Petro-friends: Foreign ownership of oil and leadership survival
| Author | Chia-yi Lee |
| DOI | 10.1177/13691481211023965 |
| Published date | 01 May 2022 |
| Date | 01 May 2022 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/13691481211023965
The British Journal of Politics and
International Relations
2022, Vol. 24(2) 343 –360
© The Author(s) 2021
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DOI: 10.1177/13691481211023965
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Petro-friends: Foreign
ownership of oil and
leadership survival
Chia-yi Lee
Abstract
The resource curse literature shows that natural resources, particularly oil, help regime or
leadership survival, but it also suggests that resource-rich countries are prone to civil wars or
political instability. This article argues that the ownership structure of the oil sector matters
and influences leadership survival. Specifically, foreign ownership of the oil sector raises leaders’
survival prospect and leads to more military interventions aimed to help the leader. Using data on
oil ownership and leaders from 1962 to 2006 across 120 developing countries, this article finds
that foreign involvement in the oil sector has a negative effect on leadership turnover. Countries
with deeper foreign involvement in the oil sector are also more likely to experience military
interventions on the side of the leaders. In other words, leaders of oil-producing countries do
receive political support when they cooperate with and serve as ‘petro-friends’ to foreign powers.
Keywords
energy, leadership survival, military intervention, oil, quantitative methods, resource curse
Introduction
Natural resources, particularly oil, are seen as ‘manna from heaven’ or ‘windfalls’ that
can substantially increase a government’s revenues, which, paradoxically, may impede a
country’s economic or political developments, a phenomenon known as the ‘resource
curse’. While much of the resource curse literature implicitly assumes that the profits of
natural resources accrue to the governments, cooperation with foreign investors is com-
monly seen in resource-rich countries, especially in the initial stage of resource explora-
tion, when foreign investment is particularly needed. There was a wave of oil
nationalisations in the 1970s, but later many countries switched to private foreign owner-
ship. What are the consequences of privatising oil to foreign investors?
The conventional view is that private foreign ownership leads to more economic gains,
as foreign companies can produce and manage oil more efficiently. This article comple-
ments the economic argument and provides a political explanation of resource-rich coun-
tries’ cooperative behaviour. I argue that cooperation with foreign investors and their
National Chengchi University, Taipei, Taiwan
Corresponding author:
Chia-yi Lee, National Chengchi University, Taipei, Taiwan 11605.
Email: cleec@wustl.edu
1023965BPI0010.1177/13691481211023965The British Journal of Politics and International RelationsLee
research-article2021
Original Article
344 The British Journal of Politics and International Relations 24(2)
home governments helps prolong leaders’ political survival. The France–Gabon and
China–Sudan relationships illustrate this patronage tie between a foreign power and the
incumbent leader based on oil interests. Foreign patronage can take many forms, and one
specific form is direct intervention in support of the leader. Two testable hypotheses
derived from this theory, therefore, are that when the level of foreign involvement in the
oil sector is higher, leadership survival will be longer and military interventions on the
side of the leader will be more likely.
The hypotheses are tested using data on oil ownership and leaders for 120 developing
countries from 1962 to 2006. The results show that leadership turnover is less likely when the
oil sector is foreign-owned, whether the sample includes all developing countries or only
oil-producing countries. The helpful effect of foreign ownership to leaders is stronger when
the time period under investigation starts from the 1970s, when oil nationalisations peaked.
The results also show that military interventions in support of the leader are more likely when
the level of foreign involvement in the oil sector is higher. In other words, foreign actors do
provide political support to the leaders who are their strategic ‘petro-friends’.
The existing literature on the link between natural resources and political survival relies
primarily on a state’s repressive capacity or patronage argument, and also implies that the
government has full access to resource rents by owning the resource sector. Previous works
on the relationship between resource wealth and political survival, however, all use a gen-
eral measure for resource wealth such as oil production or oil income without digging into
the ownership structure. It remains unknown as to whether the helpful effect of natural
resources on leaders is limited to the cases in which the government fully controls the
resource sector or not. This article suggests that external actors shape leadership survival in
resource-rich countries and shows that not only oil helps leaders, but also the ownership
structure matters, which offers new insights into the resource curse literature.
In what follows, I first review the existing literature on the resource curse, and discuss
the research question drawn from the literature. Then I provide a theory on the effect of
foreign ownership on political survival in resource-rich countries. The fourth section pre-
sents the research design to test the two hypotheses, and the fifth section shows the results.
The final section concludes with a discussion of the policy implications and the area for
future research.
Prior literature and research question
Natural resources, especially fuel resources, play an important role in the industrial-
ised world and are highly lucrative. Countries that are naturally endowed with natural
resources should benefit since these resources represent ‘unearned income’ to them.
The resource curse literature, however, argues that natural resources may be a curse
rather than a blessing, and shows that they may bring some adverse effects, one of
which is authoritarianism or difficulty of democratisation (Aslaksen, 2010; Jensen and
Wantchekon, 2004; Morrison, 2009; Ross, 2001). While most of the political resource
curse literature focuses on how resource wealth or dependence affects the level of
democracy, some scholars note that the aspect in which natural resources affect domes-
tic politics is political or regime survival (Andersen and Aslaksen, 2013; Cuaresma
et al., 2011; Omgba, 2009; Smith, 2004; Ulfelder, 2007; Wright et al., 2015). However,
even though the theory often emphasises the leader’s ability to use resource revenues
either to provide public goods or to repress the opposition, very few studies pay atten-
tion to leadership survival.
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