"Oil Curse": The Petro-Dollar Paradox

By Beau Clark

The Violence of Petro-Dollar Regimes: Algeria, Iraq, and Libya
By Luis Martinez
Translated from the French by Cynthia Schoch
New York, Columbia University Press, 2012

Luis Martinez’s examination of authoritarian regimes that are funded and sustained by petrodollars  is a historical narrative, an in-depth political history and several thorough economic analyses of the states of Algeria, Iraq, and Libya. Martinez begins by establishing the difference between petro-produced wealth and substantial economic development. Martinez argues that while petro-regimes in Algeria, Iraq, and Libya possess a great amount of wealth because of their natural resources, the economies in each state are not developing along the trajectory one might assume inevitable given their oil revenues. Instead of viewing available petroleum as a critical natural resource for the government of each state, Martinez advances a revised argument along the lines of the “oil curse: the paradox of bountiful natural resources on the one hand and a weak economic performance on the other.” Martinez’s thesis concludes that in the cases of Algeria, Iraq, and Libya, the abundance of oil has stifled economic and political development.

Martinez hypothesizes that any given “regimes’ violent political trajectory, as well as their economic failure, results from the conjunction of specific revolutionary dynamics and unforeseen oil wealth.”  Rather than being blessed to have access to oil, as the traditional narrative preaches, states like Algeria, Iraq, and Libya are victims of their most crucial resource; these countries are being politically and economically torn apart by the very commodity the international community assumes will make them stable and secure.

Martinez employs a country-based case study organization to his work in order to prove his hypothesis. He traces the intersections between oil, economic development, and political movements in Algeria, Iraq, and Libya between the 1970s and the 2000s. For example, Martinez challenges the popular notion that the ‘70s were the golden age of  petrodollar regimes, pointing instead to the increased reliance on petro-financed security forces to support otherwise frail governments in each state. In the end, Martinez establishes a political and economic pattern of destruction in the Algerian, Iraqi, and Libyan regimes dependent on oil revenue. While Martinez does not necessarily believe the availability of oil to be the central contributing factor to the economic hardship faced by these states, he does argue that political regimes reliant on oil earnings create “an economy of waste and plunder that has ensured their longevity.”

Martinez’s work is especially relevant given the recent surge of democratic sentiment in the Arab world through the Arab Spring movement. Authoritarian regimes across North Africa are being replaced by democratically elected leaders. If Martinez’s predictions are correct, developing democracies in oil-rich states will have to withstand strong temptations to revert back to cyclical economies of “waste and plunder” sustained by  petrodollars. Only time will tell if the newest democracies in the Arab world will.

This review appeared in Al Jadid Vol. 18, no. 66.

© Copyright 2014 AL JADID MAGAZINE


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