Oil Discoveries, Shifting Power, and Civil Conflict

Abstract

Can the discovery of petroleum resources increase the risk of civil conflict even before their exploitation? We argue that it can, but only in poorer states where oil revenues threaten to alter the balance of power between regimes and their opponents, rendering bargains in the present obsolete in the future. We develop our claims via a game‐theoretic model of bargaining between a government and a rebel group, where decisions over war and peace occur in the shadow of increasing oil wealth that both increases national wealth and shifts relative power in the government's favor. To test the model's main hypothesis, we leverage data on newly discovered oil deposits as an indicator of the state's expected future power resources. Our argument has important implications for the literature on credible commitments, power shifts, and violent conflict.

This Mine is Mine! How Minerals Fuel Conflicts in Africa

“…We use this level of aggregation rather than administrative boundaries to ensure that our unit of observation is not endogenous to conflict events. 7 Our unit of observation therefore is a cell-year in Sections III and V; that is, we study how mineral resources affect the probability that a conflict takes place in a given cell 5 For feasibility, see Fearon (2004), Collier, Hoeffler, and Rohner (2009), Nunn and Qian (2014, and Dube and Naidu (2015); for greed, see Reuveny and Maxwell (2001), Grossman and Mendoza (2003), Hodler (2006), and Caselli and Coleman (2013); for state capacity, see Fearon (2005), Persson (2011), andBell andWolford (2015); for capital-intensiveness, see Dal Bó and Dal Bó (2011) and Dube and Vargas (2013); for migration, see Le Billon (2001), Ross (2004), and Humphreys (2005).…”

Natural Resources and Conflict

“…While the effects of having such a weak state apparatus are not immediately noticeable in the middle of the natural resource boom, they typically have a negative impact on the state's capability to persist during crises, leading to political instability. This mechanism has among others been studied by Fearon (2005), Besley and Persson (2011) and Bell and Wolford (2015).…”

Resource Concentration and Civil Wars

“…Natural resources and ethnic divisions are known to be correlated with civil con ‡ict in one way or another (see e.g., Le Billon 2001, Collier and Hoe-er 2004, Ross 2004, Montalvo and Reynal-Querol 2005, Fearon 2005, Humphreys 2005, Lujala 2010, Dube and Vargas 2013, but the theoretical literature does not shed su¢ cient light yet on the independent and joint causal role of resource concentration and ethnic divisions. The existing theoretical studies about the e¤ect of natural resources on con ‡ict, by and large do not relate to geographic concentration: Caselli and Coleman (2013) focus on the decision of the dominant ethnic group to exploit or not the other groups in terms of the proceeds from extraction of natural resources, but do not take into account how the geographic distribution and the economic features of natural resources a¤ect the risk of ethnic con ‡ict of di¤erent kinds; Reuveny and Maxwell (2001) and Grossman and Mendoza (2003) use a dynamic framework to predict that present resource scarcity and future resource abundance cause appropriative competition; Hodler (2006) …nds that natural resources lead to more con ‡icts in fractionalized countries; Rohner, Thoenig and Zilibotti (2013) predict natural resources to have a particularly detrimental e¤ect if initial trust in a country is low; Fearon (2005) argues that natural resources can foster con ‡ict by weakening state capacity; Besley and Persson (2011) and Bell and Wolford (2014) emphasize that weak institutions, low income and large natural resources lead to a greater risk of civil war; van der Ploeg and Rohner (2012) study the two-way interaction between natural resource extraction and civil war, focusing on depletion speed. To repeat, none of these papers consider geographic concentration of resources and how it overlaps with the geographic concentration of minority groups.…”

“…However, the preventive war incentive analysis does not separate or highlight the role of geography or concentration of resources: a minority group could have preventive war incentives to rebel wherever the future enrichment and strengthening of the majority group is expected to come from. Perhaps for this reason, the most recent works on civil war rationalization and natural resources that emphasize commitment problems, like Besley and Persson (2011), Lei and Michaels (2011), and Bell and Wolford (2014), focus on the e¤ects of changes in total amounts or values of resources rather than on distribution and concentration variables. 7…”