Rentier peace or resource curse? The ambiguous effects of oil wealth and oil dependency on violent conflict

The 'paradox of plenty' and the 'resource curse' hypotheses claim that abundance in natural resources, particularly oil, encourages civil war through a number of causal mechanisms. Natural resources provide both motive and opportunity for conflict, rent seeking slows down growth and renders state institutions weak thus creating indirect causes of violent conflict. Contrarily, the theory of the rentier state – largely neglected in the study of peace and war in this respect – suggests that regimes use revenue from abundant resources to buy off peace through corruption, large-scale distributive policies and effective repression. Consequently, such rentier states would tend to be more stable politically and less prone to conflict. These two theories thus imply ambivalent effects of resource abundance on political stability and conflict proneness. This paper presents part of a solution to this apparent puzzle for the case of oil-producing countries. The key argument is that resource wealth per capita needs to be taken into account, since only the availability of very high per capita revenues from oil allows governments to achieve internal stability. Our empirical analyses confirm this hypothesis. More specifically, multivariate crosscountry regressions based on replication datasets show an inverted-U-shaped relationship between revenues from oil per capita and violent conflict. We detect the opposite linkage (U-shape) for the effect of oil dependence measured in terms of oil exports as share of GDP. The politically stabilizing effect of resource wealth is also demonstrated in a macro-qualitative comparison for a reduced sample of highly dependent oil exporters. Using the same reduced sample, the paper also examines whether the mechanisms hypothesized by the rentier state theory are at work. Our findings suggest that oil wealthy countries manage to maintain stability by a combination of large-scale distribution, high spending on the security apparatus, and protection by outsiders. In contradiction to the rentier state theory, the institutions of these wealthy countries do not seem to be characterised by patronage and clientelism.