Student essay: Energy and ‘Freedom’
Posted by Arjendu on June 4, 2016
Hami Abdi: Oil’s Impact on Freedom
The Middle East is located where the southern shores of the Tethys Sea occupied a 100 million years ago. Over the years, the organic remnants from aquatic life buried under miles of sediments at the bottom of the sea got transformed into crude oil through a long series of chemical reactions involving the heat from the hot zones deeper into the earth. The creation of oil is a remarkable process. Unfortunately, this does not change the fact that oil contributes to the lack of freedom in Middle Eastern countries.
Countries with oil can find it hard to establish democracy, a concept closely tied with freedom. The Rentier-State theorem implies that countries that generate enough revenue from their natural resources to obtain financial freedom from their citizens tend away from democracy. These countries are named rentier states. The intuition is that since rentier states can manage without the need to tax their citizens, the citizens become less demanding. The situation is exacerbated when the government provides allocations to its citizens, even though this allocation makes up a small percentage of its total expenditure. Thus, as a result, rentier states have a small group of people in the government that possess the large oil-related revenues controlling the entire nation.
For instance, observe United Arab Emirates’ Dubai. As per many Middle Eastern cities, Dubai has no taxes. Moreover, the city is generating lots of revenue as is evident by its luxurious hotels, vehicles, and other facilities. However, hidden in between the dashing city lights and the magnificent skyline are all the poorly-treated construction workers that are making all of this happen. These workers are underpaid and made to work under life-threatening conditions (e.g. installing beams on the 76th floor amidst a sandstorm). Unfortunately, for reasons mentioned in the previous paragraph, these workers are essentially unable to invoke a change. There are undoubtedly other instances of violation of human rights and freedom in Dubai and other Middle Eastern countries that cannot be corrected given the rentier-state structure.
Oil also restricts external countries from interfering and preventing internal violations of human rights and freedoms. Throughout the world, there is a large demand for fossil fuel, given our daily routines. In particular, 40% of our total consumption of energy (104,426 TWh) comes from oil – that is equivalent to 3592 mega-tonne of oil equivalent! Interfering with internal affairs of Middle Eastern countries would mean perhaps jeopardizing about 27% of the world’s energy sources, given that the Middle East is responsible for producing 66% of the world’s oil supply. Furthermore, these countries provide perfect shields for extremists and radicals that eventually lead to the rise of extremist groups, such as Al-Qaeda. Hence, in a way, the world’s dependence on oil contributes to terrorism and loss of human freedom in the Middle East.
Lastly, the reliance on oil prevents economic growth, and thereby, essentially imposes economic restraints on the citizens of Middle East. As discussed previously, rentier states obtain essentially their entire revenue from external sources. It has been shown that this leads to an unproductive domestic economy because its governments are not compelled to apply free market principles to create an environment conducive to economic growth. Thus, many Middle Eastern countries have relatively low standards of living, and their market lacks the necessary infrastructure to nourish maximum economic freedom.
http://www.opec.org/opec_web/en/data_graphs/330.htm. However, if we want to include only the oil that is exported from the Middle East, the 27% should be closer to 22.6%, as per this article: http://euanmearns.com/oil-exports-from-the-middle-east-and-the-price-of-oil/
More on Rentier State: http://gov332.weebly.com/uploads/1/3/5/2/13525224/beblawi-rentier_state.pdf
Formation of oil in Middle East: http://www.nytimes.com/2010/08/03/science/03oil.html