Oil, climate and war: The curse of the petrostate

What is the connection between oil, war, and the climate crisis? In this Long Read, Alexander Etkind explores the tendency of authoritarian petrostates, such as Russia and Iran, to launch wars and to downplay climate change. 

Last December on Fox News, Donald Trump answered the question that worries us all: “You’re not going to be a dictator, are you?” He said: “No, no, no, other than day one. We’re closing the border and we’re drilling, drilling, drilling. After that, I’m not a dictator.” He obviously likes this word, drilling: the more times he repeats it, the closer he feels to day one. We know that he wants to build a wall on the border, but why drill for oil? There should be a reason why drilling sits in the mind of the hopeful dictator who has never been involved in the oil business.

The curse

Political scientists call it the oil curse, economists call it the Dutch disease, and anthropologists, extractivism. All this literature – hundreds of studies – has proven that oil is related to dictatorship, corruption, and aggression. In 2021, Jeff Colgan demonstrates that petroagression was the most common type of military conflict around the world: the petrostates launch wars more often than other countries, and their military conflicts are longer than others. The wars that have occurred since then confirm this idea: Russia is a petrostate, and Azerbaijan too. Venezuela is a classical petrostate. Iran and Qatar, two petrostates, have been financing Hamas and the Houthis for decades.

The time of oil barons is over – this the time of oil sultans. Most of the global oil is drilled by the states and not by private entrepreneurs. Oil wealth leads to the proliferation of bureaucracy, secrecy and inequality. Political economy connects oil revenues to the large government, but there is more to it. God, chance, or some other power arranged things so that oil is connected with religion. As Michael Ross demonstrates, the Islamic countries own 62 percent of the world’s oil reserves and export more than half of global oil. Another 5 percent of reserves belong to countries with an Orthodox Christian population. There is also a link with ideology: a quarter of extractable oil is concentrated in three post-socialist countries – Russia, Venezuela and Kazakhstan. Finally, oil is clearly connected to dictatorship. Only oil gives super-profits that allow the dictator to prosper despite his corrupted elites, impoverished subjects, and senseless wars. From Libya to Russia, from Iran to Venezuela and from Saudi Arabia to Turkmenistan, a typical dictator is the leader of a petrostate. He is drilling, drilling… and polluting the planet. He is also shooting. A small but super-active part of the international community, these petrostates are the main source of energy, emissions, and wars.

Extended to OPEC+ in 2016, the Organization of Petroleum Exporting Countries now boasts twenty-three members, including the belligerent Russia. It is highly meaningful that E in OPEC stands for “exporting” and not “extracting”. The petrostate is constituted not by extraction of fossil fuel but by its export. For the planetary atmosphere it makes no difference whether oil is burned close or far from the place of origin. For national politics, it is a factor of huge importance. The US is not a petrostate, though this country extracts a lot of oil. In contrast то Saudi Arabia and Russia, its exporting rivals that have been truly led by dictators, the US burns almost all its oil on its own territory. Capitalism needs growth, and there are only two sources of it – export and internal consumption. For an oil-exporting country, growth consists of increasing sales of oil to foreign clients while keeping domestic consumption stable: on this condition, the increasing profits go straight to the state’s coffers. However, a country that drills and burns its oil at home has growth that boosts people’s energy consumption, so that they have bigger houses, more cars, speedier commutes – and burn more oil. In the world as we knew it before the current crisis, that meant increasing prosperity for all. This is changing, quickly and unpredictably. Still, there is no economic base for the oil-based dictatorship in the US, whether Trump understands it or not. However, Trump’s role models in Russia and the Middle East – his very idea of successful governance – are all connected to oil.

The crisis

Despite all the changes, oil remains with us like the Moon, and also has two sides. Monopoly, dictatorship, and aggression make the political face of oil. From John Rockefeller to the Koch brothers and from Gaddafi to Putin, this face has been always turned to us. There is also the ecological side. Burning oil products is a major source of climate change. Whether you are more concerned about heat waves or forest fires, permafrost in Siberia or famines in Africa, bankruptcies of ski resorts or flood risks for the coastal cities – climate change is a major threat to your work, leisure, and health. Paling the mortgage crisis of 2008, the real cost of home insurance in the US has been skyrocketing because of floods and hurricanes. To avoid massive foreclosures, individual states such as Florida and Louisiana create firms working as “insurers of last resort”. But nobody has enough money to cover potential indemnities, so this fiction is waiting for a disaster.

Our crisis includes climate change, multiple wars, and huge economic challenges. It is so complex that no formulation fits it. There are many notable attempts, however. Adam Tooze, a historian at Columbia University, has coined the word “polycrisis,” which alludes to its multidimensional nature. Alluding to its permanent character, “permacrisis” was recently declared the word of the year. In a more optimistic way, Mary Kaldor, a British political scientist, in a recent lecture at the Central European University in Vienna called our crisis “an experimental rupture,” and compared it to the French Revolution. Bruno Latour, the late French sociologist, wrote during the first Trump campaign that any election is a choice of climate policy, and any war is a battle for survival in the climate crisis. Ulrich Beck, the late German sociologist, said that only climate change would save us from ourselves.

I agree with some of these statements and disagree with others. The crisis is neither pluralistic nor is it permanent. Salvation will not come from technological progress, as happened in the earlier revolutions. It is due to this progress that our growth has reached its planetary limits and is collapsing before our eyes. We still live in the City upon a Hill but the expansion of this City has reached the boundaries of the Hill. This is the root cause of all other troubles. The crisis is complex, but it organized not like a mythical hyperspace but like a tree that has the roots and the fruits. They are connected, but you do not want to mix them up.

Experts predicted the crisis long ago, but now that it is unfolding, it does not belong to the experts anymore. Extreme weather events come to you directly, with no mediation. A constructivist picture is losing its validity. Heat waves, hurricanes and even insurance risks are not interpretable constructs – they are vital threats. There is no hope that PR methods will dispel climate change. We are face to face with the material reality of the crisis.

Everyone knows that greenhouse emissions cause climate change, and that the emitters should pay for their emissions. When used, a barrel of oil emits about half-ton of greenhouse gas. For this amount of emissions, the consumers pay about sixty dollars in Europe, and forty in California. Of course, they pay these emission fees on the top of eighty dollars that they had already paid for every barrel. Those who export oil and take part in the overall profits, do not pay for the emissions that their oil produces abroad. While the oil-consuming states, their corporations, and their private actors, pay for their emissions, the petrostates do not.

Working now for decades, Emission Trading Schemes attribute emissions to the country in which fossil fuel is burned, and not to the country from which it had come. This accounting emphasizes the responsibility of the buyer and denies that of the seller. But the emissions are their common products, their joint creations, the results of trade and collaboration. Developing in the oil-consuming parts of the world such as the EU, US and China, the cap-and-trade schemes do not embrace the petrostates who supply these countries with fuel. There is no moral or ecological justification for this practice. Consider Russia, for example. Its domestic emissions are roughly equal to the emissions that the Russian oil brings to the countries that buy it. But Russia does not pay for any of its emissions – neither for those that it generates on its own territory nor for those that its oil produces when it is burned in foreign lands. This is extraordinary. When we pay for a car, a computer or even a pair of shoes, we pay taxes, and we assume that everyone who made this product also paid their taxes. This assumption works with the products of labor but it does not work with natural resources such as oil.

If the world were just, petrostates would have carried the burden of the green transition along with the consumers of their oil. It has not happened. Since the petrostates shape a cartel, nobody has the power to tax them. Were it not about oil but about cars, computers or shoes, such oligopoly would have not been tolerated, but in oiligopoly – the world of the petrostates – it is still normal. Even though the share of renewables is growing and the electric cars are in vogue, increasing the price of petrol in the gas stations is the nightmare of the current generations of politicians. Joe Biden had just started his service in the Senate when the oil shock of 1973 happened. Emmanuel Macron had his lesson when yellow vests rebelled in Paris in 2018, protesting a tax that would make petrol more expensive. When the Russian petrostate launched a deadly war and Ukraine attacked Russian refineries, Ukrainian allies were trying to stop these attacks because of their fear of the increasing oil prices.

Paying for oil and petrol, we do not pay for the labor used for extracting it. We pay instead for the luck enjoyed by those who own it. Moreover, these lucky ones have united against the rest of the world, which increases their luck. Even in times of peace, the world did not treat petrostates as equals but rather as spoiled children. Secretly afraid of them, the grown-ups established special relations with these brats, bribing some and accepting bribes from others. In times of war, a belligerent petrostate turns into an international pariah, but retains most of its powers despite all sanctions and resolutions. Everyone else is surprised but the issue is much older than the war: a petrostate has never abided by the rules of the international order. Created by the countries that rely on the labor of their citizens, these rules work only for these countries. The countries that rely on their natural resources, remain outside of the international order even though they vitally depend on their consuming partners.

The war

Unlike the two sides of the Moon, the two faces of oil interact and amplify each other. The oil curse is bad enough, but emissions make it much worse. Under the pressure of decarbonization, petrostates see the reduction of their exports as a security threat. A typical war of the last thirty years has been a war between a petrostate and its neighbor, with the US and EU interfering at some later stage. Sometimes, a petrostate starts a war against the neighbouring country that also has oil, but more often a petrostate starts a war against the neighbour that transports its oil. Arguably, delivery routes are even more important for a petrostate than oil reserves.

The literature on petroagression does not differentiate between these two types of oil wars. In the last decades, we’ve seen them both: wars for delivery routes on land and sea – Russia vs. Ukraine, Russia vs. Georgia, Azerbaijan vs. Armenia, the dark story of Nord Stream, the Western coalition against Yemen and Iran; and wars for oil assets such as the Iraqi invasion of Kuwait, and the declared intention of Venezuela to capture Guyana. Finally, in the Gaza conflict we see the combination of many types of and motivations for war. Even if a petrostate such as Iran or Qatar has no understandable interest in attacking or subverting its neighbor, it has financial means to do so. In some cases, this is the best explanation that we have. Some wars of this century, probably most of them, would not have happened if one or both sides had no petrodollars in their sovereign funds.

We constantly hear about the seaborn transportation of oil through the hotspots such as Suez Canal, Persian Gulf, the Strait of Hormuz, Malacca Straits, Turkish Straits, Danish Straits, and Nord Streams I and II. However, more than a half of global oil is transported by land – by pipelines, railways, or even in trucks. For this half, there is usually a transit state that separates the petrostate and the consumer: examples are Georgia and Ukraine for Russia, Armenia and Georgia for Azerbaijan, Cameroon for Chad, and to some extent, Kuwait for Iraq. Some European countries such as Austria, Slovakia, and Hungary, are also transit hubs for Russian oil and gas. Charging serious money for transportation, these transit states are natural allies of petrostates. Relying on these transit fees that finance oligarchy and corruption, these countries experience the oil curse by proxy. But this is not a traditional dependency of the colonial state on its imperial master.

A transit state has an unusual power to block the trade. Even though this power is a potential rather than real, it is an existential threat for a petrostate. Transit dependency is mutual, and Ukraine has not blocked the gas transit despite the war, though it is threatening to stop it in 2024. The very ability of the neighboring country to control the vital trade turns it into the mortal enemy of the petrostate. A war for annexing the transit state is a particular type of petroagression, arguably more common that a war for the foreign oilfields. Seaborn trade does not know this problem because there are no states on high seas. Transit war is typical for terrestrial petrostates such as Russia, its neighbors in the Caucasus, and for land-locked petrostates in Africa. This is a crucial context for understanding the Russo-Ukrainian war, which followed many Russian projects of building seaborn routes around Ukraine.

One distinctive feature of oil is that it displaces other sectors of the economy, an effect which is called the Dutch Disease. Treating this disease, Norway locks all profits from the oil and gas trade in a sovereign fund for future generations. Oilmen drill the fuel and traders sell it, and they get their salaries. However, nobody receives the profits, which are high: in Norway, fifty billion in 2022, or more than a trillion dollars through the recent decades. This Nordic method alleviates the political symptoms of oil, but is still disastrous for its climate side because the Norwegian oil is burned elsewhere (and Norway does not pay for emissions). Following this model, the Russian government also created such a sterilization fund, but the war unlocked it, and its money have directly financed the war efforts. Profits came from the oil and gas trade, they are being spent for continuing this trade, and they will return when victory comes and trade resumes. As Fernando Coronil demonstrated some thirty years ago in Venezuela, the petrostate operates a vicious circle. Undergoing specialization, it sees the oil trade as its existential interest. There are threats – competition, transit states, decarbonization. The more specialized a petrostate is, the more securitized are these threats, and the closer war is. In the perverted logic of the petrostate, decarbonization makes war inevitable.

This all came as a surprise to the international community. Political leaders of energy transition imagined it as a common cause. However, many countries of the world have made their net-zero pledges – petrostates haven’t. Their governments see decarbonization as a zero-sum game or, even worse, a conspiracy aimed at depriving them of essential profits. Indeed, every solar farm, windmill or nuclear power plant means that that this country would buy less oil and gas. The European benchmarks – halving emissions by 2030, reducing them to net zero by 2050 – translate into proportional reductions of the revenue of the supplying petrostates. The European Green Deal was announced in 2020 and legislated by the European Parliament in 2021. The Carbon Border Adjustment Mechanism will increase the European prices of Russian aluminum and cement by 16%. This ambitious program was announced in 2021, and should start working in 2026. Russia understood all this was as a trade war and – surprise, surprise – followed up by a shooting war.

“After” does not mean “because of,” though we are very eager to construct such a causality in the case of war. Understanding the war in Ukraine as a trade war – a preventive attack on the European and global plans of decarbonization – does not exclude other motives, such as Russia’s imperial ambitions or nostalgic Soviet revanchism. In any war, geographic, economic, cultural, and ideological factors come together. In the final account, this brings us back to the dilemma of the “weak” vs the “strong” reading of the global crisis. If we see it as a polycrisis, we assume that contemporaneity of the war with decarbonization is just a coincidence. If we see the crisis as hierarchically organized, with the climate crisis as its main reason, we acknowledge the causal relations between decarbonization plans and the actions of the petrostates.

To be sure, the petrostate is not the only source of inequality and war in this world. The responsibility of the consuming states – those who buy fossil fuels and take a cut of the profits – is no less significant. However, there are two factors of asymmetry. First, the buyers of oil have acknowledged their responsibility, and the sellers have not. Second, importing states have proved their ability to absorb the ups and downs of energy supply. They have their issues – the American fear of increasing petrol prices is an example – but they also have a diversity of technologies and flexibility of supplies that the petrostates do not have. Specialized and ultra-conservative, petrostates preserve themselves largely unchanged, as if they live in a different historical time. Securitizing the very advance of green and lean modernity, these countries feature what I call carboresistance – the policies of distrust, denial, and disinformation about climate change. Some of these operations are directed against the transit countries, others against consuming countries, and still others against one’s own population. In rare cases, carboresistance turns into petroagression. In the worst scenario, it leads to the world war.

In a recent study, the citizens of nine European countries were asked which event has had the biggest impact on their future. Younger people are most likely to name climate change. Older people mention immigration. In Eastern Europe, people feel more engaged with the war in Ukraine. The coming elections on both sides of the Atlantic will see a fight between the right who focus on migration, and the left with their green activism. But at a closer look, all three dominant issues are interconnected. Migration all over Europe is now defined by the war in Ukraine, though many still think about migrants in traditional terms, as if they mostly come from Africa. The Russian invasion of Ukraine is intrinsically connected to climate change. With this understanding, we would not be that much divided after all.