Crude Power: The Foreign Policy of Oil-Producing States Emma M. Ashford Glasgow, United Kingdom M.A., American University, 2009 B.A., University of Virginia, 2007 ADissertationpresentedtotheGraduateFaculty of the University of Virginia in Candidacy for the Degree of Doctor of Philosophy Woodrow Wilson Department of Politics University of Virginia August 2014 c Copyright by Emma M. Ashford All Rights Reserved August 2014 ACKNOWLEDGEMENTS This dissertation would not have been written without the support and advice of many other people. I would like to thank my committee - Allen Lynch, Dale Copeland, David Waldner and Paul Stephan - for all their e↵orts throughout this process, especially their helpful comments and criticism on early drafts, which helped to make this project far better. In this dissertation, which blurs the line between international relations and comparative politics, I am particularly grateful for the di↵ering viewpoints and theoretical background each brought to this project: Dale Copeland provided valuable insights on the best ways to structure theory and find one’s own theoretical weaknesses, while David Waldner brought to bear his in-depth understanding of the issues surrounding analysis of natural resources in politics. I am particularly grateful to my chair, Allen Lynch. In addition to his wealth of knowledge on the politics of post-Soviet states, his support and advice on the dissertation process in general has been invaluable. I am also indebted to a number of other scholars at U.Va, in particular to Todd Sescher for his extremely constructive comments on various chapters of the dissertation. I would like to thank Je↵ery Jenkins and the members of the 2012 and 2013 Graduate Development Seminar, who not only provided critical comments on the project, but also provided moral support and acted as a sounding board for ideas throughout the dissertation writing process. The writing of the dissertation was made possible by funding from the Department of Politics, as well as financial support in the form of a predoctoral fellowship from the Bankard Foundation. Last but not least, I would like to thank my family and friends, in particular, my parents and my brother, who have been extremely supportive throughout this long process. Their cheer and encouragement have been vital to the completion of this dissertation, and of the PhD. My husband Will deserves special recognition. His love and support from beginning to end of this process has kept me sane and happy. Without him, this dissertation would never have been completed. ii TABLE OF CONTENTS ACKNOWLEDGEMENTS ................................... ii LIST OF FIGURES ....................................... vi LIST OF TABLES ........................................ vii CHAPTER I. Introduction ....................................... 1 1.1 Whatisa‘Resource-Rich’State? . 5 1.2 Foreign Policy of the ‘Rentier State’ . 9 1.3 OutlineoftheDissertation ............................ 11 II. A Theory of Resource Abundance and Foreign Policy ............. 14 2.1 What Do We Know About Resource-Rich States? . 16 2.1.1 Domestic Political and Economic Distortions . 16 2.1.2 International Relations and “Resource Wars” . 18 2.1.3 Oil and Aggression . 20 2.1.4 Natural Resources: More than a Means for Conflict . 22 2.2 Oil, Natural Resources and Foreign Policy . 24 2.3 A Theory of Resource Abundance and Foreign Policy . 30 2.3.1 Oil Will Make You Rich . 32 2.3.2 Resource Rents and Weak Institutions . 33 2.3.3 “Nervos Belli, Pecuniam.” ....................... 43 2.3.4 Constraints in Government-Dominated Economies . 46 2.3.5 Theoretical Implications . 49 2.4 Methodological Issues . 51 2.4.1 Methodology and Case Selection . 51 2.4.2 Boundary Conditions . 55 2.4.3 Resources, Autocracy, Trade and Conflict . 57 2.5 Conclusion..................................... 58 III. Resource Wealth and Aggression: A Quantitative Analysis ......... 59 3.1 Methodology . 60 iii 3.1.1 Dependent Variables . 61 3.1.2 Independent Variable, or; What is a ‘Resource-Rich State’? . 63 3.1.3 Control Variables . 67 3.2 Empirical Results: Conflict Initiation and Oil . 69 3.2.1 Regression Analysis . 70 3.2.2 RobustnessTests ............................ 75 3.2.3 Conflict and Oil . 81 3.3 Empirical Results: Oil, Threats and Sanctions . 84 3.3.1 Logistic Regression Analysis . 84 3.3.2 RobustnessTests ............................ 89 3.3.3 Threat/Sanction Initiation and Oil . 91 3.4 Oil vs. Natural Resources . 91 3.5 Conclusion..................................... 95 IV. Russia ........................................... 98 4.1 Russian Oil, Gas and Foreign Policy . 99 4.1.1 A Brief History of the Russian Petrostate . 99 4.1.2 Russian Foreign Policy Since the Soviet Collapse . 101 4.1.3 Is Russian Foreign Policy Aggressive? . 107 4.2 From Oil to Weak Foreign Policy . 108 4.2.1 The Development of Russian Foreign Policy Institutions . 108 4.2.2 Are Russian Foreign Policy Institutions Weak? . 113 4.2.3 Is Institutional Weakness Oil-Related? . 116 4.2.4 Russian Military Spending and Focus . 118 4.2.5 Government Constraints in Foreign Policy . 121 4.2.6 Conclusion . 124 4.3 From Weak Foreign Policy Apparatus to Aggression . 125 4.3.1 Russia and NATO in Kosovo (1999) . 125 4.3.2 The Second Chechen War (1999-2001) . 133 4.3.3 The War in Georgia (2008) . 142 4.4 Conclusion..................................... 151 4.4.1 Alternative Explanations . 151 4.4.2 Russia: Personality-Driven Aggression . 152 V. Saudi Arabia .......................................154 5.1 Oil, Foreign Policy, and the Saudi State . 155 5.1.1 A History of Oil in the Kingdom . 155 5.1.2 Saudi Foreign Policy: 1990-2012 . 157 5.1.3 Does Saudi Foreign Policy Exhibit Aggressive Tendencies? . 162 5.2 From Oil to Weak Foreign Policy . 163 5.2.1 The Development of Foreign Policy Institutions . 163 5.2.2 Are Saudi Foreign Policy Institutions Underdeveloped? . 167 5.2.3 Is Institutional Weakness Oil-Related? . 170 iv 5.2.4 Military Expenditure in the Kingdom . 173 5.2.5 Government Constraints in Foreign Policy . 175 5.2.6 Conclusion . 178 5.3 From Weak Foreign Policy Apparatus to Aggression . 179 5.3.1 Saudi Arabia and Yemen . 179 5.3.2 Saudi Arabia and the Arab Spring . 190 5.4 Conclusion..................................... 206 5.4.1 Alternative Explanations . 207 5.4.2 Saudi Arabia: Institutional Fragmentation and Aggression . 208 VI. Venezuela .........................................210 6.1 Oil and Foreign Policy in Venezuela . 211 6.1.1 A History of Oil in Venezuela . 211 6.1.2 Venezuelan Foreign Policy: 1990-2013 . 213 6.1.3 Is Venezuelan Foreign Policy Aggressive? . 218 6.2 From Oil to Weak Foreign Policy . 219 6.2.1 Institutional Development and Foreign Policy . 219 6.2.2 Are Venezuelan Foreign Policy Institutions Underdeveloped? . 224 6.2.3 Is Institutional Weakness Oil-Related? . 227 6.2.4 MilitaryExpenditureinVenezuela . 229 6.2.5 Government Constraints in Foreign Policy . 232 6.2.6 Conclusion . 234 6.3 From Weak Foreign Policy Apparatus to Aggression . 235 6.3.1 Venezuela and Colombia . 235 6.3.2 Hugo Ch´avez: Covert and Verbal Aggression . 248 6.4 Conclusion..................................... 260 6.4.1 Alternative Explanations . 260 6.4.2 Venezuela: Conflict as a Probabilistic Outcome . 261 VII. Conclusion ........................................263 7.1 A Theory of Natural Resources and Aggression . 263 7.2 Di↵eringOutcomesinOil-RichStates . 265 7.2.1 A Pugnacious Petrostate: Iraq . 265 7.2.2 A Peaceful Petrostate: Kazakhstan . 272 7.3 SummaryofFindings ............................... 280 7.3.1 Theoretical Implications and Alternate Explanations . 284 7.4 KeyObservations ................................. 285 7.5 DirectionsforFutureResearch . 289 7.6 PolicyImplications ................................ 290 APPENDICES ...........................................293 BIBLIOGRAPHY .........................................310 v LIST OF FIGURES Figure 1.1 Oil Prices (1987-2012) . 5 2.1 Mean Conflicts/Threat Initiation by Level of Oil Revenue . 25 2.2 Causal Links between Oil, Foreign Policy Institutions and Aggression . 31 2.3 The Institutional-Personalisation Mechanism . 39 2.4 The Institutional-Informational Mechanism . 40 2.5 Rationality: Institutions and Personality . 56 3.1 Motivations for Threat/Sanction . 63 3.2 Distribution of States by Oil Revenues (as % of GDP) . 66 3.3 Petrostates and Conflict . 70 3.4 Predicted Probabilities of Conflict Initiation . 74 3.5 Predicted Probabilities of Conflict Initiation by Oil Revenues & Four Key Variables: Great Power Status, Democratic Peace, Distance & Trade Flows . 75 3.6 Predicted Probabilities of Conflict Initiation: Two Measures of Oil Wealth . 83 3.7 Predicted Probabilities of Threat/Sanction . 87 3.8 Predicted Probabilities of Threat/Sanction . 88 4.1 Russian Oil Rents (1991-2010) . 117 4.2 Russian Oil Revenues vs. Military Expenditure (1991-2010) . 119 5.1 Saudi Oil Revenues (1970-2010) . 171 5.2 Saudi Oil Revenues vs. Military Expenditure (1991-2010) . 173 6.1 Venezuelan Oil Revenues (1970-2010) . 228 6.2 Venezuelan Oil Revenues vs. Military Expenditure (1991-2010) . 230 vi LIST OF TABLES Table 1.1 Types of Natural Resources . 6 1.2 Measurementsof‘Resource-Rich’:Oil . 8 2.1 High-Level Militarised Interstate Disputes Involving Petrostates . 26 2.2 OilRevenuesvs. NaturalResourceRevenues . 29 2.3 Tax Revenues vs. Natural Resource Revenues . 35 2.4 Foreign Policy in Weak and Strong Institutional Environments . 42 3.1 Petrostates in Dataset . 65 3.2 Summarystatistics .................................... 67 3.3 Conflict Initiation by Annual Oil Revenues . 71 3.4 RobustnessTest:AlternateOilMeasure . 77 3.5 Haber/Menaldo Data on Conflict (1816-2002) . 80 3.6 Revenuesvs.GlobalSuppliers.............................. 82 3.7 Threat/Sanction Initiation by Annual Oil Revenues . 85 3.8 Natural Resources and Conflict Initiation . 93 3.9 Natural Resources and Threat/Sanction Initiation . 94 7.1 Theoretical Expectations and Findings . 282 7.2 Comparison of Theoretical Explanations for Aggression in Oil-Rich States . 285 A.1 All Militarised Interstate Disputes Involving Petrostates (1965-2001) . ..