By: Brendan Connell
Last week, South Sudan reported reaching its highest oil output since the 2012 shutdown of oil production that devastated the economy of both itself and its northern counterpart. Its news like this that makes the political scientist cringe with thoughts of how seemingly every oil-abundant country has been ‘cursed’ with poverty and despotism. But while this is the point where most would bash South Sudan’s resurrected oil industry, I’m less inclined to say that downgrading the oil sector is the best strategy here. In fact, with some tweaks, there’s really no reason that what people refer to as the dreaded ‘oil curse’ cannot become an oil blessing.
This is because oil abundance does not mean oil dependence. After all, the U.S. is projected to be the leading oil producer in the near future and isn’t plagued with ‘curse-like’ conflict. Oil dependence is where the real devil lies. Oil-dependent governments prop themselves up with oil profits rather than public legitimacy. They also have no other reliable options for income, meaning that oil isn’t just part of the economy, it is the economy. Those fortunate to get their hands on oil profits fight to the death to keep their position, while the ‘have-nots’ have nothing to lose in fighting for a piece of the pie. It’s not hard then to see how this creates a situation ripe for conflict. Even the wealthy oil-looters in government are at risk with all their eggs in one basket, so to speak. The military likes getting paid, so when oil prices drop or oil stops flowing, you better believe s#!t will hit the fan.
Take South Sudan, for instance. Besides its stunted development, oil-related profits prior to the 2011 shutdown comprised 98% of South Sudan’s fiscal revenue. It’s a trembling thought to think about what would happen if 98% of South Sudan’s money vanished overnight. It’s even more disconcerting to know that all it takes to cut off South Sudan’s oil exports is the flip of a switch by a cranky Omar al-Bashir [President of Sudan], who controls the Greater Nile Pipeline. What both Sudanese states really need is to pivot their attention to their other economic sectors, particularly in agriculture where Sudanese people benefit from vast amounts of land and idle labor. The creation of a new income base can lower the stakes of controlling oil wells and make life without oil a lot more bearable.
But this doesn’t mean oil production has be stopped or lessened. Actually, it means the opposite—oil flow should surge in order to tap into new profits that governments can redistribute to other sectors of the economy. It might be a tough pill for the libertarians to swallow, but Sudanese agriculture will need government subsidies and safety nets to get off the ground. Exports as lucrative as oil can play a big role in funding such projects. Oil can even be used as bargaining leverage for better trade deals with countries that have a large stake in Sudanese oil, such as oil-hungry China. Sudanese governments could offer reduced tax rates to foreign oil companies in exchange for lower tariffs on Sudanese agricultural goods entering the oil company’s home market.
It’s thinking outside the box like this that will help translate oil wealth into a more widespread phenomenon that all Sudanese can benefit from. Of course, many will ask why leaders would ever risk empowering a population that could threaten the regime’s hold on power. I will be the first to say that spreading around oil wealth is a good way for some authoritarian rulers to commit political suicide (or actual suicide, for that matter). But leaders content with their monopolized oil wealth aren’t exactly safe either. As said before, if the oil ever stops flowing, rulers may find themselves surrounded by the gun barrels of their own disgruntled military. So creating new income bases isn’t as contradicting to a leader’s well-being as most think.
It for these reasons above that I’ve never really liked the term oil curse to begin with. ‘Curse’ seems to give oil the tone of producing some mythical inevitability of conflict—that no matter what a state does, it’s doomed to poverty, authoritarianism and whatever other unfortunate fates that scholars can ponder up. But in reality, oil is what states make of it. The oil woes of both Sudanese countries will be solved not by cutting off pipelines, but by craftily moving oil revenues into other sectors of the economy. And so, dare I say it—drill, baby, drill!
The views expressed in this article are the author’s own and do not necessarily reflect the views of the Global Politics Student Association.