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Peruvian police officers stand guard in a recovered area deforested by illegal gold mining in Peru. Peruvian police officers stand guard in a recovered area deforested by illegal gold mining in the Madre de Dios province of Peru, Feb. 19, 2019 (pool photo by Cris Bouroncle via AP Images).

The International Politics of Energy and Resource Extraction

Friday, Nov. 22, 2019

Despite concerns over the environmental impact of industrial mining and the contribution that fossil fuels make to global warming, resource extraction continues to be a major source of revenue for both developing countries and wealthier nations alike. In fact, new data show that the amount of resources being pulled from the earth has tripled since 1970, though the global population has only doubled in that time.

Amid global efforts to reduce carbon emissions as part of climate change diplomacy, fossil fuels remain among the most prized extractives, for a simple reason: Global demand combined with the wealth they generate continues to give some countries, including members of the Organization of the Petroleum Exporting Countries, outsized global influence.

The lucrative contracts associated with the extractive sector help to explain why resource extraction remains central to many developing countries’ strategy to grow their economies. But the windfalls don’t come without risks, most prominent among them being the “resource curse” that can plague countries that fail to diversify their economies to generate alternate sources of revenue. Corruption can also thrive, especially when government institutions are weak. And when the wealth generated from resource extraction isn’t fairly distributed, it can entrench a permanent elite, as in Saudi Arabia, or fuel persistent conflicts, as in the Democratic Republic of Congo.

The environmental impact of fossil fuels is driving some changes, in particular a push to develop renewable energy sources, such as wind and solar. But the transition to renewable energy sources is slow to develop, even as its long-term financial viability remains uncertain.

WPR has covered a broad range of issues regarding energy and resource extraction, and continues to examine key questions about future developments. Will renewable energy sources eventually overtake fossil fuels? Or, as countries begin to transition away from more heavily criticized energy sources, like coal, will they replace them with other fossil fuels, like natural gas? What can countries do to avoid the resource curse? Below are some of the highlights of WPR’s coverage.

Our Most Recent Coverage

Saudi Arabia’s Oil Industry Faces Unprecedented Risk and Uncertainty

Saudi Arabia’s oil sector has probably never seen developments as jarring as the ones since late August. A shakeup in the Energy Ministry, with a member of the royal family appointed minister for the first time, was followed by the stunningly precise attacks on oil facilities in eastern Saudi Arabia. Once-inconceivable questions are now being asked about the extent of U.S. commitments to the kingdom’s security, which have formed the backbone of Saudi policy for decades. How will the kingdom react?

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Resource-Based Development

Many developing countries see resource extraction as a path to growing the economy and improving livelihoods. But experts argue that extraction must be part of a broader plan for how and where to invest resources, bolstered by transparent reporting and governance systems, if it is to be an effective development strategy.

The Resource Curse

Resource extraction can go from a blessing to a curse when it fuels corruption or entrenches an elite, robbing citizens of the financial benefits while causing environmental damage. Countries that fail to diversify their revenue sources also risk an economic collapse and social unrest when the resource becomes scarce or global prices drop.

Illegal and Informal Mining

Globally, illegal mining has become a major social and environmental concern. In the Amazon, researchers describe illegal mining for gold as an “epidemic,” encroaching on indigenous communities and destroying vast swathes of the rainforest. The efforts are often funded by organized crime or major industries, who recruit local workers but do not offer them the training or protection formal mining industries do.

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The Human and Environmental Costs

The wealth produced by the extractive industries comes at great cost, both to local communities and the environment. Despite initiatives to boost transparency, involve affected communities in planning and minimize environmental impact, mining projects continue to drive social conflict and cause serious injustices.

Infrastructure and the Global Energy Market

In addition to generating lucrative business deals, the global energy market also shapes international diplomacy. Oil and gas pipelines serve as infrastructure physically joining participating countries, while nuclear energy deals can create industrial and scientific partnerships that span a generation. Meanwhile, competition for markets can also fuel strategic competition and conflict.

Oil and OPEC

Though OPEC still retains significant influence, its power is waning. The growth of the United States as an oil-exporting country and the rise of renewable energy have chipped away at its control over the energy market. And Qatar’s exit from OPEC last year might be a sign that oil’s future is not bright.

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Editor’s note: This article was originally published in June 2019 and is regularly updated.