoritarianism, corruption, civil conflict, and economic dysfunction are evident in the list of the five major African oil exporters: Algeria, Angola, Libya, Nigeria, and Sudan. The recent histories of mineral exporters support the correlations: for example, "blood diamonds" fueled Sierra Leone's decade-long civil war, and the continuing conflict in the metal-rich eastern Congo has caused up to 6 million deaths. The phenomenon is not solely African: Burma, Yemen, and Turkmenistan, for example, are also resource cursed. Moreover, poor governance in resource-cursed countries can engender follow-on pathologies, such as a propensity to cause environmental damage both domestically (for example, through the destruction of forests) and globally (through increased greenhouse gas emissions).

Most research on the resource curse has focused on the institutions of exporting countries. This essay focuses instead on importing countries, especially those in North America and Europe. I survey how the resource curse impedes core interests of importing states. I then discuss how the policies of importing states drive the resource curse, and how these policies violate their existing international commitments. The second half of the paper describes a policy framework for importing states that can improve international trade in resources for both importers and exporters.

The Resource Curse Harms Importing States

Importing states that engage commercially with resource-cursed countries risk channeling funds to hostile, repressive, or failing regimes in ways that threaten their own national priorities. For example, some of the regimes most antagonistic to the West in the past forty years, including the Soviet Union, Iran, Iraq, and Libya, have been financed by Western oil and gas payments. Resentment of repressive regimes in the Middle East--both among elites and on "the street"--has fueled radicalization and anger at the Western states that support those regimes. Taking the United States (the largest resource importer) as an example, most of the countries on the U.S. "State Sponsors of Terrorism" list have been oil exporters; and groups that the United States considers threats to peace (such as al-Qaeda and Hezbollah) have used conflict diamonds to escape U.S. asset freezes. Today terrorists continue to seek havens in areas of resource-fueled conflicts, such as the Great Lakes region of Africa.

One traditional importing-state strategy for securing resource access and supply has been to support "rentier" regimes, which sustain their rule by spending resource revenues on patronage and security forces. The long-term results of this strategy have been mixed. Regimes that do not respect the rule of law have tended to revise resource contracts unilaterally. Some rentier regimes have been overthrown by hostile forces (for example, the Shah in Iran) or have become hostile themselves (such as Gaddafi in Libya and Hussein in Iraq), resulting in restricted resource access for Western firms. Restricted access and political uncertainty have increased price volatility, which has contributed to global economic instability. (Four of the last five global recessions have been preceded by an oil price spike.) Moreover, even friendly rentier regimes tend to lose governance capacity over time, and regimes supported as strategic partners have found it harder to maintain order as their people gain greater access to information, adopt anti-state and anti-corporate ideologies, and acquire weapons (as in the Niger Delta and Yemen). …

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