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On oil and democracy

Robin Lustig | 11:22 UK time, Friday, 2 November 2007

It has been something of a truism for several years now that oil and democracy do not tend to make happy bed-fellows. It’s more than a decade since Dick Cheney, who at the time was CEO of Halliburton, remarked on what a shame it was that “the good Lord didn’t see fit to put oil and gas reserves where there are democratic governments”.

But you can, of course, look at it another way. Perhaps it’s the very existence of the black sticky stuff beneath the ground that makes it so difficult for democracy to thrive. (There are, as always exceptions: the UK, Norway and Canada all seem to manage, but it’s probably significant that in these countries democratic traditions were already pretty well established by the time the oil men started drilling.)

Earlier this year, I was in Nigeria to report on the near-farcical presidential election. There was fraud and malpractice on a massive scale: for the first time in my career, I was able to interview, on the record, a man who told me exactly how you go about buying votes at the polling station.

And it was a Nigerian political analyst who made the point that if a government gets the bulk of its revenues from taxes levied on oil companies, it has little need to listen to its own voters. It has plenty of cash, whether or not they support it, and it can always use some of that cash to bribe them. It puts a bit of a different spin on the old American anti-colonial slogan “No taxation without representation”. If it's the oil companies who pay most of the taxes, maybe it’s the interests of the oil companies that the government mostly represents.

So why do I raise all this now? Well, look at what’s been happening to oil prices. The cost of crude is up by 40 per cent since August and could soon be nudging $100 a barrel. (To me, it seems only yesterday that we were worrying about it getting as high as $50. But that’s progress for you.) And where do you think all that extra dosh going?

Here’s the list of the world’s top 10 oil exporters last year: Saudi Arabia, Russia, Norway, Iran, United Arab Emirates, Venezuela, Kuwait, Nigeria, Algeria, Mexico. You don’t need too many fingers to count the democracies, do you?

So when you look at what’s happening in Russia, and you ask yourself why President Putin is so confident of winning the parliamentary elections in December – or in Saudi Arabia, and you ask yourself why there isn’t more pressure for democratic reform – or Nigeria, and you ask why such vibrant entrepreneurial people are so appallingly governed, you may be very tempted to come up with the same one word answer.


  1. At 08:56 PM on 02 Nov 2007, Bedd Gelert wrote:

    Robin, if you have not already seen the film 'Iraq in Fragments', I would recommend it as I think you would enjoy this documentary in three parts. It is very low-key and shows daily life for Iraqis.

    The most moving bit for me [ and I'm relying on an inaccurate memory, so forgive me ] was when a guy was discussing the war, and said words to the effect of 'They say the war is about oil. Well that didn't help us before. So take the oil. But leave us alone in peace. '

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  2. At 03:36 PM on 04 Nov 2007, Pepper wrote:

    I think it is more accurate to say that it is a phenomenon of co-incidence, i.e. an accident of demographics that the major oil reserves are found naturally occurring in third world regions, where dicatatorships prevail, rather than that there is any direct causal relationship between oil and dictatorships. (By the way, Australia has reasonable oil resources too.) However, I do agree that the subsequent power and wealth the oil delivers to incumbent dictators, makes it more difficult for opposition forces to unseat them. Historically, the only way appears to be via violent conflict. There are plenty of third world, tin-pot dictatorships without major oil reserves too, yet just as corrupt. I think corruption in government is endemic where the masses are uneducated, disadvantaged and powerless, viz a viz, the third world. Perhaps their autocratic leaders prefer to keep them that way and thereby ensure that oil taxes travel more easily with no resistance into the very same autocrats' private pockets.

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