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The Paradox of Plenty and Natural Resource-Driven Conflict

Written by Grace Avila Casanova

March 1, 2018

Factors such as the increasing competition over land and water, environmental degradation, demographic growth and climate change are arguably aggravating the situation. Broader processes such as social discrimination, inequality, political instability and corruption usually follow the natural resource boom; alongside internal contradictions: an endemic lack of innovation and entrepreneurship as ownership transfers overseas or is centralised in corrupt government extraction and exploration departments.

The experience of countries across Africa, Latin America and Asia demonstrate that under such conditions, natural resource wealth can somehow destabilise the progress of development. Conflicts in several African countries have been fuelled by lucrative resources such as diamonds and oil. In recent decades Sierra Leone, Congo, Liberia and Angola have undergone civil wars primarily due to diamond mining. Latin America’s long history with violent conflict over mineral resources includes two prolonged civil wars triggered by control over nitrate-rich territory and oil reserves. Since 1980, civil war in Colombia has been closely linked to oil extraction. Recently Bolivia, Mexico and Peru have experienced conflicts regarding land and indigenous rights, labour practices, and environmental regulations over gold, silver and copper. Meanwhile, countries in the Asia-Pacific region are among the world’s leading producers of tin, aluminium, nickel and natural gas. These resources are key drivers of international political rivalry. Other resources such as rubber, palm oil and coconut are at the centre of conflicts over access to markets and price regulation.

Scarcity or abundance?  

Scarcity and abundance can summarise the link between conflict and natural resources in terms of availability and quantity. According to the first approach, the scarcity of resources creates incentives for conflict based on the idea that different groups may engage in conflict over access to a determined, lacking vital resource. The second approach refers to abundance as the catalyst of conflict because primary commodities are attractive to political elites, therefore, create the conditions for competition over resource-rich land and its exploitation. However, neither approach alone can consistently explain the development of conflict. Case in point: Botswana, the world’s largest producer of diamonds, is one of Africa’s most stable countries, has an exemplary human rights record and it is relatively corruption free. Indeed, both scarcity and abundance demonstrate how mutually reinforcing factors such as the politics of ownership, power ambitions, economic interests, regional dominance and access to resource extraction contribute to the development of conflict in either abundance or scarcity situations.

The Resource Curse 

An extensive amount of theory has been written about the ‘resource curse’. Simply put, some resource rich countries experience less economic growth and worse development outcomes than countries with fewer natural resources. Venezuela, the world’s richest oil country, saw demand for refined crude oil ruin the economic welfare of a prosperous country. A succession of socialist regimes failed to provide the socioeconomic stability from the influx of petrodollars marred with corruption and bribery. The demand for the Venezuelan bolívar rose, leading to an appreciation against other trading partners’ currencies on the foreign-exchange markets. This appreciation made the prices of other commodities uncompetitive on the world markets. As time passed, the oil sector grew in prominence and importance, while other industries and agriculture faded away. In Mexico, roaring global avocado demand has fostered wide deforestation and the growing use of pesticides has polluted fresh water supplies. In Brazil, resource wealth in cocoa beans and oil has done little to lift the standard of living, let alone alleviate widespread poverty. Instead, the country has invested resources and expertise in these sectors at the expense of others.

Evidence demonstrates that the mismanagement of natural resources can aggravate, contribute to or lead to the development of conflict. Therefore it is clear that, in either context (scarcity or abundance), institutions play a leading role in determining whether natural resource wealth represents a curse or a blessing. Nonetheless, further exploratory questions must be addressed to truly comprehend the depth of this issue,  including What constitutes strong institutions? and What the role of globalisation is in resource-driven conflict?. Similarly, areas such as religion, identity, ideology and ethnicity must be examined in order to underpin context-specific historical grievances.

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