Oil, Energy and Mining in International Politics

Oil, Energy and Mining in International Politics
Miners watch the rescue efforts for two fellow gold miners at La Solution mine in La Paz, Bolivia, Nov. 20, 2010 (AP file photo by Juan Karita).

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, the amount of resources being pulled from the earth has tripled since 1970, though the global population has only doubled in that time.

Global efforts to reduce carbon emissions as part of climate change diplomacy notwithstanding, fossil fuels remain among the most prized extractives, for a simple reason: Global demand combined with the wealth they generate have historically given 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. 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. And the environmental damage caused by the extractive industries has decimated local communities and driven social protest movements around the world.

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The environmental impact of fossil fuels, particularly with regard to climate change, is driving some changes, in particular a push to develop renewable energy sources, such as wind and solar, whose long-term financial viability has become clearer. But as the green energy transition gathers steam, the impact of mining the critical minerals required for the technologies that will enable it is also attracting more attention.

WPR has covered a broad range of issues regarding energy and resource extraction, and continues to examine key questions about future developments. As renewable energy sources become more prevalent, what will it take to make sure the green transition doesn’t amplify the destructive impact of the extractive industry? How will the war in Ukraine affect the geopolitics of global energy markets? What will the shift away from fossil fuels mean for the development trajectories of oil-exporting countries as well as the Global South? Below are some of the highlights of WPR’s coverage.

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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 that physically joins 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, even as conflicts—like the war in Ukraine—can have a major impact on markets.

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.

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.

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 global energy market, and the coronavirus pandemic flattened demand and clouded the oil sector’s already uncertain future. Now the war in Ukraine has upended energy markets, causing a spike in prices, but also generating greater urgency to accelerate the transition to renewable energies.

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.

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

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