Peace Research Institute oslo
Lecture 14
The Resource Curse
Siri Rus Aastad describes how resources can impact conflict onset and intensity.

Being a resource-rich country can give a state leverage during war, but it can also intensify the violence.

How can resources impact an armed conflict, and how can local and international actors respond?
"When people talk about a 'resource curse'," says Siri Rus Aastad, a research professor at the Peace Research Institute Oslo (PRIO), "they're talking about the effects natural resources have on conflicts." The idea behind the curse is that the more valuable resources a country has the more likely it may be to experience major violence. This is a controversial claim, however, and one that is relatively new to the field.

When mapping these effects, though, we have to think about the conditions under which resources contribute to conflict. There isn't a higher amount of valuable resources equals higher chance of violent conflict equation, because not every resource-rich region is war-torn. Oil, for example, is not a guarantee of violence.

Which means that researchers focused on the role these resources play in armed conflicts have to think about the mechanism that create these conditional effects. Which leads to the question: how much of this "curse" is driven by the resources themselves as compared to other factors?
Hectorir | wikicommons
One of the first articles talking about the resource curse was written by Jeffrey Sachs and Andrew Warner in 2001 – they posited a link between an abundance of resources and less developmental growth. As discussed in our second lecture on the causes of conflict, Paul Collier and Anke Hoeffler published a famous 2004 paper on greed vs. grievance as reasons to start a war; they linked the greed hypothesis to a surplus of valuable resources.

Rebels, the logic went, can loot these resources and use them to finance their rebellions. This argument received a lot of attention at the time, and the resource curse became linked to greed discourses that claimed that the presence of valuable resources can make it harder to main peace and resist conflict onset.

This interpretation was not without challengers, however. One of these came from James Fearon, a political scientist who, with David Laitin in 2003, promoted an alternative explanation for conflict onset: weak states and the opportunities they provide to rebel groups. In 2005, Fearon expanded this argument in response to greed discourses by writing that, without weak state control, rebels would never have had the opportunity to loot resources and fund themselves. For him, this explains why resource-rich countries with stronger state structures see less violence than resource-rich but unstable states

Other factors that complicate these arguments include what kind of resource we're talking about. Agriculture, oil and minerals may all affect conflict differently, and may intersect with different socio-political factors in unpredictable ways. There's also a different between diffuse resources, which are spread over large areas (fields, forests), and point resources, which are extracted at particular sites (mines, oil refineries). You can't loot all resources in the same way, either – diamonds are easier to steal than oil.

But even with these disputes in the literature, it became clear that researchers needed to start paying closer attention to resources in conflict. Siri claims that from 50-60% of global conflicts since 1963 have involved natural resources, with a high percentage of these found in Africa.

Broadly speaking, these researchers became interested in any conflict in which resources were a prominent factor. The war might be over resource control, but it could also be financed by resources. There have also been many conflicts over land rights and how land is to be used – farmer vs. herder conflicts are a prominent example of this.

Once these became a popular area of study, different researchers started to specialize in particular resources so as to learn more about the complex dynamics involved. Oil and diamonds were popular subjects, with both receiving national and even Hollywood attention (Syriana (2005), Blood Diamond (2006)), but forests, mines and crop fields were also studied.

Generating Datasets

Finding relevant data requires asking the right questions. When it comes to analyzing resource and conflict, this involves looking beyond simple criteria like whether a country possesses both. Russia resists such reductive coding: listing it in datasets as a conflict-affected, resource-rich country ignores the fact that diamonds and natural gas are in Siberia while the nation's insurgencies are, for the most part, limited to the North Caucasus.

This involves dividing countries into conflict zones and seeing to what extent resource extraction, transportation or sales impact specific regions. If, for example, elites from the Caucasus owned shares in Siberian mining companies, then this would have to be reflected in the data.

Researchers have developed their datasets to be sensitive to this type of nuance, meaning that links between resources and region-specific conflicts are accordingly easier to address. But this is easier when discussing localized resources like diamonds. The extended networks involved in the oil industry, for example, make its impacts harder to track.

Oil is a special case also for the fact that there's more of it and it plays a larger part in the global economy – the world will survive without diamonds, but not without oil. That, and it's harder to track where oil came from and what factors were involved in its extraction and transportation.

Which means that we need to treat each resource differently, although there are some common ways their impact can be assessed. One blunt approach is to compare resource revenue to a country's GDP in order to compare its relevance among other resources.

We can also look at other factors like production volume, revenue generated, the value of reserves in nature, export shares, government revenue shares and more. These allow for different dynamics to be identified – the US, for example, produces more oil than Nigeria, but Nigeria exports more. This has been theorized as being due to Nigeria being a poorer country and thus more dependent on exports to generate revenue. They may not be able to utilize their abundance of oil inside the country due to economic or political factors. This kind of dynamic can prove relevant during a conflict.

Another category of dynamics involve political management. Is resource extraction privatized or nationalized? Is the industry regulated at a local or state level? Are resources coming from federated areas within states that have more control over how these resources are dealt with? Collier and Hoeffler, along with Dominic Rohner, have built on Fearon's work on opportunity and feasibility in a 2009 article that takes these factors into account.

But even with all this research, it's still a relatively new area and there's lots we don't know. People are developing new ways of collecting and analyzing data in order to discover correlations and analyze them, but we don't know the causal mechanisms yet. Part of the difficulty is that that the outcomes studied (war, no war) are often made up of lots of different moving pieces and researchers are still coming to grips with these dynamics.

Some say that we need more disaggregated data, not just looking at countries and states but using more comprehensive surveys. There's also the classic chicken-and-egg arguments about war impacting resources and resources impacting war. It's a hard cycle to break down and analyze comprehensively.

There are a lot of concerns over future resource-based conflicts, especially over water, but the main type of conflict studied right now is civil war and these are usually not focused on issues like this. That said, tensions between countries that share waterways (Egypt, Sudan, Ethiopia, or Uzbekistan, Tajikistan) run sometimes incredibly high. We just don't have the same data on these conflicts, though, as we do on present armed conflicts. But that doesn't mean that these won't develop into wars or interventions at some point.

Other factors that need to be taken into account in order to figure out what makes resources a volatile hotspot. Histories of conflict between countries or groups, for example, or structural inequalities and other grievances. Then there's interest in how resources intersect with issues of gender, aid or education – how were each of these affected by the presence of diamonds in Sierra Leone's civil war, for example?

There's still a lot of work being done to try to parse out the different mechanisms involved, with some saying the setbacks result from the issue's complexity and others claiming that the "curse" might not be as relevant as some researchers would make it out to be.

Siri gets more into the figures below.

Resources and Conflict Onset

Researchers claim there's a link between natural resource production/export and conflict onset. This seems particularly relevant when oil is involved, especially in contexts of longstanding autocratic regimes or corruption.

But, if you were to plot this data on a chart, it would have an inverted-U shape – this seems to imply that, once a dictatorship gets strong enough, it can take enough control to make sure that resources become an asset to the regime instead of a threat. This seems true even in cases involving oil, diamonds and other gems, which are otherwise connected to longer and more severe conflicts with a higher likelihood of recurrence even once violence ends.

There are three main mechanisms at work here.
When a rebellion is motivated by resource gain or financed by looting.

This is an example of direct motivation.
Grievances related to unfair distribution of resources or other forms of inequality.

This is an example of indirect motivation.
When resources are connected to poor economic performance or state weakness.

This is an example of indirect motivation.
A common example of the first dynamic are the impact of blood diamonds on the civil wars in Sierra Leone and Liberia, neighbouring countries in West Africa. They were used to finance rebel groups, but in Liberia timber was also used to support the rebels. There were also cases where people would sell rights to plots of land in order to raise funds, which sometimes led to selling more "rights" than there was land.

In Nigeria, there are many tiny oil refineries in the Niger river delta. Some armed groups would steal oil from the pipelines, process it locally and sell it in the black market – but this is far more complex than dealing with diamonds because there needs to be more infrastructure and set networks of buyers.

There have been more unorthodox examples of resources than these. Cashew nuts were used to finance rebels in Senegal, and there have been examples of using "blood bananas" in other countries.

Then there is the second dynamic: grievance factors, especially with inequality. This is especially true in countries with histories of colonialism, where resource extraction may be connected to concessions that were given in oppressive contexts. But these concessions could also have been made in the post-colonial period – one suggestion is to cancel all concessions so as to re-negotiate new deals from scratch, but this would cause other problems that would have to be dealt with.

The idea of wealth-sharing is controversial and highly subjective, because it depends on concepts of fairness. Is it fair for all citizens to benefit from a country's natural resources? Is it fair that those who have invested more should reap more benefit? Should the poorer regions get more than others? Should people who live in the region of extraction get more?

This last question of region is particularly complicated, because in many war-torn countries there can be massive differences in quality of life depending on where someone lives. These often are expressed or result in what what our third lecture referred to as horizontal inequality, where different groups in a society have different experiences of factors like access to resources or services.

These inequalities provide fodder for narratives, which can either refer to present-day or historical grievances. Sierra Leone's Revolutionary United Front (RUF) was a rebel army that fired people up with songs asking the president where their diamonds were, or where the benefits from them were going. These are meant to consolidate and exacerbate grievances, linking socio-political factors to felt deprivations like hunger.
Grievances are sometimes generated not only because of inequality, but also because of a given group's expectations. Off-shore gas deposits were found in southern Tanzania, leading the president to promise locals in a marginalized region that they'd one day be as rich as Brunei. What wasn't mentioned, however, was how long it takes to develop a gas field and build pipelines. This led to major, violent demonstrations and observers were wondering whether Tanzania, which has been a relatively peaceful country in an unstable region, would descend into civil war. It had many of the "red flag" factors, but it did not. Researchers are still looking into this.

Another factor that can lead to conflict is environmental degradation. There have been cases where oil spills in certain river deltas, like in Nigeria, have experienced major oil spills and companies have not wanted to repair the damage. They blamed local rebel groups. Agricultural land was ruined, fisheries were depleted and locals had to go out further to fish, which they could not do because of certain regulations and so their livelihoods were ruined (not to mention their health) with no compensation. This kind of grievance can be used by rebel groups to recruit disaffected locals into a fight.

Job immigration can also create grievances, like when big companies move into a region and huge numbers of workers expect to become employed and thus improve their region's economic standing. These companies, though, sometimes bring in their own workers (as is the case with some Chinese companies in Africa), leading some locals to wonder whether the authorities are more interested in foreign businesses or in their own people.

It doesn't only have to be foreign countries bringing in their workers – sometimes a specific ethnic group or tribe are given economic privileges and this can create a very volatile set of grievances.

The third dynamic concerns whether resources contribute to a weak state or generally poor economic performance – these, Laitin argues, create opportunities for rebel groups to seize power.

One factor to pay attention to is known as the Dutch Disease, which is when dependence on one particularly valuable resource impacts growth in other industries. The term was invented in the 1970s to describe how Dutch manufacturing capacities took a huge dive after the discovery of Europe's largest natural gas field in the Netherlands. In cases where this resource runs out or becomes unstable, it becomes difficult to fill that gap and prevent economic collapse.

Another factor is inefficient spending, especially with regards to nonrenewable resources. Some commentators recommend spending revenues on education, infrastructure, electricity and other factors that can contribute to economic growth and diversification, but this is not always what happens.
Golden statue of Turkmenistan's first president.
This was the case in the island nation of Vanuatu, where huge fluoride deposits led to a boom-and-bust cycle because profits weren't invested in the developing nation's infrastructure. In an absurd turn, much of the money was invested in a Broadway show that later tanked, taking the funds with it.

One opposing example that's often mentioned is Norway. The country found oil deposits in the 1970s, which turned it from a poor nation to a rich one very fast. But they created a system where they couldn't use too much of their oil revenues on government spending, otherwise there'd be a big boom and things would be sent off-kilter. Checks and balances kept the system in place and drove growth.

But a perennial factor that prevents this from happening is corruption, with kleptocratic leaders or oligarchs engaged in what's called rent-seeking, the process of adding to one's own wealth without reciprocation. In new democracies this can prove dangerous as, if a government administration knows that they won't get re-elected the following term, they may decide to grab everything while they're in power.

Chad is an example of this dynamic. Oil was discovered in the country, and when the World Bank stepped in they tried to set up infrastructure that would allow for the proper development of the industry: mechanisms for funds, distribution, escrow accounts and so on.

The country's dictator, however, surrounded himself with allies and family and took control of these mechanisms, opening all the accounts and taking nearly everything. The country went from an oil-rich conflict-affected nation to being a conflict-affected nation without oil, which created all sorts of other problems.

Perhaps the most compelling insight that comes from studying the resource curse is a clear difference between cursed and not-cursed nations: strong institutions with checks and balances. Turning our attention to the institutions as a way to regulate potentially violent social forces may indeed be a positive step, but the problem still remains: how to build them if they're not already there?

Regulation and Institutions

"On a practitioner level," Siri says, "the question many researchers are asking themselves is how to build peace and not spoil the future?" This involves a number of incredibly complex factors, including negotiating with warlords who are in the process of grabbing everything while they're in power. Or who use child soldiers, or repress populations in various ways. In many cases, removing certain actors might create a vacuum that goes on to create something worse – this sometimes making concessions, concessions that fail. But concessions that might have prevented the situation from getting worse.

Which leads the conversations to the mechanisms that can be put in place to foster checks and balances, or to allow for greater regulation and institution-building. These mechanisms can be applied at different points in the process: extraction, commodity refining, revenue distribution and broader regulations.

There have been attempts to address problems with extraction, which include putting pressure on peace spoilers, rebel groups or foreign extractive firms. Some have suggested bringing in UN troops with a special mandate, one that possibly includes engaging in firefights. Others have proposed sanctions on resources connected to region-specific conflicts, like against diamonds in Sierra Leone or oil in certain Iraqi regions. This approach has seen some success.

As mentioned above, one approach is to review and renegotiate contracts, or cancelling concessions in order to make more just or more inclusive deals, or at least a deal that takes into account nuances on the ground.

There are also attempts to track commodities and revenue, like the Kimberly standards for diamonds. These track stones from mine to seller, and then again from seller to seller. They aim to prevent blood diamonds from reaching the market and it has made some successes even though they can't catch everything.

Another example are larger structures like the Extractive Industry Transparency Initiative (EITI), which tried to create standards for transparency while also trying to involve local communities in inclusive actions. The International Tin Initiative (ITI) launched a tin supply chain initiative, like the Kimberly standards but applied to another industry. The Dodd-Frank Act, which formed part of the Wall Street bailout in 2008, included stipulations limiting companies from trading in conflict minerals.

One such material is coltan, which is used to create essential parts for smartphones, computers and other electronics. It's mined in the Democratic Republic of Congo (DRC), and it's extraction has been linked to various conflicts that have been active for decades. There's also a great deal of sexual violence against women associated with areas with heavy mining, which has led to concern over "blood smartphones" funding armed and gender-based violence.

Two Western campaigns focusing on these components led to reduced coltan trading, which meant that many people in these regions lost their livelihoods – for many, the only option to survive was to join the rebels. Which was a major lesson for policy makers that these kinds of initiatives can backfire.
The EITI expanded to include different countries, including western nations, leading to greater scrutiny over whether policies like this work. Success had to be further defined, and it started to include institutional goals, transparency norms, participation and inclusion mechanisms, compliance, the creation and promotion of multi-stakeholder groups, reporting standards, public outreach and information distribution. This extended to include broader peacebuilding concerns, like including civil society groups, decreasing corruption, improving the general investment climate, promoting good governance and improving living standards.

Successes were mixed. The institutional goals went through, with transparency becoming an industry standard. Operational goals and clearer standards and reports were also implemented. The broader goals, however, especially the development goals and the inclusion of civil society, have not seen much success.

Investments seem to have been improved, but it's hard to tell how solid these numbers are and whether certain initiatives also act as smokescreens. People might be included, fore example, but not given power. There's no evidence for a decrease in corruption either, though this is something that's hard to find evidence for.

This has led some to claim that the EITI has failed, but others frame it as baby steps in a positive direction that nonetheless have produced fruit. The progress in terms of standardization and transparency remain.

Challenges connected to revenue distribution and allocation are often concerned with fairness and corruption. Addressing these often involve restructuring deep-seated social structures, which is not a simple task. Since transparency has been an area of progress in other sectors, possible solutions proposed include transparent wealth sharing schemes.

In Nigeria, for example, 13% of resource-based revenues go back to the region where it was produced, with the rest being subject to negotiations. In Aceh, a resource-rich province in Indonesia with separatist activity, they receive 70% of resource revenue.

There are also benefit sharing schemes, which didn't work very well in Sierra Leone. The Diamond Area Community Development Fund stipulated that 3% of the tax generated from the sale of diamonds were to be given by extractive companies to local communities, but they were handed to various chiefs and then disappeared.

This was an example of a community development agreement (CDA), which often are implemented to give direct funds or social benefits to the community, but the Diamond Area fund was so small that it was thought to have been insignificant.

There have been initiatives to help certain countries invest funds according to long-term interests, but this is difficult as immediate needs, such as post-conflict reconstruction, might be neglected.

There's also discussion about what to do about illegal resources, such as Afghanistan's opium industry. There are poppy farmers whose only livelihood is their crop – some advocate for burning the fields as a way to limit exports, but others say that less putative approaches might help farmers transition to a new industry. But these transition programs still, by their very nature, allow for opium trade to continue, even if in a limited form. And these opiates can be used to finance conflict or wreck other kinds of damage.

On the other hand, burning the fields makes certain populations more vulnerable to recruitment by groups such as the Taliban.
This is not to say that helpful policies are impossible to find, just that they're exceedingly complex. Sometimes even the 'best' policies have side effects that will have to be mitigated, and predicting what they might be will give policy makers a better chance of doing this. Bans or sanctions can prevent sales but damage local communities and create grievances that lead to violence, and working with local representatives can sometimes mean being manipulated by warlords and rebel commanders.

It can be hard to make decisions taking these factors into consideration without a knowledge of what happens on the ground, and this is why researchers are trying their best to understand relevant factors and get this information in front of policy makers.

The questions they have to ask themselves when analyzing a given region include: what are the main challenges? Who are the actors involved, and who's responsible for what? Do you intervene during abstraction, refinement, transportation, sales?

And the dynamics of each resource are different, and impact the situation differently. There's a lot of attention paid right now to water and water basins, especially when it comes to a nation's ability to build a dam upriver from another nation's water supply. Understanding these dynamics is difficult – but, every time a new trend comes to light, it then can be put to use in understanding even just one small portion of the big picture.
Siri Rus Aastad is a research professor at the Peace Research Institute Oslo (PRIO). Her research interests include conflict data and trends, as well as the human consequences of conflicts.

Josh Nadeau is a freelance writer and peacebuilding practitioner.
He studied at PRIO in 2018.

Banner photo from NBC News
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Further Reading
Do Natural Resources Matter for Interstate and Intrastate Armed Conflict?
Koubi, V., et al. (2013)
Journal of Peace Research 51(2): 227-243.
What Have We Learned About the Resource Curse?
Ross, M. (2015)
Annual Review of Political Science 18: 239-259.
Building or Spoiling Peace? Lessons from the Management of High-Value Natural Resources
Rustad S et al. (2012).
Chapter in High-Value Natural Resources and Peacebuilding
Ed Lujala & Rustad